mayor

Providence Mayor Urged To Avoid Firing All Teachers

by AP on February 28, 2011

Huffington Post…

PROVIDENCE, R.I. — A union representing teachers in the state’s financially troubled capital city says it has met with the mayor to discuss the decision to send them all termination notices. The Providence school board voted Thursday night to send the notices to the nearly 2,000 teachers after city officials said the move would give them “maximum flexibility” to make budget cuts. The terminations would be effective at the end of the 2010-11 school year. The Providence Teachers Union said its president, Steve Smith, met with the city’s new mayor, Angel Taveras, on Sunday to explain the potential ramifications to the city based on what it called “the unlawful firing” of all 1,926 teachers. Taveras, elected in November as the city’s first Hispanic mayor, suggested firing a smaller percentage of teachers, the union said. But Smith remained steadfast in the position that such action isn’t the solution to the city’s financial problems, it said. Smith, who wants the termination letters rescinded, said firing any teacher without cause is unacceptable and would be more costly to the city, the union said in an e-mailed statement. He said layoff letters, if necessary, should be sent based on the anticipated number of positions at risk because of expected budget cuts, the union said. “We remain committed, ready to sit down with the mayor and prepared to be a part of the solution of solving the city’s financial woes,” Smith said. Taveras, who said he wanted to work with the teachers and their union, insisted most of the teachers will have their dismissal letters rescinded in the coming weeks. He said the notices were sent because of a state law requiring school departments to notify teachers by March 1 if they’ll be laid off the following school year. The notices don’t mean the teachers definitely will lose their jobs, but the vote means some of them could. The 4-3 vote gives the city the opportunity to terminate as many teachers as it deems necessary for budgetary reasons, but the city hasn’t indicated how many that could be. Taveras said the decision to issue the notices was difficult but the city’s financial crisis is staggering. The financial problems in Providence, the state’s biggest city, have caused enough alarm at the state level that Gov. Lincoln Chafee instructed two of his top fiscal officers to meet with city officials. A recent audit showed Providence, which has about 175,000 residents, had nearly depleted its rainy-day fund and overspent its budget last year by more than $57 million. Taveras last month created a Municipal Finances Review Panel to review the city budget across all departments. The panel will offer recommendations to the mayor in the next two weeks. Taveras said Sunday in a message to residents posted on the city’s website that issuing the dismissal notices to all the teachers was “a decision of last resort.” He said he had to avoid a situation in which next year the city has more teachers on its payroll than it can afford to pay. “My administration has a fiduciary responsibility to the taxpayers of Providence to address the fiscal crisis we face AND a moral responsibility to our children to make sure we manage cuts to school funding in a way that best serves our students and the community,” the message said. Taveras said the notices sent were of dismissal, not layoff. He said layoffs often come with provisions that could affect the city’s ability to control costs as much as it wants to. He said dismissals are different because they enable the school district to end its financial obligations to people.

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Providence Mayor Urged To Avoid Firing All Teachers

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Bloomberg Set Up Lobbying Group To Block Comcast-NBC Merger: Report

by on February 10, 2011

Last July, a group called the Coalition for Competition in Media wrote a letter to two key House subcommittee chairs on Capitol Hill, pleading for help in stopping the then-pending $30 billion megamerger of Comcast and NBC Universal. The group identified itself as “a coalition of public interest organizations, unions, small and minority media companies and independent programmers,” and said the merger was “fundamentally threatening to the public interest.” That may well have been a sound contention, and any reader might have thought the letter–part of an extensive PR and lobbying campaign–was distributed by a grassroots consumer organization. The letter was signed by the members of the coalition, including the media conglomerate Bloomberg LP. What the letter did not say is that Bloomberg LP was the driving force behind the PR campaign, and the Coalition for Competition in Media was conceived, funded and staffed by lobbyists for New York City Mayor Michael Bloomberg’s $7 billion-per-year media company.

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Bloomberg Set Up Lobbying Group To Block Comcast-NBC Merger: Report

Neighboring States Celebrate Tax Hike, But Will It Really Help Them?

