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Obama To Call Income Inequality ‘The Defining Issue Of Our Time’

by The Huffington Post on January 25, 2012

Huffington Post…

The president has the wealth gap on his mind. Obama will identify the need for a level economic playing field as “the defining issue of our time” in his State of the Union address Tuesday night, according to early excerpts of his speech made available to the press . “No challenge is more urgent. No debate is more important,” reads the excerpt in part. “We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.” Obama will deliver his address after decades of divergence between America’s richest citizens and everybody else. A Congressional Budget Office report recently confirmed that the gap separating the wealthiest and poorest Americans is historically large, and that the nation’s top earners have seen their incomes skyrocket in the past 30 years while paychecks for the vast majority of people have barely changed at all. The address will also take place amidst a grim season for the American economy, a time when millions of people are out of work , and millions more have jobs that don’t pay enough to boost them out of poverty . Presently, income inequality is more severe in the U.S. than almost anywhere else in the developed world — a circumstance likely related to the country’s pervasive levels of poverty and economic struggle . In confronting the dearth of economic opportunities for ordinary workers, Obama seems to be echoing — whether intentionally or unintentionally — the concerns of the Occupy movement , which cast a spotlight this autumn on the national wealth gap and the harsh conditions faced by those looking for jobs. In evidence of how thoroughly the Occupy movement saturated the national conversation, the number of times the media mentioned the phrase “income inequality” increased nearly five-fold during the first two months of the Occupy protests, according to Politico. The president is also likely playing into Americans’ concerns about the issue. Nearly three-quarters of Americans said that they think income inequality is a problem for the United States, according to an October poll conducted by The Hill . More generally, countless polls in recent months have shown that the economy and the availability of jibs are the top concerns for Americans. Evidence suggests that the income gap may be holding back a broader economic recovery, which has yet to manifest despite the Great Recession officially ending in 2009. Income equality positively correlates with economic growth , according to a September study from the International Monetary Fund. In the hours leading up to Tuesday night’s address, onlookers raised their eyebrows at the news that Debbie Bosanek, secretary of billionaire financier and occasional Obama adviser Warren Buffett, will receive a seat of honor next to Michelle Obama during the proceedings . Buffett made headlines over the summer when he argued, in a widely read New York Times op-ed, that America’s very wealthiest citizens should pay higher tax rates than many of them currently do. Buffett cited the example of his office co-workers, who he said paid a higher percentage of their income as taxes despite earning much less than him. By seating Bosanek next to the First Lady, Obama appears to be aligning himself with Buffett and others who argue that the rich are given too much freedom to stockpile their wealth. A report earlier this month from the Congressional Research Service pointed to regressive alterations in the tax code — that is, high earners paying smaller and smaller shares — as one of the major reasons for the differences in income growth during those years. The report found that between 1996 and 2006, the top 0.1 percent of tax filers experienced an almost two-fold increase in income, while the bottom 20 percent of filers saw their incomes fall by 6 percent. Here are 15 charts to illustrate what Obama has termed “the defining issue of our time”:

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Adam Levin: The Real SOPA Opera Should Be ID Theft

by Adam Levin on January 24, 2012

Huffington Post…

The Stop Online Piracy Act, and its sister legislation in the Senate, the Protect Intellectual Property Act caused quite a stir in Silicon Valley, Hollywood and Washington. The two bills were intended to put a hard stop on theft of intellectual property on the Internet, by means that are controversial in terms of the First Amendment . Big players from the overlapping worlds of movies and music pushed for this bill. So did their high priced lobbyists. But SOPA and PIPA were ultimately shelved last week, and not just because there were formidable forces lined up against it. Google, Facebook, Yahoo, AOL and Twitter are just a few of the tech companies that opposed the bills, and they can certainly afford some pretty high priced lobbyists, too. What also put a knife through the heart of SOPA and PIPA was the non-paid lobbyist community — a.k.a., the grassroots. The last few weeks, millions of people signed petitions in opposition of the bills. And sites like Wikipedia and Reddit went dark for 24 hours in protest. “What has happened in the last few weeks will permanently change the way citizens communicate with their government… This is a new day,” Sen. Ron Wyden (D-OR), told The Washington Post’s Greg Sargent . Wyden has been SOPA and PIPA’s chief opponent in the Senate. I don’t argue with the good intentions of the bills’ sponsors — online piracy of music, movies and the like is a serious problem that has existed and grown in direct proportion to the existence and growth of the Internet itself. But Silicon Valley folks argued that the proposed legislation would seriously curtail the operations of very popular websites, such as YouTube, even though the proprietors of those sites are not trying to steal anything themselves, and generally take steps to be certain that they don’t, in the language of the bills, “facilitate” online piracy. Regardless of the fate that befalls either piece of legislation, the battle over online piracy is raging and will continue for quite some time. And the reason why the issue will remain top of mind is the same reason why the bills were beaten back: powerful interests lined up on both sides of the issue, and real people weighed in and let their voices be heard. I only hope that people keep talking because the truth of the matter is that SOPA and PIPA only scratch the surface of online piracy. But while we contemplate the gargantuan battle of the content vs. technology worlds, we must not forget an equally serious, actually even more serious example of online piracy. While no numbers have been reliably developed to compare the two, I would make book that the most common and sinister piracy that goes on via the Internet involves database compromise and identity theft rather than theft of movies or music. According to the Identity Theft Research Center , 4,300,056 records containing sensitive consumer data were stolen in hacking incidents in 2011 alone, exposing those consumers to the risk of identity theft. The current proposed legislation doesn’t deal with identity theft, but of course, there are a number of laws on both federal and state books that do. Unfortunately, most aren’t tough enough and, in the case of the federal government, they are few and far between. One of the complaints I have often heard from proponents of SOPA is not so much that existing law is inadequate, but rather that existing enforcement of that law is lacking. Doubtless, while SOPA (or Son of SOPA) provides new and potent enforcement weapons, the noise surrounding the recent battle will definitely step up enforcement activities under current law, something that is critical, especially if both bills die beneath the Capitol dome (which apparently one has). And given the fact that Congress has mastered the art of internecine squabbling and gridlock, nothing seems to be going anywhere fast in Washington, no matter how serious the problem. If only identity theft were as buzz worthy; alas, (the recently departed) SOPA and PIPA are big news because of the power and prestige of those on both sides of the issue. That’s why the grassroots ultimately had to get involved. The victims of intellectual property piracy are generally large and powerful companies, with lobbyists in Washington and in every important state capital, with money to spend to help with enforcement or to technologically impede the theft of their property. On the other hand, the victims of identity theft are generally individuals with meager resources, both financial and political, to fight against the theft of their sensitive personal information, and the destruction of their financial lives, or even more dire consequences should they experience medical or criminal identity theft. Put simply, the victims of intellectual property theft are generally much wealthier and more powerful than the thieves, whereas in identity theft, the playing field is generally more tilted in favor of the bad guys. It’s safe to say that if multibillion dollar companies need more legislation and better enforcement procedures to protect their property, individuals need all the help they can get to protect theirs. While there are many organizations that do their best to prevent identity theft, they cannot match the resources available to those who have large financial interests at stake, like the entertainment companies that have embraced SOPA. This is, after all, America, where money talks but big money shouts. I hope that the senators and representatives who are hell-bent to kill or at least seriously maim the Consumer Financial Protection Bureau and other consumer-oriented federal regulatory agencies take note of the fact that consumers need all the help they can get to protect their identities. Unfortunately, there are no lobbyists or media campaigns to shout at Congress, but perhaps a large chorus of smaller voices will make a lot of noise at the polls in November. This article originally appeared on Credit.com .

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Adam Levin: The Real SOPA Opera Should Be ID Theft

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Yahoo Delivers Another Listless Performance

January 24, 2012

SAN FRANCISCO – Yahoo’s latest financial results show the Internet company is still losing ground in the battle for online advertising. The fourth-quarter breakdown announced Tuesday is the latest in a succession of ho-hum performances. The company earned $296 million, or 24 cents per share, in the October-to-December period. That is down 5 per cent from $312 million, or 24 cents per share, a year earlier. The earnings matched analysts’ estimates. Fourth-quarter revenue dropped 13 per cent from the previous year to $1.32 billion. After subtracting commissions, Yahoo’s revenue totalled $1.17 billion. That was $20 million below analyst projections. It’s the 13th straight quarter that Yahoo’s net revenue has declined from the prior year. Yahoo Inc. recently hired former PayPal executive Scott Thompson as CEO in its latest attempt at a turnaround. Thompson is the fourth CEO in less than five years to try to snap Yahoo out of a financial funk that has depressed its stock. Yahoo dipped 2 cent to $15.67 in extended trading after the report came out. The stock price has fallen by about 40 per cent from its levels five years ago. As the company ushers in Thompson, Yahoo isn’t making any promises for a quick start under his leadership. Yahoo predicted its net revenue in the first quarter will range from $1.02 billion to $1.1 billion. The mid-point of that target works out to $1.06 billion, unchanged from last year’s first quarter. Yahoo’s financial malaise comes as advertisers are shifting more of their budgets to the Internet as people spend more of their time on the Web. The biggest beneficiaries of this boom so far have been Internet search leader Google Inc. and Facebook, the owner of the largest online social network. While Yahoo continued to struggle during the final three months of last year, Google’s revenue rose 25 per cent from the same period in 2010. As a privately held company, Facebook doesn’t disclose its financial results, but data compiled by independent research firms show its website has been luring advertisers away from Yahoo.

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Yahoo Co-Founder Calls It Quits

January 17, 2012

Yahoo co-founder Jerry Yang announced on Tuesday that he is stepping down from his position on the Yahoo! Board of Directors, as well as his other positions on the boards of Yahoo Japan Corporation and Alibaba Group Holding Limited. From Yang’s letter to the Yahoo! Board Chairman Roy Bostock, per a press release : My time at Yahoo!, from its founding to the present, has encompassed some of the most exciting and rewarding experiences of my life. However, the time has come for me to pursue other interests outside of Yahoo! As I leave the company I co-founded nearly 17 years ago, I am enthusiastic about the appointment of Scott Thompson as Chief Executive Officer and his ability, along with the entire Yahoo! leadership team, to guide Yahoo! into an exciting and successful future. Yang and David Filo founded the company in 1995. Yang has sat on the Yahoo board since March 1995 and served as CEO from June 2007 to January 2009, according to the press release. On January 4 the struggling web giant appointed PayPal chief Scott Thompson as its new CEO, filling the void left when the company directors ousted Carol Bartz in September . According to the AP, Thompson is Yahoo’s fourth CEO in less than five years. Thompson praised Yang on Tuesday. “I am grateful for the warm welcome and support Jerry provided me during my early days here,” said Thompson in a statement . “Jerry leaves behind a legacy of innovation and customer focus for this iconic brand, having shaped our culture by fostering a spirit of innovation that began 17 years ago and continues to grow even stronger today. Jerry has great confidence in the future of Yahoo!, and I share his confidence in the enormous potential of Yahoo! in the days ahead.” The New York Times refers to Yang’s tenure as CEO as “turbulent.” Writes the AP , “Although a popular figure among Yahoo employees, Yang had alienated the company’s shareholders by turning down a $47.5 billion takeover offer from Microsoft Corp. in 2008.” AllThingsD’s Kara Swisher speculates that more big changes may result if the company’s Q4 earnings, to be announced on January 24, fall into the lower end of the projected range. She foresees a possible shakeup of the board, as well as the possibility of selling some of its shares back Alibaba Group and Softbank, Yahoo’s major partners in Asia.

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Handful Of Americans Account For Half Of U.S. Health Care Costs

January 17, 2012

The cost of health care may have gone up for almost all Americans in recent years, but a handful of consumers are getting hit especially hard. Just five percent of Americans accounted for half of the country’s health care costs in 2009 , according to a report from the Agency for Healthcare Research and Quality. Though the findings indicate that a small share of the population is responsible for much of the country’s health care costs, the concentration right at the top is actually going down, the report found — one percent of Americans accounted for 22 percent of health care costs in 2009, down from 28 percent in 2008. Baby boomers — those between the ages of 45 and 64 — and the elderly were overly represented among the top health care spenders, the report found . Women and white Americans were additionally overly represented among the top health care spenders. Children and young adults were disproportionately represented among the bottom half of spenders. Relief from skyrocketing health care costs may be in sight. Overall health care spending as a share of the nation’s economy stabilized in 2010 , after two years of slow growth, according to a government report released earlier this month. Still, if health care spending is only stabilizing because of the sluggish economy, costs may not be slowing for good. Indeed, if current estimates prove correct, the nation’s health care spending is on track to comprise a fifth of the U.S. economy by the end of the decade , according to a July report from Medicare’s Office of the Actuary. Should that prediction prove true, it would be up from the roughly 17 percent of GDP health care spending accounted for last year. This is nothing new; domestic health care spending has been on the rise for years. In 2008, Americans spent more than three times on health care than what they spent just 18 years before , according to a Kaiser report. Health care costs accounted for more than 15 percent of U.S. gross domestic product by that time — one of the highest rates of industrialized nations. The rising cost of paying medical bills has hit Americans especially hard in recent years. The total number of Americans with health insurance fell in 2010 for the first time in decades , CNNMoney reports. All told, the number of Americans without health insurance rose to 49.9 million that year , according to Census Bureau data.

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GOP Candidates Decry Extended Unemployment Benefits

January 17, 2012

Republican presidential candidates sharply criticized extended unemployment insurance during Monday evening’s debate in South Carolina, where the unemployment rate is 9.9 percent. “I think we have to look at having a reasonable time for people to be able to come back, get a job and then turn their lives around,” former Sen. Rick Santorum said in response to a question from Brett Baier of Fox News. “But what we’ve seen in the past under this administration is extending benefits up to 99 weeks. I don’t support that. I think if you have people who are out of work that long a period of time, it’s without question, it makes it harder to find work when you come back.” Congress has given the long-term jobless additional weeks of unemployment benefits in every recession since the 1950s. In 2009 lawmakers increased the duration of federal benefits to 73 weeks in hard-hit states. The compensation kicks in for workers who use up 26 weeks of state-funded benefits. Research has shown that the longer people are out of work, the more trouble they have finding new jobs. But the latest research has not shown that the current regimen of extended benefits is significantly increasing long-term unemployment. Former House Speaker Newt Gingrich suggested the unemployed should have to do job training in order to qualify for benefits. “All unemployment compensation should be tied to a job training requirement,” Gingrich said. “If somebody can’t find a job and they show up and they say, you know, ‘I need help,’ the help we ought to give them is to get them connected to a business-run training program to acquire the skills to be employable. Now the fact is, 99 weeks is an associate degree.” According to the Congressional Research Service , people with advanced degrees are no less likely than high school dropouts to join the ranks of the 99ers. There are roughly 1.9 million people who’ve been out of work for 99 weeks or longer, up from 1.4 million in December 2010. Santorum said he supported allowing states more freedom to craft unemployment policies. “What I believe, just like I did with welfare reform — when we reformed welfare, we sent it back to the states and we gave the states the flexibility to design these programs,” Santorum said. “Just as I would do here with unemployment insurance. It should go back to the states, let the states design it. If South Carolina, because of a unique situation, wants to have a longer unemployment period of time because of a unique situation here, fine. But to have a federal program that roughly and crudely tries to assess the problem of unemployment from state to state and area to area is the wrong approach.” States have more control of unemployment insurance than Santorum suggested. They already do administer their own unemployment programs within federal guidelines. South Carolina was one of several states last year to cut the duration of state-funded benefits from 26 to 20 weeks, and South Carolina lawmakers are mulling proposals to require drug testing and volunteer work for claimants. The full complement of federal benefits is only available in states with high unemployment rates. Rep. Ron Paul (R-Texas) sounded a more compassionate note during the debate, saying he opposed extended unemployment insurance but that benefits shouldn’t be cut abruptly. “A little while ago we were talking about funding the unemployed and of course that should be privatized and I don’t support it, but I don’t support cutting it off like that,” Paul said. “I would cut some of the military spending like Eisenhower advises, watch out for the military complex.” In December, Congress reauthorized extended unemployment insurance programs through February, but it did so in a way that will allow the final 20 weeks of benefits to phase out in one state after another over the course of this year even if the programs are preserved beyond February.

