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Apple Loses Battle To iPad Rival

by The Huffington Post on December 4, 2011

Huffington Post…

Score one for Samsung. A U.S. judge has denied Apple’s request for a preliminary injunction against several Samsung Electronics products. A ruling in Apple’s favor would have blocked Samsung from selling some of its products in the U.S.. While Apple has maintained that several devices from Samsung’s Galaxy line of smartphones and tablets are “slavishly” copying Apple iPhone and iPad devices, U.S. District Judge Lucy Koh in San Jose, California, didn’t think Samsung’s gadgets posed enough of a threat that they should be immediately banned. “It is not clear that an injunction on Samsung’s accused devices would prevent Apple from being irreparably harmed,” Koh wrote, according to Reuters . However, Koh’s ruling doesn’t reject Apple’s patent infringement claims against the South Korea-based electronics giant. “It’s possible that Apple will get a more favorable outcome on some of the asserted rights in the main proceeding,” Foss Patents speculates . On Friday, Australia’s highest court extended a ban on Samsung’s Galaxy Tab in that country, Reuters reported . Though the injunction blocking sales of the device had been overturned on Wednesday , Apple managed to win a weeklong extension of the ban. “It’s no coincidence that Samsung’s latest products look a lot like the iPhone and iPad, from the shape of the hardware to the user interface and even the packaging,” an Apple rep told All Things D back in April , shortly after filing suit against Samsung. “This kind of blatant copying is wrong, and we need to protect Apple’s intellectual property when companies steal our ideas.” Take a look at our slideshow (below) to see a side-by-side of Apple’s iDevices and Samsung’s various Galaxy gadgets.

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Apple Loses Battle To iPad Rival

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Minnesota Shutdown Sees Light At The End Of The Tunnel (LATEST UPDATES)

July 15, 2011

The post and live blog below are a collaboration between Patch and HuffPost reporters. Minnesota Gov. Mark Dayton and top Republicans struck a deal Thursday to end a budget impasse that prompted the state government to shut down, with the Democratic governor giving up on raising taxes. The agreement came after a three-hour negotiating session that followed Dayton’s announcement of his offer earlier in the day. If details are worked out and approved by state legislators, it would end the shutdown over how to resolve a $5 billion deficit that has lasted two weeks so far. Dayton said the government would be back in business “very soon,” but didn’t say exactly when. The two sides agreed on a proposal that would raise $1.4 billion in new revenue, half by delaying state aid checks to school districts and the other half by selling tobacco payment bonds. It was a big sacrifice by Dayton, who had made new income taxes a central plank in his campaign last year and the centerpiece of his budget. Republicans said they agreed to drop a list of policy changes and a plan to cut the state workforce by 15 percent. “It was about making sure that we get a deal that we can all be disappointed in, but a deal that is done, a budget that was balanced, a state that was back to work,” said Republican House Speaker Kurt Zellers, who appeared with Dayton and Senate Majority Leader Amy Koch after the private meeting. The glum looks on their faces testified to a hard bargain. “Nobody is going to be happy with this, which is the essence of real compromise,” Dayton said. The date of a special legislative session to pass a budget and end the shutdown has not been set. Some terms of the deal still need to be filled in. Below, a live blog of the latest developments to unfold in Minnesota.

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Harlan Green: The Economics of Poverty — Thinking in Win-Win Terms

July 5, 2011

Everyone seems to be playing the blame game this political season. Did Obama deliver the change in Washington he promised, ask both his supporters and opponents? Conservatives and progressives are unhappy with the slow-growing economy and jobless rate still hovering around 9 percent. And no one is quite sure who to blame — Obama or GW Bush? Is it too much government, or too little? But rather than play the blame game, why not think in Win-Win terms? Why not correct the causes of so much economic instability, which can lead us out of the swamp of debt that has resulted? There is a much deeper reason for the malaise, in other words. Most of us have not seen a rise in either real incomes or wealth since the 1970s. And this in turn has led to a deep-seated pessimism and loss of confidence in both private and public institutions. The 1970s coincided with the end of the longest U.S. war in history at that time — Vietnam. The fact that two more wars are draining our resources, and could ultimately cost upwards of $3 trillion, is also a contributing cause to the current sluggishness. Monies and resources diverted from producing butter to guns means those resources are wasted and not recycled back into the economy to create more wealth. Economists have studied the costs of wars, but not the effects of income inequality. Yet we are suffering from the greatest redistribution of wealth since 1928. And such inequality is probably the major cause of our worst economic downturns — both the Great Depression and just ended Great Recession. We now know income inequality has reached levels of 1928-29, the beginning of the Great Depression, because potential Nobel economists Thomas Piketty and Emmanuel Saez have documented it (See Feb. 2003 Quarterly Journal of Economics ). Such extreme inequality created a credit bubble that burst and so led to a sharp diminishment in aggregate demand, which is the sum of domestic public-private spending, net exports and investment, and which is approximated by U.S. Gross Domestic Product data. The relationship is intuitively simple, yet was hard to verify before Piketty and Saez did their research. As more income flowed to the top income brackets — much of it from tax laws that favored investors over wage and salary earners — the lower and middle-income classes had to borrow more to keep up their consumption patterns. Easy credit available with the last housing bubble accelerated that borrowing, to the tune of $2.3 trillion extracted from housing in the last decade. But the excess housing supply produced during the bubble caused housing values to crash, losing more than $4 trillion and counting of the $11 trillion in housing assets. President Roosevelt’s Federal Reserve Chairman, Marriner Eccles, first put his finger on this problem of inequality as a cause of the Great Depression. “…a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.” Hardest hit have been families living in deep poverty. Today that is defined by the Census Bureau as incomes of less than $22,000 per year for a family of four. In fact, the number and percentage of people in deep poverty hit a record high in 2009, with the data going back to 1975. Nineteen million people were living in deep poverty in 2009, up 2 million from 2008, according to the U.S. Census Bureau and CBPP. Yet we know there is enough wealth for all. The historical personal income rate of increase for all American households averages 5.6 percent per year, before inflation, so no income segment has to see a reduction in income. In fact, modern economic theory says as much. When incomes are more fairly distributed — whether via progressive taxation or other wealth equalizing policies (such as greater access for all to an adequate social safety net), the economy grows faster for everyone. Put more money into consumers’ pockets (i.e., the lower and middle class income brackets that spend the most, as we have said) and we all win. It creates greater aggregate demand — i.e., effective demand in Eccles’ words — for not only more goods and services, but investments that create jobs. This is something understood by most reputable economists. Such demand can be created from either the public or private sectors, in other words. So there is a Win-Win solution to the demand problem if we allow a more level income field. This policy, a recognition that what harms each of us harms all of us, is a truth most explicitly formulated by John Maynard Keynes. He is the economic theorist reviled by those who oppose most forms of government spending — except for defense, of course. It is also a solution to the wildly fluctuating financial markets that have impoverished so many. In fact, if we realize the potential for growth inherent in the U. S. economy, we might not be having such a debate between the have and have-nots. One example is the controversy over social security solvency. The headlines say its Trustees predict it will run out of money in the 2040s. Yet the reality is that if the average annual Gross Domestic growth rate of the last 75 years, including the Great Depression (which is 3.5 percent per year) were continued, social security would not run out of funds — ever. But its Trustees have chosen to use a more conservative projection of 2.6 percent — one of three included in the Trustee’s annual report — which has only happened during the worst downturns. The lesson is that if we focused on policies that nurture sustainable economic growth, social security doesn’t become a potential problem in 2043, or ever. That is why wealth redistribution should be discussed, because it is a way of ensuring sustainable growth. Not only the middle class, but most income segments have seen a decline in their real (after inflation) incomes since the 1970s — except for the top 1 percent income bracket, as we now know. For example, according to the Center for Budget Policies and Priorities , just between 1979 and 2007: • The top 1 percent’s share of the nation’s total after-tax household income more than doubled, from 7.5 percent to 17.1 percent. • The share of income going to the middle three-fifths (or 60 percent) of households shrank from 51.1 percent to 43.5 percent. • The share going to the bottom fifth of households declined from 6.8 percent to 4.9 percent. • The share going to the bottom four-fifths (80 percent) of the population declined from 58 percent to 48 percent. The Great Recession is but one example of the consequences of such a continued degradation of middle and lower-income brackets. There is no good economic or political reason for such inequality to continue, if we want more sustainable — and predictable — economic growth. But first we have to win over the Win-Lose crowd who don’t believe the U.S. economy is capable of growing as much as it has over the past 75 years. Then it will be a Win-Win solution for all. Harlan Green © 2010

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Greece Would Likely Default If It Followed French Banks’ Plan: S&P

July 4, 2011

ATHENS (Angeliki Koutantou) – Greece would likely be in default if it follows a debt rollover plan pushed by French banks, S&P warned on Monday, deepening the pain of a bailout that one European official said will cost Athens sovereignty and jobs. European politicians and bankers had expressed confidence last week that the French proposal would not trigger a default, but ratings agency Standard & Poor’s said it would involve losses to debt holders, most likely earning Greece a “selective default” rating. “It is our view that each of the two financing options described in the (French banks’) proposal would likely amount to a default under our criteria,” S&P said. French banks, major holders of Greek sovereign debt, proposed voluntarily renewing some of the bonds when they fall due, but on different terms. S&P cut Greece’s sovereign rating to “CCC” last month, from “B,” on a view that any restructuring of the country’s massive debt load would count as an effective default. The euro fell from around $1.4550 to a session low around $1.4510 after the latest S&P comment. Derivatives industry body ISDA said before the French proposal was released in late June that a voluntary agreement to roll over Greek debt would “typically” not trigger payments on credit default swaps. Greece was already facing an uphill struggle this week to start the process of selling off state-owned assets and reform its tax system to meet European Union and IMF conditions for bailing it out. The deep spending cuts required under the loan terms have sparked angry protests on the streets of Athens. Eurogroup Chairman Jean-Claude Juncker said Greece will lose sovereignty and jobs to meet those criteria, a comment that has enraged unions. Any suggestion of foreign intervention in running the country is an incendiary political issue that will make implementing reforms even tougher. Public-sector union ADEDY, which has launched crippling strikes and protests, reacted angrily to his comments. ADEDY President Spyros Papaspyros said Juncker was out of line: “Mr Juncker interferes in the internal affairs of a country, provokes European rules and is an embarrassment for the country whose government tolerates him.” Juncker’s comments could trigger more of the anti-austerity street protests that have roiled the country for months as Greece stays stuck in its worst recession since the 1970s with a youth unemployment rate of more than 40 percent. “The sovereignty of Greece will be massively limited,” Juncker told Germany’s Focus magazine in an interview released on Sunday. Teams of experts from around the euro zone would be heading to Athens, he said. “One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the euro zone,” Juncker said. EASIER SAID THAN DONE Greece last week passed austerity measures worth 28 billion euros ($40 billion) and promised to deliver 50 billion euros in sell-off revenues by 2015, including raising 5 billion euros by the end of this year alone. On the list are public utilities whose sale is sure to prompt public reaction. “Greece now needs to push faster fiscal adjustments and structural reforms,” said EFG Eurobank economist Platon Monokroussos. “On the privatization front, it is of essence the government delivers fast results to send a strong signal to financial markets.” That is easier said than done. The socialist government, which came to power on a social welfare platform, has yet to launch a single state sale in 18 months in power and must set up a privatization agency within weeks to meet its target. It must also start to sell state property, estimated at up to 300 billion euros but often entangled in legal complications. “The 50 billion euro target is not achievable,” said Constantinos Mihalos, head of the Athens Chamber of Commerce. “Share values are very low right now because of the recession.” At the same time, Greece needs to deliver on pledges to reform a chronically inefficient tax system that has relied too much on middle class salary earners and let wealthy tax evaders off the hook, producing disappointing revenues this year. Finance Minister Evangelos Venizelos told Reuters in an interview on Friday that Greece would tap for the first time private-sector expertise but tax offices around the country are notoriously resistant to any change. “A greater effort is needed to rein in tax evasion and broaden the tax base in a bid to bring the ratio of revenues to GDP closer to euro area average and reduce expenditure and waste in the broader public sector,” Monokroussos said. Investors have feared that default by Greece would send shockwaves through the world finance system with some commentators saying such an eventuality could call the whole euro zone into question. Another hurdle is the law on a uniform pay scale for the public sector, sure to cut further the salaries of civil servants who have already seen their pay reduced by an average 15 percent as a result of a wave of austerity measures to secure the 110-billion-euro bailout last year. On Saturday, euro zone finance ministers approved a 12 billion euro loan Greece needs to avert default. The IMF will meet on July 8 to approve the 12-billion euro loan tranche, which is expected to be handed over by July 15 and allow Greece to avoid the immediate threat of debt default. But the country still needs the second rescue package, which is also expected to total around 110 billion. EU officials will now look at how private creditors can be involved voluntarily so that rating agencies do not declare the rescue a “credit event.” (Additional reporting by Wayne Cole in Sydney) (Writing by Dina Kyriakidou and Emily Kaiser; Editing by Louise Ireland, Peter Millership and Neil Fullick) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Week Ahead: Lots of Data Ahead of July 4th Holiday

June 24, 2011

Most investors next week will undoubtedly be looking forward to the long July Fourth holiday weekend. Everyone could use a breather after weeks of bad economic news and stock market losses. Nevertheless, a good bit of economic data will be released. The ISM Manufacturing Index for June is due Friday and it may be the most significant report all week. The ISM index is the most widely watched factory report and it follows closely in the wake of disappointing regional manufacturing data. Economists expect the index to fall to 51.8 in June from 53.5 in May. For months manufacturing had been a lone bright spot on an otherwise grim economic landscape. But that may be changing; the regional data was impacted by bad weather across many regions of the U.S. — notably tornadoes and flooding in the Midwest — which disrupted supply chains. Three Federal Reserve District Bank surveys of manufacturing are due ahead of the ISM report and they should give a preview of what’s to come on a national scale. The Dallas Fed’s Texas Manufacturing Outlook is due Monday and it may offer the most optimistic view. The Richmond Fed’s Survey of Manufacturing is due Tuesday and the Kansas City Fed Manufacturing Survey is due Thursday. The Chicago Purchasing Managers index, used to gauge demand for goods made in factories, is due on Thursday. Consumer spending and personal income data for May are due on Monday. Meanwhile, more bad news is expected from the housing sector. The S&P/Case-Shiller Home Price Index for April is due Tuesday and the numbers are expected to show a continued decline in home values. Pending home sale data for May is due Wednesday. The U.S. housing sector has been just as stubborn as the labor market in its refusal to participate in a recovery. Consumer confidence has been rocked as homeowners see the value of their homes decline and with it the equity that provided a cushion against financial emergencies. Speaking of consumer confidence, the Conference Board’s Consumer Confidence Index will be released Tuesday and the final take on the Reuters/University of Michigan Consumer Sentiment Index is due Friday. The only hope for an increase in these indexes stems from a slight drop in gas prices as oil prices have dipped in recent weeks to around $90 a barrel from over $110 a barrel in the spring. Car makers on Friday will release figures on June sales of North America-produced motor vehicles.