January 13, 2011

SPRINGFIELD, Ill. — While many states consider boosting their economies with tax cuts, Illinois officials are betting on the opposite tactic: dramatically raising taxes to resolve a budget crisis that threatened to cripple state government. Neighboring states gleefully plotted Wednesday to take advantage of what they consider a major economic blunder and lure business away from Illinois. “It’s like living next door to `The Simpsons’ – you know, the dysfunctional family down the block,” Indiana Gov. Mitch Daniels said in an interview on Chicago’s WLS-AM. But economic experts scoffed at images of highways packed with moving vans as businesses leave Illinois. Income taxes are just one piece of the puzzle when businesses decide where to locate or expand, they said, and states should be cooperating instead trying to poach jobs from one another. “The idea of competing on state tax rates is . . . hopelessly out of date,” said Ed Morrison, economic policy advisor at the Purdue Center for Regional Development. “It demonstrates that political leadership is really out of step with what the global competitive realities are.” By going where no other state dares to tread, Illinois could prove itself to be a policy pacesetter or the opposite – a place so dysfunctional that officials created a jaw-dropping budget crisis and then tried to fix it by knee-capping the economy. Illinois faced a budget deficit of $15 billion in the coming year, equivalent to more than half the state’s general fund. Officials warned that state government might not be able to pay its employees. It certainly would fall further behind in paying the businesses, charities and schools that provide services on the state’s behalf. To avoid that, the Democrat-controlled General Assembly voted to temporarily raise personal income taxes 66 percent, from 3 percent to 5 percent. Corporate rates will rise, too – from 4.8 percent to 7 percent – when Democratic Gov. Pat Quinn signs the measure. The increase is expected to produce $6.8 billion a year for the four years it’s in full effect. That should be enough to balance Illinois’ annual budget and begin chipping away at a backlog of roughly $8 billion in old bills. The tax move inspired a day of taunts across state borders and finger-pointing between parties. “Years ago Wisconsin had a tourism advertising campaign targeted to Illinois with the motto, `Escape to Wisconsin,’” Wisconsin Gov. Scott Walker said in a statement. “Today we renew that call to Illinois businesses, `Escape to Wisconsin.’ You are welcome here.” Illinois state Sen. Dan Duffy, a Republican, labeled the tax increase “the nuclear bomb of jobs bills.” There was even some carping from Illinois Democrats. Chicago Mayor Richard Daley predicted jobs will start trickling out of Illinois with little fanfare. “Businesses don’t have press conferences like this and announce they’re moving 50 people out, 60 people out, 70 people,” Daley said at an event in Chicago. But Illinois’ governor rejected the idea that the increase would allow other states to lure jobs away. “Lots of luck to them, but that’s not going to happen,” Quinn said at a news conference Wednesday. Businesses look at more than taxes when making financial decisions, Quinn said. They also look at whether state government is stable and able to provide good roads and schools. “It’s important for their state government not to be a fiscal basket case,” Quinn said. A Wisconsin company seemed to prove his point. Train-maker Talgo Inc. is threatening to leave Milwaukee because Wisconsin rejected federal funds for high-speed rail. Talgo still considers Illinois a strong possibility for its new the company’s new home, despite the tax increase, said spokeswoman Nora Friend. The tax increase “would not weigh in as a positive, but it’s difficult to say whether it’s the deciding factor,” Friend said. “It would be one more factor that gets weighed in.” Illinois Democrats note that even after the increase takes effect, the 5 percent personal income tax rate will still be lower than many nearby states’. The top personal rate in Wisconsin is 7.75 percent, for example, and Iowa’s is 8.98 percent. Indiana and Michigan will have lower rates, however – 3.4 percent and 4.35 percent. Bill Ecton, 54, owns Ecton’s True Value Hardware in Robinson, Ill., just a few miles from the Indiana border. He was resigned to the fact that Illinois ultimately would raise taxes to repair the budget, but he said the taxes will take a toll. “If I have to pay more to the state, it’s money that I can’t pay out in wages,” Ecton said. “I’m not saying I’m laying people off, but maybe I’m going to look twice at adding another one.” ___ Associated Press writers David Mercer in Champaign, Ill., Scott Bauer in Madison, Wis., Dinesh Ramde in Milwaukee and Charles Wilson in Indianapolis, Ind., contributed to this report.

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Bonnie Kavoussi: Unemployment Crisis Taking Enormous Toll On Low-Income Teens