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5 Ways A Renter Can Save On Wintertime Heating Bills

January 16, 2012

From Mother Nature Network’s Matt Hickman: Q: I rent a shared two-bedroom apartment in Boston that’s somewhat of an anomaly in this “heat and hot water included”-heavy town: My roommate and I are in control of, and pay for, our own gas heating. Last winter’s monthly heating bills were somewhat of a horror show (I guess that’s what we get for scoring a decent pad with relatively cheap rent) so we’ve decided to put our heads together to see how we can reduce the cost. Have any quick and easy ideas on how we should start? A: I’m in the exact same boat, my friend. My rental is quite lovely and affordable (at least by downtown Brooklyn standards), but when I signed away on that initial lease several years ago, I had no idea as to how financially draining those winter heating bills could be. To make things worse, I live on the top floor of an older building that directly faces the water, so when those January winds pick up, there’s no way I’m not cranking up the thermostat. Still, I’ve managed to pick up a few tips and tidbits that have helped me stay cozy and save a few bucks each month without having to resort to drastic measures like building a bonfire in the middle of the living room.

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Iran to boost gasoline output by 20m ltrs a day

January 12, 2012

(MENAFN) The National Iranian Oil Production and Distribution Company’s managing director, Alireza Zeighami, said that Iran would increase its gasoline production by nearly 20 million liters a day, …

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UK trade gap widened in November

January 12, 2012

(MENAFN) UK’s trade deficit reached USD13.26 billion in November compared to USD12.2 billion in October, KUNA reported. The figures, reported by The Office for National Statistics (ONS), …

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Renault to invest USD533.7m in France

January 12, 2012

(MENAFN) Renault’s General Director, Carlos Tavares, said that the carmaker would invest USD533.7 million in order to enhance the firm’s output in France, reported Xinhua News. Tavares added that …

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Iran accuses Israel, US of killing nuclear scientist

January 12, 2012

(MENAFN – Jordan Times) An Iranian nuclear scientist was killed by a car bomb on Wednesday that Tehran immediately blamed on Israel and Washington, worsening a tense international stand-off over its …

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China’s Dec CPI down to 4.1%

January 12, 2012

(MENAFN) China’s National Bureau of Statistics (NBS) said that in December, the country’s consumer price index (CPI) went up 4.1 percent from the previous year’s same period, and was down 0.1 …

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Occupy Wall Street Can’t Muster Zuccotti Park Re-Occupation

January 11, 2012

NEW YORK — The barricades may be gone, but the birthplace of the anti-bank movement is hardly re-occupied. On Tuesday night, metal barricades that had ringed Zuccotti Park since police cleared it in an early-morning raid in mid-November were removed, and hundreds of occupiers flooded back in. But by Wednesday afternoon, the park was mostly empty, and the small group of occupiers gathered there seemed unsure if the barricades’ removal was a victory. If it was, some said, it was a small one. For one thing, the old barricades did not actually block access to the park; two gaps remained on either side of the plaza, although they were heavily monitored by New York City police and security guards employed by the park owner, Brookfield Properties. For another, all of the rules put in place on the night of the raid remained. Sleeping bags and tents were not allowed, and lying down or standing on the stone benches that once served as the foundation for a thriving tent city was strictly forbidden. The barricades were taken down a day after a complaint was filed by civil rights groups, arguing that the barricades violated city zoning law because they restricted access to the park, which is required to be open 24 hours a day. Police spokesman Paul Browne told the Associated Press that the decision to remove the barricades was made before the complaint was filed, because officials no longer felt they were necessary. Since the loss of the park, the Occupy movement in New York City has lost much of its momentum. While distinct events have captured national media interest — like a promising recent campaign called Occupy Our Homes , aimed at the foreclosure crisis — there has been more silence than action. Some protesters say that in order for the Occupy movement to thrive again, another public space must be taken. Others say this is merely a moment of transition; when the movement reemerges, it will take a different form. On Wednesday, the 40 or so occupiers gathered in the bitter cold seemed uncertain about the future, but one thing seemed clear: Zuccotti Park is not likely to return to what it was, at least, not anytime soon. “I think it’s great that the barricades are down because it makes the park a more inviting cultural and political space,” said Mark Bray, a 29 year-old PhD student at Rutgers University and self-appointed spokesman for the movement. “But beyond that, I’m really not sure how much of a difference it makes,” Bray paused, glancing at the pile of metal barricades that were stacked where the press tent once stood. “The rules haven’t changed.” There were nearly as much security personnel in the park as protesters. Last night, three protesters were arrested on minor charges such as trespassing, The New York Times reported. Others were threatened with arrest for bringing in books and food. The People’s Library was back Wednesday, with two small boxes holding about 50 books — a random selection taken from the 2,500 volumes that currently make up the full library, now stored in a space a few blocks from the park.. “It’s hard for us to bring the books out, but we’re trying,” said Hristo Voynov, a librarian with the movement. Since the park was cleared, he’s been spending less time protesting, but still thinks of his position as a full time job. He spends most days sorting books in the storage space. Nearby, the Think Tank working group began to mic check, announcing a meeting to talk about how the barricades’ removal will affect the Occupy movement. A woman in a bright red jacket named Michelle stood briefly on one of the stone benches, holding an Occupy Wall Street Think Tank sign overhead. A security guard quickly approached. “You can’t stand there,” he told her. “And don’t lie down or stretch out either,” he added. She quickly stepped down, and the guard moved a few yards to deliver the same message on to a reporter standing on another bench, attempting to photograph the scene. Some of those huddled with the Think Tank group seemed worried. “This could be some kind of trap to let us in and then swoop down and arrest us again,” said an older man wearing a puffy jacket. Several others murmured agreement. “I’m just really excited that the barricades are down,” Michelle countered. “If they go back up, we’ll just have another reason to fight.” She added that she hoped to see more developments soon, like nationwide general assemblies. “There are lots of ways we can connect,” she said. The rest of the group, bundled under scarfs, hands in pockets, nodded. A tall man wearing a parka with the hood pulled up over his head walked by with a large sign: “OUR VOICES NEED SPACE.”

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AllThingsD: Myspace — Yes, Myspace — Says It’s Going to Sell You Web TV

January 10, 2012

Lots of folks are waiting for Google, or Apple, or Verizon or someone to offer a Web video subscription service that would rival cable TV. None of those guys have announced their plans for that, yet. But Myspace has: It says it will offer an “over the top” service in the first half of this year.

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Netflix Users To Wait Twice As Long For Warner Brothers Flicks

January 6, 2012

‪ ‬ By Peter Kafka, Warner Brothers Will Make Netflix, Redbox, Blockbuster Wait Longer for New Movies via All Things D Want to watch a new movie just out on DVD from Warner Brothers? You’re going to have to buy it, or wait even longer to get it from Netflix or other disc renters. A new deal between Time Warner’s movie studio and Netflix, Redbox and Blockbuster will double the “window” for new releases. That means the services will now have to wait 56 days after the discs first go on sale to offer them to their customers, instead of 28 days. The move is part of Hollywood’s ongoing campaign to bolster flagging DVD sales, and sources tell me the new deal is supposed to be announced at next week’s Consumer Electronics Show in Las Vegas. Warner Brothers executives have already talked publicly about extending the current window. This is the second time that Warner has been able to get the rental services to wait before distributing its movies. In 2010, it struck deals with Netflix, and later Coinstar’s Redbox, to wait 28 days before renting its new discs. Coinstar and Netflix later landed similar pacts with most of the other big studios. (Coinstar did up end up in legal battles with Universal Studios and 20th Century Fox, which like this Web site is owned by News Corp.) Two years ago, Netflix was able to argue that by delaying access to DVDs, it was able to get its hands on more streaming content, and lower prices for the discs it did buy. This time around, though, Warner won’t be granting any additional digital rights to the studios. It will simply be offering them the ability to buy discs in bulk, at a significant discount to retail pricing, like they already do. Earlier today, news broke that HBO, another Time Warner unit, would stop selling its DVDs to Netflix altogether, but sources tell me the two moves aren’t directly related. Next week’s planned announcement is supposed to be tied to Warner Brothers’ continuing push for Ultraviolet, an industry consortium that’s supposed to allow home video buyers to watch their purchases on multiple machines, in multiple formats. Reps for Time Warner, Coinstar, Netflix and Blockbuster parent company Dish Network declined to comment. Via Warner Brothers Will Make Netflix, Redbox, Blockbuster Wait Longer for New Movies on All Things D More On All Things D: RIM Hopes Next PlayBook OS Will Impress at CES Coming to a Smartphone Near You: Gorilla Glass 2 The Music Business Welcomes the Future, a Decade Behind Schedule Viral Video: Oscar Host Billy Crystal Is a Yeti?

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Harlan Green: Government Has to Work — or Else

January 5, 2012

We can no longer afford to listen to those conservatives who believe government is the problem since there is no viable recovery from the worst recession since the Great Depression without government investment in sectors that will grow our future economy — particularly in education, infrastructure, and the research and development of new technologies such as that jump-started the Internet. So say more economists, such as Nobelist and former chief World Bank economist Joseph Stiglitz in his most recent Vanity Fair article, ” The Book of Jobs ” that details how we recover from the Great Recession, and which sectors will prosper and expand. This means a “wrenching transition” of our whole economy, as happened in the 1930s, which means government has to be part of the solution. Dr. Stiglitz says: “The problem today is the so-called real economy. It’s a problem rooted in the kinds of jobs we have, the kind we need, and the kind we’re losing, and rooted as well in the kind of workers we want and the kind we don’t know what to do with. The real economy has been in a state of wrenching transition for decades, and its dislocations have never been squarely faced. A crisis of the real economy lies behind the Long Slump, just as it lay behind the Great Depression.” And so just as with the Great Depression, government has to be part of the transition. Those who advocate little or no government — such as Libertarian candidate Ron Paul who would abolish just about all government — do not seem to realize it would be a return to the beginning of the Industrial Revolution so well documented by Charles Dickens — when there were no child labor laws, for instance. Or a return to the Great Depression (really two, back-to-back) that lasted almost 10 years when there was no social security, unemployment insurance, or government investments that modernized the industrial sector for World War II. Stiglitz notes: It is important to grasp this simple truth: it was government spending — a Keynesian stimulus, not any correction of monetary policy or any revival of the banking system — that brought about recovery. The long-run prospects for the economy would, of course, have been even better if more of the money had been spent on investments in education, technology, and infrastructure rather than munitions, but even so, the strong public spending more than offset the weaknesses in private spending. So, surprise-surprise, the Great Recession wasn’t really the fault of anyone in particular but a cascade of events that are driving us hell-bent out of the industrial, blue-collar era of factory jobs into the White Collar Service and Information Age. And we cannot do this without public-sector investments that must ease the transition; otherwise we are doomed for a “much longer long slump than necessary,” in Stiglitz’s words. It was small government conservatives like Presidents Reagan and George W. Bush that had been wasting taxpayers’ monies to pay for foreign wars and tax cuts since 1980, rather than paying down the deficit or even shoring up social security and Medicare. George W. Bush wasted four consecutive budget surpluses of the Clinton era. And the low interest rates engineered by Chairman of the Federal Reserve Alan Greenspan for that purpose in turn inflated the housing bubble, lending a sense of false prosperity. The result of such small government policies was the Fed then took away the punch bowl in 2006 and raised interest rates 17 consecutive times that in effect burst the bubble by raising all those teaser and liar loan interest rates too high for borrowers who shouldn’t have qualified for them in the first place. But that only hastened the inevitable rush away from Industrial to the Information Age. Factory jobs and salaries had already begun to decline in the 1970s along with household incomes for most Americans. Stiglitz says: “Today we are moving from manufacturing to a service economy. The decline in manufacturing jobs has been dramatic — from about a third of the workforce 60 years ago to less than a tenth of it today. The pace has quickened markedly during the past decade. There are two reasons for the decline. One is greater productivity — the same dynamic that revolutionized agriculture and forced a majority of American farmers to look for work elsewhere. The other is globalization, which has sent millions of jobs overseas, to low-wage countries or those that have been investing more in infrastructure or technology. What we need to do instead is embark on a massive investment program — as we did, virtually by accident, 80 years ago — that will increase our productivity for years to come, and will also increase employment now. This public investment, and the resultant restoration in G.D.P., increases the returns to private investment. Public investments could be directed at improving the quality of life and real productivity — unlike the private-sector investments in financial innovations, which turned out to be more akin to financial weapons of mass destruction.” In other words, we need to put public monies where it will do the most good. Corporate profits today are the highest in history as a percentage of GDP — more than 14 percent — yet their CEOs haven’t been investing it wisely. Most of their profits have been either hoarded, invested overseas, or used to buy back stock to increase the stock options held by corporate executives. It has lined their own pockets, rather than that of their employees and therefore the economy as a whole. And that is where today’s right and far right wing conservatives want even public monies to flow — into their supporters’ already full pockets — when they won’t allow the Bush tax cuts to expire that have bloated the federal deficit. This will only hasten the decline of America already suffering from record high income inequality, low rates of social mobility, record high violent crime rates, and a government they don’t want to work for the future of all Americans. Government has to work — or else. Harlan Green © 2011

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Disney, Comcast Reach Deal

January 4, 2012

LOS ANGELES (AP) — The Walt Disney Co. said Wednesday that it reached a long-term agreement with the nation’s largest TV signal provider, Comcast Corp., that extends their partnership into the next decade. The 10-year deal covers major pay channels ESPN, Disney Channel and ABC Family and the retransmission of free ABC broadcast network programs through seven ABC TV stations. It allows Comcast subscribers to gain greater access to shows on demand over the Internet on multiple devices. Terms were not disclosed. The deal comes as TV distributors and content owners continue to spar over fees to carry programming. In the New York area, a dispute between Time Warner Cable and The Madison Square Garden Co. has left some cable subscribers without access to Knicks basketball or Rangers hockey games since early in the new year. Disney and Comcast agreed on the package covering 70 channels or services even though only a few agreements covering ABC Family, Disney Channel and Disney XD had expired at the end of 2011. The companies agreed that a long-term comprehensive deal was in both their interests. Comcast and Disney called the scope and range of the deal “unprecedented.” “It reinforces the value of the multichannel subscription and takes full advantage of new technologies, which serve all of our viewers,” said ESPN executive chairman George Bodenheimer in a statement. The deal incorporates Comcast’s Xfinity TV online suite of programs and gives its 22.4 million video subscribers online access to services such as ESPN3, which offers live feeds of games that are sometimes not on the television network. Comcast subscribers will also be able to watch ABC shows such as “Castle” and “Grey’s Anatomy” on demand, but they won’t have the option of fast-forwarding through commercials. Comcast also agreed to carry the pay TV channel Disney Junior, a rebranded network focused on children up to age 7 that will replace the SOAPnet channel in February. Disney shares rose 49 cents to $38.80 in afternoon trading. Comcast shares rose 10 cents to $24.59.