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Agency Blocks Restart Of Keystone Oil Pipeline

June 3, 2011

WASHINGTON — The U.S. pipeline safety agency Friday blocked a Canadian company from restarting its Keystone oil pipeline until U.S. officials are satisfied the company has made required repairs and completed safety tests. The order by the Pipeline and Hazardous Materials Safety Administration cites two leaks last month on the 1,300-mile pipeline, which carries oil from Canada through North Dakota, South Dakota and Nebraska. One arm then travels through Missouri to Illinois, while another goes through Kansas to Oklahoma. A spokeswoman for the pipeline agency said Friday that federal inspectors will closely review repair work done by the pipeline’s owner, Calgary-based TransCanada. The company reported a May 7 leak of about 400 barrels in North Dakota, and a leak of about 10 barrels last Sunday in Kansas. TransCanada is seeking to build a second pipeline from western Canada to the Texas Gulf Coast – a project that has drawn fierce opposition from environmental groups who call the pipeline an ecological disaster waiting to happen. The proposed pipeline, like the existing pipeline, would carry crude oil extracted from tar sands in Alberta, Canada, to refineries in the U.S. Critics say the tar sands produce “dirty oil” that requires huge amounts of energy to extract, while supporters say the two pipelines would create thousands of jobs and help cut $4-a-gallon prices at the pump. Anthony Swift of the Natural Resources Defense Council, an environmental group, said the federal order blocking the Keystone line “should be a clarion call” for the U.S. State Department to seriously consider safety concerns posed by the proposed pipeline from Canada through Montana to Texas. State Department approval is needed because the project crosses the U.S. border. Pipeline regulators need time to sort out what has gone horribly wrong with the current Keystone project before moving forward with the new one, dubbed Keystone XL, Swift said. “The history of Keystone has shown that these pipelines are dangerous. State shouldn’t fast track the review of Keystone XL until we know how they can be built and operated safely,” he said. A spokesman for TransCanada could not immediately be reached for comment. ___ Array

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Real Estate | Gauntlet Commercial Real Estate Capital Closes $6 …

May 31, 2011

“We are looking for equity investors and property owners in downtown Los Angeles to possibly joint venture with or who are looking to sell,” said Elzufon.Gauntlet Commercial Real Estate Capital is a boutique investment …

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Fed Needs To Raise Rates To Avoid Bubble, Fed Official Says

May 29, 2011

May 29 (Bloomberg) — Federal Reserve Bank of Kansas City President Thomas Hoenig, the central bank’s longest-serving policy maker, said the U.S. needs to raise interest rates to encourage individuals to save and avoid future asset bubbles.

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Nuke Plant In ‘Tornado Alley’ Not Fully Twister-Proof

May 27, 2011

WASHINGTON — The closest nuclear power plant to tornado-ravaged Joplin, Mo., was singled out weeks before the storm for being vulnerable to twisters. Inspections triggered by Japan’s nuclear crisis found that some emergency equipment and storage sites at the Wolf Creek nuclear plant in southeastern Kansas might not survive a tornado. Specifically, plant operators and federal inspectors said Wolf Creek did not secure equipment and vehicles needed to fight fires, retrieve fuel for emergency generators and resupply water to keep nuclear fuel cool as it’s being moved. Despite these findings, the Nuclear Regulatory Commission concluded that the plant met requirements put in place after the Sept. 11 attacks that are designed to keep the nuclear fuel cool and containment structures intact during an emergency. Wolf Creek Nuclear Operating Corp., which runs the facility about 150 miles northwest of Joplin, said it would take action to correct the problems. “The issues affected only one of several (emergency) procedures, so we continue to conclude Wolf Creek meets requirements, the same conclusion we’ve reached for every U.S. plant,” said Scott Burnell, a NRC spokesman. Wolf Creek, until recently, was one of three nuclear plants placed on a federal watch list in March for safety-related issues. David Lochbaum, a former nuclear plant engineer who now works on nuclear safety for the advocacy group Union of Concerned Scientists, said the equipment that a tornado could disable is the “backup of backups,” but that potential should raise concern nonetheless. “It’s kind of nuclear safety 101,” Lochbaum said. “It’s kind of stupid for it to be there, where it could help with a tornado, and a tornado takes it out.” Already this year, tornadoes have knocked out power to nuclear power plants in Alabama and Virginia, exposing vulnerabilities. At Browns Ferry in Alabama, storms disabled sirens, meaning that police and emergency personnel would have had to use telephones and loudspeakers in a crisis. At the Surry Power Station in Virginia, documents obtained by The Associated Press show that a tornado badly damaged a fuel tanker used to refuel a backup generator. Those instances, along with the situation at Wolf Creek, highlight a larger problem at the nation’s 104 nuclear reactors: While reactors and safety systems are designed to withstand a worst-case earthquake, flood, or tornado, that doesn’t necessarily mean all emergency equipment or the buildings that house such equipment are disaster proof. Wolf Creek’s location in Tornado Alley means that it was designed to handle the maximum tornadoes possible for the United States, with wind speeds up to 360 miles per hour and a maximum rotational speed of 290 miles per hour. But its fire truck is parked in a sheet-metal building “not protected from seismic or severe weather events,” according to the NRC inspection conducted after the Japanese disaster. Jenny Hageman, a spokeswoman for the plant, said there are other options besides on-site equipment for dealing with fires. “We are absolutely protected from a tornado,” Hageman said. “Is everything protected from a tornado on this job site? No. But we protect the critical elements.” The NRC’s post-Japan inspections found numerous other instances where U.S. nuclear plants kept equipment needed to fight fires or to cope with a loss of electrical power in places that a flood could overwhelm or an earthquake could damage. What sets Wolf Creek apart is that it is at much greater risk of being struck by a tornado than other plants are from natural disasters. Since 1985, when the Wolf Creek plant came on line, six tornadoes have touched down in Coffey County, where the plane is located, according to the National Climatic Data Center. All of those twisters were minor, and caused no injuries or deaths. Over that same time period, the National Weather Service issued 23 tornado warnings in the county. “Before Joplin, we had a tornado in the county next to us that ripped up the city of Redding,” said Coffey County emergency management coordinator Russel Stukey. Stukey expressed skepticism about the NRC’s findings, but acknowledged that “a nuclear plant in Kansas should be prepared for a tornado. I wouldn’t go as far to say Wolf Creek is not.” Despite the close calls, including the recent series of deadly tornadoes in the South and Midwest, a twister never has struck Wolf Creek, Stukey said. NRC records show that those nuclear plants hit by a tornado have emerged largely unscathed: _In June 2010, a tornado ripped off siding off a building housing emergency equipment and knocked out one of two power sources at the Fermi nuclear plant in Michigan. An alert was declared, and the plant was stabilized. _Tornadoes struck the Quad Cities nuclear power plant in northwestern Illinois in 1990 and 1996. In 1990, the plant’s security fence was damaged and the roof of one building blew onto a duct that connects the radioactive waste processing area to a venting stack. No radioactive gas was released. Six years later, a tornado damaged one of the unit’s secondary containment structures, leading to an alert and shutdown. _In 1998, a tornado hit the Davis-Besse plant in Ohio, causing significant damage to electrical distribution systems, sirens and other “unfortified” structures, according to the NRC. There were no adverse effects to public health and safety. Similar problems occurred more recently at nuclear power plants in Virginia and Alabama in the path of tornadoes. After the twister at the Surry plant damaged a tanker truck used to fuel a backup generator, state officials were unsure whether the generator it supplied was needed to run emergency systems. The utility called state officials seeking help, and a contractor supplied the plant with a fuel tanker. “I personally do not want to be that close to disaster again,” said Harry Colestock, the director of operations for the Virginia Department of Emergency Management, in an email directing his staff to hold a follow-up meeting with the company, Dominion. Dominon spokesman Jim Norvelle said an older fuel tanker was at the plant, but utility workers did not believe it could navigate the debris left by the tornado. The company is evaluating how it stores equipment and has agreed to supply a liaison to the state’s emergency operations center upon request. Just over a week later, tornadoes forced the Browns Ferry Nuclear Plant near Athens, Ala., to shut down after severe weather wrecked transmission lines and created problems for a plant in Tennessee. The storms also disrupted siren systems that alert residents living near nuclear power plants to trouble. The sirens, which are connected to the electrical grid, failed during a blackout. Tennessee Valley Authority officials said they are in the process of adding sirens that have battery backups, meaning they would work even during a power outage. At one point, only 12 of 100 sirens in the communities surrounding Browns Ferry worked. A similar problem occurred in the region surrounding the Sequoyah Nuclear Plant in Soddy-Daisy, Tenn., which lost 36 of its 108 sirens. If there had been a crisis at either nuclear plant, emergency officials would have driven vehicles with loudspeakers through affected areas to alert residents. ___ Associated Press writer Ray Henry in Atlanta contributed to this report. ___ Online: Array Array Array

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The Story Herman Cain Won’t Tell You About His Years In Corporate America

May 23, 2011

What GOP presidential contender Herman Cain lacks in political experience, he likes to say, he makes up for with decades’ worth of success in corporate America. He climbed the corporate ladder at the Pillsbury Company, chaired the Federal Reserve Bank of Kansas City, and rescued the failing Godfather’s Pizza franchise. That business-centric message has won Cain his share of admirers: a focus group convened after a recent Fox News presidential debate overwhelmingly declared Cain the winner…

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Benjamin F. Edwards & Co. Opens Branch Office in Wichita

May 23, 2011

First Office in Kansas and 16th Nationally

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Kansas Poised To Pass Controversial Anti-Abortion Measure

May 13, 2011

TOPEKA, Kan. — Kansas legislators approved a ban Friday on insurance companies offering abortion coverage as part of their general health plans except when a woman’s life is at risk, capping a string of for abortion rights opponents in the four months since sympathetic Gov. Sam Brownback took office. Brownback, an anti-abortion Republican, is expected to sign the bill sent to him by the state House a mere 15 minutes before lawmakers adjourned their annual session. The House’s early-morning vote was 86-30 in support of a larger bill that included the abortion coverage restrictions. The state Senate had approved it Thursday night, 28-10. If the bill becomes law as expected, starting in July, individuals and employers who want abortion coverage would have to buy supplemental policies that cover only abortion. Supporters of the bill argue that it will protect employers who oppose abortion rights from having to pay for policies that cover the procedures. The legislation also says that no state or federally administered health-insurance exchange in Kansas established under last year’s federal health care overhaul law can offer coverage for abortions, other than to save a woman’s life. “This bill includes very crucial pro-life language,” said House Judiciary Committee Chairman Lance Kinzer, an Olathe Republican. “I would view this as an important conscience protection for Kansas business owners.” After taking office, Brownback called on the GOP-dominated Legislature to create a “culture of life.” He’s already signed legislation to tighten restrictions on late-term abortions and require doctors to obtain written permission from parents before terminating minors’ pregnancies. Legislators also have sent him a bill to impose new health and safety standards specifically for abortion clinics, which Brownback is expected to sign. And the state budget approved by lawmakers contains a provision diverting $300,000 in federal family planning dollars away from Planned Parenthood to public hospitals and health departments. Those measures are part of a wave of anti-abortion legislation across the nation, as abortion opponents have been encouraged by the election of new Republican governors last year and conservative legislators. Several states have considered insurance coverage restrictions similar to Kansas’ legislation. Democratic Govs. Kathleen Sebelius and Mark Parkinson, who held the office before Brownback, blocked most major changes in Kansas abortion laws, vetoing legislation that is becoming law this year. “There’s clearly a message here that women are dispensable,” said state Rep. Annie Kuether, a Topeka Democrat and one of the Legislature’s shrinking number of abortion rights supporters. “I’m sick and tired of being treated like a second-class citizen.” But Kathy Ostrowski, legislative director for the anti-abortion group Kansans for Life, said the state’s new laws will protect women who seek abortions from dangerous clinics and provide more accurate reporting by doctors about their activities. The tighter restrictions on late-term procedures are based on a notion disputed by abortion rights supporters and the American College of Obstetricians and Gynecologists that a fetus can feel pain by the 22nd week of pregnancy. “It has obviously been a good session,” Ostrowski said after lawmakers adjourned. “We have established a beachhead of protection for the developing unborn child.” Supporters of the restrictions on health insurance coverage for abortions noted that Missouri has long had such restrictions. Blue Cross Blue Shield of Kansas City, which operates in 30 Missouri counties and Johnson and Wyandotte counties in Kansas, carries its Missouri practices into Kansas. The company has said consumers rarely ask for abortion-only policies. “The fundamental issue here is not – although I wish it were – the ability to further limit legal access to abortion, but rather who pays,” Kinzer said. Abortion rights supporters are skeptical, believing the bill’s backers want to cut off a way for women to cover the cost of terminating pregnancies. And Rep. Barbara Bollier, a Mission Hills Republican who supports abortion rights, questioned whether women would buy abortion-only policies long before they have crisis or unwanted pregnancies or are rape victims. During the House’s debate, Rep. Pete DeGraaf, a Mulvane Republican who supports the bill, told her: “We do need to plan ahead, don’t we, in life?” Bollier asked him, “And so women need to plan ahead for issues that they have no control over with a pregnancy?” DeGraaf drew groans of protest from some House members when he responded, “I have spare tire on my car.” “I also have life insurance,” he added. “I have a lot of things that I plan ahead for.” ___ The insurance legislation, including the abortion restrictions, is in HB 2075. The original version of the abortion measure is HB 2292. ___ Online: Kansas Legislature: http://www.kslegislature.org Kansans for Life: http://www.kfl.org Planned Parenthood: http://www.plannedparenthood.org/kansas-mid-missouri/

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TIAA-CREF and CBL Form $1.09 Billion Joint Venture

May 11, 2011

TIAA-CREF and CBL & Associates Properties Inc. formed a $1.09 billion real estate joint venture to invest in market-dominant shopping malls. TIAA-CREF will invest in four of CBL’s market dominant shopping malls: Oak Park Mall in Kansas City, KS; West County Center in St. Louis, MO; CoolSprings Galleria in Nashville, TN; and Pearland Town Center in Pearland, TX. “We have been exploring joint venture opportunities for quite some time and our patience…

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Where It’s Better To Rent Than Buy

April 29, 2011

Of the 50 most populated cities in the United States, New York remains the city where it’s better to rent than buy. The Big Apple’s competition? Fort Worth, Texas. That’s according to the recently released Q2 2011 Rent vs. Buy Index by Trulia , an online real estate resource. The site compares rent of a two-bedroom apartment with median list price of a home to create price-to-rent ratio. Using that ratio, they divide cities into three groups: (1) cities where it is beneficial to buy a home; (2) cities where the choice should be made on a case-by-case basis; and (3) places where renting is much less expensive. According to Trulia’s release, buying a home has become more affordable than renting an apartment in 80 percent of major cities. Besides New York and Fort Worth, only in Kansas city is renting the preferable option. Right behind those cities are Memphis, Los Angeles and San Francisco,. On the other end of the spectrum, the majority of cities where buying makes sense are located in the Western United States. Las Vegas comes out atop the buy-here rankings, followed, in order, by Phoenix, Arlington, Miami and Mesa (Ariz). Taken by itself, the price-to-rent ration doesn’t completely explains why a high-rent, foreclosure-addled city like Miami lands in the buy-here sector, while a city with low rents like Fort Worth is the second most friendly rentable city. As always, caveat rentor. Below is the graphic visualizing the rent-to-buy ratios of fifty metropolitan cities:

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What Happened To Entrepreneurship During The Recession?