December 23, 2010

Nyeka Alston-Orisakwe, 18, of Boston, dressed as a nurse at her family’s Halloween party, but without a job, she has not been able to stanch the financial bleeding at home. Her single, unemployed mother, Dominique Alston, 36, postponed paying the cell phone bill to pay for the Halloween party instead. Alston receives only $1,700 in unemployment benefits and child support per month to take care of four children–far below the federal poverty level. Alston’s unemployment benefits are scheduled to expire in January, though she plans to apply for a 17-week extension: her last chance before bumping against the 99-week maximum. Alston-Orisakwe’s experience typifies the job searches of millions of teenagers. It’s been the worst year for teenagers to find employment since the government started keeping track in 1948, according to the Center for Labor Market Studies at Northeastern University. In the down economy skilled adults are applying for the same entry-level positions that students typically fill. As a result, it’s next to impossible for many low-income teenagers to find work. Federal stimulus money for teen jobs expired at the end of June and the prospect of new federal funding for teen jobs is unlikely. That has left a group of idle low-income teens, often with unemployed parents, unable to develop professional skills and step in to support their families. “If it comes between my children being happy or the choice being late on the bill, I’ll make my children happy,” said Alston, who has been unemployed ever since her temporary administrative job at Children’s Hospital Boston ended in June. “I wish I could just snap my fingers, and she gets a job.” Nyeka Alston-Orisakwe has applied to more than 15 retailers around Boston, ranging from Dunkin’ Donuts to Old Navy and movie theaters, without a single interview for a long-term job. (Pictured: Nyeka Alston-Orisakwe, 18, of Boston, in her room.) The only store that called her back: an Aeropostale looking for temporary work during Black Friday weekend. A line of about ten people stood behind her as she was interviewed at the cash register. Aeropostale did not call her again. There were 12.5 million U.S. teens without a job on an average month this year, up from 10.4 million in 2005 and 8.7 million in 2000, according to Northeastern’s Center for Labor Market Studies. The average percentage of teenagers with jobs nationwide has been nearly cut in half since 1999 to 26 percent. There were 28 applications for every hiring in the retail sector–jobs that teens typically go after — between January and November of 2010, according to the Kronos Retail Labor Index. “Nationally, it’s devastating,” said Neil Sullivan, executive director of the Boston Private Industry Council. “A whole generation is going through their teenage years without any paid work experience.” Low-income minorities are at a particular disadvantage when searching for jobs because they live in neighborhoods with fewer jobs and have fewer connections and less access to transportation, according to Northeastern’s Andrew Sum. 
Nationwide, he said, only 13 percent of low-income African-American teenagers and 17 percent of low-income Hispanic teenagers are employed. By contrast, 35 to 37 percent of upper-middle-class white teenagers are employed. “Kids who really need help the most and could raise their family incomes the most are getting the work the least,” he said. Year-round jobs are more beneficial than summer jobs, Sum added, because the opportunities are more varied, and there is enough time for teenagers to interact meaningfully with mentors in the workplace. But Boston’s city government has devoted the vast majority of those resources to summer jobs. The city government’s Boston Youth Fund funded 3,200 youth jobs this past summer, while the Boston Youth Fund is funding only 500 part-time teen jobs during the school year. “To come up with money to pay young people all year-round–that is hugely expensive,” said Conny Doty, director of the Mayor’s Office of Jobs and Community Services, who described summer and year-round jobs as equally valuable. “It’s just not realistic.” During an interview at her home in Dorchester, Boston’s largest neighborhood, Alston-Orisakwe said she became more responsible and self-confident when she worked at Boston’s Franklin Park Zoo. She earned $8 per hour there for the past three summers through the city’s Boston Youth Fund and through the zoo’s Teen Ambassadors program during the previous school year. She used to cry when other teenagers made fun of her, and temporarily dropped out of high school during her freshman year because other students mocked her about her clothes and short hair. Then, after learning to answer zoo visitors’ questions about animals, she started to speak with poise and self-confidence. “Back then, you say one bad thing to me, I’d cry,” she said. “Before, I never liked talking to people… The zoo helped me talk to people. Now I’m not afraid to answer you if you had a question. If you had a question now, I’d be proud to answer.” Then her job ended in August. “I need a job,” she said. “It’s my senior year, and I need to save money for school and a car and to help my mom out.” But she’s had no luck so far. When she asked a local Halloween costume store whether she might get a call back after she had applied, a cashier said it depends on her availability. Then she knew she was not going to get a call. “They have to realize people are in school, so not everyone is available from 9 in the morning to 9 at night,” she said, sitting on a chair in her family’s living room, her arms crossed against her pink jacket. “They don’t want to even at least call you to try for an interview. They don’t even want to do that, which is stupid.” Now, Alston-Orisakwe spends much of her time at home, watching television, hanging out with friends, sleeping, or lying on her bed listening to music, gazing at posters of Marilyn Monroe in her room. Inspired by the TV show “Project Runway,” she dreams of someday moving to California and becoming a fashion stylist. If she is accepted and can pay for tuition, she hopes to study fashion and retail management next year at the New England Institute of Art. But glamor is out of reach for now, as she shops only occasionally now. Outside, she can hear neighbors arguing, cursing loudly, and sometimes having fist fights. Alston-Orisakwe said she is not going to bide her time waiting for employers to call her back. “I’m going to start calling up places and start harassing them,” she said. “That’s what you got to do now. I’m just going to keep applying until I get a job.” Her mother, Dominique Alston, said that employers are opting for older workers with more experience, but if teenagers never get hired then they will remain at a disadvantage. “If somebody doesn’t give them that chance, they never get it,” she said.

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Areas Of Detroit Could Lose Garbage Pickup, Police, Fire Services

December 13, 2010

In yet another sign of growing fiscal problems for states and municipalities, Detroit may be cutting key services in certain portions of the city, the WSJ reports. This could mean that city officials will be faced with the tough decision whether to repurpose or outright abandon certain sections of the city, as the population has dwindled by half since 1950. Here’s the WSJ: “Until now, the mayor [Dave Bing] and his staff have spoken mostly in generalities about the problem, stressing the need for community input and pledging to a skeptical public that no resident would be forced to move. But the approach discussed by city officials could have that effect. Mr. Bing’s staff wants to concentrate Detroit’s remaining population–expected to be less than 900,000 after this year’s Census count–and limited local, state and federal dollars in the most viable swaths of the city, while other sectors could go without such services as garbage pickup, police patrols, road repair and street lights.” The move comes after the city borrowed $100 million to fund its police and fire departments and used other bond offerings to raise funds. Mayor Dave Bing also recently announced that the city will offer incentives to residents to move to certain less blighted areas of town. Here’s the AP with more details: “The city has identified at least seven to nine population centers that would encompass two-thirds of its 139 square miles, the newspaper reported. Bing said his administration by spring plans to make the locations of core areas public and final decisions haven’t been made. Details of incentives also haven’t been decided. “I don’t want people to think that, if they hold out, there’s going to be a pot full of money somewhere, because there’s not,” Bing said. At a news conference Thursday, Bing aide Karla Henderson said the idea behind the plan is to concentrate the city’s limited resources into stronger, more compact neighborhoods. “We don’t have a formal plan, but we feel we need to go back out to the community and share this information with our residents,” said Henderson, group executive of the city’s planning and facilities department.