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Chinese Currency Reaches All-Time High

December 26, 2011

SHANGHAI (Reuters) – The yuan closed up against the dollar on Monday after hitting an all-time high in intraday trading, guided by a stronger mid-point by the People’s Bank of China, and looks set for an over-4-percent appreciation for 2011, traders said. The yuan is expected to remain stable or rise slightly in the last week of the year to close 2011 near 6.30 versus the dollar, in line with market expectations. The currency is likely to continue to appreciate next year as China continues to post big trade surpluses despite a slowdown in exports and amid pressure from the United States to let the yuan rise to balance bilateral trade, traders said. But the yuan’s appreciation is likely to slow to around 3 percent in 2012, with much of the rise seen in the second half of next year as China may keep the yuan relatively stable in the first half to assess the impact of the euro zone crisis, they said. “The PBOC has recently set a slew of strong mid-points and pumped dollars into the market via state banks, giving the market a clear signal that the government won’t let the yuan depreciate,” said a trader at a major Chinese bank in Shanghai. “But the central bank appears not in a hurry to let the yuan appreciate amid global economic uncertainties resulting from the euro zone debt crisis. So the yuan is likely to move largely sideways in coming months.” Spot yuan closed at 6.3198 against the dollar, up from Friday’s close of 6.3364, after hitting an all-time high of 6.3160. Its previous peak was 6.3294 hit on December 16. The PBOC set the dollar/yuan mid-point at 6.3167 on Monday, stronger than Friday’s 6.3209 and near the record-high fixing of 6.3165 on November 4. FIGHTING SPECULATORS The yuan has appreciated 4.27 percent so far this year, with most of the gain being recorded in the first 10 months of the year as China tries to rebalance trade and use the currency to help fight high inflation. While the government has recently halted yuan appreciation amid slowing exports, it also seems to be wary of a weaker yuan that may lead to capital outflows. Some overseas investors appear to have been shorting the yuan in recent months amid signs that China’s growth is slowing under the double weight of a global slowdown and the country’s monetary tightening policy in place since October last year. The PBOC, in addition to using strong mid-points to signal government intentions to keep the yuan stable, has also acted to inject dollars into the market via state-owned banks whenever there are signs that the yuan is set to weaken sharply. The yuan has thus been effectively kept in a range of 6.3 to 6.4 against the dollar since early November — a trend traders say they believe to continue well into 2012. In contrast, offshore benchmark one-year non-deliverable forwards (NDFs) have largely been forecasting a yuan depreciation in a year’s time since late September, reversing a general trend of predicting an appreciation since the yuan’s revaluation in July 2005. One-year NDFs fell slightly to 6.3790 on Monday against 6.3810 at the close on Friday, implying that the yuan will depreciate 0.97 percent in 12 months from Modnay’s PBOC mid-point, compared with a 1.01 percent fall implied on Friday. Copyright 2011 Thomson Reuters. Click for Restrictions .

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Key Company Reverses Course In Online Piracy Fight

December 23, 2011

The largest Internet domain registrar and web hosting company Go Daddy has abandoned its support for the proposed Stop Online Piracy Act (SOPA), according to a statement released by the company Friday. “Fighting online piracy is of the utmost importance, which is why Go Daddy has been working to help craft revisions to this legislation — but we can clearly do better,” said Warren Adelman, Go Daddy’s newly appointed CEO. “It’s very important that all internet stakeholders work together on this. Getting it right is worth the wait. Go Daddy will support it when and if the internet community supports it.” Go Daddy had been one of two major tech companies to support the legislation . “If you’re Nike, and you make tennis shoes and there’s a company in some other country that can manufacture those for 10 cents on the dollar and sell them as if they were real Nikes, you have a big problem,” said Christine Jones, general counsel for Go Daddy, earlier this month. The Huffington Post’s Zach Carter reported on the bill’s implications: SOPA would imbue the federal government with broad powers to shut down whole web domains on the basis that it believes them to be associated with piracy — without a trial or even a traditional hearing. It would provide Hollywood with powerful new legal tools to stifle transactions with websites whose existence worries the movie industry. The bill’s supporters, which also include major record labels, trial lawyers and pharmaceutical giants, call SOPA a robust effort to curb piracy of American goods online. Opponents, however, have castigated it as an unparalleled attack on free speech online. Civil liberties advocates say SOPA would give the U.S. government the same censorship tools used in China. Those in the technology sector warn that the bill creates enormous new barriers to entry for web startups, threatening innovation and job creation. Farther afield, librarians say that under the letter of the proposed anti-piracy law, they could be jailed for simply doing their jobs. In a November interview with HuffPost, Jones had endorsed the legislation, saying everyone in the internet ecosystem needs to do their part to fight illegal downloading. At the time however, Jones did express some reservations about the use of Domain Name System (DNS) blocking — the tool the government would use to shut down websites — as a technique that could create significant technical problems for the functioning of the internet. She also expressed reservations about the bill’s “private right of action,” which allows movie studios and other companies to seek site takedowns outside of court. DNS blocking by the government and a private right of action for companies that believe their content is being infringed are the main features of the bill. Nevertheless, Jones wrote several blog posts for the Go Daddy website explaining and defending the bill. The company says those blog posts have now been removed. Leah Kauffman, the singer-songwriter who had a 2007 viral sensation with “I got a Crush … on Obama” released a new song attacking SOPA called “Firewall (Don’t Let Our Government Ruin The Internets).” A coalition of Silicon Valley leaders, including Google co-founder Sergey Brin, Craigslist founder Craig Newmark and Huffington Post CEO Arianna Huffington, have signed an open letter to Washington opposing the bill. The House Judiciary Committee confirmed Tuesday that work on the legislation would be delayed until Congress returns from its winter recess.

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How To Contact The Companies Who Support SOPA

December 22, 2011

Who’s officially on the record backing what could be the worst thing to ever happen to the internet? All of these companies listed below. Don’t take our word for it–this list comes straight from Congress. Just FYI.

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Bipartisan Group Casts Bizarre Pro-Porn Vote

December 19, 2011

WASHINGTON — On Thursday, a bipartisan coalition of lawmakers directed the federal government to deploy radical new powers to enforce and protect copyrights on pornography. By a vote of 9 to 18, the House Judiciary Committee rejected an amendment offered by Rep. Jared Polis (D-Colo.), which would have barred the Department of Justice from using the new tactics envisioned by an anti-piracy bill to protect “obsecene and pornographic works.” Members of both parties came together to defeat the anti-pornography initiative, with Judiciary Chairman Lamar Smith (R-Texas), ranking member John Conyers (D-Mich.), and even hardcore social conservative Rep. Steve King (R-Iowa) all against Polis’ amendment, and in effect, standing up to protect the porn industry. The vote came during a hearing to modify the text Stop Online Piracy Act, or SOPA, a bill which gives filmmakers and the federal government the ability to shutdown entire websites that they claim are involved in piracy — without a trial or even a traditional hearing. And while the legislation is being pushed most aggressively by Hollywood movie studio and major record labels, the sweeping enforcement powers envisioned by the bill could be deployed by adult film auteurs, as well. Yet a spokesperson for King explained his vote by arguing the Polis amendment would have actually led to more porn online. By enforcing the intellectual property rights of porn producers, King’s office argued, the DOJ would be able to take down many websites that post porn illegally. Polis is one of a handful of outspoken SOPA opponents on the Judiciary Committee, whose position is embraced by several major Silicon Valley companies alongside the ACLU, Internet experts and academics. Web programmers warn that the primary anti-piracy tactics envisioned by the bill would weaken online security measures and crack the very foundation of the Internet. The ACLU and other First Amendment advocates blast the destruction of entire websites without a trial — rather than the removal of infringing material — as a major free speech violation. By introducing his porn rider, Polis forced SOPA supporters into casting an awkward vote. Determining whether a site takedown would protect pornographers would require the Justice Department to conduct additional reviews and open up takedowns to a new category of legal challenges. And that might make the process of website annihilation slower for Hollywood studios seeking to crackdown on pirated mainstream movies. Hollywood has repeatedly cast SOPA as job-creating legislation, with Motion Picture Association of America Chairman Chris Dodd celebrating the bill as a way to protect actors and technicians alike. Economists say it’s unlikely that the bill will actually create any jobs, warning that it’s tactics are particularly problematic for legitimate tech start-ups , but film-friendly lawmakers have been happy to parrot the MPAA talking points. To date, however, no members of Congress have celebrated SOPA’s potential to create more porn stars. Several lawmakers ducked the vote by simply not attending. In fact, of the 10 amendments that received roll call votes on Thursday, Polis’ porn amendment received the fewest total votes, with just 27, compared to as many as 34 on other amendments. Reps. Ben Quayle (R-Ariz.) and Howard Berman (D-Calif.) curiously were able to vote on both the amendments offered before and after the porn amendment, but disappeared for the porn vote. A spokesman for Polis insists that the amendment was not simply a humorous effort to put SOPA supporters in a difficult position. “It makes a serious point,” Polis spokesman Chris Fitzgerald told HuffPost. “You’re basically going to have the Justice Department policing all of this, and if we’re going to be extending those resources, we shouldn’t be prioritizing the property rights of pornographers over others.” Polis’ unusual allies supporting his amendment also included members on both sides of the aisle, with SOPA opponents Reps. Darrell Issa (R-Calif.) and Zoe Lofgren (D-Calif.) joining strident social conservative Reps. Louis Gohmert (R-Texas) and Jim Jordan (R-Ohio).

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Scientists Shatter Internet Speed Record

December 16, 2011

Scientists and researchers have set a new Internet speed record by managing to transfer data at a sustained rate of 186 gigabits per second (Gbps), a rate equivalent to moving two million gigabytes — or 100,000 full Blu-ray discs — in a single day. The blazing transfer speed was accomplished at the SuperComputing 2011 conference in Seattle in November by an international team seeking ways to more efficiently share and distribute the massive amount of data coming from the Large Hadron Collider (LHC) particle accelerator at the European Center for Nuclear Research (CERN) with scientists all over the world. “Enabling scientists anywhere in the world to work on the LHC data is a key objective, bringing the best minds together to work on the mysteries of the universe,” David Foster, CERN’s deputy IT department head said in a CalTech media release . According to CalTech , the amount of data produced by the LHC is only expected to grow in the coming years: More than 100 petabytes (more than four million Blu-ray disks) of data have been processed, distributed, and analyzed using a global grid of 300 computing and storage facilities located at laboratories and universities around the world, and the data volume is expected to rise a thousand-fold as physicists crank up the collision rates and energies at the LHC. By comparison, Verizon’s FIOS network, which offers some of the fastest speeds available to the public in the U.S., comes in at a mere 150 Mbps, less than one one-thousandth of the speeds achieved in this test, according to NPR . Also reporting on the record-setting speeds, the BBC noted that the fastest transfer rates available to the public in the U.K. is a 1.5 Gbps connection currently being tested in East London by Virgin Media. The group responsible for the transfer between Seattle and Victoria, Canada, was comprised of high-energy physicists, computer scientists, and network engineers and the study was led by the California Institute of Technology (Caltech), the University of Victoria, the University of Michigan, the European Center for Nuclear Research (CERN), Florida International University and others, according to CalTech. Check out the video below for more information on the connection between the University of Victoria and the Caltech booth at the Super Computing 2011 Conference in Seattle. Photo by Flickr user Manchester-Monkey

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All Aboard The Crowdfunding Train: Washington’s Widespread Support For Startup Fundraising Bill

December 12, 2011

(By Deborah L. Cohen – Reuters) – A motley crew of backers is pushing Congress to loosen restrictions on crowdfunding, the new capital-raising method that uses the Internet to solicit start-up investment, despite warnings about the potential for fraud. Popularized by online platforms such as Kickstarter and Kiva, crowdfunding currently relies on a donation-style model where fans of an artistic project, venture or nonprofit campaign pledge money in exchange for early product or philanthropic fulfillment. It seems in Washington, almost everyone is a fan, from conservative Republicans to grassroots liberals; a recent House bill to ease crowdfunding restrictions passed 407-to-17. Broad-based support for crowdfunding is a natural fit because it’s in everyone’s interest to improve the flow of money to small companies during a prolonged weak economy, said James Angel, an associate professor at Georgetown University’s McDonough School of Business. “The real question is how do you protect investors from the inevitable fraudsters,” Angel said. “That’s where the fine tuning comes in.” With everyday citizens able to invest in new companies at the earliest stage of development, the fundamentals of startup funding are changing rapidly. Current SEC rules make it illegal for companies at this stage to solicit securities investment from unaccredited investors. But with pending changes, the capital-raising method could start to draw closer attention from traditional investors. “Folks have talked about the issues of having unsophisticated investors getting involved here, the possibilities of fraud, and I think the SEC is going to have to seriously look at this,” said Mark Heesen, president of the National Venture Capital Association. Following last month’s House bill, the Senate is now considering a similar measure at a time when legislators are looking for ways to ease SEC restrictions that make it costly for cash-strapped companies to raise early-stage capital. The House bill, introduced by Rep. Patrick McHenry (R-NC) and passed November 3 creates an SEC registration exemption for businesses using crowdfunding to seek low levels of investment. It came on the heels of an overture to crowdfunding included in President Barack Obama’s jobs speech. McHenry’s measure lets a company raise up to $2 million annually from investors who pledge up to $10,000, or 10 percent of their annual income in exchange for small stakes. “(Crowdfunding) sort of democratizes investing,” said McHenry, adding he was inspired in part by Sherwood Neiss, a Miami entrepreneur and crowdfunding proponent. “It makes it legal for individuals to have small dollar investments in their favorite brand or product.” SEC regulations dating back 80 years prohibit private companies from soliciting the sale of securities from individuals other than high net worth accredited investors. Meanwhile, the cost of clearing registration hurdles for small-share offerings puts them out of reach of many ventures in need of growth capital. A separate crowdfunding bill was introduced in the Senate November 9 by Sen. Scott Brown (R-Mass). Among other differences, Brown’s bill, which is under review, puts lower thresholds on investment. SEC regulators and others have expressed concern about protecting everyday investors from fraud and mitigating risk by controlling the investment level is seen as one way to ensure protection. “I think we’re all just super passionate about small business. The types of small businesses we’re passionate about might be a little different,” said Kassan, co-director of the Sustainable Economies Law Center, a grassroots group based in Oakland, California. The group had petitioned the SEC in favor of rule changes allowing for low levels of investment in small businesses from community investors. “We’re just outraged by the fact that small business is pretty much cut off from the capital markets,” said Kassan, a securities lawyer. A supporter of McHenry’s legislation, Kassan added that easing restrictions on crowdfunding appeals to some backers of the Move Your Money campaign, which encourages individuals to divest from large financial institutions such as Wall Street banks. Her point further illustrated the diverse support behind the crowdfunding trend. Who stands to win? It remains to be seen if the investment levels proposed by in the current bills would be a boon to both community-oriented businesses and growth enterprises attempting to fundraise with subsequent rounds of private financing, such as venture capital, on the path toward eventually going public. “The lower level is more for community development, people you have a connection to,” said Paul Spinrad, developer of the blog CrowdfundingLaw.com and an influencer of The Sustainable Economies Law Center grassroots campaign. “A lot of the investor types like the idea but hate the cap.” In addition, some startups may be too sophisticated to garner interest by appealing to broad-based audiences. “I think crowdfunding is great for non-complex types of companies,” said Heesen. “If you’re in the life science field looking at creating a new medical device or a new biotechnology drug, this is a difficult area,” he added. At the very least, the pending legislation promises to boost the popularity of existing crowdfunding platforms, both for entrepreneurs and their backers. Slava Rubin, CEO of crowdfunding site IndieGoGo, was optimistic about the impact. “(The legislation) would really open up the funder base,” said Rubin, whose site, which launched in January 2008, distributes “millions of dollars” to a 50,000 campaigns across 206 countries. Of the organizations that use IndieGoGo to raise money, small business is already the fastest growing, he said. Coulter Lewis is co-owner of the 15-month-old startup Quinn Popcorn, and raised early-stage startup capital on Kickstarter. The venture was able to raise $28,000 within a month, far exceeding expectations, just on the promise of organic microwaveable popcorn. The product is now sold in 25 retail stores in the Boston area. “I think it’s wonderful,” Lewis said of potential crowdfunding legislation. “That’s what people are buying – an opportunity to be part of it. As long as they have a limited amount of control, it would be fine.” Copyright 2011 Thomson Reuters. Click for Restrictions .