April 5, 2011

They were among the recession’s most inspiring stories: laid-off workers who went on to start their own businesses rather than dropping out of the labor force or crawling back to corporate America. But a recent analysis of Census data calls into question the popular belief that the financial crisis spurred American entrepreneurship. Instead, entrepreneurial activity took a nosedive during the downturn, according to a new paper from the Federal Reserve Bank of Cleveland. The new report challenges another study that used identical Census data. According to a widely-circulated study by the Kauffman Foundation, a Kansas City-based entrepreneurship advocacy group, new business creation spiked during the recession. Released last May, the study found the monthly rate of people transitioning into self-employment steadily rose from late 2007 to a 14-year high in 2009 . “Kauffman’s findings give only half the picture,” says Scott Shane, the new paper’s author and entrepreneurship professor at Case Western Reserve University. “Sure, the number of Americans who became self-employed grew. But that number was dwarfed by the amount of US entrepreneurs whose businesses failed during the recession, and who were forced to exit self-employment.” As a result, the total number of self-employed Americans shrank to 9.8 million in June 2009 from 10.2 million in November 2007, Census data show. All told, 68,490 more businesses closed in 2009 than in 2007, an 11.6 percent increase in the business closure rate. “If you have more people giving up than going in, I can’t see how entrepreneurship went up,” says Shane. The main point of contention between the two reports is which measure does a better job of capturing entrepreneurial activity: the net change in the total number of self-employed workers or the rate by which people become self-employed. One thing both studies can agree on is that the majority of the businesses formed during the recession are not hiring employees in the short term. But Dane Stangler, research manager at Kauffman, is bullish over the long term. Even though they have not yet hired an employee, “non-employer firms started during the most recent recession will become the employer firms of the next decade,” Stangler says. So will the hoards of new businesses created since the downturn began — many of which still don’t employ workers — boost the economy? Even though only three percent of new businesses created without employees eventually evolve into businesses with employees, a 2007 study by the National Bureau of Economic Research found that those three percent made up over a fourth of “young businesses,” or companies under three years old with employees. That three percent also accounted for 20 percent of the revenue generated by young businesses. And relatively young businesses — not small businesses — are the biggest engines of job growth, according to Census economists . ‪If these trends are still valid in the post-recession economy, then Kauffman may have been right to focus on the flow of entrepreneurs into the economy during the recession, rather than the total stock.‬

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The 3 U.S. Nuke Plants Regulators Are ‘Most Concerned About’

March 31, 2011

WASHINGTON — The Nuclear Regulatory Commission says three U.S. nuclear power plants need increased oversight from federal regulators, although officials stressed that all are operating safely. NRC Chairman Gregory Jaczko (YAHT’-skoh) says the three plants – in South Carolina, Kansas and Nebraska – need more intensive review than other plants because of problems with safety systems or unplanned shutdowns. Jaczko told a House subcommittee Thursday that the plants “are the ones we are most concerned about” among the 65 U.S. nuclear power plants in 31 states. Jaczko did not identify the plants, but an agency spokesman said they are the H.B. Robinson nuclear plant in South Carolina, Fort Calhoun in Nebraska and Wolf Creek in Kansas.

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Plane Controversy Dogs Democratic Senator’s Reelection Bid

March 30, 2011

WASHINGTON — Sen. Claire McCaskill once turned a political opponent’s use of a plane to her advantage. Now she’s seeing the issue from a different vantage point. With a tough re-election race in 2012, the Missouri Democrat has come under heavy criticism for her use of a plane she owns with her husband. First it was revealed that McCaskill, among the wealthiest members of the Senate, had received approximately $79,000 in federal reimbursements for her flights, including at least one to a political event. A few days later, McCaskill revealed that she and her husband had also failed to pay about $320,000 in state taxes on the plane. The revelations have embarrassed McCaskill, who was elected in 2006 as a champion of good government. They have also emboldened GOP opponents eager to puncture her image as a plainspoken woman of the people. Republicans believe McCaskill’s plane can serve as just one example of what they see as her straying from the will of Missouri voters. “I think voters will hold against her that she said she was fighting government waste, talking about how there shouldn’t be two sets of rules, and on the other hand she wasn’t paying her property taxes,” said Lloyd Smith, the executive director of the Missouri Republican Party. “That in and of itself rubs people the wrong way.” McCaskill’s frustrated supporters agree. “The fact that a lot more people in the state know that she and her husband have a private jet, it’s not the best thing that could happen,” said Steve Glorioso, a Kansas City, Mo., media consultant who has worked with McCaskill in the past. “But she is very good at communicating with average Missourians, and campaigns make a difference.” McCaskill wraps the plane revelations up in a single phrase. “A serious, sloppy mistake,” she told The Associated Press on Tuesday. She is adamant that she has not lost a common connection with Missouri voters. “My husband’s wealth is something that’s been relatively new in my life,” she said. “I do not feel disconnected to folks in Missouri. As somebody who was a single mom with three kids for much of a decade without really any support from anyone else, someone who worked my way through school – I don’t feel the fact that my husband has been very successful has changed how I view my priorities in my job.” National Democrats certainly hope so. With the party clinging to a majority in the Senate after Republican gains in 2010, few races highlight the fragility of Democrats’ majority more than McCaskill’s. She was already a top GOP target in 2012, after she was elected by a slim margin in 2006, a good year for Democrats. In 2008, Missouri was one of the few swing states that President Barack Obama lost – even as McCaskill campaigned relentlessly for him. Since 2008, the president’s poll numbers in the Show Me State have been well below his national averages. It’s against this backdrop that McCaskill has been hit with the fallout over the plane she owns with her husband, Joseph Shepard, through one of his business subsidiaries, even before she begins her re-election campaign in earnest. McCaskill certainly knows how much damage the controversy could cause. In 2004, when she ran against incumbent Democratic Gov. Bob Holden in the primary election, she put up television ads showing an airplane circling around an outline of the state of Missouri, while an announcer criticized Holden for flying on “300 taxpayer-funded trips.” The ads helped her defeat Holden, though she went on to lose the general election. Asked about her ads against Holden, McCaskill dodged the question. “I know everyone wants to get into political this and that,” she said. “I’m trying to keep this simple. I found a mistake. I owned the mistake.” Her critics, though, say it shows her to be a hypocrite and fits a pattern of behavior. Brian Walsh, a spokesman the National Republican Senatorial Campaign Committee, said McCaskill has spent her time demanding more transparency in Congress while holding herself to a different standard. “Her refusal to engage in the same level of transparency she’s demanded of others has left more and more voters wondering if they can trust what she says,” Walsh said. McCaskill has spent her four years in the Senate working on initiatives to curb government waste and abuse and was among the few Senate Democrats to shun earmarks. Republicans say that image has been irreparably damaged by the plane episode. McCaskill argues that she’s been forthright and addressed the issues surrounding her plane straight on since they came to her attention. She has paid her back taxes, she said, and has written a reimbursement check to the U.S. Treasury Department. Her own situation has redoubled her commitment to transparency, she said. But she acknowledges the political damage is tough to calculate. “The voters are going to have to decide here,” she said. “I’m not going to shy away from who I am.” Mike Zweifel, a Republican from Columbia, Mo., said he is skeptical that the plane alone could doom McCaskill. Next year is a long way off, he said, and the plane might not be the most important thing to voters. But he says it offers Republicans an important talking point. “If the (former) state auditor can’t pay her taxes on time, what does that say about her credibility?” he said. Missouri Republicans say the plane is the first crack in an image McCaskill has crafted over more than 30 years in state and local politics. They have long sought to raise awareness about McCaskill’s fortune – she is among the wealthiest members of the U.S. Senate – and the business ties of her husband. McCaskill, though, has some factors in her favor. Besides the early timing of the plane revelations, Missouri Republicans have not settled on a consensus candidate. A potentially bruising primary is likely. And then there is the candidate herself, a proven fundraiser and dogged campaigner who has earned a reputation for surviving bizarre and difficult developments in her past campaigns. When McCaskill was a county prosecutor in Jackson County, Mo., her then-husband was arrested for marijuana possession. She still won re-election. (She divorced her husband, now deceased.) In both the 2004 gubernatorial race and her 2006 Senate race, her opponents made an issue out of Shepard’s extensive business ties. “I have had some very tough campaigns,” McCaskill said. “In fact, most of my campaigns have been very tough. There have been all kinds of attacks on me, on my husband. So this doesn’t surprise me.” ___ Associated Press writer Alan Scher Zagier in Columbia, Mo., contributed to this report.

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Video: Ratajczak Says No One Had as Much `Courage’ as Hoenig

March 25, 2011

March 25 (Bloomberg) — Donald Ratajczak, chief consulting economist at Morgan Keegan & Co., talks about the retirement of Federal Reserve Bank of Kansas City President Thomas Hoenig and its impact on Fed monetary policy. Hoenig will retire on Oct.1. Ratajczak speaks with Mark Crumpton on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

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Bernanke: Dodd-Frank Should ‘Level Playing Field’ For Small Banks

March 23, 2011

SAN DIEGO – New financial regulatory reforms should help reduce the edge that large banks have over smaller ones because of their implicit support from government, Federal Reserve Chairman Ben Bernanke said on Wednesday. Bernanke argued the Dodd-Frank reform legislation will address the issue of firms perceived as too big to fail by restricting their activities, raising their capital requirements and enhancing regulators’ ability to wind them down. “A financial system dominated by too-big-to-fail firms cannot be a healthy financial system,” Bernanke told a group of community bankers in a speech that did not touch on the broader economic outlook. “One benefit of the reforms should be the creation of a more level playing field for financial institutions of all sizes,” he said. A number of other top Fed officials, including Richard Fisher, president of the Dallas Fed bank and Thomas Hoenig, president of the Kansas City Fed, have argued the legislation does not go far enough. They have called for very large banks to be broken up. WATSON NO CREDIT OFFICER Bernanke said part of the reason the new laws governing the financial sector would support community banks was that regulators are cognizant of their concerns and challenges. With that in mind, the Fed is aware that many community banks need time to recover from the financial crisis. “We recognize the importance of striking the right balance between promoting safety and soundness throughout the banking system and keeping the compliance costs for smaller banking firms as small as possible,” he said. He said the crisis suggested fancy computer models are no substitute for on-the-ground intelligence on lending, joking the IBM computer that had recently won the U.S. game show “Jeopardy!” was not well equipped to make credit decisions. “This advantage for community banks is fundamental to their effectiveness and cannot be matched by models or algorithms,” Bernanke said. “Watson may play a mean game of Jeopardy, but I would not trust it to judge the creditworthiness of a fledgling local business or to build longstanding personal relationships with customers and borrowers.” Copyright 2011 Thomson Reuters. Click for Restrictions

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Are Farmland Values Growing Overly Ripe?

March 17, 2011

With booming farm income and robust demand for farmland, property values for agricultural land soared in the fourth quarter of 2010, according to the Federal Reserve Bank of Kansas City’s Survey of Agricultural Credit Conditions. Agricultural commodity prices surged in late 2010, boosting farm income, especially for crop and cattle producers. The burgeoning farm profits accelerated cropland and ranchland value gains in the Federal Reserve’s seven…

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NAIC Leases 131,000 SF in Kansas City

March 16, 2011

The National Association of Insurance Commissioners leased 131,576 square feet at Town Pavilion at 1100 Walnut in Kansas City, MO. The group’s move in is scheduled for February 2012. NAIC’s central office is currently at 2301 McGee St., an eight-story, 159,000-square-foot office property in the Crown Center submarket of Kansas City. Town Pavilion is a 34-story, 833,426-square-foot office building in the central business district. It was constructed…

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Walker’s Budget A ‘Smack In The Face’ For Wisconsin’s Artists

March 8, 2011

A career in the arts “don’t plant no corn,” Bruce Dethlefsen’s father told him when he was a boy in Kansas City in the 1950s. Soon, his job as Wisconsin’s poet laureate may not even pay gas money. The $2,000 annual budget for the post, which Dethlefsen assumed Jan. 1, is a casualty of Governor Scott Walker’s drive for austerity. The first-term Republican, whose proposal to curb collective bargaining for public employees has incited protests across the U.S., faces a $3.6 billion deficit over the next biennium. His proposed budget seeks $3.4 billion in savings and spending cuts.

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David Morris: And the Academy Award for Cowardice Goes to…

March 3, 2011

From all accounts, Charles Ferguson’s acceptance speech was the highlight of the Oscars. After winning an Oscar for Best Documentary for Inside Job , a compelling and searing indictment of Wall Street’s role in the economic crisis, Ferguson injected some much-needed real world relevance amidst the fabulously glitzy proceedings. “Forgive me, I must start by pointing out that three years after a horrific financial crisis caused by fraud, not a single financial executive has gone to jail — and that’s wrong.” That bears repeating. Not a single financial executive has gone to jail. The government was not always so cowed by Wall Street. In the 1980s, after deregulation led to the takeover of Savings and Loans by aggressive entrepreneurs who committed fraud on a massive scale, the federal government swung into action. Joe Nocera in the New York Times recalls, “There were a dozen or more Justice Department task forces. Over 1,000 F.B.I. agents were involved. The government attitude was that it would do whatever it took to bring crooked bank executives to justice.” Nearly 1,000 savings and loans — a third of the industry — collapsed, costing taxpayers over $200 billions. And the Department of Justice won 1,000 felony convictions in major cases. The Department of Justice still prosecutes cases of financial malfeasance, as long as the perpetrators are not heads of major financial institutions. Consider its vigorous prosecution of Martha Stewart, who was convicted in March 2004, not even of insider trading but of lying to the SEC and the FBI about insider trading. She served five months in a West Virginia federal prison. Compare that to the way the Department of Justice approached the investigation of John Mack that same year. Mack had just stepped down as President of Morgan Stanley and would soon become its CEO and Chairman of its Board. In the most recent of what are rapidly becoming iconic pieces of an era in Rolling Stone Matt Taibbi tells the story of a young man named Gary Aguirre who joined the SEC in September 2004 and shortly thereafter began investigating an insider-trading complaint against a hedge fund manager named Art Samberg. One day, with no advance research or discussion, Samberg had suddenly started buying up huge quantities of shares in a firm called Heller Financial. “It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller,” Aguirre recalls. “And he wasn’t just buying shares — there were some days when he was trying to buy three times as many shares as were being traded that day.” A few weeks later, Heller was bought by General Electric — and Samberg pocketed $18 million. Aguirre identified Mack, a close friend of Samberg’s, as the person most likely to have tipped Samberg off. He discovered that Mack had been begging Samberg to cut him into a potentially lucrative deal involving a spinoff of the tech company Lucent. “Mack is busting my chops” to give him a piece of the action, Samberg told an employee in an e-mail.” A few days after Samberg sent that e-mail, Mack flew to Switzerland to interview for a top job at Credit Suisse First Boston. Among the investment bank’s clients was Heller Financial. As soon as Mack returned from that trip, he called Samberg. The next morning, Mack was cut into the Lucent deal, an investment that made him more than $10 million. And as soon as the market reopened after the weekend, Samberg started buying every Heller share he could, right before it was snapped up by GE. The deal looked like a classic case of insider trading. But in the summer of 2005, when Aguirre told his boss he planned to interview Mack, things started getting weird. His boss told him the case wasn’t likely to fly, explaining that Mack had “powerful political connections.” (The investment banker had been a fundraising “Ranger” for George Bush in 2004, and would go on to be a key backer of Hillary Clinton in 2008.) Aguirre was contacted by Morgan Stanley’s regulatory liaison, a former top aide to Eliot Spitzer. A few days later, another of the firm’s lawyers, Mary Jo White, formerly U.S. attorney of the Southern District of New York, called the SEC director of enforcement. Taibbi caustically and accurately sums up the situation. Pause for a minute to take this in. Aguirre, an SEC foot soldier, is trying to interview a major Wall Street executive — not handcuff the guy or impound his yacht, mind you, just talk to him. In the course of doing so, he finds out that his target’s firm is being represented not only by Eliot Spitzer’s former top aide, but by the former U.S. attorney overseeing Wall Street, who is going four levels over his head to speak directly to the chief of the SEC’s enforcement division — not Aguirre’s boss, but his boss’s boss’s boss’s boss. Mack himself, meanwhile, was being represented by Gary Lynch, a former SEC director of enforcement. Aguirre didn’t stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. In 2011 neither Congress nor the White House has much stomach for prosecuting Wall Street. Indeed, the four Republicans on the Financial Crisis Inquiry Commission (FCIC) voted to strip the following words from its report: “Wall Street,” “deregulation”. As