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How The Auto Industry Bailout Pulled One Indiana Town Back From Brink

November 23, 2010

KOKOMO, Ind. — Jerry Price remembers the eerie silence less than two years ago when he walked through one of the transmission plants that long provided the economic lifeblood of this town steeped in auto industry history. With the machines still and the workers gone, casualties of Chrysler’s bankruptcy declaration a few days earlier, the only signs of life were a few lights that had been left on. “None of us, including myself, ever thought that this place would be running again,” said Price, vice president of United Auto Workers Local 685. Not only has the plant reopened for business, but President Barack Obama and Vice President Joe Biden are visiting Tuesday to herald Kokomo as one of the major success stories of the auto bailout. Residents of this city, where unemployment once soared above 20 percent after the shutdown, are doing their part to proclaim the virtues of legislation that generated plenty of controversy at the time. “If the bailout hadn’t come, then we’d be a ghost town,” said Jeff Newton, a pastor who runs Kokomo Urban Outreach, which runs a network of food pantries. Kokomo’s fortunes have been entwined with the auto industry since 1894, when Elwood Haynes invented one of the first automobiles in the United States there. Since the 1930s, when then-Delco (later Delphi) located there, followed by General Motors and Chrysler, the auto industry has been the city’s bread and butter. Today, Kokomo is likely more dependent on the industry than any other city in the country – including those in Michigan, said Indiana University-Kokomo Chancellor Michael Harris, an economist who has studied the auto industry for 20 years. Nearly 25 percent of the city’s work force is employed by the industry, he said. Most work at the four Chrysler plants that employ about 4,500 today, at GM, which employs about 1,000, or at Delphi, which has about 1,400 workers. “If the auto industry would have totally walked away from Kokomo, we would probably have unemployment that would have hit 35 percent,” said Harris. As it was, the city’s unemployment rate hit 20.4 percent in June 2009, the highest level in the past decade. “It’s been very scary at times,” said Dave White, 58, who has worked at Chrysler for 24 years. His wife also works for the automaker. Kokomo leaders and business owners say an infusion of cash pulled the city back from the brink. Besides benefitting from Chrysler’s $7.1 billion share of the auto industry bailout, the plant received nearly $4 million in federal stimulus money and an $89 million grant to help Delphi Automotive Systems develop electronic components for vehicles. In September, the jobless rate dropped to 12.7 percent – the lowest rate in nearly two years. Stimulus money paid for a new park pavilion and helped remodel a fire station. Democratic Mayor Greg Goodnight said the city used other money to remove 11 stoplights and convert several streets into one-way streets to help make downtown more friendly for pedestrians. Volunteers also planted flowers throughout downtown to spruce up the area. While those jobs were temporary, observers say the bigger – and longer lasting – boost has come from Chrysler and Delphi, which have invested heavily in Kokomo since receiving federal help. Delphi announced a $28 million investment and Chrysler has promised more than $300 million to retool one of its transmission plants. “There’s no doubt that Chrysler has decided to make Kokomo the center of their manufacturing for the future,” Harris said. Even so, Kokomo’s recovery is still in its infancy. Newton, the pastor whose Kokomo Urban Outreach runs six neighborhood food pantries and meal programs, said the food pantries still serve about 800 people each month – the same as they did during the height of the depths of the recession. “We had people crying in the hallways” when things were at their worst, Newton said. “They’d never had to go to a food pantry before, and they felt ashamed.” Now, instead of autoworkers scrimping on food to pay mortgages and car loans, they’re seeing more minimum-wage workers to whom the recovery hasn’t yet trickled down, he said. Penny Irwin, the broker-owner of Re/Max Realty One in Kokomo, said the average price of a home in Kokomo dropped about $30,000 over the last three years. But home prices are slowly improving. According to Indiana Association of Realtors statistics, the median cost of a home in Howard County is $75,250, up from $69,900 a year ago. Downtown has also seen a turnaround, with 13 new businesses starting up or moving in since January, said John Wiles, a former newspaper editor who now heads the Kokomo Downtown Association. The city used an economic development income tax for some projects, made matching loans to downtown businesses to improve building facades and set up a riverfront development district along Wildcat Creek to encourage new restaurants by making it easier to obtain liquor licenses. “We’ve done a lot of things for ourselves,” Goodnight said. The riverfront initiative – along with Small Business Administration financing – made it possible for father and son Steve and Blake Kinder to start Cook McDoogal’s Irish Pub, a new downtown bar with lavish woodwork rescued from old churches and remodeled homes that’s set to open Tuesday. A couple of years ago, Blake Kinder said, the only people downtown were coming for court appearances. Now, it’s common to see young mothers walking their babies in strollers. “The mood has definitely risen,” he said. “People are starting to feel more comfortable about Kokomo’s future, whether they like to admit it or not.” ___ Associated Press writer Tom Coyne in South Bend also contributed to this story.