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Report: Countries Face A ‘Great Challenge’ Economically For The Foreseeable Future

December 12, 2011

An OECD report due for release this month will say markets and governments face an uphill struggle to fund themselves next year amid extreme uncertainty over the euro zone and the global economy, the Financial Times said on Monday. The report will say that financial stresses are likely to continue with the unpredictability of markets threatening the stability of many governments that need to refinance debt. “(On occasion), market events seem to reflect situations whereby animal spirits dominate market dynamics, thereby pushing up sovereign borrowing rates with serious consequences for the sustainability of sovereign debt,” Hams Blommestein, head of public debt management at the Organisation for Economic Co-operation and Development, is quoted as saying. For the foreseeable future it will be a “great challenge” for a wide range of OECD countries to raise large volumes in the private markets, with so-called rollover risk a big problem for the stability of many governments and economies, the article said. The OECD says, according to the FT, that the gross borrowing needs of OECD governments are expected to reach $10.4 trillion in 2011 and will increase to $10.5 trillion next year – a $1 trillion increase on 2007 and almost twice as much as in 2005. (Reporting by Stephen Mangan; Editing by Nick Macfie) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Rupert Murdoch Lobbies Congress To Restrict Internet

December 8, 2011

WASHINGTON — News Corp. honcho Rupert Murdoch threw his weight behind Congress’ attempt to restrict the Internet, personally lobbying leaders on Capitol Hill Wednesday for two measures that purport to combat piracy. Murdoch’s media empire is among some 350 large corporations that have come out in favor of the Stop Online Piracy Act in the House, as well as the Protect IP Act in the Senate. Both measures would require Internet operators to police activity online, and would mandate Internet giants like Google and AOL (the parent company of The Huffington Post and an opponent of the bills) and credit card companies to take down sites that have content deemed to be in violation of copyright rules. The battle has pitted huge content generators like Disney and the motion picture industry against their online competitors, with each side reportedly spending some $90 million on lobbying efforts . Supporters say the measures will help curb theft and preserve the integrity of the Internet. Opponents charge that the measures amount to censorship that will stifle innovation and impose higher costs on consumers . News Corp. owns 20th Century Fox films and many television franchises such as “The Simpsons.” The firm has long lobbied on the issue, donating to members on both sides of the aisle . The personal intervention of Murdoch shows how high the stakes are. Sources confirmed to HuffPost that the media magnate was pushing for the two bills, and that he met with Senate Minority Leader Mitch McConnell (R-Ky.). Murdoch’s presence comes as high-profile opponents, such as Google’s Eric Schmidt, have been ramping up their public efforts to kill the bills. Additional reporting by Zach Carter

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Jared Bernstein: What Now?

November 28, 2011

OK. Thanksgiving’s behind us, the 91% of the workforce with jobs are back to work, and in DC at least, there’s a sense of “what happens next?” in the air. Here’s one man’s answer: Anatomy of a failure : It would be a pleasure to never hear the words “super” and “committee” in the same sentence again for a while but I’m afraid it’s actually important to review what happened. The “both sides are to blame” meme is irresistible but doesn’t hold up to even casual scrutiny. The Democrats on the committee went deep into Republican territory with spending cuts, putting hundreds of billions of cuts in Medicare and Medicaid on the table, and asked for less revenue in exchange than they should have. But the Republicans wouldn’t really budge on taxes and that queered the deal from the start. (Their latest retort: “you can’t raise taxes in a recession… even the president has admitted that”… is nonsense. This is a ten year deal, one that could easily have the tax increases phase in later.) I’m really not sure how this story gets told and who’d even want to hear it. But it needs to get out there. Where’s POTUS ? The president should not, in my opinion, take any heat at all for not playing along in the deficit reduction follies going on in Congress. The Republicans have made in clear that if he’s for it, they’re agin’ it and I don’t see what’s gained for him getting burned again by them. If I thought his involvement would contribute to a more positive outcome, I’d argue differently, but I don’t. He needs to be doing whatever he can to either give the economy the lift it needs, or explain to the electorate why he’s unable to do so. More on that below. Republicans on parade : The weekly beauty contest has to end soon and a front-runner will likely emerge before long. At that point, things get ugly. Slugfest: If Tolstoy had been a political consultant, he might have written, “Every happy election strategy is unique; every unhappy election strategy is the same: start negative and go down from there.” At 9% unemployment, the opposition’s hand is dealt — they’ll obviously run against the incumbent’s record. Now, I’m no presidential historian, and I worked for the man, but I’m hard-pressed to think of a president who’s done more and gotten less for it. The Recovery Act, saving the auto industry health care reform, financial reform — all are landmark legislation. The first two demonstrably helped and the latter two have great potential, though they’re far from reaching fruition. But none are popular. I’m not saying there haven’t been large missteps — the handling of the debt ceiling debacle, the precipitous shift to deficit reduction — but the POTUS can be forgiven for feeling a little bit like “no good deed goes unpunished.” (BTW, one of the more dispiriting polls I saw when I was working for the administration was one showing that the auto bailout polled worse than the TARP. I get it — people don’t like bailouts, and they had a hard time sorting out one from the other. But the man made a tough decision — a truly hard, courageous call — that preserved the freakin’ American auto industry! Can I get a witness here?!?) Temperatures rising : All of the above is occurring while the electorate’s temperature is rising… at least I hope it is. News accounts — so this is at the level of anecdote for now — suggest that the failure of the super committee may have been a dysfunctional bridge too far for a lot of people (which would imply something good actually came out of the process). It’s one thing to just throw your hands up and dismissively (and correctly) say “they’re all crazy clowns down there in Washington.” It’s another, however, to get genuinely worried about our inability to self-correct. If so, that could motivate people to push aside the Tea Party, Norquist, take-no-prisoners-make-no-compromise group that has frozen our politics and rendered the nation unable to meet the increasingly serious challenges we face. Europathy : Contagion fears increase as leaders continue to bumble along, slouching toward a solution when the world needs them to be sprinting. As I wrote the other day, the potential for a country to leave the Eurozone is real, and the magnitude of the disruption from that event is hard to exaggerate. Imagine you lent the Newman family across the street a couple of grand in dollars and they paid you back in “Newmans” and you’ll get the flavor of what’s going on here. Still, the thing to keep in mind here is that the solution is known and within the realm of possibility — a large backup fund for banks holding bad debt supported by the ECB (which needs to take a page from our Fed and start printing a lot of euros) and northern members of the zone, and a managed default for Greece. The politics are really tough, however, and after a week in the UK, I must say I’m more sympathetic. Folks on this side of the pond need to appreciate how deeply the populaces of the richer countries disdain any bailout. Yes, true leadership at a time like this means doing things that are deeply unpopular (see note above re President Obama), but that kind of thing is a lot harder in parliamentary systems. But that’s also why advanced economies have central banks — they’re politically insulated so that they can do the right thing at the toughest time. In that regard, the real failure here has been the ECB. (I should note that I’m eating Greek yogurt — made in Greece — as we speak, so I’m trying to do my small part.) Economy : Oh yeah… that. Well, retailers apparently had a kick-ass black Friday — the American consumer just cannot be stopped. But I still don’t see where self-sustaining growth comes from in the near term absent government measures to either boost demand or help revive the housing market. And to the contrary, there’s a real question as to whether the Congress can get it together to extend the expiring payroll tax holiday (over $100 billion) and extended unemployment benefits (about $60 bn). With multipliers, that’s 1-2% less GDP next year. So the slog continues. Absent Congress, the only idea I can think of to really move the needle is to seriously nudge Fannie and Freddie to get much deeper into the business of loan mods. More on that soon on these pages, but it probably involves replacing the acting director of Fan and Fred’s regulator, the FHFA. The current holder, Ed DeMarco (a Bush appointee) has been a tough, responsible regulator. But he’s not been nearly forthcoming enough regarding modifications and most people who’ve looked into this think that an Obama appointee might help get some things moving. This isn’t a lot to ask for given the depth of avoidable economic pain out there — we’re not talking about a major coop or firing a faithful ally. And I’m not saying it will solve everything, but it’s a necessary step and the admin should either take it or explain why I’m wrong. This post originally appeared at Jared Bernstein’s On The Economy blog.

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PHOTOS: Artist Takes The Occupy Movement Underwater

November 26, 2011

First New York, then other cities around the world. Now the Occupy movement has spread underwater and it doesn’t even involve humans. Taiwanese artist Vincent J.F. Huang has created an installation that uses marine animals to examine the burgeoning protest movement. “The Atlantis Project,” which is on exhibit at Artspace in Sydney, Australia, features a number of marine animals “occupying” models of famous world landmarks. Through the course of the exhibit, the aquarium’s coral will continue to grow “until the life-sustaining resources of the aquarium are fully consumed,” and the coral loses its pigment . The aquarium and the life it contains are a microcosm, according to a press release. “The project metaphorically represents the limitations of earth’s resources.” The project’s connection to the occupy movement is also explained: Outrageous affairs are occurring and infuriated marine creatures are occupying icons of human civilization underwater. The spectacles of corruption and aberration in modern Atlantis are exposed! Art imitates life and Occupy Wall Street in other ways beyond this project as well. ARTINFO’s Ann Binlot observed parallels between the current movement and Philip Glass’ opera “Satyagraha,” about Mahatma Gandhi. Earlier this month, an Occupy Wall Street committee reached out to artist Mark di Suvero , whose sculpture “Joie de Vivre” is located in New York’s Zucotti Park. View photos of The Atlantis Project installation below, courtesy of Vincent J.F. Huang: —

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Bank Of New York Mellon Backs Off From Its Plans For Deposit Fee

November 26, 2011

(JED HOROWITZ, Reuters) – Bank of New York Mellon Corp, which was derided for a plan to charge some of its large corporate and investment management clients for holding their deposits, appears to have flinched. The bank has not assessed a penny since warning clients about the possible deposit fee in early August, officials told Reuters, although it remains burdened by cash that it cannot profitably redeploy at rock-bottom interest rates. The fee of 0.13 percent was to have taken effect on August 8 for accounts with more than $50 million that had soared well above their monthly averages as clients fled short-term investments for the safety of U.S. banks. “My guess is that the backlash was pretty stringent and they decided not to do it,” said William Gerber, chief financial officer of TD Ameritrade Holding Corp, a cash-management client of Bank of New York. “I can see their problem but I’m not that empathetic considering all the fees we’ve been waiving.” He was referring to hundreds of millions of dollars of money-market mutual fund fees that financial companies have waived over the past two years lest investors realize negative returns on their fund holdings. Unlike Bank of America, which was shamed into withdrawing a plan to charge its customers $5 for debit card transactions after a torrent of articles ridiculing the proposal, Bank of New York said that its super-sized version of its deposit fee is not dead. “We haven’t charged any clients to date, and the policy remains in place as markets remain unsettled and interest rates remain at historic lows,” BNY Mellon spokesman Ron Sommer wrote in an email. The fee, he added, was aimed at “a small number of clients with extraordinarily high and volatile deposit levels.” In its August letter, the bank urged clients to consider cash investment options “to minimize any effect” of the mooted fee. ANXIETY DROVE DEPOSITS The plan was prompted by a flood of deposits from companies, money-market funds and other clients fleeing short-term investments that exposed them in late July to the then-unfolding Greek financial crisis and from U.S. government securities amid a Congressional impasse over raising the U.S. debt ceiling. A source said Bank of New York’s deposits swelled about 39 percent in a period of two weeks in late July and early August to about $250 billion, underscoring the fragility of the global financial system at any sign of panic and creating balance-sheet management challenges for the bank. At the end of September, deposits were 45 percent higher than a year earlier, Chief Financial Officer Todd Gibbons said in discussing third-quarter earnings, though he said the influx had stabilized since earlier in the quarter. Sommer declined to discuss the deposit levels. Bank of New York continues to attract a heavy flow of cash since it has higher ratings from Moody’s Investor Services than trust bank competitors such as State Street Corp and Northern Trust Corp, another official said. Those banks did not match Bank of New York’s deposit fee announcement, although some commercial banks with larger lending businesses that fund loans with deposits have been passing FDIC fees to some of their small-business customers. The policy was initiated under former Bank of New York Chief Executive Robert Kelly, who was ousted in early September and replaced by Gerald Hassell, a 30-plus-year veteran of Bank of New York who some insiders said was more sensitive to client relationships. Kelly took the top role when the New York bank combined in 2007 with Pittsburgh-based Mellon Financial Corp, which he led. “I believe they are backing away from the strategy, Gerard Cassidy, an analyst at RBC Capital Markets, wrote in an email. “Not certain if it is customer backlash or a rethinking of strategy under new CEO.” Custody banks make most of their money from holding securities and other assets for clients worldwide and ensuring that they are properly accounted for and exchanged when clients demand. Bank of New York swapped its 338 retail branches and small business banking businesses in 2006 for JPMorgan Chase & Co’s corporate trust business and $150 million in cash. The deal helped Bank of New York avoid some of the credit problems that continue to depress earnings of more traditional banks, but deprives it of the ability to negotiate on loans and other businesses in return for winning custody activities. Because rates are so low, many custody banks today are less eager to attract new business or are more aggressive about insisting that clients offset the low-return deposit business by using other services, said Anthony Carfang, head of Treasury Strategies, a Chicago-based consulting firm. (Reporting by Jed Horowitz; Editing by Tim Dobbyn) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Black Friday Draws Crowds, But Spending In Doubt