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Countdown To No Kickoff: Next Football Season Hostage To Owners’ Demands

February 16, 2011

WASHINGTON — The National Football League’s 32 owners are hurtling toward a March 4 deadline, giving every indication that they plan to lock out the players and stadium employees, potentially jeopardizing the next season in an effort to extract an extra billion dollars per year for themselves and require the players to put in two extra regular season games. The move comes after the owners have managed to siphon hundreds of millions of dollars from taxpayers to build and maintain stadiums for their private businesses. With the exception of Green Bay, which is collectively owned by community members and run as a nonprofit, the other 31 teams are privately owned, meaning that the NFL’s lucrative business generates an extraordinary amount of money for a handful of men. The owners are claiming that they need an extra billion dollars to make it worthwhile to invest in the upkeep of the stadiums and other facilities. The players say they are more than willing to help make those investments, but, like all investors, they want a cut of the returns and they want to see the owners’ books to verify their claims of impoverishment. There’s reason for suspicion. The owner of the Cincinnati Bengals, for instance, is insisting that he needs the extra money from the players to maintain the team’s stadium. “The investments that need to be made to keep the stadium and our other facilities in first-class condition require an economic system that fairly allocates financial reward and risk,” said Bengals owner Mike Brown in an October letter explaining the team’s position to progressive advocacy group Progress Illinois. Problem is, the Bengals don’t pay for those investments. The local taxpayers do. The stadium was entirely a gift from taxpayers to the team. The lease requires taxpayers to pay the costs of routine maintenance and upgrades, which amounted to $10.2 million over the past decade, according to the Cincinnati Enquirer . And now the Bengals want four times as much from taxpayers for the next decade. Listening to the owner’s argument, one would think he was footing the bill himself. “Our stadium has repeatedly been recognized as one of the finest venues in the league, and we are very proud for what it means to our fans, our players and our community. Like any facility of its size and complexity, our stadium needs ongoing maintenance and improvement,” he wrote, skipping over the part about who paid for it, adding that the community should be grateful that the team still plays where it does. “Even though the Bengals operate in one of the smallest communities in the NFL, and in an area that has been hit hard by the recession, we have maintained our commitment to provide fans with the highest-quality football in an outstanding setting.” Some of the fans remain unconvinced of the high-quality claim, as well. “The community is fed up with the Bengals. They don’t try to put a winner on the field,” Hamilton County Commissioner Todd Portune told HuffPost, noting that the team has had a losing record in 19 of the last 21 seasons. People are fed up, he said, by an “ownership that feels like it did the community a favor by playing ball here.” Hamilton County taxpayers are reminded of their generosity to the Bengals each time they pay a half-cent sales tax surcharge that is dedicated to paying for the stadium and its maintenance. With revenue declines as a result of the recession that followed 9/11 and the downturn following the financial crisis, tax receipts are no longer covering the county’s bills — the type of risk that Mike Brown was referring to. “I don’t want to get in the middle of their labor dispute, but the problem is the financial model that the NFL has actively pursued, that the ownership of teams have been willing co-conspirators to, that has put a gun to head of taxpayers to foot the bill for costs that ought to be born by private enterprise,” Portune said. Cincinnati City Councilman Wendell Young introduced a resolution expressing the council’s outrage at the Bengals’ request of even more subsidies for its business. “[I]n order for Hamilton County to fund this level of improvements, it would have to raise taxes or potentially cut funding for hospitals, public safety and other vital public services, none of which is reasonable or appropriate to impose on the citizens of the City of Cincinnati or Hamilton County who have provided the Bengals with such a significant public subsidy for nearly 20 years that has helped to make the Cincinnati Bengals one of the most profitable franchises in the National Football League.” Young said the resolution will see a vote next week. “It seems to me unconscionable for them to ask the city to pay for things they can obviously afford themselves,” he said. With taxpayers tapped out, the owners are turning to the players. The owners want a bigger slice of the profit pie. If they don’t get it, they will lock the players out, preventing them from getting on the field. It’s not a strike: Just like factory owners would chain the door to keep out union workers, NFL owners will lock shut the door on the 2011-2012 season. In a Tuesday op-ed , NFL Commissioner Roger Goodell, who represents team owners, conceded that it is only the owners who are making demands, but tried to flip the situation upside down. He argued that the fact that players aren’t making demands is evidence of owners’ impoverished situation. “The union has repeatedly said that it hasn’t asked for anything more and literally wants to continue playing under the existing agreement. That clearly indicates the deal has moved too far in favor of one side,” Goodell wrote. The owners have two key demands: They want an extra billion dollars of the roughly $9 billion revenue pie that is the NFL, and want an additional two regular season games. The owners say they need the extra billion for upkeep and “professional fees” for legal and other services (fees that would presumably go to cover owner lawsuits against the elderly who can no longer afford season tickets or small alternative newsweeklies that run articles critical of ownership). The owners also want to limit pay to unproven rookies, many of whom just finished playing for free for four or five years for a lucrative college program. The players’ union is willing to concede this, to an extent. But the average NFL career lasts only three-and-a-half years, meaning the owners want to take a big chunk from nearly a third of a player’s typical career. The owners want to replace two of four preseason games with regular-season games, which players oppose: They say two more games will increase injuries at a time when player safety is ostensibly a paramount concern of the league’s. The league has been preparing for this lockout for years, the players say, noting that the owners hired the same attorney who led the NHL lockout and has instructed teams to include provisions in contracts that reduce or eliminate pay in the event of a lockout. The NFL has been similarly adept negotiating with the television networks and the owners will get paid even if the games aren’t played. Last year, roughly two-thirds of the 100 most-watched television shows were individual NFL games, said George Atallah, a top NFL Players Association official. “We didn’t get here yesterday. The league has taken steps to prepare for a lockout for almost three years now,” Atallah told HuffPost. The union also been preparing, encouraging players to be ready for paychecks to stop and health insurance to be cut. Star players are involved in the union: Aaron Rodgers, the Super Bowl MVP, is the Packers’ union representative; Drew Brees is on the union’s executive committee; Peyton Manning has been personally involved in negotiations and is an alternate rep for the Colts. More starting quarterbacks serve as player representatives today than at any other time in the union’s history. Meanwhile, city officials across the country are letting team owners know that a lockout would damage local economies. Minneapolis Mayor R.T. Rybak said in his letter that he takes no position on the contract negotiations, but that a lockout would “hurt working families in Minneapolis.” “As Mayor of Minneapolis, the city that hosts the Minnesota Vikings, I know that the NFL season has an important economic impact on my city and region. One study has estimated that regular-season games generate $6 million in economic impact, while playoff games generate an additional $9 million in economic impact. Directly and indirectly, these dollars support a wide variety of good jobs for workers in the hospitality, hotel and service industries. Minneapolis is one of the leading hospitality and entertainment cities in the country and these jobs are an important part of our overall economic vitality.” Rybak wrote that he was glad players had pledged not to strike and that he wished the league would make a similar pledge not to do a lockout. Other mayors have said the same thing. “It is clear that the vast popularity and financial success of football means that a lockout cannot be in the interest of anybody involved, particularly the fans, workers or businesses who support the game,” wrote Kansas City Mayor Mark Funkhouser to Chiefs chairman Clark Hunt. Miami Mayor Tomás Regalado sent an identical letter to Goodell. It continues: “I call upon the owners to announce to the fans that they will not lockout the players. The players already have pledged to not strike. By making the parallel commitment, the owners would create the breathing room for a deal to be struck.” Mayors in Houston, Texas, and Baltimore, Md., have sent similar letters. Jerry Watson, who owns a bar near the Green Bay Packers’ Lambeau Field, says no games would mean less revenue for his business, the Stadium View Bar & Grill. “Without the NFL it would cost me a third of my business, and it’s going to cost my employees a lot of money,” Watson said. “It’s going to hurt the state of Wisconsin.” The players’ union estimates that having no NFL games would reduce economic activity by $160 million in each city with an NFL team. An NFL spokesman referred HuffPost to a story by the Atlanta Journal-Constitution dubbing the players’ union’s claim “false,” speculating that if people don’t spend money going to games, they’ll spend it elsewhere. “Attending a professional sporting event is one of many entertainment options in metropolitan areas,” the article states, quoting a 2000 study by Dennis Coates and Brad R. Humphreys of the University of Maryland-Baltimore County. “Fans could alternatively go out to dinner and a movie, or bowling, during a sports strike.” HuffPost had asked the NFL if it had any response to the mayors who say their towns will be hurt by a lockout. “The focus of the clubs is to reach a fair agreement by the March 4 expiration of the CBA,” the NFL’s spokesman said.

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Nicholas Carroll: The Broken Covenant Between Rich and Middle Class

February 15, 2011

Henry Ford did not invent the middle class; it had been around a long time in the form of artisans and shop-keepers. Nor did Ford single-handedly drive the expansion of the American middle class; the Industrial Revolution was already doing that. What Ford did accomplish on January 5th, 1914 — when he unilaterally raised workers’ salaries from a minimum of $2.34 a day to $5 a day — was to hugely undermine the tradition of industrial worker exploitation embraced by the robber barons of the late 1800s. He had several reasons, reducing employee turnover being one of them, but the Earth-shaker was, “So they can afford to buy my cars.” Ford wanted more customers, and to get them he needed a bigger pool of Americans with discretionary income: that group called “the middle class.” To get that — in a leap of thought — he was willing to reduce worker exploitation to sell more cars. Coming from a noted union-hater, Ford’s action and reasoning crystallized a new concept in the distribution of wealth, a concept that would have lacked the same credibility coming from workers or unions. In fact it was so radical that one commentator observed even the Wobblies were momentarily stunned into silence. It wouldn’t last long. In 1929, the combination of financial fraud and folly knocked the workers back into the mud, putting a temporary end to the growth of the middle class. Whether Federal intervention or World War II (or neither) ended the Great Depression is a moot point; what WWII did do, we are assured by people who lived through it, was “pull the country together” in a way that had not been seen before or since. Out of that heady atmosphere of cooperation and technical advance came streamlined cars, air conditioning, television, a housing boom, and the GI Bill sending blue-collar workers off to college in unprecedented numbers. By the mid-1950s, Ford’s personal dream was realized, because there were a hell of a lot of Americans who could afford to buy a car. The radical idea Ford articulated had become a covenant — and there was so much new wealth that the rich hardly seemed to object that much of it was going to the growing middle class. Where the slide started is arguable. If it didn’t start with the war in Vietnam, it unquestionably did by the early 1980s, when big business received both tacit and blatant messages from Washington that they could flout Federal regulations with relative impunity. At the same time there were increases in manufacturing and wholesaling efficiency, more outsourcing of work offshore (now called “globalization”), and the probably-unexpected bonus that women entering the workforce would allow businesses to pay everyone less. The covenant was eroding, and by the mid-1980s the middle class was beginning to need two incomes per family to stay middle class. So one could point the finger at the manufacturing sector for beginning to chew away at the gains of the middle class. But it would be Big Finance that was destined to bring us to the Great Recession, leading off with the 1980s Wall Street “bonfire of the vanities,” hitting the news with the fall of Drexel Burnham , and creating the first widespread bank crisis since the Great Depression in the form of the late 1980s savings and loan crisis. With too few executives going to jail in the S&L crisis, the financial sector retained its chutzpah, and opened the road to ruin in 1999 by lobbying through the gutting of the 1933 Glass-Steagall Act — a law that among other things limited the relationship between Big Finance and local banking. It is worth a brief detour here to consider the fundamental difference between producers and financial people. Producers need customers who buy goods and services. Financial people don’t, exactly; they live on taking a slice of transactions between producers and customers. One might call a mortgage a real product, but it’s not — it’s an enabler to the real transaction, the real transaction being where the producer (home builder) sells a home to the customer. Psychologically this means there is a huge gulf between producer and financier. The first produces or delivers a more-or-less real thing for real people. The latter takes a slice of the financial pie as it flies by; the psychology is all “take” and no “make.” (And local banking stands somewhere in between — not exactly producing, but providing some services of actual value such as checking accounts.) This is not to suggest that producers are without sin. A day never passes without news of tainted food, poisoned water, phony shortages, exploding cars, or carcinogenic drugs. Likewise there is no hard-and-fast line between business models. Automakers have become hugely dependent on financing. Major telephone companies and cable networks seem to focus more on selling contracts than providing service. But at the end of the day, good or bad product, sterling or shoddy service, the producer has to sell their product or service, or they go bankrupt. Further, they have a limited market to sell it to. Shoe companies with $100 sports shoes cannot sell them in the Third World; they need customers with $100 in discretionary income. Producers are also more accountable. Ford Motor Co. is by most reckoning on track towards a level of reliability that rivals Honda — but they have to sell those cars to an audience where some are old enough to remember Ford Pintos exploding into flames when rear-ended. Telcos stand tall in their arrogance towards customers, yet AT&T has become known for inferior cellular connections, and they are paying the price as customers ranging from individual consumers to Apple Computer vote with their feet. Big Finance is more fluid than producers in its “product packaging,” as Wall Street demonstrated by selling the worthless dregs of subprime mortgages (ersatz goods) not only to Deutsche Bank, but to the investment funds of small Norwegian towns. Big Finance is also more nimble. While Wall Street financiers don’t have the physical mobility of boiler-room online fraud operations, they don’t have factories tying them down either. The executive who can no longer find buyers for CDOs can freely move into selling bison ranching shares or tulip bulb futures to buyers from Kansas to Kenya. The bottom line is that by any sane person’s reckoning, the question “Who caused the Great Recession?” leads to the financial sector — and the certainty that, left to themselves, the financial sector will “do it again” — and again and again, leaving nothing of the covenant that “the rich shall allow the middle class a passably decent lifestyle.” So regardless of their individual politics, middle class Americans who want to remain middle class should make note of the fundamental difference between producers and big finance, and accept — or insist — that Big Finance once again be closely regulated at the Federal level. Because no matter how it is packaged, the combination of deregulation and lax regulation means “no rules” for Big Finance — and that doesn’t bode well for the remnants of the middle class.