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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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Joel Epstein: How the Unions Can Help LA Pay for the Wilshire Subway Extension

November 12, 2010

With the Democrats licking their wounds and the Republicans and Tea Partiers licking their chops, it is time to trot out some old ideas for funding the construction of public transportation in LA. There are no new ideas, just recycled old ones. Inspired by the mid century unions which built housing for their members, my latest epiphany concerns the feasibility of using union and public pension fund money to fund LA’s overdue public transportation projects. For starters I passed the idea by LAANE’s executive director, and the chief deputy to María Elena Durazo , Executive Secretary — Treasurer of the Los Angeles County Federation of Labor. Both seemed to think I’m a crackpot. Maybe so, but good ideas come from all over, and several other local civic leaders have encouraged me to keep at it. If you care about LA and mobility around the region you have probably heard something about the 30/10 Initiative and the 12 transit projects the Mayor, Metro , and others have been working to realize for a year or more through some combination of federal transportation grants and loans. Let’s face it, after the midterm election we’re in a new world. Even though the new Congress is sure to include public transportation enthusiasts from both sides of the aisle, advancing 30/10 has just gotten that much harder. In all likelihood, support for the plan will now come at best in piecemeal fashion, leaving many Angelenos gasping for the hoped for mobility solutions that 30/10 promised. What is more, the public remains divided over anything that is going to cost them more at tax time. It is true that County voters passed the half cent transportation sales tax known as Measure R in 2008, but who is to say they will support another tax or surcharge or whatever name we slap on it to accelerate the 30/10 projects. This reality presents no small obstacle to 30/10 and frankly always did. But what if the big unions in LA and elsewhere stepped up and said they are going to invest some of their pension money in Metro’s building project? Every investment needs a quid pro quo and with unemployment in LA still at near record highs, jobs are the quid — or is it quo? — in this deal. Sure, some will say Big Labor is just creating higher priced union jobs for their members with this idea. Yes, that’s one of the outcomes and perhaps the key reason the LA Labor Federation’s Durazo and national labor leaders like AFL-CIO President Richard Trumka should care about and look into it. But that is not the only thing the plan does. With more public transportation projects funded sooner, the plan benefits all of us who long for the day we can ride the Wilshire Subway from downtown to the VA, light rail from the South Bay to Figueroa or some form of fast public transportation from the San Fernando Valley to the Westside. Union and public pension fund investment in public transportation may be the economic shot in the arm LA needs, but President Obama and a divided Washington just can’t, or won’t, deliver. To understand the feasibility of all of this I spoke with an investment management advisor from the Union Labor Life Insurance Company (Ullico) . Founded in 1927, Ullico offers insurance, commercial lines of credit and other investment products and services. As of 2008, Ullico’s J for Jobs Fund, a product of the company’s Real Estate Investment Group had invested $2.3 billion in a variety of union labor real estate construction projects. According to REIG News these investments include LA Live-Phase II, the Red Building in West Hollywood and Horizon at Playa Vista; as well as hotels, casinos and office buildings in New York, Las Vegas and elsewhere. Though I am still struggling to find out what sort of returns investors actually realized on this pooled real estate investment fund, given the slump in the market I’d be surprised if the unions saw the promised and hoped for mid-teen percentage returns. Ullico told me they are just now starting to raise money for a new $750 million to $1 billion infrastructure fund and that in principle this fund might include public transportation infrastructure investment. Ullico says “might” because frankly other sorts of infrastructure investments like power plants may produce better investment returns than public transportation, which tends require a subsidy to operate once built. And this is to say nothing of investors’ well founded concern that large infrastructure projects tend to run over budget as in the case of NY/NJ’s ARC transit tunnel, New York’s Second Avenue Subway and Boston’s Big Dig. One seasoned Wall Street municipal finance expert told me that while he likes my idea, Wall Street or the unions or whoever is investing needs details and a set of real cost projections. In other words, the deal has to pencil out or there is none. Well no one ever said doing 30/10 or a union funded investment in public transportation infrastructure construction would be easy but isn’t it worth a try? On a recent conference call with the Mayor and the Deputy Mayor for Transportation both said my idea wouldn’t work. But when I persisted, asking whether they had actually approached Labor’s Durazo with the idea of using union pension money to help finance part of 30/10 the Mayor responded, “no.” While I can appreciate the unions wanting the largest possible return on investment, if you don’t have a job generating income to invest in your pension then the issue of higher returns is moot. In this idea I see an opportunity to put thousands of union workers back to work building stuff that LA needs, as opposed to another casino on the Las Vegas strip. Even if those Las Vegas construction jobs are union work, no LA union member needs to be investing in them. Industry practice says lower interest paying infrastructure projects like the Wilshire subway can be bundled together with other projects paying better returns, for a decent average return. Who knows? Maybe if done right, the projected returns of my Union Public Transportation Investment Fund (UPTIF) will appeal to non-union investors as well. Durazo and Trumka, I hope you are reading. UPTIF is an idea worth considering.