November 26, 2011

JESSICA WOHL, (Reuters) – Retailers were hoping for more shoppers like Shawn Elzia as the annual Black Friday bargain stampede marked the unofficial start of what is widely expected to be a middling holiday shopping season. The Brooklyn, New York teacher, one of hundreds of thousands of shoppers jostling for deals around the country, said he ended up spending about 25 percent more than he planned, even while worrying about the state of the economy. “I did not expect such deals,” the 33-year old said as he left a Macy’s store in Jersey City, New Jersey clutching bags full of clothing for himself and his family. “It’s slashed down to the bones,” he said. “There were some great discounts if you showed up early.” Deals are always part of the picture on the Friday after Thanksgiving. This year was notable for an earlier opening for some retailers and possibly for the one shopper using pepper spray to make sure she could get a popular video game system. The early start by stores brought out younger shoppers such as Alina Ybarra, who spent the wee hours of the morning with her friends as they all looked for items for themselves. “It’s really chaotic,” Ybarra, 17, said of her first Black Friday outing as she finished her shopping in Santa Monica, California. She said that she liked the deals at stores such as Gap Inc’s Old Navy and Urban Outfitters. “It seems like a lot of teenagers were the primary shoppers, maybe because of the hour, but I think net-net it’s not really going to result in an incremental positive for retailers,” Ed Yruma, senior equity analyst at KeyBanc Capital Markets, said after checking out crowds at the Mall of America in Bloomington, Minnesota. He said shoppers were not carrying a lot of shopping bags. Leon Clare, 24, and Shawn Sykes, 27, both U.S. Navy Corpsmen, drove about 125 miles from 29 Palms Marine Base to Santa Monica so they each could spend close to $175 on a pair of Air Jordan Retro 3 shoes in “Black Cement,” popular new sneakers from Nike Inc. “This is for me,” said Clare, who plans to spend more on holiday gifts later on in the season. “I’m leaving for Afghanistan in March. I’m getting something for everyone, just in case I don’t come back.” WORRIED… AGAIN More than 120 stores at the Mall of America opened at midnight. The crowd at that point was about 15,000 people. Mall operators estimated that it was the largest crowd ever at the mall, which is big enough to hold seven Yankee Stadiums. While eager shoppers emerged from stores around the country lugging big-screen TVs and bags full of video games and toys, it was far from certain that people will pull out their wallets for much more than the best deals this year. Shoppers with limited budgets started using layaway at chains such as Walmart as early as October. Retail shares fell more than the overall market on Friday. “Americans are still worried about jobs, still worried about the economy,” said Mike Thielmann, group executive vice president at J.C. Penney, who noted that shoppers were buying gifts and for themselves, and said jewelry was selling well. In Houston, Rico Salvosa, 60, bought two cameras at Best Buy and said he had saved about $170. “It’s worse than before because business is slow,” Salvosa, who wholesales stone countertops, said as he left the store with his daughters. “I don’t have a lot of savings for holiday shopping. I told them, ‘I cannot buy everything that you’d like.’” Competition among the retailers was fierce as it was among shoppers, as some stores opened hours earlier than before. Outside Macy’s flagship store in New York, some Occupy Wall Street activists chanted “boycott Macy’s” and “stop supporting big corporations” even as about 9,000 people lined up to shop when the store opened at midnight. Opening early appeared to work, judging from the long lines at stores such as Macy’s, Toys R Us, Best Buy, Walmart and Target. “It was crazy around midnight and one in the morning,” said a Target employee at the chain’s East Harlem, New York store, where the crowd thinned out later on Friday morning. Even after a Toys R Us in New Jersey had been open for nearly an hour, at 9:50 p.m. EST on Thursday night, there was still a line of about 300 people waiting to get inside. The 24 hours that started at 9 p.m. Thursday will be the biggest in retail history, with sales estimated at $27 billion, according to Craig Johnson, president of Customer Growth Partners, one of the few experts predicting a strong season. The term “Black Friday” commonly refers to the day after Thanksgiving, the traditional start of the busy holiday shopping season when retailers do brisk business. (See related story: Spirited ‘Black Friday’ has dark roots. While it is the busiest day of the year in terms of store traffic, it does not always mean that sales will soar for the season. Despite brisk sales right after Thanksgiving in 2008 and 2009, total holiday season sales fell as the recession gripped the country. The National Retail Federation, an industry trade group, expects 152 million people to hit stores this weekend, up 10.1 percent from last year. Yet it expects sales for the full November-December holiday season to rise just 2.8 percent, well below the pace of last year when sales rose 5.2 percent. Luxury chains such as Saks Inc and those catering to lower-income shoppers, such as dollar stores, are expected to do well this shopping season. “For our products that are $25,000 and up, growth is phenomenal,” said Mark Vadon, founder of online jewelry retailer Blue Nile. “Price points under $100 are also doing really well. For the mass part of the market, consumers are strapped and being a lot more wary.” Overall, retail executives and analysts expect a more competitive shopping season than in 2010. Unemployment remains at 9 percent, European debt woes are weighing on the stock market, and consumer confidence remains spotty. Online sales on Thursday and Friday surpassed last year, and more shoppers used their mobile devices to buy, according to IBM data. The amount U.S. shoppers spent via eBay Mobile more than doubled on Thanksgiving, while eBay’s PayPal Mobile unit saw a five-fold increase in global mobile payment volume versus last Thanksgiving. The online push put pressure on some companies. Walmart.com saw some very high traffic, so some customers may have experienced delays as they tried to check out, it said. Even Apple Inc gets into the Christmas spirit on Black Friday, the only day that it usually offers discounts. This year it offered its typical $101 discount on its $900-plus Mac laptops and $41 or more off its $499-plus iPads. (Reporting by Dhanya Skariachan, Liana B. Baker and Phil Wahba in New York, Mihir Dalal in Jersey City, New Jersey, Jessica Wohl in Chicago, Diane Bartz in Hyattsville, Maryland, Lisa Baertlein and Edwin Chan in Los Angeles, Alistair Barr in San Francisco and Bruce Nichols in Houston. Editing by Jon Loades-Carter, Phil Berlowitz and Robert MacMillan) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Shoppers Answer Stores’ Call, Showing Up Early For Black Friday Deals

November 25, 2011

NEW YORK — Move over turkey – it’s time to shop. Black Friday began in earnest as Target, Abercrombie & Fitch and other stores opened their doors at midnight – a few hours earlier than they normally do on the most anticipated shopping day of the year. A few retailers even had lines of shoppers when they opened on Thanksgiving Day. Herald Square in New York was bustling at 6 p.m. with shoppers looking to snag discounts at Old Navy and other stores that were open on the Thanksgiving. By 9:45 p.m., more than 300 people were waiting outside a Best Buy in New York before it opened at midnight. An hour later, nearly 2,000 were in line at another Best Buy in St. Petersburg, Fla., ahead of its midnight opening. Roberto Rubi, 24, of Seminole, Fla., had been standing in line since 1 a.m. on Thanksgiving morning and hoped to score a cheap TV and laptop. He ate dinner with his family at home while three of his buddies took his place in line. “It’s hard times,” Rubi says. “So, any discount helps.” Retailers hope the earlier openings will make shopping more convenient for Americans who are more likely to be worried about high unemployment and the other challenges they face in the weak economy. Black Friday is important to merchants because it kicks off the holiday shopping season, a time when they can make 25 to 40 percent of their annual revenue. It’s expected that shoppers will spend nearly $500 billion during the holiday shopping season, or about 3 percent more than they did last year. “It’s a good move to try to get shoppers to spend sooner, before they run out of money,” says Burt Flickinger, III, president of retail consultancy Strategic Resource Group. About 34 percent of consumers plan to shop on Black Friday, up from 31 percent last year, according to the International Council of Shopping Centers, and 16 percent had planned to shop on Thanksgiving Day itself. For the weekend, 152 million people are expected shop, up from 138 million last year. To get people to shop, merchants pulled out of their bag of tricks. A few opened last year at midnight, but several other stores are doing so this year. Some are matching the prices of their competitors. Others are offering layaway plans that allow shoppers to pay as they go. But the deals are what’s driving many early shoppers into stores. After all, Americans are focusing more on bargains these days, a habit they picked up during the economic downturn. The Gap is offering discounts of 20 to 60 percent on many items. Old Navy has pea coats for $29 and jeans for $15. Toys R Us is selling a Transformers Ultimate Optimus Prime action figure for $30 off at $47.99 and a Power Wheels Barbie vehicle for $120 off at $199.99. And Best Buy has a $499 42-inch LCD HDTV for $199 and a $400 Asus Transformer 10-inch tablet computer for $249.99. Millie Ayala, 28-year-old receptionist, began standing in line at a Toys R Us in New York at 5:30 p.m. on Thanksgiving, armed with the retailer’s circular and a plan for how she and her sister would scour the store for deals. On her list? An interactive dog named Cookie and dolls for her two young daughters. “Finances have been tough,” she says. “Things are a lot more expensive but with Black Friday deals, things are more affordable.” After showing up at Best Buy in New York on Wednesday at 3 p.m., Emmanuel Merced, 27, and his brother were the first in line when it opened. On their list was a Sharp 42-inch TV for $199, a PlayStation 3 console with games for $199.99 and wireless headphones for $30. Merced says he likes camping out for Black Friday and he figures he saved 50 percent. “I like the experience of it,” says Merced, who plans to spend $3,000 to $4,000 on gifts this season. It remains to be seen whether that enthusiasm will linger throughout the holiday shopping season. But analysts seem to agree that if retailers want shoppers to keep coming back, they’ll have to keep discounting. “The consumer is continuing to spend and shop and look for the bargains,” says said John D. Morris, BMO Capital Markets analyst. “If it’s the right product at the right price, she’s shopping and buying.” _____ Anne D’Innocenzio in New York and Tamara Lush in St. Petersburg, Fla., contributed to this report.

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Margaret Chan, WHO Chief, Slams Tobacco Firms That ‘Harass’ Governments

November 23, 2011

GENEVA — The head of the World Health Organization says countries should stand together against tobacco companies who are trying to “harass” governments into softening their anti-smoking stance. Margaret Chan says the tobacco industry is pressuring countries like Uruguay, Australia, Norway and the United States over measures aimed at reducing smoking-related disease. Tobacco giant Philip Morris launched legal action against Australia’s government on Monday after the country’s Parliament passed legislation banning all logos from cigarette packages. Chan told a public health meeting in Geneva on Wednesday that tobacco is “the only industry that produces products to make huge profits and at the same time damage the health and kill their consumers.”

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Don Tapscott: Cutting Out the Banker Middleman

November 21, 2011

In the wake of the 2008 global financial crisis, we need to rethink and redesign many organizations and institutions that have previously served us well but are now beginning to falter. Fortunately, the Internet lets us do this. It slashes collaboration costs and makes possible completely new models of combining people, skills, knowledge and capital for economic and social development. Around the world, individuals and groups are working together, developing new businesses based on peer-to-peer (P2P) collaborative networks. The financial services industry has always been the antithesis of P2P collaboration. Hierarchy is deeply entrenched in this industry, for good reasons such as security, auditing, and regulatory compliance. But we are now seeing the rise of three types of P2P activities in this sector. First, financial services companies are moving beyond electronic mail, document management and other primitive technologies to new collaborative software suites like Jive and Moxie Software Spaces, which encourage P2P collaboration within corporate boundaries. Second, financial services companies themselves are beginning to act as peers, and are collaborating rather than treating one another as superiors or subordinates in the supply chain. This is good. The industry needs a new modus operandi, where all of the key players (including banks, insurers, investment brokers, rating agencies and regulators) embrace principles of transparency, integrity, collaboration and sharing of information. For example, banks should open up financial modeling and make pertinent assumptions and data transparent to all interested parties. Among other things, such P2P collaborations could enable banks to value the trillions of dollars in toxic assets that are weighing down their balance sheets. But the third and most interesting of P2P innovations in financial services is the growing number of lenders and borrowers connecting directly via the Internet and avoiding the cost and frustration of dealing with banks altogether. The goal is to benefit both the lender and the borrower. For example, if one person is now receiving one percent interest on a savings account and another is paying 29 percent on a credit card, a mutually-agreed 10 percent rate is a match made in heaven, giving the lender a tenfold increase in return while affording the borrower a chance to begin paying down the principal. Typical P2P borrowers want to consolidate debts and pay off credit cards. Initial attempts at Internet-enabled loan banks were a disaster. From 2005 (when P2P lending launched in the U.S.) till 2009, P2P startups experienced a boom and then went bust, culminating with regulators shutting them all down. Many investors were burned. In the case of one company, Prosper.com, angry investors launched a class-action lawsuit . After the initial debacle, two of the main U.S. services, Prosper and LendingClub.com , registered their platforms with the SEC in 2009 and 2008 respectively. Both overhauled their business models, with the stated goal of offering greater protection to the lender. They publish online their detailed financial performance figures, which are monitored by third-party sites such as www.LendStats.com . In the past two years the growth of P2P lending companies has been dramatic, with 15 percent month-over-month growth rates, and lenders receiving 8 – 10 percent returns. With these numbers, it’s no surprise that some of the biggest venture capital firms, such as Union Square, Draper Fisher Jurvetson, and Google Ventures are moving into the industry. Both Prosper and LendingClub subject would-be borrowers to rigorous scrutiny. Deadbeats are not welcome. Prosper rejects 80 percent of loan applicants; LendingClub’s rejection rate is 90 percent. According to estimates by analysis group Gartner Inc., the value of outstanding loans transacted P2P will grow to $5 billion in 2013. Although that’s still a paltry amount compared to the Wall Street titans, the P2P model strikes at the core of the banking industry. There are already more than 35 social-banking companies in more than 20 countries. Prosper in the U.S., Community Lend in Canada, Smava in Germany and Qifang in China have similar models. Today the U.K. and U.S. social-banking market has outstanding loans of $700 million. What these P2P networks do that banks can’t (or won’t) is let people align their investments with individuals or causes that they believe in. Prosper accepts investments of as little as $25 and estimates its returns to be from 6 percent to 16 percent. Borrowers can post their personal stories, endorsements from friends, and group affiliations, in an effort to win the hearts, minds and dollars of potential lenders. It’s easy to see why a growing number of consumers feel this is better than putting their money in a bank and watching it being gobbled away in fees. Is this the beginning of an outright social movement? P2P lending will certainly not displace the retail lending divisions of the big banks anytime soon. That said, well-regulated social banking clearly offers many advantages, in developed markets as well as rising economies. If some of the early hurdles can be ironed out, the phenomenon has a promising future. The sheer growth of the sector has certainly chipped away at the skepticism surrounding it and reinforced the viability of a more cost-effective way for lending. Banks should find ways to embrace these new models rather than fighting them. Experience shows that such industry disrupters can hurt those who ignore or resist them. This article originally appeared on Reuters.com .

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Marty Zwilling: 5 Easy Steps to Your Own E-Commerce Startup for $100

November 18, 2011

If you have a unique creation or invention, and you are not selling it around the world on the Internet, now is the time to start. The cost of entry has never been lower. Anyone can be an entrepreneur today, without a huge investment, bank loans, venture capitalists, or Angels. In the early days (20 years ago), most new e-commerce sites cost a million dollars to set up. Now the price is closer to $100, if you are willing to do the work yourself. Here are the key steps for a personal home-based business website selling a few products (as an alternative to Ebay): Go online to reserve a website domain name. Be sure it matches your business, and get a hosting agreement from one of the popular providers like GoDaddy. The cost for the domain name is maybe $10/year, and the hosting starts around $50/year. Start simple. Download free website tools. Many hosting services offer free tools, or will build a default website for you. Other popular tools are available at low cost, with built-in e-commerce capabilities (pay via PayPal or credit card), including FrontPage in the Microsoft Office Suite, and DreamWeaver by Adobe. Open an account with PayPal. This costs nothing, and allows you to safely collect money from customers all around the world. If you want to also accept all the popular credit cards, that will require a merchant services account for a low monthly fee. Personalize a simple web site. Customize your website using one of the tools above, selecting one of the standard templates for design and layout. You probably want at least a home page, product page, order page, and contact page. The menu should include a link to your blog, separately set up on Blogger, Wordpress, or TypePad, again free. Publish the site and now you are in business. But don’t be fooled into expecting people to flock to your site after you tell a few friends. Now the real work begins — promotion, marketing, blogging, and all types of search engine marketing. But even these can be done for almost no cost, if you are willing to learn and do the work yourself. Obviously, commercial e-commerce sites handling thousands of products and back-office functions are more expensive, and usually require professional help to do the custom programming and special site navigation features. All this may cost a few thousand dollars, but don’t get talked into an Amazon.com replacement just yet. The next step in complexity is building a software product that you can offer as a service to your customers. A simple example might be mortgage calculator to add to your real estate sales site. Any credible software developer should be willing to tackle this kind of tool for a couple of thousand dollars. Then there are full-featured software sites like Facebook. The logic behind all these features is millions of lines of code, and cost millions of dollars to develop and maintain. Don’t expect that you can create a new social networking site in your garage, and steal all the users away from Facebook. Facebook is making money today, but only after a $150 million investment. But even Facebook started simple, and then developed more and more robust iterations as user interest caught on. I give this advice all the time “launch fast and iterate.” You can’t get it all right the first time, and the market will be gone if you try to include every feature in the first version. The net is that if I see a website business plan today with a projected development cost greater than $200K, I suspect the founder must be including some fancy perks, or they don’t understand the market dynamics of e-commerce today. Budding entrepreneurs and home-based businesses should be writing business plans before they start, so they understand and can manage the tasks ahead, but no outside investor need ever see the plan. Fund it yourself (bootstrapping) and do-it-yourself entrepreneurs are the best kind, because they can focus on the business, rather than fund raising, and have full control of their destiny. Life is more fun that way. Grab your shopping basket.