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David Isenberg: The Known and Unknown Contractor

February 10, 2011

It is not a secret that as Secretary of Defense during the presidency of George W. Bush Donald Rumsfeld was sympathetic to using private military contractors. In 2003, he said that as many as 320,000 jobs filled by military personnel could be turned over to civilians. Ironically, long before Abu Ghraib, Defense Secretary Rumsfeld was preaching the virtues of using contractors in prisons. The secretary said at a town hall meeting in August 2003 that the Army pays $20,000 to $40,000 to hold a prisoner each year, whereas it costs Kansas only $14,000 per year. “I don’t think of running a prison as a core competency of the United States military,” he said In September 2004 he told the Senate Armed Services Committee that he had identified more than 50,000 positions now filled by uniformed personnel “doing what are essentially nonmilitary jobs.” At the same time, he said, the Army was so short-handed it had to call up tens of thousands of reservists to fight in Iraq. Rumsfeld said he intended to assign the troops to military jobs and hire civilian workers or contractors to take the non-military jobs. “We plan to carry this conversion out at a rate of about 10,000 positions per year,” Rumsfeld told the committee Now, thanks to his just published memoir, ” Known and Unknown ” we have a few more examples of his view on contractors. As part of the book’s promotional effort for the book Rumsfled created a website , where he has posted hundreds of documents from his files. If you search them using the “contractor” keyword you get things like the following 25. 2004-03-30 to (no recipient) re (no subject) Category: George W Bush Secretary of Defense (21) – 2004 – Snowflakes New pay schedules, so that US SOF don’t get enticed out to the CIA or to private contractors at much higher salaries than we are currently able to pay them. One might recall that PMC advocates have claimed that this was an overblown concern but evidently it was serious enough to get Rumsfeld’s attention Then, there was this, which is actually pretty sensible and uncontroversial. TO: Honorable Andrew Card FROM: Donald Rumsfeld SUBJECT: Military Detailees March 28, 200l lo:28 Andy, are you going to take a look sometime at the way the demand for members of the armed services in the total White House complex has ballooned’? 1 am told it has gone from 1,400 to 2,100. 1 don’t know from when, or whether that figure is accurate, but it is worth checking. We might want to think about ways that that number can be cut down and possibly ways more could be reimbursable, rather than non-reimbursable. Also, it may make sense to replace some functions now performed by uniformed military personnel with contract employees, as WC are doing at the Pentagon. For example, mess attendants for U.S. forces in Bosnia are provided by an outside contractor, not by soldiers. Let me know what you think. Thanks. I WlR:dh 03270 l-24 And, proving that Eisenhower’s famed military-industrial complex is now more properly accurately described as a military-industrial-congressional complex, is this: 2001-02-22 Re Ethics Laws Category: George W Bush Secretary of Defense (21) – 2001 – Snowflakes … of the new Congressional ethics laws that apply to the Executive Branch is that the contractor community has to be very careful about dealing with the Executive Branch, but they … February 22, 2001 9:08 PM SUBJECT: Ethics Laws One of the side effects of the new Congressional ethics laws that apply to the Executive Branch is that the contractor community has to be very careful about dealing with the Executive Branch, but they don’t have to be careful about dealing with the Congress. As a result, since I was last here, there has been a process taking place that has knitted the defense contractor community to the Congress with an unfortunate effect on the defense establishment. Finally, there was this. If Rumsfeld has bothered to look at how this training has actually turned out he is probably feeling embarrassed. Contractors such as DynCorp and others have been heavily involved in this and have received loads of criticism for their efforts. 2. 2002-04-23 to Gen Franks re Contractors Category: George W Bush Secretary of Defense (21) – 2002 – Snowflakes … 2002-04-23 to Gen Franks re Contractors … April 23, 2002 6:30 PM TO: Gen. Franks CC: Gen. Myers FROM: Donald Rumsfeld SUBJECT: Contractors Have you thought of using contractors to train the Afghan army? Thanks. DHR:dh 042302-24

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AusTex Oil Limited (ASX:AOK) Drilling Commences On Pratt No.1 Well Of Cooper Project In Kansas

January 25, 2011

AusTex Oil Limited (ASX:AOK) Drilling Commences On Pratt No.1 Well Of Cooper Project In Kansas

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In Tough Economy, Santas Are Also Suffering

December 20, 2010

(AP, By Tamara Lush ) — Craig McTavish — a.k.a. Santa — has the beard. He has the belly. He even has a few tricks up his sleeve, like pulling up to parties on his Harley-Davidson in full Kris Kringle garb. But there’s one thing he doesn’t have: work. For freelance Santas, this holiday season has been more “no, no, no,” than “ho, ho, ho.” Bookings have declined as paying $125 an hour for Santa to visit a holiday party has become an unaffordable luxury. It’s the second year of declining parties and events, Santas say. “This year has been a bust as far as making any money,” said McTavish, a retired firefighter who co-owns a landscaping business with his son. “I’ve booked nothing. Usually there’s always something for Christmas Eve, but I don’t even have that.” In addition to knowing which children have been bad or good, the modern-day Santa also hears which families don’t have enough money for presents. “You can see the downturn from the chair,” said Nicholas Trolli, the president of the Amalgamated Order of Real Bearded Santas — a 1,700-member social group the Boston Herald once dubbed “The Nation’s Premier Fraternity of A-List Santas.” Trolli lives in Sarasota, Fla., but travels around the country as a hired Santa. On a recent day, he worked a mall in Kansas City that had to lower photo prices by 20 percent. “People are telling us they just can’t afford a photo with Santa,” Trolli said. Even in-demand Santas with real beards have had to slash rates, Trolli said. They once commanded $200 an hour, but now they’re charging half that. Trolli said that anecdotally, his members’ bookings are off about 25 percent. Other Santas around the nation said that in good years, they booked 40 events a season and are down to fewer than 10. Others who once booked 10 events a year are down to none. Most Santas don’t rely on the gigs as a primary source of income, but they say they enjoy doing it and the extra money is nice. John Wenner, a Santa with a real beard from Woodbury Heights, N.J., said his last good year was 2008, when he booked dozens of private parties and corporate jobs. This season, he’s only had a few gigs. “They’re way down this year,” Wenner said. “It’s amazing how down. I’ve even cut back my price a little bit, to help sway a little more business. As it is, the way the economy has been, it’s getting tough.” Despite the less-than-jolly economic climate, Santas said the joys of the job mostly make up for the tough times. They love talking to kids, making adults laugh and spreading some holiday cheer in a year where joy has been in short supply. Several mentioned buying presents — or even Christmas trees — for needy families. Trolli’s group encourages members to book charity events for free or reduced prices if they don’t get paying gigs. A lucky few — mostly in wealthier parts of the country — are reporting a booming business. Doug Peters of Davie, Fla., said he’s had an excellent couple of years; last year, a wealthy customer on the exclusive South Florida enclave of Fisher Island asked him to work Christmas Eve. Peters charged $500 an hour and the customer didn’t blink. Still, being Santa isn’t cheap. A decent-looking fake-fur trimmed red jacket, hat, pants and boots cost upward of $1,000. And that’s not even counting an authentic-looking beard. Walter J. Wood — also known as Santa Woody — is a Phoenix-area Kris Kringle who looks like something out of a holiday Coca-Cola ad. The $100 an hour he charges “really doesn’t recoup the costs,” he said, especially when you take into account gas, travel time and the expense of miscellaneous items like beard glue. “I glue my beard on — no one else does that,” said Wood, whose other job as a painting contractor also hasn’t had much success this year. “I can eat a cookie in front of a kid and the kid won’t know.” Steve Robinson, a 47-year-old Santa in St. Petersburg, Fla. whose main job is as a grocery store baker, has another suspicion about why he’s gotten fewer bookings this year. “The kids are learning younger and younger that Santa isn’t real and that mom and dad buy the presents,” he sighed. “I can pretty much light up a room as long as the kids are 10 and under.”

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Colliers Acquires The Winbury Group To Expand Midwest Operations

December 3, 2010

Colliers International continued its aggressive growth strategy by acquiring a controlling interest in The Winbury Group in Kansas City. The firm will now operate as Colliers International | Kansas City and becomes the ninth local CRE firm in the US to…

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Nelson Davis: What Small Business Owners Really Want

November 20, 2010

We are in that hazy netherworld that seems to sneak up on us near the end of every year. We wonder where the time went, what the New Year will hold and how we can take our enterprise to what we euphemistically call the next level. This year there is an extra bit of haze in the picture because the mid-term elections have sent a lot of rookies to various legislatures and embracing small business may not be their #1 priority. This is a good time to share some thoughts on what the business sector and small business in particular really want and need. I think that the biggest thing small business owners want from all levels of government is simply respect. With over 60% of all jobs created in the country coming from the small business community, won’t politicians and others simply say “nice job” to the men and women who hustle and risk every day to build and grow various enterprises. It is my contention that small business gets only lip service in the corridors of congress because the heavy hitter lobbyists represent other interests. That respect has to begin at the local level. Last week I received a nice note from Bob Foster, the Mayor of Long Beach California regarding a pilot program they’ve been working on for greater small business development. He and his council want more city contracts to go to small and even very small businesses. He says this will help generate job growth and sales tax revenue, and ensure that their tax dollars are spent locally. Are your local politicians building real bridges to entrepreneurs? If so, please let me know about it and be sure to thank them for it. The next thing the owner of a growing business wants to have is a clear set of rules regarding taxes, and health care costs that will hold steady for at least a few years. The top layer of clouds blotting out the sun for business is that a massive expansion of government has created an equivalent amount of uncertainty for the private sector. Uncertainty means that money goes to the mattress and many expansive thoughts are put away for a while. Big business in America is sitting on about $1.8 trillion in cash, waiting for a sign that the federal government won’t do a snatch & grab on their resources. Carl Schramm, head of the Kauffman Foundation in Kansas City has a clear idea about how the country can build a path to greater economic growth. In a Forbes Magazine interview he said “The single most important contributor to a nation’s economic growth is the number of startups that grow to a billion dollars in revenue within twenty years.” He went on to say that in the U.S. we need to see 75 to 125 of those billion dollar babies every year to feed a post WWII rate of growth. The owners of growing businesses need care, feeding and specific education on how to get where they want to go. From our twenty years of producing television stories of small business owners for Making It! we’ve seen about five (out of 1000) rise to the billion bucks level. They were all headed by hungry and even driven people who probably consume big dreams for breakfast! One of the exciting aspects of this for me is that this superstar level of entrepreneur comes from all known ethnicities and genders! Most business owners simply want to make an independent living that can take care of their families and help the kids through college. Many don’t have the iron constitution, discipline and raw ambition that it takes to go from very small to large, but that isn’t what they want. I know that you can find your own comfort level of enterprise building and it may have three, six or nine zeroes after the first three digits. Business owners don’t want to feel that they are being treated as pawns in some sort of class warfare. President Obama and his administration have acquired a reputation as being anti-business. A lot of the energy of the Tea Party seems to have come from small business owners who feel that Washington simply doesn’t understand them or their place in reviving the American economy. Politicians sometimes inject haves versus have-nots notes that imply business owners have some sort of unfair advantage. Some Wall Street barons may indeed have that advantage, but Main Street America certainly does not. Notice that I didn’t put easier loans or money in general on the wish list. Money has never been cheaper and it seems that loans for going enterprises are available. I believe that what small business owners really want is very much what all humans crave. That would be understanding, appreciation, encouragement and respect. Those ingredients are the food of dreams and no country can be great without entrepreneurs who harbor big dreams.

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Michael Hudson: My Talk With Michael Hudson, Part 1

November 10, 2010

Michael Hudson and Michael Hudson are often mistaken for each other. Along with sharing a name, they share an interest in the creative ways that some people help themselves to other people’s money. Michael Hudson the economist — author of such books as Super Imperialism — teaches at the University of Missouri-Kansas City. In 2006, he wrote a prescient cover story for Harper’s entitled ” The New Road to Serfdom: An illustrated guide to the coming real estate collapse .” Michael W. Hudson the reporter is a staff writer at the Center for Public Integrity , a nonprofit news organization. He’s been credited with being far ahead of the media pack in exposing subprime lenders’ methods. He’s the author of the new book, The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America, and Spawned a Global Crisis . This is Part 1 of an edited transcript of an email conversation between the two Michael Hudsons. Michael W. Hudson, reporter : First of all, let me apologize for all the confusion that the publication of my book has caused. I’ve lost count of the magazines and Web sites have identified me as you, and vice versa. I am not trying to assume your identity. I swear. I first became aware of the “Will-the-real-Michael-Hudson-please-stand-up?” problem in the spring of 2006. I started getting compliments from friends and colleagues for your Harper ‘s piece about the coming real estate bust. I pushed aside the unworthy impulse to simply say, “Thanks,” and explained that I hadn’t written the story. A different Michael Hudson, an economist, had written it. Besides the fact that there was another Michael Hudson out there writing a Harper ‘s cover story I wished I’d written, the thing that struck me was your willingness to go beyond a “what-goes-up-must-come-down” analysis of the housing run-up. You came right out and declared that “this particular real estate bubble has been carefully engineered to lure home buyers into circumstances detrimental to their own best interests.” I was also intrigued by the way you questioned not only the sustainability but also the ideology of the housing boom, noting how going into debt — taking on a huge mortgage — had become defined as an “investment,” as a path to not only wealth but freedom as well. As I reported on the mortgage market, one thing that fascinated me was how the impresarios of the housing boom used the idea of the American dream to clear the way. They talked about homeownership as if nothing else mattered. Even Ameriquest , the most notorious of the subprime sharks, called itself “Proud Sponsor of the American Dream” and described its mission as “helping people achieve their homeownership dreams and financial freedom.” There was one problem: Ameriquest almost never made home purchase mortgages. It was a refi shop. In 2004, one quarter of 1 percent of its loans went for home purchases. Rather than promoting home ownership, Ameriquest’s loans increased the odds that borrowers would end up in foreclosure, by ratcheting up the amount of debt they owed on their homes. The rhetoric worked well, though, on Democrats who worried about minority access to credit as well as on Republicans who embraced George W. Bush’s “ownership society.” Some conservatives have pushed the talking point that liberal Democrats “forced” bankers to make subprime loans. The lenders made these loans, however, not because government required them to do so, but because they were wildly profitable. What the homeownership spiel did, though, was give the mortgage lenders a fig leaf they could hide behind. Whenever somebody suggested tougher rules on home loans, the mortgage industry painted it as an assault on homeownership and equal opportunity. Michael Hudson, economist : I first heard of you about a decade ago. A Norwegian economist greeted me at a German economics conference and telling me that he had just bought my latest book. He then proudly held up your first book on consumer debt, Merchants of Misery , and suggested I autograph it. The next year there was a third Michael Hudson at the same conference, giving an article on Georg Simmel’s Philosophy of Money . The offprints were mailed to me by mistake. I began to wonder if there was something in the numerology of names that led to three Michael Hudsons all dealing with money and credit. I never heard of the third MH again, but I began reading your articles , especially after you joined the Wall Street Journal . While you were dealing with the abuses on the ground level, I was dealing with the economy-wide debt level. I’m on the economics faculty at the University of Missouri at Kansas City. UMKC is the main alternative to the Chicago School monetarists. Where the Chicago Schoolers speak of “money” and relate it to consumer prices, I focus on credit and relate it to asset prices. I popularized my academic articles for Harpers in 2006, explaining how real estate prices were determined by how much a bank would lend. Lower interest rates, slower amortization rates (“interest-only loans”), lower down payments and easier credit terms enabled millions of Americans to take on huge debts today with the hope of reaping huge capital gains sometime in the future — or simply to avoid having to pay more as home prices rose beyond their means. Your articles showed how the mortgage brokers and other pilot fish for Wall Street increased debt pyramiding by outright fraud. These sleight-of-hand lending practices at the local level were enabled by junk economics at the highest level. Alan Greenspan became a Bubblemeister, applauded by CNBC and the media for convincing them that prices bid up by debt leveraging was “wealth creation.” This wealth creation really was debt creation. That’s what was bidding up real estate prices — just as was the case with leveraged buyouts bidding up stock prices during the takeover wave. And a rising proportion of this debt was “empty” debt, without any corresponding real value. Much of it simply represented hope that real estate prices would rise all the more. And much of it was based on fictitious income statements, fictitious appraisals, fictitious mortgages filled in by crooks — thousands of people all involved in financial crime. As my UMKC colleague Bill Black has noted, not a single major player has been indicted in the recent financial scandals — except for the one person who walked into a police station with his hands up and surrendered (Bernie Madoff).