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Video: Rattner Says U.S. Automakers Are Poised to Gush Profit: Video

October 21, 2010

Oct. 21 (Bloomberg) — Steven Rattner, the former head of the federal government’s auto task force, talks about the outlook for the U.S. auto industry, global competition for U.S. manufacturing, the national debt and his investment strategy. Rattner, who is co-founder of private-equity firm Quadrangle Group LLC, speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.” Rattner is also a financial adviser to New York City Mayor Michael Bloomberg, who is founder and majority owner of Bloomberg News parent company Bloomberg LP. (Source: Bloomberg)

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Steve Parker: It’s Official: "Red Light Cameras" Don’t Work

October 18, 2010

Ever wonder why, with all those “red light cameras” installed across the nation, no city involved in using them has reported any big decrease in accidents at the affected intersections or even any significant income gain? In fact, in Los Angeles yesterday, it was revealed, after a city-wide audit, that the 32 red light cameras installed throughout Los Angeles have actually cost the taxpayers some $2.6 million just the past two years. You’d think that with the tickets in the LA program costing around $500 a pop, there’d be at least a little spiff for some city program… like for the city’s desperate school system or the libraries which Mayor Antonio Villaragosa has shut down. Incidentally, San Diego has also decided to take action against the installers and maintainers of their red light camera system, having experienced some of the same problems Los Angeles has just revealed. In one fell swoop, Los Angeles found out yesterday that almost 1/2 of all red light tickets go unpaid with the driver not needing to fear any reprisals, that the placement of LA’s red light cameras was purely decided on a political, not a safety, basis and that the city gets only about $150 from the $500 tickets (those that are paid) with the rest going to the state and the majority going to the company which installed and maintains the red light camera systems. According to Rich Connell in the’s Los Angeles Times : Some 45% of Los Angeles’ red-light camera tickets are currently unpaid, partly because holds are not placed on driver’s licenses and vehicle registrations for unsettled photo enforcement infractions, Los Angeles officials said Wednesday. The disclosure came as City Controller Wendy Greuel issued an audit finding the photo enforcement program bypassed some of the city’s most dangerous intersections and is costing the city more than $1 million a year to operate, despite fines and fees that can exceed $500. This scandal came to light several months ago, when that LAPD report showing no improvement in accident rates at many of the intersections was released to the public. Several local news reporters, print and electronic, went over the internal audit and found it appeared that not only were accident rates not declining at these intersections, but both the city and the public seemed to be paying for a service which was providing no benefit for them. Soon after the story hit the papers and the airwaves, City Controller Wendy Greuel, who no doubt saw a great story on which to grandstand, also made clear she has the power to order the changes discussed in the Times ‘ story, as she controls many of the city’s purse strings. So for those who have red light cameras in their city and have been wondering if they are at all effective, the third-biggest city in the nation has the answer: No. Deployed correctly, could they do a better job? Or have these highly-expensive and difficult-to-maintain systems been a boondoggle since the beginning; are they old technology which companies are trying to sell as 21st century capable? Finally, and perhaps most important, if nearly 50% of the tickets issued in Los Angeles have gone unpaid because the “accused” never signs a “promise to appear” and it’s impossible for a citizen to cross-examine a camera in court should they challenge the ticket, is it at all possible (or necessary) for the law to regress to the point where some Kodak Brownie mounted on a light pole determines the innocence or very expensive guilt of a Los Angeles driver?

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Happy Meal Toy Ban Under Consideration In San Francisco