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Foreclosure Crisis Far From Over

November 17, 2011

Five years in, the nation is less than halfway through its foreclosure crisis, the nonpartisan Center for Responsible Lending warned in a report released Thursday. “For people that think we’re out of the woods, they need to kind of rethink that premise,” said Roberto Quercia, director of the Center for Community Capital at the University of North Carolina at Chapel Hill and one of the study’s authors. Roughly 42.2 million Americans took out a mortgage loan between 2004 and 2008. By February of this year, 2.7 million of those households, or 6.4 percent, had lost their home to foreclosure. CRL estimates that an additional 3.6 million households, or 8.3 percent, are at “immediate, serious risk” of losing their homes. And that estimate is probably lowballing the problem, the researchers said: CRL’s research only extends through February 2011, and it excludes both loans originated outside the given time-frame and loans that are not yet seriously delinquent. What exactly is pushing homeowners to the brink? Researchers found the type of mortgage a borrower has can have a greater impact on the borrower’s ability to stay in their home than even income or credit history. This trend has had particularly adverse affects for minority homeowners. Higher-income Latinos are three times more likely to lose their homes to foreclosure than their white counterparts, according to the report. Similarly, higher-income African Americans have foreclosure rates twice that of higher-income white borrowers. In low-income communities, minority foreclosure rates also eclipse those of white borrowers. What separated the minority borrowers from their white counterparts is the type of mortgages they were sold, the researchers concluded. Minority borrowers have a disproportionately large percentage of risky subprime loans, the mortgages infamous for their high interest rates and problematic payment options. African American and Latino borrowers with good credit histories — a credit score of at least 660 — are three times more likely than white borrowers to end up in a high interest rate mortgage, the report found. “It’s industry which has painted this picture of ‘oh, it’s the borrower’s fault,’ that the homeowner is behind on mortgage payments,” said CRL spokeswoman Kathleen Day. “But they do that to deflect attention from the unbelievably irresponsible lending they were doing.” Researchers also discovered that the type of person most likely to lose their home to foreclosure changes depending on geography. In cities and states where property values were high prior to the collapse of the housing bubble — including many parts of California, Florida and Arizona — it is wealthier homeowners who have the highest foreclosure rates. In communities where real estate prices remained relatively low before the market collapsed — such as Detroit, Cleveland and St. Louis — it is the lower-income borrowers who are fighting to keep their homes. “The story in Michigan is different than the story in Florida,” said Quercia. “In Michigan, in the run up to the bust, there was very high unemployment and people were given loans to take equity from their homes to make ends meet. In Florida, where there was very low unemployment prior to the crisis, mortgages were used to increase the affordability of the home.” The idea that the national foreclosure crisis is a collection of local foreclosure crises suggests that any solution to the slump needs to be tailored to local situations, Quercia said. And customized remedies are especially important in minority neighborhoods that have been hardest hit by the crisis. “The idea of letting the market fix itself won’t really work because these communities of color will be so heavily impacted,” says Quercia. “In many lenders’ minds, these neighborhoods have a reputation as high risk areas because of all the foreclosures, so it will take a very proactive approach to rebuild them.”

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TV Retailers Plan To Be ‘Aggressive’ With Promotions On Black Friday

November 6, 2011

NEW YORK (Reuters) – It may not be a blood bath, but it will definitely be a dogfight. The television aisles of top U.S. retailers are poised for a hard-fought contest this holiday season as chains take little chances with budget-conscious shoppers. Unlike last year when some such as Best Buy held the line on discounts and promoted only high-end TVs, many retailers told Reuters this past week that they plan to do whatever it takes to get the customer through the door. For the consumer, expect to see price cuts of up to 40 percent from a year ago on big-screen TVs, plus free shipping deals and even a 36-month financing option, in the run-up to ”Black Friday” on Nov. 25, the unofficial start of the holiday selling season. “As we look at the holiday season, we are going to play offense,” Hhgregg Inc Chief Executive Officer Dennis May told Reuters in an interview last week. “We are going to be very promotional. We are going to be aggressive.” U.S. shoppers have held off on buying televisions and other nonessential items in the anemic economy. But the TV market is also a victim of a lackluster product cycle. Early last week, Japanese manufacturer Sony Corp warned investors that its TV division is headed for its eighth consecutive annual loss, while rival Panasonic Corp forecast its biggest annual net loss in a decade. “My outlook is not any different from Panasonic and Sony,” Anthony Chukumba, an analyst with BB&T Capital Markets said. ”We have a lull right now in terms of TV demand; part of it is macro-driven, part of it is product cycle-driven. There is just not a lot of innovation out there. “And a couple of things that may in fact just have been counted on to drive incremental demand like 3-D and Internet-connected smart TVs are just not working.” Against this backdrop, global demand for televisions is expected to fall about 1 percent in the fourth quarter, according to Paul Gagnon, director of North American TV research for consulting firm Display Search. This will fuel the intense fight for shoppers as they look for the biggest bang for their buck during the holiday season. “It is starting even earlier than usual. You are seeing sharp promotions. You are seeing Wal-Mart out there with a TV this weekend and Amazon.com with special deals. It is upping the overall intensity,” Bernstein analyst Colin McGranahan said. “It is going to be a dogfight. Everyone’s going to be fighting because demand is not great,” McGranahan said. Best Buy has already said it would offer free shipping on online orders from Nov. 1 through Dec. 27. On TVs costing more than $899, the world’s largest consumer electronics chain is offering 36-month financing, a 60-day price guarantee and a promise to even pick up the TV from the customer’s house if the model was not what he or she really wanted. “Given economic realities, consumers are definitely more discerning this holiday season, definitely looking for the best value for their money,” Mike Mohan, senior vice president and general manager of Home Theater at Best Buy, said. FOCUS IS ON BIGGER SCREENS Industry watchers expect retailers to focus less on promoting special features like 3-D technology, which can be difficult for the average consumer to understand. “Today’s TVs have so many capabilities such as Smart TV, Internet and 3-D technology and there are also a lot of confusing terms such as screen refresh rate and HDMI Inputs. Consumers can become overwhelmed and have difficulty understanding what television will meet their needs,” Jim Hilson, BJ’s Wholesale vice president of merchandising said. Instead, they expect the focus to be on screen size, stressing the increased affordability of big screens. “In the U.S. which is one of the more mature markets around the world for TVs, one that has already largely gone through the flat-panel TV transition, mostly what people are out there doing right now is updating the size,” Gagnon said. Hhgregg said it is carrying more giant TVs with 60-inch and above screens, and reducing its inventory of 32- and 40-inch TVs this holiday season. “I can get a 60-inch TV for what I used to pay for a 40-inch TV,” Hhgregg CEO May said. “The screen size the consumer has always wanted has become affordable to them now.” Due to their focus on larger sizes, retailers including Best Buy, BJ’s, Sam’s Club and Hhgregg told Reuters that they will not be reducing their shelf space for televisions despite the uncertainty in demand. “To some degree, the 42 (inch) is the new 32. The 55 is the new 42,” said Jason Shaw, vice president of merchandising for electronics at Wal-Mart’s Sam’s Club warehouse store operation. ”They are getting more for their money than they have ever gotten before.” (Reporting by Dhanya Skariachan in New York, editing by Bernard Orr and Maureen Bavdek) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Larry Magid: In Defense of Netflix

November 3, 2011

During its recent quarterly earnings report, Netflix admitted that it had lost 800,000 customers since it announced a price increase in June, but I’m not one of them. I continue to find plenty of great programs to watch on Netflix and, for the time being at least, I’m happy to pay $7.99 a month for access to thousands of movies and TV shows. Apparently I’m not alone. As awful as the 800,000 number sounds, it’s important to note that Netflix ended the quarter with 21.4 million streaming subscriptions and 13.9 million DVD subscriptions. Despite the subscriber loss, a lot of people are sticking with the service. I’m not uncritical of the company. Netflix’s decision to add 60 percent to the cost for those who wanted to both stream and get DVDs was clearly a boneheaded move. As a landlord of a one-unit rental house, I learned a long time ago that if you’re going to “raise the rent,” you do it gradually over time. You don’t hit people with a sudden whopping price increase. The next major PR bungle was its decision to rebrand the DVD business as Qwikster and make people go to separate websites for DVDs and streaming. Maybe it should have instead called the new service “QuickSand,” because the dumb move caused the company to sink even further. While the company has lost maybe 4 percent of its subscribers, it lost nearly 75 percent of its stock value between its peak in July and its depths last week. Starting in March, Netflix will no longer be streaming content from Starz, which provides it with lots of movies including titles from Disney. But as CEO Reed Hastings pointed out, there is plenty of other content available. In his letter to stockholders, he said that Starz accounts for “6 percent of viewing hours.” The reason that the Netflix price increase didn’t bother me is because I had already stopped using it for DVDs. A lot of people may forget that until November 2010, the company charged $8.99 for unlimited streaming and one DVD at a time but then started offering a $7.99 streaming only service with an extra $2 a month charge for that DVD. Like a lot of customers, I happily “downgraded” to the streaming-only service because I found myself hardly ever watching DVDs. Those red envelopes would sit around the house for weeks and even $2 a month was too much for a service that I just wasn’t using. I’m not suggesting that Netflix has all the content I want to watch. I sometimes rent newer titles from Amazon or iTunes and I occasionally still rent DVDs from that kiosk at the grocery store or the one remaining video store in my neighborhood. I also go out to movies now and then and watch movies on airplanes, where I spend far too much time. I spend relatively little time watching “TV,” and often it’s when I’m exhausted and just in the mood to zone out for awhile. Netflix might not give me the widest or even best selection, but there is always something worthwhile. In fact, some of the programs on Netflix (like terrific documentaries from PBS, the History Channel, Discovery and National Geographic) might actually be more worthwhile than the flicks I might otherwise have watched if I had an unlimited choice. The big question for Netflix is whether it will be able to continue to provide compelling content. It’s not as if Netflix gets to pick anything it wants. It has to negotiate deals with content owners who, of course, want to extract as much money for the rights as they possibly can. Part of the problem is that Hollywood is trying to hang on to its old models. Studios like to control their distribution “windows.” They keep movies in theaters for as long as they can get paying customers before dolling out the content to other distribution channels, including DVD and a variety of pay-per-view services before releasing it to premium channels like HBO or unlimited streaming services like Netflix. Netflix is also battling Internet service providers, some of which want Netflix to pay them to carry video traffic to consumers. According to Sandvine’s Fall 2011 Global Internet Phenomena Report, “Netflix eats up 32.7 percent of peak downstream traffic in United States.” Overall it accounts for 27.6 percent compared to YouTube’s 10 percent. Last year Comcast demanded that Level 3 Communications, Netflix’s Internet provider, pay a recurring fee to transmit Netflix content to Comcast customers. Another problem is that Internet service providers are increasingly putting caps on how much data users can download. So far, it’s not a big issue for most home users, but it’s a major issue for the rapidly growing number of people who use mobile carriers to stream video to tablets, laptops and even smartphones and handheld media players. And, of course, Netflix has some pretty powerful competitors, including Amazon, which offers a far smaller selection of free content to its Prime customers who pay $79 a year and also get free two-day shipping. This story first appeared in the San Jose Mercury News and on LarrysWorld.com

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Michel Kelly-Gagnon: Should We Trust the Government to Protect Our Online Privacy?

October 29, 2011

Privacy is logically a matter of individual conscience. It belongs to every individual to decide what he considers part of his private life and how much of it he is willing to expose to others. When you invite a friend into your home, when you walk in the street, when you post something on the Internet, or when you make an economic transaction, you are releasing some information about you. In other words, social life necessarily involves a breach of privacy, and it is — or should be — up to each individual to decide which trade-off he is willing to make between the benefits of privacy and the benefits of social interaction. Of course, there are costs to whatever one chooses. One can’t have both the benefits of total privacy and the benefits of total social immersion. Sacrificing some social life in favour of privacy involves a cost; sacrificing some privacy in order to have more of a social life does too. But ultimately, that is a matter for each one of us to decide. As more and more of our social life seems to be going on in the virtual world of the Internet, this is the kind of fundamental principle that should inform the debate about privacy online. Unfortunately, this as on so many other issues, calls for the government to take this responsibility away and to decide on behalf of all of us have muddled the debate. For example, there have been more and more attacks on the privacy practices of large IT companies such as Google and Facebook in recent years. Governments are investigating Google for inadvertently collecting data transmitted to its Street View vehicles by unprotected home computer networks. Facebook is also under investigation by the Irish privacy commissioner for the way it uses its customers’ information. Now, in theory, nobody is forced to deal with Google or Facebook. If you stay inside your home or behind your garden walls, a Google Street View car will never see you. If you refuse to become friends with anyone on Facebook and you don’t post any pictures or information about yourself on the Internet, you will remain mostly invisible in that virtual world. There may of course be a high cost in avoiding Google, eschewing Facebook, and living as a recluse, but there is also a cost (a privacy cost) in making the opposite choice and trying, for example, to have as many friends and social connections as possible. Some people seem to think that individuals are not wise enough to make these choices, and that somebody has to decide for them and impose the same trade-off on everybody. I prefer to think that any individual, in matters concerning his own life, is wiser than anybody else. And that there is usually a way to solve these matters without recourse to government intervention. For example, private companies do have incentives to be careful with their customers’ data. Indeed, they usually have elaborate privacy policies . Google blurs faces and licence plate numbers from its street views, and you can ask them to delete more. This would be the case even without the threat of government intervention. Facebook bowed to pressure from users and privacy advocates and made various changes to simplify its privacy settings and allow less information to be shared and searched on its pages. Any private supplier can only use or request information from his customers up to the point where the marginal benefit for him stops outweighing the cost of bad publicity and the loss of unhappy customers. Free markets provide their own checks and balances, especially when hundreds of potential competitors are lurking. It is simply not possible to have everything — both to force companies to guarantee total privacy, and to have efficient social networks and information to which advertisers and investors will continue to flock. If somebody disagrees with that assessment, he is quite free to go and create the next search engine or social network, and use none of his customers’ data. Good luck! These views may seem unconventional in today’s debates, but they are not exactly far-fetched or original. I am simply proposing to rely mostly on private choices when dealing with privacy issue, something that should be obvious and logical. This is in opposition to the reigning ‘public,’ that is, government approach to this problem. There is indeed a great paradox here. The very governments which have built large databases with information that they legally force individuals to provide, which have created ID papers and systems that make individuals continuously traceable — these very governments are now harassing private companies that offer benefits in exchange for voluntarily giving up some privacy (or giving up privacy that is impossible to protect in an advanced society). Who will watch the watchdog? General legal rules are certainly necessary to facilitate life in society. But there is no place, in a free society, for bureaucrats and politicians to impose their uniform vision of privacy. Let every individual take care of his own privacy, and make the trade-offs he chooses. Let companies compete for offering consumers different mixes of privacy and other benefits. And let’s accept that, contrary to the public view of privacy, there is no panacea in politicians and government bureaucrats making such decisions for everybody.

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Can This Startup Make Local Search Smarter?