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Robert Auerbach: Why the Federal Reserve’s Contribution to Unemployment and Price Discrimination Continues

October 27, 2010

As I described earlier, the Fed began paying banks interest on their reserves one month after the September 2008 financial crisis struck the United States economy and spread throughout the world. The Fed (actually taxpayers) paid the banks more than $2 billion in 2009 at a small, but risk free, rate of one-quarter of 1 percent. Economists inside and outside the Fed said these payments would be an incentive for banks to sit on their reserves rather than loan the money to businesses in a risky environment. This was the Bernanke Fed’s contribution to unemployment. I suggested that interest payments on reserves should be lowered and short term interest rates targeted by the Fed be allowed to rise to maintain a moderate rate of increase in the money supply. However, Fed policy still persists as the banks sit on $1.047 trillion in reserves on September 1, 2010. This is 53.4 percent of the money (the monetary base) the Fed has issued. Compare this to 5.3 percent on August 1, 2008 before the financial collapse and the interest payments on bank reserves were paid. So what does the Fed want to do now? Three Fed officials, Federal Reserve Bank Presidents, William C. Dudley (New York), Charles L. Evans (Chicago) and Eric S. Rosengren (Boston) have signaled their views making headlines: “Fed Officials Signal New Economic Push.” (New York Times, 10/1/10) The officials reportedly suggest buying longer term Treasury bonds and thus issuing more money. Once such transactions are made the sellers will deposit the money in a bank account. The banks may continue to hold more than half of the new money in reserves and collect more risk free interest. Instead of buying bonds why not follow the suggestion to lower interest payments on bank reserves and raise target interest rates to allow the money supply to increase at a modest rate? Temporary attempts to change long term interest rates on U.S. Treasury bonds have many collateral effects, such as changing the current (spot) and future exchange rates, inducing outflows of capital from the U.S. and causing turbulence in the international money markets. I do not recall that the previous four Fed Chairmen (Arthur Burns, G. William Miller, Paul Volcker and Alan Greenspan) discussed these collateral effects of Fed policies in House Banking hearings where I assisted in preparing questions. Hello, the U.S. is affected by changes in the international money markets that respond to Fed policies. The banks certainly favor the Fed’s interest payments if they can continue to earn sufficient risk free interest on their reserves. Naturally, these Fed Bank presidents would be expected to have a strong incentive to please the banks that elected them to their office and may wish to be reelected at the end of their five-year terms. Two thirds of the nine board of directors that elect the presidents at each of the twelve Federal Reserve district banks are elected by Fed member banks in the district. (All national banks must be member banks. It is optional for banks chartered by state governments.) The election must be approved by the Board of Governors in Washington, but first the applicants must win over the votes of the bankers. I had experience with this political process when a lawyer at the Kansas City Fed bank successfully ran to be its president. I was one of his staff tutors on monetary policy and general economics. It is an important political process that is also a major conflict of interest for the nation’s most powerful bank regulators to be elected by the banks they will regulate. When I testified against the payment of interest at a Congressional hearing, Congressman Pat Toomey (now running for the Senate in Pennsylvania) made a compelling and common argument for the payment of interest on bank reserves required by the Federal Reserve. (3/5/2005) If banks are required to hold reserves, it is a tax on their earnings, from money they cannot invest, that should be offset with interest payments to the banks. Surplus reserves (reserves that are not required) do not qualify under this rationale. Economists have also said that the interest payments on reserves would be passed on to the depositors so that people could earn interest on money rather than wasting resources searching for secure investments that pay market rates of interest. These arguments are not applicable in the current U.S. banking system. First, the interest payments on reserves are unlikely to be fully passed on to “ordinary” depositors by most banks. Rather, it would be a gift to bank stock holders estimated to have a present value of $16.7 billion. The reason interest payments are not fully passed on to depositors is another story about bank pricing practices. An underlying fact is often ignored. Reserve requirements imposed by the Fed on banks are actually optional for many depositors. Vice President Richard G. Anderson of the St Louis Federal Reserve Bank calls them a “voluntary tax.” (“Economic Synopses”, 2008, No. 30) One reason is that many business depositors have “retail deposit sweep programs.” These are zero balance accounts because the money is taken off the banks’ books before the banks close and interest is paid overnight. Then the money is put back into the accounts. That is all phony accounting to pretend there is no money in the account that would require the banks to hold reserves. The banks can pay a higher interest on these accounts because the Fed does not require reserves to be held against the accounts. This a deplorable form of price discrimination that treats the “ordinary” depositors as fools who receive regular accounts that pay lower interest, currently often near zero. The Fed should stop this price discrimination, but why would they hurt the banks that elect the Fed Bank presidents? Sweep accounts are not the only method banks have used to reduce reserve requirements. One example is an accounting scheme called “The Eurodollar Game” that large banks with offshore branches can use to reduce their reported deposits and thus their required reserves. (The game includes counting Friday as three days in calculating average deposits. The deposits can be transferred to offshore accounts so they don’t appear on Friday and then brought back on Monday, another phony accounting trick.) Fed Chairman Paul Volcker replied to a request from Banking Committee Chairman/Ranking Member Henry B. Gonzalez to stop the Eurodollar game. Volcker replied that since there were other ways to bypass reserve requirements it would not be desirable to fix this one problem.

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John Haggerty Named Vice President of Biomedical Services for InfuSystem

October 27, 2010

MADISON HEIGHTS, MI–(Marketwire – October 27, 2010) –  InfuSystem Holdings, Inc. ( OTCBB : INHI ) ( OTCBB : INHIW ) ( OTCBB : INHIU ), a leading provider of infusion pumps and associated products and services, has appointed John Haggerty as Vice President of Biomedical Services. In this newly-created position, Mr. Haggerty will oversee biomedical repair, recertification and maintenance services provided from InfuSystem’s Biomedical Centers of Excellence in Michigan, Kansas, California, and Ontario, Canada.

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Food Stamp Usage Soars Among Working Families

October 22, 2010

HONOLULU — Lillie Gonzales does whatever it takes to provide for three ravenous sons who live under her roof. She grows her own vegetables at home on Kauai, runs her own small business and like a record 42 million other Americans, she relies on food stamps. Gonzales and her husband consistently qualify for food stamps now that Hawaii and other states are quietly expanding eligibility and offering the benefit to more working, moderate income families. Data from the U.S. Department of Agriculture reviewed by The Associated Press shows that 32 states have adopted rules making it easier to qualify for food stamps since 2007. In all, 38 states have loosened eligibility standards. Hawaii has gone farther than most, allowing a family like Gonzales’ to earn up to $59,328 and still get food stamps. Prior to an Oct. 1 increase, the income eligibility limit for a Hawaii family of five was $38,568 a year. “If I didn’t have food stamps, I would be buying white rice and Spam every day,” said Gonzales, whose Island Angels business makes Hawaiian-style fabric angel ornaments, quilts, aprons and purses. Eligibility for food stamps varies from state to state, with the 11 most generous states allowing families to apply if their gross income is less than double the federal poverty line of $22,050 for a family of four on the U.S. mainland. The threshold is higher in Alaska and Hawaii. With more than 1 in 8 Americans now on food stamps, participation in the program has jumped about 70 percent from 26 million in May 2007, while the nation’s unemployment rate rose from 4.3 percent to 9.2 percent through September of this year. “We’ve seen a huge increase in participation due to the economic downturn,” said Jean Daniel, a spokeswoman for the USDA’s Food and Nutrition Service. “That’s the way this program was designed.” In addition to helping alleviate economic pressures, many states embrace the popularity of food stamps because their cost – $50 billion last year – is paid entirely by the federal government. States are only responsible for paying half of their programs’ administrative costs. Food stamps have been blasted by some Republicans in this midterm election season as just another federal entitlement program, with former House Speaker Newt Gingrich framing the vote as a choice between “the party of food stamps” and Republican policies that create jobs. Participants in the food stamp program, technically called the Supplemental Nutrition Assistance Program, receive a per person average of $133 per month to buy staples including milk, bread and vegetables. Shortly after Hawaii announced it was raising its eligibility limits starting this month, three carloads of 10 seniors drove to the Kauai Independent Food Bank to ask if they qualified. Nine of them did, said Judy Lenthall, executive director for the food bank, which helps people apply for food stamps. “We saw an immediate and overwhelmingly wonderful response,” Lenthall said. “It surprised us how fast it’s spreading.” States that have relaxed food stamp eligibility did so by moving to a system where applicants could qualify based on their income, and their other assets such as real estate, vehicles and savings accounts could be ignored. Basing food stamps on income alone allows the newly unemployed and the elderly to seek government food aid without having to first sell their property or exhaust every dollar they’ve earned, said Sue McGinn, director of the food stamp program in Colorado, which will expand eligibility beginning in March. “They won’t have to wipe out their savings to apply for benefits,” McGinn said. Many of these states also raised income limits, although applicants still have to show they’re essentially living at the poverty line after accounting for allowable deductions, including elder medical expenses and child support. “It helps moderate and low-income people who are struggling,” said Stacy Dean of the Washington-based Center on Budget and Policy Priorities. “They’re doing everything we want: they’re working, paying all their bills, taking care of their kids, and they still don’t have enough money at the end of the month to put food on the table.” Since 2000, the only states that haven’t enacted the lower food stamp eligibility requirements are Alaska, Arkansas, Indiana, Iowa, Kansas, Missouri, Nebraska, South Dakota, Tennessee, Utah, Virginia and Wyoming. In Hawaii, where everything from milk to gasoline is typically the highest in the nation, the changes are welcomed by Gonzales and others. “As long as my kids have good food, that’s all I care about,” Gonzales said. “It makes a tremendous difference.” ___ Online: Food and Nutrition Service: http://www.fns.usda.gov/snap/

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Bank Of America Plans To Resume Some Foreclosures

October 18, 2010

WASHINGTON — The pace of U.S. home foreclosures may not slow much after all. Bank of America said Monday that it plans to resume seizing more than 100,000 homes in 23 states next week. It said it has a legal right to foreclose despite accusations that documents used in the process were flawed. Other major leaders have yet to say whether they will follow suit and resume foreclosures in the states that require a judge’s approval. But analysts expect the move by the nation’s biggest bank will give way to an industrywide effort to push ahead with a wave of foreclosures that have depressed the housing market. Banking analyst Nancy Bush of NAB Research said other lenders are likely to follow because foreclosure practices were similar from bank to bank. “We’ll be back to square one by the end of the year,” she said. The bank’s move could mean that the costs of the foreclosure document mess will wind up being less than some investors had feared just days ago. Bank shares sank last week after JPMorgan Chase & Co. said it set aside $1.3 billion in the third quarter to cover legal expenses that include the foreclosure problems. Bank of America Corp. says it’s confident of its foreclosure decisions in a majority of its questionable cases. The bank is still delaying foreclosures in the 27 other states, which don’t require a judge’s approval. Its move comes two weeks after the bank began halting foreclosures nationwide amid allegations that bank employees signed but didn’t read documents that may have contained errors. “The basis for our foreclosure decisions is accurate,” Dan Frahm, a Bank of America spokesman, said in announcing the bank’s new approach. The company said it plans to resubmit documents with new signatures in the 23 states that require a judge’s approval to restart the foreclosure process. It will delay fewer than 30,000 foreclosures. Bank of America was the only lender to halt foreclosures in all 50 states. Other companies, including Ally Financial Inc.’s GMAC Mortgage unit, PNC Financial Services Inc. and JPMorgan, have halted tens of thousands of foreclosures after similar practices became public. Shares of Charlotte, N.C.-based Bank of America had been flat earlier in the day but jumped on the news. They rose 36 cents, or 3 percent, to close at $12.34. Analysts at FBR Capital Markets said in a note to clients that the bank’s announcement demonstrates that the issue may be “overblown.” Still, more problems surfaced Monday that suggest the controversy may be far from over. A deposition released by the Florida attorney general’s office revealed that the office manager at a Florida law firm under investigation for fabricating foreclosure documents signed 1,000 files a day without reviewing them. The manager also would allow paralegals to sign her name for her when she got tired, the deposition said. Cheryl Salmons, office manager at the Law Offices of David Stern, would sign 500 files in the morning and another 500 files in the afternoon without reviewing them and with no witnesses, said former assistant Kelly Scott in a deposition released by the Florida attorney general’s office. Jeffrey Tew, an attorney for Stern’s firm, didn’t immediately return a phone call. Government-controlled mortgage buyers Fannie Mae and Freddie Mac have stopped referring foreclosures to Stern’s firm while they review the firm’s filings. In some states, lenders can foreclose quickly on delinquent mortgage borrowers. By contrast, the 23 states in which Bank of America is restarting foreclosures use a lengthy court process. They require documents to verify information on the mortgage, including who owns it. Those states are: Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin. ___ Associated Press Writer Mike Schneider contributed reporting from Orlando, Fla.

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AusTex Oil Limited (ASX:AOK) Reports Rolf #1 Well Success In North West Kansas<br />

October 17, 2010

AusTex Oil Limited (ASX:AOK) Reports Rolf #1 Well Success In North West Kansas

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Fed Leans Toward Two-Step Plan To Boost Economy

October 13, 2010

WASHINGTON — The Federal Reserve is leaning toward taking two steps to boost the economy: Buying more Treasury bonds to drive down loan rates, and signaling an openness to higher prices later to encourage more spending now. Fed Chairman Ben Bernanke and his colleagues appeared to be nearing consensus on those ideas at their September 21 meeting, according to minutes of the closed-door deliberations that were released Tuesday. Economists predict Fed officials will approve the bond purchase program at their Nov. 2-3 meeting. Fed policymakers also spoke at their last meeting about setting a higher inflation target, hoping that would get people to spend more money in short run. The minutes showed the Fed was concerned that the economy was growing slower than they had expected. While Fed officials didn’t see the economy slipping back into a recession, they worried it had become vulnerable to “potential negative shocks.” They expressed concerns that unemployment, which has been at 9.6 percent for the past months, would stay elevated. Fed officials said they were prepared to provide additional relief “before long,” according to the minutes. Economists and investors took that as a sign that they are ready to act. “The Fed is close to introducing a second round” of stimulus, Paul Ashworth, economist at Capital Economics, said the minutes showed. Wall Street has been eagerly awaiting the Fed’s decision to purchase government debt, known officially as quantitative easing. The Fed minutes signaled that move is near and lifted all major indexes. Fed policymakers didn’t settle on how big the debt purchase should be or how to structure the program. Such details are what they are wrestling with as their prepare for the November meeting. The Fed’s purchase aims to drive down interest rates on mortgages, corporate debt and other loans. It hopes that this will spur Americans to boost spending, which would strengthen the economy and ultimately chip away at the stubbornly high unemployment rate. Public remarks by Fed officials since the September 21 meeting suggest the program will be smaller than the $1.7 trillion one it launched during the recession. Under that program, the Fed purchased a mix of mortgage securities and government debt. The effort was credited with forcing down mortgages rates and providing support to the weakened housing market. Two Fed officials in recent remarks have suggested the new purchases shouldn’t exceed $500 billion. At the September meeting, some Fed officials thought the economic benefit of the debt purchases could be “small.” A smaller program isn’t expected to lower rates as much as the Fed’s crisis-era program did, economists say. Moreover, there’s concern that even cheaper loans will fail to get people and companies to ramp up their spending. Thus far, they haven’t been confident enough in the economy or their own financial prospects to do so. Bernanke said last week that another round of securities purchases would likely help the economy. So far, five of the Fed’s 11 voting members, including Bernanke, are leaning toward additional aid or are at least open to it. Fed Vice Chairwoman Janet Yellen, whose duties include building support for Bernanke’s position, is likely to vote with the Fed chief. Fed Governors Kevin Warsh, Elizabeth Duke, Daniel Tarullo and Sarah Bloom Raskin also are likely to back Bernanke. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, however, has dissented from the Fed’s decisions all year and is likely to oppose additional aid. Speaking Tuesday in Denver, Hoenig said he isn’t confident more debt purchases “will work in the real world.” William Dudley, president of the Federal Reserve Bank of New York, has estimated that a $500 billion program would provide the same amount of stimulus as a half-point or three-quarter point reduction to the Fed’s main interest rate. That rate is already near zero and can’t be cut further. That’s why the Fed is weighing buying more government debt. Another option to help the economy also was discussed extensively at the September meeting, according to the minutes. That deals with the Fed trying to raise people’s expectations of where they think inflation is heading in the months ahead. If the Fed were to communicate that it will tolerate a higher-than-normal rate of inflation, that could make companies feel more inclined to nudge up their prices. Shoppers – thinking prices would be rising even further down the road – would be more inclined to make purchases sooner. That would lift inflation, which is now running at very low levels. Such a move would push “real” or inflation-adjusted interest rates, down, which could spur more spending. Fed officials at the September meeting noted that there are different ways it could try to influence people’s expectations of inflation. One way was to include information in the minutes of the Fed meetings to try to shape people’s expectations about inflation. It’s a controversial idea that Bernanke called “inappropriate” in August, given the country’s current economic circumstances. However, at the time he said such a step “might make sense” if the country were mired in a situation of prolonged deflation that weakened the public’s confidence. According to the Fed minutes, officials “saw only small odds of deflation.” Deflation is a widespread drop in prices, wages and the values of stocks and homes.