October 3, 2010

SAN FRANCISCO — San Francisco has a long history of bold public health and environmental stances, going after everything from plastic bags in grocery stores to cigarettes to sugary drinks. The latest target: Ronald McDonald. A proposed city ordinance would ban McDonald’s from putting toys in Happy Meals unless it adds fruit and vegetable portions and limits calories. The proposal would apply to all restaurants, but the focus has been on McDonald’s and its iconic Happy Meals. Supervisor Eric Mar said he proposed the law to protect the health of his constituents, but McDonald’s has waged an aggressive fight to block the measure. A battery of McDonald’s Corp. executives showed up at city hall to argue that the legislation is a heavy-handed effort that threatens the company’s decades-old business model and the free choice of its customers. The proposed Happy Meal law is just the latest in a string of San Francisco ordinances aimed at regulating public health. The city recently expanded a law banning tobacco sales in pharmacies to include grocery stores and big-box stores that also have pharmacies. Mayor Gavin Newsom signed an executive order earlier this year banning sweetened beverages like Coca Cola and Pepsi from vending machines on city property. Local leaders considered but ultimately abandoned laws recently that would have imposed a fee on businesses that sell sugary drinks and alcohol. Newsom has slowed down in his support of some health measures after he was attacked by his opponent in next month’s lieutenant governor’s race, Lt. Gov. Abel Maldonado, for being the “food police.” Newsom vetoed the alcohol and soda fees, and he’s indicated he’ll do the same for Ronald McDonald. The Board of Supervisors could overturn a veto but needs the votes of eight of 11 supervisors to do so. Tony Winnicker, a Newsom spokesman, has said the mayor was opposed to the measures in part because of their negative impact on local businesses. “The mayor is always open to argument and evidence about a better way – he’s not ideological, he’s not wedded to one approach,” Winnicker said. “This is not the time to be considering new fees and taxes that would put San Francisco at a disadvantage to other counties around the state.” Mar said he expected his Happy Meal bill to pass out of committee Monday and receive a vote by the full Board of Supervisors later this month. McDonald’s vice president for nutrition and menu strategy, Karen Wells, said that denying a toy to a child would undermine the authority of parents to decide what their children should eat and would be difficult to execute. “It’s different from what we’re doing today and different from what we’ve done for 25 years, successfully,” Wells said. Responded Supervisor Sophie Maxwell in an exasperated voice, “Just because it’s different does not make it necessarily difficult. I mean, McDonald’s is an amazing institution. It’s been around for many years … because it’s able to change and to adapt to new circumstances and new things that people are eating so I think I have a lot more confidence in McDonald’s, I guess, than you do.” Cynthia Goody, McDonald’s nutrition director, said there was no evidence that childhood obesity would be reduced by requiring a fruit or vegetable with all meals. In response, a supervisor asked what mix of foods would lower childhood obesity. Goody said she would need to conduct more research to provide an answer. The Happy Meal ordinance is not all surprising given San Francisco’s famously liberal leanings. “San Francisco has a reputation – and it’s well deserved – of being a very progressive city,” said Alex Clemens, founder of Barbary Coast Consulting, a local political communications firm. “With that comes naturally, hand in hand, a reliance on government to encourage thoughtful change – that’s just tradition.”

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Video: London’s Anstee Discusses Financial Services Industry: Video

September 9, 2010

Sept. 10 (Bloomberg) — Nick Anstee, the 682nd Lord Mayor of the City of London, talks about the financial services industry in the U.K. Anstee also discusses Europe’s sovereign debt and China’s economy. He speaks in Hong Kong with Bloomberg Television’s Susan Li. (Source: Bloomberg)

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Bloomberg Lambastes Empire State Building Owner For Complaining About Skyline Changes

August 24, 2010

NEW YORK — New York City Mayor Michael Bloomberg has ridiculed the owner of the Empire State Building for complaining a proposed skyscraper would ruin the view from the iconic landmark. The mayor said Tuesday every building alters the city’s skyline and no developer owes anyone an apology for new buildings. He welcomes the proposed Manhattan tower as a great investment. The City Council is expected this week to consider developer David Greenbaum’s plan for a 67-story tower a couple of blocks west of the 102-story Empire State Building. The proposed tower would be 34 feet shorter than the Empire State Building, the city’s tallest skyscraper. Greenbaum says his tower would provide critically needed office space. Empire State Building owner Anthony Malkin says it would be an “assault on New York City.”

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Geithner’s Latest Struggle: Reminiding The Public He’s Never Worked For Goldman Sachs

August 20, 2010

Earlier this month, Mr. Geithner had breakfast in Manhattan with Mayor Michael R. Bloomberg and Robert Steel, a deputy mayor and former Treasury official in the Bush administration who had previously worked at Goldman. Facetiously, a Geithner aide said Mr. Steel and Mr. Geithner knew each other from the investment bank. Later that day at a public event, the mayor in all seriousness referred to Mr. Steel and Mr. Geithner, and added, “They both worked at Goldman.”

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Morgan Stanley Scores Huge Deal With Cash-Strapped Chicago For Parking

August 9, 2010

Chicago drivers will pay a Morgan Stanley-led partnership at least $11.6 billion to park at city meters over the next 75 years, 10 times what Mayor Richard Daley got when he leased the system to investors in 2008. Morgan Stanley, Abu Dhabi Investment Authority and Allianz Capital Partners may earn a profit of $9.58 billion before interest, taxes and depreciation, according to documents for a $500 million private note sale by their Chicago Parking Meters LLC venture

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Forty Billionaires Follow Buffett’s Pledge To Donate Bulk Of Their Wealth To Charity

August 4, 2010

Famed investor Warren Buffett today announced the names of 40 of America’s wealthiest families and individuals who have signed on to the Giving Pledge, a charitable project that targets billionaires to pledge to donate the bulk of their wealth. From New York Mayor Michael Bloomberg to Oracle (ORCL) CEO Larry Ellison, each of the individuals and families announced today have made a pledge to give the majority of their wealth to the philanthropic causes and charitable organizations of their choice, either during their lifetime or after their death.