October 28, 2011

In the near future, Internet search engines and social networks will have access to data that will allow users to see in real-time the items sitting on a local store’s shelves or the dishes sizzling in a neighborhood restaurant’s kitchen. But we’re not quite there yet. As it exists today, local search faces a fundamental limitation — that at least one data-focused startup hopes to overcome. “It’s great that we can now quickly find the nearest coffee shop on our mobile phone or look up the opening hours for a nearby shoe repair,” says Rene Reinsberg, the co-founder and CEO of Boston-based Locu . “But what about what that small business has to offer?” The reality of Reinsberg’s rhetorical may not hit you until you consider a hypothetical. Say you’re on a Sunday stroll through a neighborhood in New York’s West Village when you suddenly start craving a bloody mary. But not just any bloody mary will do. You want a homemade one, with clam juice, that is less than $15. So you whip out your phone and Google “bloody mary” plus “West Village” and the search engine spits out a list of local bars and restaurants that serve bloody marys. But the list of blue links that turn up is hardly helpful . By the time you use the search results to retrieve information on pricing and ingredients, having sifted through numerous Yelp reviews, menu platforms and sites of local restaurants and bars, with their clunky online menus, you’re just about ready to settle for a can of tomato juice and a couple nips of vodka from the corner store. Why can’t Google, Facebook or any other local search tool just do the sifting for you and spit out a list of local bloody marys — rather than a list of local businesses — so you can quickly decide which clam-infused cocktail is best for you? The reason is that, behind the scenes, there’s no comprehensive database from which search engines can pull real-time menu data for the millions of restaurants and bars in the United States alone. “We’ve been working on menus for more than two years now,” says Shashi Seth, Yahoo’s senior vice president of search and marketplaces. “This can’t be done by people. You have to do this algorithmically and you have to do the type of indexing, crawling and understanding of elements that search engines employ.” That’s where Locu hopes to step in. “It’s the missing piece in local search,” says Reinsberg, who believes his startup has a solution: Patent-pending technologies that will use machine learning to “create the world’s largest repository of semantically annotated real-time small-business offerings.” Translation: Locu has invented an efficient way to build digital streams of interconnected small-business data that can make local search engines a lot smarter. The hope: Local merchants will have a more effective way to showcase their offerings and consumers can find exactly what they want. If Reinsberg explains Locu in uber-technical terms, it may be because his startup was originally born in an MIT lab under the auspices of tech legend Tim Berners-Lee , who created the world’s first Web browser and server in 1990. Last Fall, in a data course taught by Berners-Lee, Reinsberg, then an MBA candidate, teamed up with his current partners — one other MBA and two computer science PhDs — to compete in an in-class business-plan competition. They took home first prize, and with a nod of approval from one of the inventors of the Web, set out to launch Locu upon graduating in the spring. Less than six months later, the startup has closed a $600,000 round of funding from early-stage investment fund Quotidian Ventures and a pack of prominent angel investors, including some it met through AngelList, a social network that connects startups with investors . The company’s first product is the soon-to-launch MenuPlatform , which offers restaurant owners an easy way to import their menus onto Locu’s database and keep them up-to-date across each site that ends up licensing data from Locu’s repository. While the company hopes to actively work with restaurants, which could be a potential source of revenue, Reinsberg says he doesn’t necessarily need a restaurant’s direct participation to collect and update its menu data. As long as a restaurant has a functioning site with a menu, Locu’s technology can work to fetch the data. Its crawlers can then monitor the menu and automatically make changes to the data Locu stores when it detects updates. But experts still say the most scalable way to collect such an immense amount of menu data is to “crowdsource” it –- that is, convince restaurants to load their data onto the system and keep it updated themselves. As with most things on the Web, MenuPlatform’s power lies in the number of active users it can ultimately attract. Fortunately for Locu and other local business data providers, local search is booming. In 2009, 82 percent of consumers were using search engines to find information about local businesses. Two years later, that stat has grown to 86 percent , due in large part to the increasing prevalence of mobile search. In addition, local search now accounts for 20 percent of all Google search queries, according to the company. Anand Rajaraman, a data scientist at WalMart’s e-commerce group , based in Silicon Valley, predicts that Facebook’s recent changes to its platform could also compel small businesses to spend more time sharing their data and enabling its structuring. After all, it’s just another way to reach their most likely customers. “Facebook enabling new forms of sharing will be a huge incentive for local businesses to open up their catalogs on a deeper level,” Rajaraman says. “Imagine Facebook next launches an ‘eat’ button, just like it has just launched a ‘listen’ button. ‘Nate ate pasta primavera at Joe’s Pizzeria’ could then be something you share with your friends. To make this happen, restaurants would then be incentivized to itemize their menu, and next to their menu items put the ‘eat’ button.” Since Locu formed, its efforts to tailor local search to restaurant menu items has largely mirrored the evolution of local search for non-food items. Major search engines and social networks now often partner with big retailers to make not only general store listings but also actual on-site inventories searchable online. Consumers can now use Google Shopping, for instance, to see which electronics stores in their neighborhood have a certain flat-screen television in stock . And earlier this month, Walmart partnered with Facebook to host updated inventory lists on Facebook pages for each of Walmart’s 3,500 locations. “Today, we don’t connect people with Walmart,” Rajaraman says of the search shift. “We connect people with Walmart items.”

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Nigel Barber: Wall Street Protesters Have a Point: Inequality

October 20, 2011

Occupy Wall Street protesters may have a diffuse agenda for change but they are upset about the same problem — unequal distribution of income that is dragging our society down. In a land of plenty, such as the U.S., one might reasonably expect that citizens would be happy and healthy, that they might work hard and enjoy social mobility. This is the American Dream. Yet, if a person wanted to realize the American Dream, they might consider doing it in Finland, Sweden, or even Japan. The very worst place for the American Dream is America itself. This conclusion leaps from the pages of The Spirit Level by Richard Wilkinson and Kate Pickett (1). Their main point is that high levels of income inequality detract from the quality of life for all residents of a country, even the privileged elite. Inequality is stressful and undermines trust. Wilkinson and Pickett compiled an index of health and social problems for the wealthiest countries in the world. They included: Life expectancy and infant mortality Obesity Mental illness Teenage births Imprisonment rates Homicides Level of trust Children’s educational performance Social mobility When they graphed the Index of Health and Social Problems against income inequality, the found that more unequal countries did worse on every criterion. This means that if a country has very unequal distribution of income, you can be sure that it also has severe problems with health, crime, education, and, yes, social mobility. The countries with the best quality of life (and lowest religiosity ) are Japan, Sweden, Norway, the Netherlands, Switzerland and Finland. Dead last in their sample of 21 wealthy democratic countries was the U.S., followed by Portugal and the U.K. Social problems of all kinds follow from inequality. One simple measure of inequality is the ratio of income of the top 20% compared to the bottom 20% of the population. In Japan and Scandinavia, a typical ratio is that the richest fifth are four times better off than the poorest quintile. For Portugal and the U.S, the ratio is around 8, meaning that inequality is twice as great. Wilkinson and Pickett make a compelling case that inequality has a destructive impact on many aspects of the quality of life. But why is this? Why inequality is so socially corrosive Interesting as the connection between social problems and inequality is, the likely underlying mechanisms are quite fascinating. Wilkinson and Pickett argue that in more unequal societies, there is greater anxiety about social evaluation. They state: Greater inequality seems to heighten people’s social evaluation anxieties by increasing the importance of social status. Instead of accepting each other as equals on the basis of our common humanity as we might in more equal settings, getting the measure of others becomes more important as status differences widen. We come to see social position as a more important feature of a person’s identity. Between strangers, it may often be the dominant feature. (p. 43) Along with increased anxiety levels, more unequal societies undermine social trust and generate high levels of crime, violence, and mental illness and lose their effectiveness in education. Who can deny that we suffer more from these problems today than in earlier times, when this was a more egalitarian society having better opportunities for social mobility. Highly unequal societies become dysfunctional. Wilkinson and Pickett highlight the response to Hurricane Katrina where state troopers strapped on weapons to shoot looters instead of rescuing people from roofs. One could point to many other symptoms from crumbling antiquated infrastructure to a government incapable of simple tasks such as funding its own activities. In contrast, the health and happiness we associate with the American Dream are more typical of contemporary Japan and Scandinavia. The protesters may be short on solutions but they deserve credit for nailing the problem — unbridled greed at the top making life unbearable for everyone. 1. Wilkinson, R., & Pickett, K. (2010). The spirit level: Why greater equality makes societies stronger. New York: Bloomsbury Press .

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If EU Bans Ratings Agencies From Evaluating Bailout Countries, Who Will Investors Turn To For Terrible Advice?

October 20, 2011

The Wall Street Journal reports today that the EU is “leaning toward proposing a ban on the issuing of sovereign credit ratings for countries in bailout talks.” The EU’s internal market commissioner, Michel Barnier, says that he thinks “it’s legitimate to have a special treatment when a country is in negotiation or is covered by an international solidarity program with the IMF,” and, indeed, new IMF chief Christine Lagarde has signaled that she believes it’s appropriate for the EU to “prevent ratings for bailout countries.” As the EU has been “tightening rules on rating agencies progressively since the financial crisis,” according to the Journal , with a new set of proposals on the matter scheduled to be made in early November, odds are decent that this will emerge as the consensus view. However, there are dissenting opinions, and, as Reuters’ Ryan McCarthy points out, they are “hilarious” : “If ratings are banned, it will make it difficult for investors to assess the risk when a country returns to the bond market.” That’s from economist Marchel Alexandrovich, and if you want to know why he should consider taking that act on the road, let’s flash back to this piece from Shahien Nasiripour from September of 2009 — one year after the global financial crisis: Analysts at the three biggest credit rating agencies who gave positive, investment-grade ratings to AIG and Lehman Brothers up until their collapse have not been fired or disciplined, the heads of the agencies admitted at a Congressional hearing today. Moody’s, Standard & Poor’s, and Fitch Ratings all maintained at least A ratings on AIG and Lehman Brothers up until mid-September of last year . Lehman Brothers declared bankruptcy Sept. 15; the federal government provided AIG with its first of four multibillion-dollar bailouts the next day. At the hearing today, the exchange between [Representative Jackie] Speier and the agency chiefs was particularly contentious. “You had rated AIG and Lehman Brothers as AAA, AA minutes before they were collapsing. After they did fail, did you take any action against those analysts who had rated them?” Speier asked. “Did you fire them? Did you suspend them? Did you take any actions against those who had put that kind of a remarkable grade on products that were junk?” McDaniel answered first. “No, we did not fire any of the analysts involved in either AIG or Lehman,” he replied. “LOL,” is what I believe the Internet would tend to say to all of this. The Wall Street Journal reports, “There was no immediate comment from Fitch, S&P or Moody’s.” Yeah, I wouldn’t think so! [Would you like to follow me on Twitter ? Because why not? Also, please send tips to tv@huffingtonpost.com -- learn more about our media monitoring project here .]

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Herman Cain Touts ‘Bold’ Plan At GOP Debate: ‘It Didn’t Come Off A Pizza Box’

October 12, 2011

Straight out of the gate at Tuesday night’s Republican presidential debate in New Hampshire, Herman Cain touted his 9-9-9 plan, as the first part of his economic strategy, which is “present a bold plan.” His bold plan, however, is going to necessarily conflict with the second part of his economic strategy, which is “get serious about the national debt.” Bruce Bartlett, senior policy adviser to Presidents Ronald Reagan and George H.W. Bush, has what is perhaps the deepest and most substantive analysis of the 9-9-9 plan available. Here’s the salient part, with regard to deficits : Veterans of tax reform attempts in the United States know reform is very difficult and time-consuming even once. If the Fair Tax is a good idea, Mr. Cain ought to just do it, without confusing the issue with his unnecessary and highly complicated 9-9-9 plan. After all, one of the prime selling points of the Fair Tax is its simplicity, and the 9-9-9 plan is far from that. Because so little detail exists, it’s hard to do either a proper revenue estimate or distributional analysis of the Cain plan. It’s obvious, however, that Phase 1 would represent a huge tax cut for the wealthy at a time when federal revenues are at a historical low as a share of the gross domestic product and the economy’s fundamental problem is a lack of aggregate demand. Thus the Cain plan would increase the budget deficit without doing anything to stimulate demand, because rich people can already spend as much as they want and are unlikely to spend more even if their taxes are abolished. The poor and the middle class might increase their spending if they could keep more of their earnings, but they will unquestionably pay more under Phase 2 of the Cain plan. With no tax on capital gains, the rich would pay almost nothing, while elimination of all deductions and credits, as well as imposition of a national sales tax, must necessarily raise taxes on everyone else, especially those not now paying income taxes. At a minimum, the Cain plan is a distributional monstrosity. The poor would pay more while the rich would have their taxes cut, with no guarantee that economic growth will increase and good reason to believe that the budget deficit will increase. Even allowing for the poorly thought through promises routinely made on the campaign trail, Mr. Cain’s tax plan stands out as exceptionally ill conceived. Our own Zach Carter points out that Cain specifically referred to his 9-9-9 plan as “revenue neutral” on “Meet The Press” this past Sunday. “Now he’s calling for reducing debt. But there’s not enough discretionary spending in the budget to close the deficit, so he’s implicitly calling for huge medicare cuts.” Cain sparred with fellow GOP candidate Mitt Romney over his economic plan during the debate Tuesday night. “It’s a catchy phrase. I thought it was a pizza deal at first,” Romney said ofCain’s 9-9-9 plan. “9-9-9 will pass. It’s not the price of a pizza,” Cain responded. “It didn’t come off a pizza box. No. It was well researched.”

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The Top 10 Web Brands In The U.S.

October 2, 2011

Nielsen has released a list of the top web brands visited by U.S. net users in the month of August 2011. An August post on the Nielsen Blog explains that such lists are compiled by examining data collected from two sources: Nielsen’s “online panel,” which is “a people-based representative sample employed to measure consumer’s Internet behavior using Home and Work computers”; and “tag-based data from websites to account for Internet use from any source.” Unsurprisingly, Facebook appears near the top of Nielsen’s August list, according to Nielsen’s Blog post about the new list . Although the social network does not nab the number-one spot for the most unique visitors, these users logged far and away the most time interacting with Facebook-branded pages. During the month of August, the average Facebook user spent a total of 7 hours and 45 minutes on the site. Visitors to the Aol Media Network (parent company of The Huffington Post) spent the next-longest amount of time, logging an average of 2 hours and 52 minutes, nearly 5 fewer hours than users spent on Facebook. Facebook’s stunning stats fall in line with Nielsen’s September Social Media Report , which found that Facebook users in the United States spent a total of 53.5 billion minutes per month on the site, making it the most popular destination for American web users. Several similarities can be found between Nielsen’s list of the top U.S. brands and Alexia’s list of the web’s most popular sites , which tallies three months worth of a site’s visitors and page views. Websites for nearly all the brands in Nielsen’s top 10 list appear in Alexia’s top 20 most popular sites. ( Take a look at Alexia’s top sites, as reported in August 2011 .) Have a look through Nielsen’s August list of the top 10 most popular online brands in the U.S. (below). Are you surprised that any of your favorites didn’t make the list?

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SLIDESHOW: Tech Startups That Could Save The World

September 20, 2011

Could a Facebook competition encourage users to cut their utility usage? Can a mobile communication network help rural farmers share crop tips? Bringing together activists, world leaders and tech influencers, the second annual Social Good Summit seeks to answer these questions and more. The summit, which kicked off on Monday in New York, aims to find new ways to use new media and technology to make the world a better place. Presented by Mashable, the UN and New York nonprofit community center 92Y, the summit will host a number of events, including an inaugural “Startups for Good Challenge.” This competition showcases new businesses whose primary goal is to tackle, and solve, domestic and international issues. The organizations will compete for a chance to win a $10,000 cash prize. The following eight finalists have been selected to pitch their idea at the Social Good Summit: SLIDESHOW: WATCH Related Video:

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10 States Where The Internet Is Too Slow

September 19, 2011

In much of the country, access to affordable, high-speed internet is taken for granted. However, in vast sections of the United States broadband internet is either unavailable or too expensive for low-income families. The Federal Communications Commission, the Small Business Committee, and the U.S. Department of Agriculture have all urged service providers to expand to rural areas. But the companies contend that it would cost far more to run lines or install wireless towers in these remote areas than the profits that could be made from the few low-income families that live there.