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Are Banks Open On Columbus Day 2010?

October 11, 2010

A popular question today according to search trends and Q&A forums : Are banks open on Columbus Day? The answer in most cases is no. Most banks are indeed closed today, as it has been designated one of 11 federal holidays for 2010. That said, U.S. markets are open for business as usual. And some banks are in fact open. The best way to find out if your local bank is open is to give it a call or check its website. You might also check your local news outlet, as many are reporting on closings. Here are a few local closings roundups: Columbus, Ohio ; New York, N.Y. ; Miami, Fla. ; Lawrence, Kansas ; and Glens Falls, N.Y.

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Andrew Sum: Is Rising Structural Unemployment a Problem?

October 1, 2010

In recent months, a number of national economic analysts have referred to the persistence of high unemployment rates as the “new normal,” and some, including Narayana Kocherlakota, a regional Federal Reserve Bank President, have blamed rising structural unemployment as a source of the problem. This supposed rise in structural unemployment results from a mismatch between the skills required for available job openings and skills of unemployed workers. Yet very little substantive evidence has been offered in support of this hypothesis. The total number of job vacancies in the U.S. has been increasing modestly, in recent months, rising above 3 million in July. This still represents a vacancy rate of only slightly above 2% versus the massively greater number of unemployed, underemployed, and mal-employed workers (over 40 million). Knowledge of where those job vacancies are, their occupational/skill requirements, their durations, and reasons for remaining unfilled are critical to a proper interpretation of what is going on in the labor market. Unfortunately, available national job vacancy data do not provide any substantial answers to these important policy questions. However, several states including Florida, Massachusetts, and Minnesota do collect detailed information on existing vacancies. In the most recent vacancy surveys, between 32 and 45 percent of job vacancies in five states providing such data were part-time. In these states, there were approximately 8 unemployed workers seeking full-time jobs for every full-time job opening. Another issue that is critical to the validity of the mismatch hypothesis is evidence on the occupational characteristics of available job openings and their education/experience requirements. Skill mismatches imply the existence of a large pool of vacancies in high skill occupations (engineers, scientists, doctors, systems analysts, high level managers) with either above average formal educational requirements or long training durations that can lead to lags in producing a new set of qualified entrants. The available evidence from five states (Florida, Kansas, Massachusetts, Minnesota, Washington) on the educational requirements of job vacancies indicates that only 36% of the available job vacancies require the applicants to possess an Associate’s or higher degree. Applying this ratio nationally would yield just about 1 million job vacancies requiring an Associate’s or higher degree in June of this year. At that time there were 5.2 million unemployed U.S. workers with some years of college or an Associate’s or higher academic degree. When we add in mal-employed college graduates working in jobs that do not require a college degree, there were 17 million unemployed or mal-employed college graduates for these 1 million job vacancies. If skill mismatches were a serious problem in U.S. labor markets, then one would expect to find that many job openings were remaining vacant for a fairly long period of time. However, data on the durations of existing job vacancies available from three states reveal that the overwhelming share of job vacancies are very short-term in duration. Between 80 and 90 percent of the job vacancies in these three states were open for two months or less, with the vast majority of them (70%) open for less than 30 days. There are very few job vacancies that were open for more than two months (15%). The six month definition of long-term is that used by labor economists and the BLS in defining long-term unemployment. If we compare the estimated number of long-term unemployed in the U.S. in recent months (6.5 million) with the estimated number of long-term job vacancies, the ratio is 43-1. There is another approach to measuring whether labor markets are providing adequate job opportunities and experiencing serious mismatch problems. Ask the public. Repeatedly, over the first six months of this year, national public opinion polls have found an extraordinarily high degree of pessimism about the performance of the national economy and the state of U.S. or local labor markets. In a June 2010 ABC poll, 88% of the respondents rated the overall state of the U.S. economy as “not so good/poor”. Only 12% classified the economy as being in an excellent or good situation. Despite the official view announced in September by the National Bureau of Economic Research that the national recession ended sometime in June 2009, a May 2010 NBC /Wall Street Journal poll found that 76% of the public believed that the nation was still in a recession a year later. A March 2010 Pew Research Center poll on the public’s perception of job opportunities in their local home area revealed that 85% reported that “jobs are difficult to find” while only 10% though that there were plenty of jobs available. The 85% response was the highest since the national recession started at the outset of 2008. In a 2010 Pew Research Center poll, 28% of adults claimed that they had their hours reduced during the recession, 11% said they were forced to switch to a part-time job, and 23% reported a pay cut. All of these findings combined do not reveal anything close to a labor market experiencing a mismatch problem. Today, there are five official unemployed persons per every job vacancy in the nation, about 8 full-time unemployed per full-time vacancy, 10 unemployed or underemployed persons per every job vacancy, and 14 unemployed, underemployed, and mal-employed persons per job vacancy. The current degree of surplus is also likely the worst in the entire post-World War II era. In his classic 1944 text, Full Employment in A Free Society , the late William Beveridge of Great Britain noted that full employment of labor existed when “there were more available jobs than men. Jobs should wait not men.” How far removed we are from that situation today. To be worried about structural unemployment or labor mismatches with the massive degree of labor surplus currently prevailing in U.S. labor markets is not only intellectually dishonest but detracts from the more immediate need for active and comprehensive job creation efforts across the country to put the unemployed and underemployed back to work. The only labor shortage that exists today is “Honest Abes” in national economic reporting. Andrew Sum a Professor Economics and the Director of the Center for Labor Market Studies at Northeastern University.

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Bailed-Out Banks Finance ‘Legalized Loan Shark’ Payday Lenders, Says New Report

September 14, 2010

Big banks that received TARP bailout money are funding payday lenders — companies Senator Dick Durbin (D – Ill.) termed ” bottom feeders ” — and which charge high interest rates and fees for short-term loans, according to a report released Tuesday. The banks, which include Wells Fargo, Bank of America and JP Morgan, currently provide roughly $1.5 billion in credit lines to publicly-held payday loan companies and between $2.5 to $3 billion to the larger payday loan industry, says the report, which was issued jointly by community group network National People’s Action and non-partisan watchdog Public Accountability Initiative. The payday lenders, including Advance America, Cash America and ACE Cash Express, which allow customers to borrow against future paychecks, and which, according to the report, charge an average interest rate of 455 percent on top of fees of $15-18 per $100 loaned, often depend on the big banks’ financing for their business. “The very same banks that helped tank the economy and then needed hundreds of billions of dollars in taxpayer-funded bailouts are now aiding the bottom-feeders of the financial industry, as they seek–the payday lenders–to strip even more wealth away from everyday Americans,” NPA executive director George Goehl, who also called payday lending “legalized loan sharking,” said in a telephone press conference. “If Al Capone was alive today you might even get a better loan from him.” (Goehl is also a HuffPost blogger) The report, called “The Predators’ Creditors,” which features a picture of three sharks on the cover, says that some banks abstain from business with payday lenders because of what Advance America itself calls “reputational risks.” The report also notes, though, that some of these payday lenders have ties to Wall Street. For example, the board of Advance America includes former executives from Bank of America, Morgan Stanley and Credit Suisse. PAI co-director Kevin Connor, who co-authored the report, said in the press conference that big banks are attracted to the payday loan industry because “Americans were losing their jobs and homes in record numbers but they still had their family treasure to borrow against” Connor also noted that the big banks themselves pay close to zero interest when they borrow from the Fed, a stark contrast to the high interest rates paid by consumers. NPA and PAI are calling for an end to these credit lines from banks. Goehl said a protest campaign will launch today in Ohio and continue in Iowa, Kansas, Missouri and Illinois through next week, culminating in a meeting of the organizers in Chicago. “This report is really the beginning, not the end,” he said.

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FOMC Minutes: Fed Officials Pondered Further Stimulus

August 31, 2010

WASHINGTON — Federal Reserve officials signaled at their August meeting that they would consider going beyond a modest program to purchase government debt if necessary to boost the economy. Minutes of the Fed’s discussions from the Aug. 10 meeting show the central bank recognized that the economy could need further stimulus beyond the debt purchases. Those are intended to lower interest rates on a range of consumer and business loans. The minutes, which were released Tuesday, did not spell out what new steps might be taken. But they do indicate that the officials focused attention on the modest move the Fed did take at the meeting, which would invest a small amount of proceeds from its huge mortgage bond portfolio in Treasury securities. Some Fed officials argued that reinvesting proceeds from the Fed’s holdings of mortgage securities “could send an inappropriate signal to investors about the committee’s readiness to resume large-scale asset purchases,” the minutes said. One member objected and said making the change could complicate the Fed’s eventual exit from its period of aggressive credit easing, which began more than two years ago as the country plunged into a deep recession. The minutes are not verbatim and do not identify speakers but analysts said they provided an indication that the central bank engaged in an extensive debate over the issue before agreeing to provide nearly unanimous support for Federal Reserve Chairman Ben Bernanke. In the end, the Federal Open Market Committee, the panel of Fed board members and regional bank presidents who set interest rates, voted 9-1 to support the modest easing move. The only dissent came from Kansas City Federal Reserve Bank President Thomas Hoenig. Fed policymakers took the step at a time when economic growth is slowing and many are concerned the country could slip back into a recession. After the recession began in December 2007, the Fed tripled its balance sheet to help bolster economic growth and steady the housing market. In addition to buying Treasury debt, it purchased $1.25 trillion in mortgage-backed securities. For most of this year the central bank had discussed exiting the program. But at the August Fed meeting, the central bank said it would use the proceeds from the mortgage program to purchase Treasury bonds. The goal would be to keep its total holdings of securities at around $2.05 trillion. The minutes said that the committee believed that the most likely outcome for the economy was that it would continue to grow and would avoid a destabilizing bout of deflation – when prices and wages decline. But the panel said it was prepared to go further to guard against either a return to recession or deflation. The minutes said the Fed panel agreed it would “need to consider steps it could take to provide additional policy stimulus tools if the outlook were to weaken appreciably further.” Mark Zandi, chief economist at Moody’s Analytics, said it was significant that the minutes showed Fed officials were willing to consider various steps to bolster growth. Zandi said the Fed could begin significantly expanding its balance sheet by buying large amounts of Treasury securities if the unemployment rate begins to rise on a sustained basis. The jobless rate stood at 9.5 percent in July with the government scheduled to release the August report on Friday. However, other economists said they did not believe the central bank was close to resuming a large-scale effort to buy securities. They predicted that the central bank will keep its target for overnight bank loans at zero to 0.25 percent, where it has been since December 2008. But it will not launch other major credit easing efforts unless the economy weakens significantly. “The Fed doesn’t believe we will have a double-dip recession. But if there is a significant deterioration in the economy, then all bets are off and they will act more aggressively,” said David Jones, head of DMJ Advisors, a Denver-based economic consulting firm. The minutes showed the discussions on Aug. 10 lasted for more than five hours. Many analysts said the amount of time spent on a relatively modest change showed the central bank is not close to approving a large-scale operation. “The Fed will only restart its asset purchases if economic conditions deteriorate markedly from where we are now,” said Paul Ashworth, an economist at Capital Economics. Bernanke discussed a range of options that could be employed at a Fed conference Friday in Wyoming including resumption of large-scale purchases of Treasury securities. In that speech, Bernanke said he believed that the economy would continue to grow modestly in the second half of this year and then rebound to stronger growth in 2011.

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Thomas Hoenig: ‘Too Big To Fail’ Threatens Small Banks

August 23, 2010

America’s “Too Big To Fail” banking institutions threaten the viability of community banks, a top Federal Reserve official said Monday. In prepared remarks in front of the House Subcommittee on Oversight and Investigations, Thomas Hoenig , the president of of the Kansas City Fed, bemoaned the “competitive disadvantage” that large banks enjoy and called community banks “essential” to local and regional economies. Community banks, generally defined as having less than $10 billion in assets, account for all but 83 banks in the U.S, he said. Large banks, however, had the privilege of higher levels of risk and more explicit government backstops. Here’s Hoenig: Because the market perceived the largest banks as being too big to fail, they have had the advantage of running their business with a much greater level of leverage and a consistently lower cost of capital and debt. The advantage of their too-big-to-fail status was highlighted during the crisis, when the FDIC allowed unlimited insurance on non-interest-bearing checking accounts out of concern that businesses would move their deposits from the smaller to the largest banks. Hoenig, who’s been vocal critic of the Fed’s low interest rate policy , added that “the community bank business model has held up well when compared with the megabank model that had to be propped up with taxpayer funding.” In contrast to large banks, community banks have a larger “vested interest” in local economies, he said. Here’s more from Hoenig: It is said that a community with a local bank can better control its destiny. Local deposits provide funds for local loans. Community banks are often locally owned and managed – through several generations of family ownership. This vested interest in the success of their local communities is a powerful incentive to support local initiatives. It is the very “skin in the game” incentive that regulators are trying to reintroduce into the largest banks. It’s the small community’s version of “risking your own funds” that worked so well in the original investment banking model, and kept partners from making risky mistakes that would result in personal bankruptcy back then, and government intervention more recently. Community banks, it turns out, are actually doing a better job lending, Hoenig said: Data show that community banks have done a better job serving their local loan needs over the past year. Community banks, as a whole, increased their total loans by about 2 percent as compared to a 6 percent decline for larger banks. In addition, community banks have had either stronger loan growth or smaller declines across major loan categories. Business lending in particular stands out, with community bank loans dropping only 3 percent as compared with a 21 percent decline for larger banks. READ Hoenig’s full prepared remarks: hearing-testimony-8-23-10

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Real Money: Questioning the True Cost of Fed’s ‘Free Money’ Policy

August 18, 2010

Thomas M. Hoenig, president of the Federal Reserve Bank of Kansas City, continues his drumbeat to begin raising interest rates. Re-enforcing comments he made earlier this summer, Hoenig last week said it was time to begin tightening the fed’s purse strings…

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Xact Data Discovery Names Keith Hargrave GM of Kansas City/Overland Park Locations

August 18, 2010

KANSAS CITY, MO–(Marketwire – August 18, 2010) –  XDD is excited to announce and welcome Keith Hargrave as General Manager of our Kansas City and Overland Park locations. Hargrave will be responsible for overseeing all aspects of these locations. He provides support and leadership to both the sales and production teams in this market.

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CoStar’s People of Note (Aug. 8-14)

August 12, 2010

This week’s People of Note includes the following markets: Chicago, Kansas City, Los Angeles, New York City, Northern New Jersey, Philadelphia and San Francisco. NORTHERN NEW JERSEY Bangia Joins Realogy’s Global Client Solutions Team Parsippany…

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Al Norman: Another Billionaire Bailout for Wal-Mart Developer

July 9, 2010

By Al Norman Kroenke Gets Millions In Public Welfare Bridgeton, MO. On July 7, 2010, one of the richest people in America was given millions in public welfare to build an unnecessary Wal-Mart. This “bailout for Billionaires” was the work of the Bridgeton, Missouri City Council, where economic illiteracy trumps common sense. Developer Enos Stanley Kroenke, sports mogul, Walton family son-in-law, and sprawl-developer, was actually paid more than $7 million in public funds to bring low-wage jobs to this community which describes itself as the “strong and viable economic engine for the St. Louis metropolitan area.” As a result of public subsidy, Kroenke’s development company, THF Realty (the “THF” stands for “To Have Fun”) will build a new Wal-Mart roughly two miles away from an existing, smaller Wal-Mart on the same road. The smaller store will close—leaving another “dark store” by the roadside. The Bridgeton City Council voted 6-1 to pay Kroenke to leave them with an empty Wal-Mart. Only one city councilor dissented, arguing that Wal-Mart should have to pay its own way, and not be subsidized. The development agreement with Kroenke also allows the city to use eminent domain powers if necessary to complete the project. This tax bailout came over the objection of officials in St. Louis County. A state-mandated TIF Commission recently voted 6-6 on the TIF plan–with all six St. Louis County appointees on the commission voting against the bailout. A tie vote rejected the TIF. The city was able to overturn the TIF Commission with a supermajority vote of its members. The Mayor of Bridgeton, Conrad Bowers, warned that if Wal-Mart and Kroenke were not given what they asked for—Wal-Mart would leave Bridgeton entirely, dragging with it a million dollars in tax revenue from its “old” store just minutes down the road. “We got the best deal for the city we could get,” the Mayor told The St. Louis Post-Dispatch . But it is Kroenke who got the best deal. Kroenke inherited a fortune in Wal-Mart stock when he married the daughter of Sam Walton’s deceased brother Bud. Kroenke’s wife, Ann Walton Kroenke is one of the richest women in America, with an inheritance valued at $2.6 billion. Kroenke owns the Denver Nuggets basketball team, hockey’s Colorado Avalanche, is part owner of the St. Louis Rams and the English soccer team Arsenal. He was the 117th richest American, with an estimated worth of $2.7 billion in 2009. He could have built a new Bridgeton Wal-Mart without one penny of Tax Increment Financing, but the money was there for the taking. There are 19 Wal-Marts within 25 miles of Bridgeton, including a Wal-Mart right on the border of Bridgeton and St. Ann, and 7 miles away in St. Charles, Missouri. Bridgeton is a city that has been losing population. Compared to 1990, the population in Bridgeton has dropped 15%. The answer to the city’s economic stagnation is not to build more retail stores that make nothing, and sell Chinese everythings. THF Realty of St. Louis, was founded in 1991. It owns 100 properties comprising more than 20 million square feet of leaseable area in 23 states. A concentration of THF properties exists in Missouri, Illinois, Pennsylvania and West Virginia. The company says its mission is to be the “best private developer in America.” They are quite good at spending public money. Over the years, Kroenke and THF have been at the center of many controversial Wal-Mart developments in places like St. Peters, Columbia, High Ridge, Maplewood, and North St. Louis County, Missouri, as well as Glen Carbon, Illinois, Wheeling, West Virginia, and Buffalo, Minnesota. Add officials in neighboring St. Ann, Missouri to that list. Part of the “older” Wal-Mart store sits on the border of St. Ann and Bridgeton–so it was a partial source of sales tax revenue for St. Ann. Officials in St. Ann warn that their city will lose a major sales tax source when the ‘old’ Wal-Mart shuts down. St. Ann gets a 10% slice of the sales tax revenue generated by the current Wal-Mart. Mayor Bowers said the supercenter would not happen without TIF money because of the site’s demolition costs—which the city failed to get from the former property owners. So now the Mayor wants taxpayers to pay for it. The $7.2 million in sales and property taxes that will be given back to the billionaire developer in the form of site infrastructure costs, is money the taxpayers will never get to help pay for the on-going police and fire protection that this new superstore will demand. But Charles Dooley, a St. Louis County Executive said the Mayor and council should “stand together and protect the public from these strong-arm tactics” by Wal-Mart. One radio station said Wal-Mart had “bullied” the Mayor into supporting the welfare subsidy for THF. There are six dead Wal-Marts in Missouri today. The company had to demolish its store in Blue Springs, Missouri. But stores in House Springs, Kansas City, Maryville, Raytown, and Town & Country, are all still up for sale. The dead store in Town & Country, at 154,453 s.f., is almost as big as the proposed supercenter in Bridgeton. A spokesman for THF Realty, told the Bridgeton City Council that the debate over the TIF agreement was not unusual. “These are the same issues facing many communities,” he said. “It happens to cities who rely on sales taxes for their budgets. If you want to take any comfort, you’re not alone.” Because cities like Bridgeton are chasing sales tax revenue, instead of planning for sustainable land use, mistakes like the Bridgeton welfare deal get made–and neighboring towns get hurt. To build a Wal-Mart you have to be rich. Kroenke is beyond rich. His small business competitors will never get a TIF to open a store on Main Street. The real estate market in America today is an insider’s game played by the wealthy. Public subsidies to the big players are just one more incentive that leaves the smaller merchant at a competitive disadvantage. TIFs should never be used for retail. But for now, THF is “having fun” with its TIF—at taxpayers’ expense. Al Norman is the founder of Sprawl-Busters. He has been helping communities fight big box sprawl for 16 years. He is the author of “The Case Against Wal-Mart.”

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CoStar’s People of Note (June 27-July 3)

July 1, 2010

This week’s People of Note includes the following markets: Chicago, Kansas City, National, San Francisco and Southern California SAN FRANCISCO, NATIONAL Walter Shorenstein, Real Estate Mogul, Dies at 95 Commercial real estate entrepreneur Walter…

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Bernanke: Financial Reform Could Limit Megabank Growth, But Won’t End Too Big To Fail

June 16, 2010

Federal Reserve Chairman Ben Bernanke said Wednesday that the pending financial reform legislation before Congress could have the effect of simplifying the nation’s largest banks and limiting their ability to grow even larger, adding that while the bills could help end Too Big To Fail, key challenges remain. He did not, however, say that the legislation could or should force the nation’s financial behemoths to shrink — a point advocated by his colleagues in regional Federal Reserve banks across the country. Stressing the Fed’s ongoing improvements in how it regulates banks and supervises the financial system, Bernanke told a crowd of bankers, regulators and economists in New York that the Fed’s efforts and the bills pending in Congress will go a long way toward addressing the problems associated with Too Big To Fail and the weaknesses in the current financial regulatory system. The Fed, Bernanke said, is attempting to “construct better measures of counterparty credit risk and interconnectedness among systemically critical firms”; “improve their understanding of banks’ largest exposures to other banks, nonbank financial institutions, and corporate borrowers”; its supervisors are “collecting data on banks’ trading and securitization exposures, as well as their liquidity risks”; and the Fed is paying attention “not only to the risks to individual firms, but also to potential systemic risks arising from firms’ common exposures or sensitivity to common shocks.” These are among the recommendations advocated by the Squam Lake Group, a collection of 15 top economists from across the country advocating specific financial reforms to address the weaknesses that led to the worst financial crisis and subsequent economic downturn since the Great Depression. SLG organized the meeting. Attendees included Frederic Mishkin, a former Fed governor; current Philadelphia Fed chief Charles Plosser; Henry Hu, a top official at the Securities and Exchange Commission; Raymond W. McDaniel, Jr., chairman and CEO of Moody’s Corporation, parent of Moody’s Investors Service; Peter Fisher, a former top Treasury Department official; Paul McCulley, managing director of Pimco, the world’s largest bond investor, and the man who coined the phrase “shadow banking system”; Jan Hatzius, chief U.S. economist for Goldman Sachs; Lorenzo Bini Smaghi, an executive board member of the European Central Bank; top officials from the International Monetary Fund and the Organization for Economic Cooperation and Development; and bankers from the world’s largest financial firms. In explaining how the Fed’s actions will impact many of those in attendance, Bernanke said their firms may not be allowed to get any bigger. “Enhanced prudential standards for the largest firms should also reduce the incentive of firms to grow or otherwise expand their systemic footprint in order to become perceived as too big to fail,” he said. Thomas Hoenig, Richard Fisher and James Bullard, regional Fed presidents from Kansas City, Dallas and St. Louis, respectively, have said the nation’s megabanks should instead shrink because they’re already too big. According to their most recent quarterly filings with the Fed, Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley — the nation’s six biggest bank holding companies in terms of assets — collectively hold more than $9.4 trillion in assets, a figure equivalent to two-thirds of the nation’s total economic output last year, according to IMF figures. It’s also greater than the 2009 output of every other nation on Earth. Bernanke added that the largest banks could also be forced to simplify their businesses, a key reform advocated by those wishing to ensure no individual firm’s failure could put the entire financial system at risk, something that occurred at the height of the financial crisis in 2008. “[T]he financial reform legislation under consideration in the Congress usefully requires each systemically important financial firm to prepare a ‘living will’ that sets out a plan for winding down the firm’s operations in an orderly manner,” the central banker said. “The creation and supervisory review of these plans would require firms and their regulators to confront the difficulties posed by complex legal structures well in advance of the firm’s financial distress, and in some cases could lead firms to simplify their internal structures.” As for Too Big To Fail, Bernanke generally praised the approach taken by Congress. The Senate and House financial reform bills both call for enhanced “resolution authority” that should give policymakers a way to dismantle systemically important firms on the verge of failure. Bernanke said the proposed authority “is necessary if commitments to allow failure are to be credible, which in turn is essential to reverse the perception that some firms are too big to fail.” But, he added, “a key challenge would be fostering the international cooperation needed to manage the cross-border aspects of such a resolution regime.” Many critics of the legislation point to the international issue as one that assures that the resolution authority will never work — megabanks and other systemically important firms have such extensive operations in foreign markets that there’s no way to effectively dismantle them in one country without causing panic in others. Regulators in the U.S. are trying to coordinate just such an international regime to ensure that firms with broad international scope can be wound down safely if need be. The credibility of the proposed resolution authority depends on it, experts say. “It’s going to take some experience, practice and time for all of us market participants, regulators and others to assess whether or not [the proposed legislation] fully meets the concerns that led to the legislation in the first place,” Bernanke said.

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Charles Plosser, Philadelphia Fed Chief, Criticizes Financial Reform Bills, Says They Don’t End ‘Too Big To Fail’

June 16, 2010

A top Federal Reserve official reiterated his call Wednesday for a tougher approach to ending Too Big To Fail, arguing that the current pending legislation before Congress doesn’t adequately address the “most important element in fixing our financial system.” Federal Reserve Bank of Philadelphia President Charles Plosser criticized proposals that leave too much discretion to regulators and political appointees — as the legislation does — because he feels that when the time comes for a failing TBTF bank to be dismantled and shut down, regulators will be reluctant to pull the trigger. “I don’t think we’ve got the Too-Big-To-Fail problem solved in this legislation, and that’s the one I worry most about,” the central bank official told a crowd of bankers, regulators and economists in New York. Organized by a group of 15 economists that comprise the Squam Lake Group, the meeting was held to discuss the group’s views on reforming the financial system. “In my view, the most important element in fixing our financial system is that we must end the notion that some financial firms are too big or too interconnected to fail,” Plosser said. “If a firm’s creditors believe that the government will rescue them in times of trouble, they will have little incentive to exert market discipline and discourage a firm from taking excessive risk. “Eliminating too big to fail should be the first priority of any regulatory reform. This is easier said than done. As the crisis has taught us, when the systemic risks are perceived to be large — and regulators are prone to see systemic risks under every rock — they will be very reluctant to close down insolvent firms or impose losses on creditors. “So how do we reduce these risks so that regulators can credibly commit to a policy of allowing financial companies to fail and not resort to rescues or bailouts?” he asked. Plosser is one of at least four regional Fed presidents who have publicly said that the current pending legislation does not do enough to end Too Big To Fail. Richard Fisher of Dallas, Thomas Hoenig of Kansas City and James Bullard of St. Louis are the known dissenters. The Obama administration and the Fed’s Washington-based Board of Governors, meanwhile, publicly cheer the legislation, hailing it as the measure that will end TBTF. “While Congress is likely to pass a regulatory reform bill in the coming weeks, this is certainly not the end of the process of regulatory reform,” Plosser cautioned. “Regulators will need to work out many details left open by the legislation. “And taking the longer view, I don’t think that Congress’s approach is necessarily the final word on designing a resolution mechanism that will end the problem of firms that are too big to fail.” Instead of relying on the approach advocated by the Obama administration, which was largely adopted by both the House and Senate, Plosser repeated his call for a new bankruptcy-like process to resolve large, complex financial firms on the verge of failure. Market participants need firm rules and procedures, he argued, echoing a view voiced by Hoenig. Relying on regulators won’t be enough. “[I]f we are to deal effectively with the too-big-to-fail problem, we must have a credible mechanism to deal with such failures,” Plosser said. “[T]he resolution process should be as predictable as possible; regulatory authorities should not be able to use discretion to alter contractual claims in the resolution process. “I believe a bankruptcy court with special procedures for financial institutions would be better equipped than a bank regulator to credibly dismantle large financial institutions without bailouts,” he added. And unlike current bankruptcy law, which exempts derivatives contracts from its normal procedures, Plosser thinks this new version of bankruptcy should include most derivative contracts. “Arguably, this special treatment actually increased systemic risks during the recent crisis,” Plosser said of the existing exemption of derivatives contracts from bankruptcy court. Here’s how: “Sophisticated counterparties were encouraged to provide short-term repo funding, collateralized by securities that turned out to be very illiquid, such as various asset-backed securities,” he said. Repos are repurchase agreements, which are transactions in which one party borrows cash using securities as collateral with a promise to buy back those securities at a later date. “These creditors clearly perceived that they did not need to carefully monitor their borrowers’ condition, in part, because they expected that they could seize collateral before other claimants,” he said. “In turn, this created incentives for the borrowing firms to increase leverage, and increase their reliance on short-term funding, which increased fragility in the financial system.” Hence, he argues, “we should limit the special treatment in bankruptcy to a much smaller group of contracts, such as those repos secured by highly liquid collateral (cash or Treasuries).” If that happens, then other types of short-term funding may become “more expensive and less pervasive,” Plosser said. “In turn, our financial system might become a little less fragile. Not such a bad outcome.” As for the oft-repeated critique that the international coordination issues involved in putting a failing TBTF bank through bankruptcy, Plosser acknowledged that while it’s an “obstacle,” it needn’t lead to his plan being ignored. “One possible solution is for global financial firms to declare a single jurisdiction under which bankruptcy would be administered,” he said. While this would require coordination, “contrary to some claims, however, we don’t really require a full harmonization of bankruptcy regimes across nations.” Rather, he said, “it is enough to seek agreement about the creation of a special regime for financial firms. International firms do go through bankruptcy now, so I don’t see this as an insurmountable task.” These firm rules are all the more important because regulators likely won’t be able to spot the next crisis, Plosser said, echoing a sentiment voiced by other policymakers. “Discretionary supervision and regulation alone are not sufficient to prevent excessive risk-taking or prevent future crises,” said Plosser.

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