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Department Of Justice Investigating eBay

September 14, 2011

SAN FRANCISCO — Federal prosecutors are investigating whether employees of online marketplace operator eBay Inc. wrongfully used confidential information from Craigslist to build its own classifieds site. The investigation was disclosed in a copy of a grand jury subpoena obtained by The Associated Press on Tuesday. The subpoena was issued Sept. 7 by the Department of Justice in U.S district court in San Jose. The subpoena seeks information and documents about incidents in which eBay employees allegedly misappropriated confidential information from the online classifieds site. The subpoena, which was reported previously by Reuters, aims to gather information and supporting documents related to a number of incidents in which eBay employees “engaged in alleged criminal activities and misconduct focused around the misappropriation of proprietary/confidential information from Craigslist.” Incidents outlined in the subpoena include a request in 2005 by eBay founder and Chairman Pierre Omidyar for information about how Craigslist went about adding new cities and for advance notice of its launch plans. It also alleges that eBay “engaged in false advertising and trademark and trade-name infringement in order to exploit Craigslist’s trade rights.” It was unclear how many parties had been served with subpoenas related to the investigation. EBay, which is based in San Jose, bought a stake in Craigslist in 2004. Craigslist has long accused eBay of using confidential information to start its own classifieds site in the U.S. in 2007. Last September, a judge in Delaware’s Court of Chancery ruled that Craigslist founder Craig Newmark and CEO Jim Buckmaster violated their responsibilities to eBay with antitakeover measures they implemented. The moves diluted eBay’s share from 28.4 percent to 24.9 percent and made it harder for eBay to sell the stake. Craigslist, which is based in San Francisco, adopted the measures in 2008 after deciding eBay had moved from being a partner to a threat. Buckmaster testified in a nine-day trial that after starting its own classifieds site in the U.S., eBay began buying online ads steering Internet users looking for Craigslist to its own sites. EBay spokeswoman Amanda Miller said the company plans to cooperate in any inquiry related to disputes between the online marketplace and Craigslist. She noted that both companies are currently pursuing civil claims against each other in California. “EBay believes that Craigslist’s allegations against eBay are without merit. We will continue to vigorously defend ourselves, and we will aggressively pursue our claims against Craigslist,” she said. Craigslist spokeswoman Susan MacTavish Best said the company had no comment. Justice Department spokesman Jack Gillund said the agency had no comment. Shares in eBay slipped 40 cents, or 1.4 percent, to $29 in extended trading on Tuesday after reports of the investigation emerged.

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Obama Presses Republicans To End ‘Political Posturing’

September 3, 2011

WASHINGTON — President Barack Obama is calling on Congress to pass a transportation bill to ensure funding for roads and construction jobs, arguing that failure to do so would spell economic disaster. Republicans say they support passing the bill, but Obama says time is running out and “political posturing” may stand in the way. “There’s no reason to put more jobs at risk in an industry that has been one of the hardest-hit in this recession,” Obama said Saturday in his weekly radio and Internet address. “There’s no reason to cut off funding for transportation projects at a time when so many of our roads are congested, so many of our bridges are in need of repair and so many businesses are feeling the cost of delays. “This isn’t a Democratic or a Republican issue – it’s an American issue,” the president said. Obama issued his call as he prepares to make a major jobs speech to a joint session of Congress on Thursday in which he’s expected to push for bipartisan action on tax credits and infrastructure spending to get the economy out of its doldrums. A new jobs report just found the economy stopped adding jobs in August and unemployment stood at 9.1 percent. Federal highway programs, and the fuel taxes that pay for them, will expire Sept. 30 unless Congress acts, and funds for construction projects across the country would be held up. That follows the partial shutdown this summer of the Federal Aviation Administration over a showdown between the House and Senate that led to thousands of layoffs of workers on airport construction and other projects. Transportation experts say the impact of an expiration of highway programs would be even more devastating for the economy. Transportation programs tend to have wide bipartisan support, but given the focus of the House Republican majority on cutting the budget, the legislation could run into disputes over how much to spend on it. Republicans used their weekly address to push for passage of a balanced budget amendment to the Constitution and attack Obama over his approach to job creation. Rep. Bob Goodlatte, R-Va., complained that the administration has spent too much money on stimulus initiatives that didn’t work while piling on burdensome regulations. “While our workers are being held back by Washington, there’s nothing in place to stop the federal government from bankrolling further big government spending – the kind that leads to government expansion into private-sector jobs, burdensome mandates on job creators and skyrocketing national debt,” Goodlatte said. The debt legislation passed last month requires both the House and Senate to vote on a balanced-budget amendment, and Goodlatte said Obama should use his upcoming jobs speech to join the call for the measure. But the administration and most Democrats oppose the approach as unnecessary and political, arguing Congress should be able to control the budget without amending the Constitution. Passage is unlikely anyway since it requires two-thirds approval of both houses of Congress and ratification by three-quarters of the states.

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Joe Torres: DOJ’s Lawsuit Blocking AT&T-T-Mobile Merger Welcome News for People of Color

September 1, 2011

Yesterday the U.S. Department of Justice filed an antitrust lawsuit to block the $39 billion merger between AT&T and T-Mobile. This is great news for communities of color, who disproportionately rely on wireless service to make phone calls and access the Internet. The DoJ concluded the merger wou ld lead to “higher prices, fewer choices and lower quality products” for millions of wireless users. Even though AT&T has vowed to fight today’s decision in court, the announcement is welcome news for our community, which has been devastated by the nation’s economic crisis . “Blocking this merger i s a major victory for communities of color , rural communities and America’s poor,” said amalia deloney, grassroots policy director for the Center for Media Justice. “The Justice Department has taken seriously our real concerns about higher prices, fewer choices and massive job loss.” The proposed merger would result in AT&T and Verizon controlling nearly 80 percent of the wireless market. It would also likely lead to higher wireless prices, making it that much more difficult to close the digital divide. The high cost of Internet access is a primary reason why so many people of color remain disconnected. Of the four national carriers, AT&T offers the most expensive plans while T-Mobile’s plans are the most affordable. So it is no surprise that nearly half of T-Mobile’s customers are people of color. And the merger would result in major job losses for communities of color. AT&T is expected to cut up to 20,000 T-Mobile workers, and people of color make up 48 percent of T-Mobile’s workforce . The Justice Department’s decision comes as a relief for many who believed it would rubberstamp the merger — bowing to one of the most powerful corporations in the country and its army of high-priced lobbyists — rather than protect consumers by enforcing antitrust laws. “As Americans struggle in today’s economy, the Department took an important step to ensure that consumers have continued access to affordable mobile services and new technologies,” s aid Rep. John Conyers (D-Mich.) , ranking member on the House Judiciary Committee. “The action will protect American consumers and American jobs, the very purpose of our antitrust laws.” We recently learned that AT&T’s main argument for seeking approval of the merger — that it could not build out its 4G network to 97 percent of the population without acquiring T-Mobile — was a lie. AT&T’s true motives for pursuing the merger were disclosed earlier this month when the company mistakenly released unredacted confidential documents it filed with the FCC. The information revealed the company rejected a plan to build out its 4G network to 97 percent of the population at a cost of $3.8 billion. The company decided it wouldn’t be profitable to do so. Instead, AT&T decided it was better business to spend $39 billion — 10 times as much — to take out a competitor. In lobbying for support of the merger, AT&T misled dozens of lawmakers and civil rights groups, including the NAACP, the League of United Latin American Citizens and the National Urban League, all of whom called on the DoJ and the FCC to approve this deal on the basis of the carrier’s (false) claims. Hopefully, lawmakers and civil rights groups will reexamine their positions and rescind their support of a merger that is clearly not only bad for our communities but bad for our country.

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AT&T Gears Up For Rare Antitrust Fight With DOJ

September 1, 2011

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

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Aaron Shapiro: Be The Steve Jobs Of Your Company

August 31, 2011

In the wake of Steve Jobs’ announcement that he would be stepping down as CEO at Apple, Market Watch reporter Brett Arends wrote “What Apple has achieved isn’t impossible. Why don’t more companies do it?” Last week in a post for Fast Company, I answered that question by taking a look at what it takes to create outstanding digital products. Apple is a standout company because Steve Jobs refused to accept mediocrity. Your company’s success depends on whether you follow in his footsteps. Apple will be fine without Steve Jobs. Because Steve Jobs isn’t just a CEO, he’s an idea and an idea that all companies should embrace. I know, because I aspire to bring him to life every day at my company. Steve Jobs represents an ethos that is core to Apple’s culture. He, as an idea, is a simple one. It’s all about building amazing, intuitive, life-changing products that people love. To embody this principle, Apple doesn’t need Jobs. It can live on through the shared vision of Apple’s talented people who deeply care and are dedicated to creating greatness. As long as that culture continues to thrive in Cupertino, Apple will be fine. That said, it’s also a culture other companies would be well-served to have. As MarketWatch reporter Brett Arends wrote last week, “What Apple has achieved isn’t impossible. Why don’t more companies do it?” Because it’s really, really hard. At HUGE, we all come together, every day, to try to build Apple-caliber digital products that people love to use. That’s what our clients are asking from us when they hire us to create a new mobile application, website, social media experience, outdoor digital installation or anything else. They want us to produce something so special, something that’s so genuinely loved by their users, that their business is dramatically transformed as a result. That’s no easy task. It means pushing yourself to design something, and then throwing it all away to try to make it better. It means constantly challenging yourself to see if the experience can be easier, more beautiful, simpler, more elegant, more in tune with what people will embrace. It’s a painstaking undertaking that means sweating all the details, because your heart and soul is in it, and because it’s become your baby and you want it to be absolutely perfect. Then one day you release it to the world — in our case turning it over to our clients and their audience — and you hope for the best. You catch yourself holding your breath, sitting at the edge of your seat, engaged in a very pregnant pause waiting for feedback. But in your heart of hearts, you know that it will be OK and the product will be a success for one simple reason: you designed it for yourself. That’s the secret to all great design: you may not be a member of the product’s target demographic, and you may never use it in real life, but you designed it for yourself. And your goal was to build a revolutionary product. Your self-imposed expectation of performance exceeds that of most technology users in the world. And that’s what makes great products great. But most people don’t bother to do this. That’s why Apple is such a standout. For many the passion, the heartache and the pressure that’s required is just too much. They fall back to what is easy: mediocrity. They punch the clock, go home at five to play soccer with the kids, and don’t really push themselves or their team toward greatness. HP’s TouchPad is a case in point. Think for a moment about that product and the team behind it. Were they really trying to reinvent the world? To create the best tablet possible? No. If they were, they certainly weren’t trying hard enough. Because all they created was an iPad clone with a few extra bells and whistles. Why would anyone buy a bad imitation of the original for the same price? They wouldn’t and didn’t. If HP had a Steve Jobs culture, they would have made something completely different. They would have pushed themselves to make something better. Better could have been cheaper; better could have been something dramatically different that makes people rethink whether an iPad is the tablet for them; better could have had consumers wondering how they ever lived without it. But HP took the easy way out. For many years, taking the easy way out was relatively acceptable. You could get away with it and keep a product on the market. No more. In the tech world this has come to life as a “Sell Big or Die Fast” mentality. To non-tech companies, the stakes are the same. There’s no such thing as an offline business. Every company’s customers, employees, job candidates, “friends,” and “followers” are technology users. They create mass public opinion and operational performance; they shape brands and drive sales. In 2012, 50 percent of consumer spending is going to be influenced by or transacted through the Internet, according to Forrester Research. This means every company must provide users with a first-class digital experience they want to use, ideally one worthy of Steve Jobs’ approval. This is what I write about in Users, Not Customers . Every company can and should provide people with outstanding digital experiences, because it is increasingly becoming the point of difference between companies that thrive and those that die. So the opportunity for you, as a manager, executive, technologist, or whatever your job is, is to follow in Steve Jobs’ footprints. Be the Steve Jobs of your company. Just like him, you can push yourself and your team to create exceptional digital products and experiences that are so special in forty years you’ll look back and be proud that you were part of it. It’s the key to your business success, your company’s ability to compete in today’s digitally-driven economy, and it’s the key to a rewarding, fulfilling career and personal happiness. Make something you really, really love. Got a question for Aaron Shaprio? Let him hear it at @amshap.

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Chuck Collins: CEOs Rewarded for Tax Dodging Gymnastics

August 31, 2011

As the Super Congress eyes trillions in budget cuts that will undermine the quality of life for most Americans, here’s a stunning fact to contemplate: Twenty-five hugely profitable U.S. companies paid their CEOs last year more than they paid Uncle Sam in taxes. In other words, the more CEOs dodge their civic responsibilities, the more lavishly they’re paid. That’s the key finding of a new Institute for Policy Studies report, Massive CEO Rewards for Tax Dodging, which I co-authored. These artful dodgers include the CEOs of Verizon, Boeing, Honeywell, General Electric, International Paper, Prudential, eBay, Bank of New York Mellon, Ford, Motorola, Qwest Communications, Dow Chemical, and Stanley Black and Decker. Their average annual compensation totaled $16.7 million, well above last year’s average of $10.8 million for the CEOs of S&P 500 companies. Instead of paying their fair share, these companies spend millions lobbying for additional tax breaks and loopholes. Twenty of the 25 companies spent more lobbying Congress last year than they paid the IRS in federal corporate taxes. General Electric invested $41.8 million in lobbying and got $3.3 billion in tax refunds. Boeing spent $20 million on lobbying and got a $35 billion contract from the U.S. government, while paying a paltry $13 million in U.S. taxes for a company with $4.3 billion in U.S. income last year. Eighteen of the 25 companies aggressively use off shore tax havens to shift profits around the globe to avoid U.S. taxes. These 18 companies together had 556 subsidiaries in the Cayman Islands, Singapore, Ireland, and other havens. The offshore scam works like this: companies pretend their profits are earned in low-tax or no-tax jurisdictions — and then feign losses from their U.S. operations at tax time. Whatever happened to corporate civic leadership? A previous generation of CEOs would have been ashamed to be compensated so lavishly while their companies abandoned responsibility for paying their fair share. They would have been embarrassed to go year after year contributing little or nothing to the public investments that make the United States a vibrant business environment. Here are a few examples of these champion tax-dodgers: • Chesapeake Energy paid its CEO Aubrey McClendon $21 million last year but paid zero federal corporate income tax in 2010. Chesapeake is fracking the tax code, drilling it for every possible subsidy it can extract — while lobbying to preserve antiquated tax breaks for oil and gas industry. • Online retailer eBay paid its CEO John Donahoe $21.4 million last year while collecting a federal tax refund of $131 million. eBay’ 31 subsidiaries in Switzerland, Singapore, and seven other tax havens facilitate its efforts to move money around the planet as a tax-dodging strategy. • Insurance giant Marsh & McLennan paid its CEO Brian Duperrault $14 million yet collected a $90 million tax refund from Uncle Sam. The company has 105 subsidiaries in 20 off shore tax havens, including 25 in Bermuda — a favorite locale for insurance companies seeking to avoid both taxes and regulation. These super-moocher companies happily benefit from the privileges and advantages of doing business in the United States. If a competitor tries to steal their product or idea, these corporations rush to the U.S court system and law enforcement agencies for remedies and justice. The U.S. military guards their global assets. They use the fertile ground of publicly funded research and infrastructure to bolster their own profits. They create new products from a foundation of Uncle Sam’s investments in medical and scientific research and government funded technologies like the Internet. Our taxpayer-funded roads, ports, and bridges bolster their business environment. Our public schools and universities educate the workers these companies rely on. In fact 16 of these 25 CEOs attended public universities. They personally were educated with help from U.S. tax dollars. These CEOs profess to love America. But when it comes time to pay the bills, they’d rather outsource that job over to you or the small business down the road. Congress should pass the Stop Tax Haven Abuse Act which would limit some of these tax shenanigans. In the face of growing fiscal austerity, these companies should contribute to the solution and pay their fair share of U.S. taxes.

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