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Online Wall Of Shame Gets Owners To Clean Up Their Property

August 4, 2010

Owners neglecting their property in one eastern Pennsylvania city are getting an online shaming. Reading Mayor Tom McMahon announced a new online “Wall of Shame” featuring blighted properties that he said would be torn down unless owners fix them up. The property owners’ names are posted along with pictures and addresses.

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Video: London’s $218 Million Cycle-Hire Scheme Launches Today

July 30, 2010

July 30 (Bloomberg) — Mayor Boris Johnson is spending 140 million pounds ($218 million) to encourage more Londoners to get on two wheels with a cycle-hire program that sprinkles the capital with as many as 5,000 bikes starting today. Bloomberg’s Elliott Gotkine reports.

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Video: London’s $218 Million Cycle-Hire Scheme Launches Today

July 30, 2010

July 30 (Bloomberg) — Mayor Boris Johnson is spending 140 million pounds ($218 million) to encourage more Londoners to get on two wheels with a cycle-hire program that sprinkles the capital with as many as 5,000 bikes starting today. Bloomberg’s Elliott Gotkine reports.

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David Cameron Woos Wall Street CEOs In New York

July 21, 2010

NEW YORK — British Prime Minister David Cameron met with Wall Street CEOs on Wednesday to press the case for doing business in the United Kingdom, and later planned to rub elbows with media and political elites at a welcome dinner on his first official visit to New York City. The closed meeting with business leaders included top executives at JPMorgan Chase & Co., Goldman Sachs Group Inc., Citigroup Inc. and Morgan Stanley. The British consulate said the discussions focused on prospects for more trade and investment with the UK. Cameron, who took office 10 weeks ago, also planned talks later with U.N. Secretary-General Ban Ki-moon. He arrived in New York on Wednesday afternoon after a visit to Washington, where he met with President Barack Obama and discussed the war in Afghanistan at the Pentagon with U.S. officials, including Deputy Defense Secretary William Lynn. Cameron was greeted in New York by Mayor Michael Bloomberg at a street corner just after he arrived. The pair grabbed hot dogs from a street vendor but ignored questions from reporters while they ate. Cameron did flash a thumbs-up when asked about his lunch. He and Bloomberg planned to wrap up the day with another meal together – a more refined private dinner on the Upper East Side. The guest list, provided to The Associated Press, included Whoopi Goldberg, Katie Couric, Diane von Furstenberg, Newt Gingrich, NBA commissioner David J. Stern and News Corp. CEO Rupert Murdoch. Pennsylvania Gov. Ed Rendell, New Jersey Gov. Chris Christie and Indiana Sen. Evan Bayh also RSVP’d to attend. Guests were to be served grilled lamb chops, string beans and roasted fingerling potatoes and were to watch a private performance by Rufus Wainwright, a Bloomberg aide said. Cameron had hoped his first U.S. visit as prime minister would focus on trade and troop involvement in Afghanistan, but it has been overshadowed by questions of whether oil giant BP swayed Scotland’s decision to release the Lockerbie bomber. Libyan Abdel Baset al-Megrahi was convicted for the 1988 bombing of a Pan Am jet over Lockerbie, Scotland, that killed 270 people, most of them American and many from the New York area. Last year the Scottish government released the cancer-stricken al-Megrahi on compassionate grounds. The matter has received new attention because of accusations that BP helped influence the release of al-Megrahi as part of efforts to seek access to Libyan oil fields. BP has acknowledged that it urged the British government to sign a prisoner transfer agreement with Libya but says it never specified al-Megrahi’s case. The four U.S. senators from New York and New Jersey met with Cameron on Tuesday to press for a new investigation. In a solo appearance Wednesday, Bloomberg said that while al-Megrahi’s release was a “miscarriage of justice,” he said he had no plans to press the case further with Cameron. “That’s a federal issue and there’s no reason why I would bring it up,” he said.

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Janet Murguía: What’s the Holdup? Strategies to Jump-Start a Stalled Economy

July 13, 2010

More than 15 million Latinos are unemployed. If 400,000 jobs were created each month, it would take three years to get back to a national unemployment rate of 5%. Worse, more than 4.5 million families are at risk of losing their homes to foreclosure. It’s easy to get lost in these grim statistics, but for the millions of Latinos and Blacks bearing the brunt of the financial crisis, it’s much more personal than numbers. The National Council of La Raza (NCLR), through the work of its Affiliates and the NCLR Homeownership Network, sees the recession from the eyes of families facing the prospect of losing their jobs and homes. Although financial experts say that the national economy has turned a corner, minority communities have remained stagnant. At Monday’s Economy town hall at the 2010 NCLR Annual Conference, major national figures convened to report on the status of economic recovery in Latino communities and discuss local and national approaches to restoring the nation’s financial well-being. Shaun Donovan, Secretary of the U.S. Department of Housing and Urban Development (HUD), acknowledged that communities of color have been hit hardest by the recession. He announced First Look , a new HUD initiative that gives state and local governments, and nonprofits involved in the HUD Neighborhood Stabilization Program, the first opportunity to acquire HUD properties. He also announced that there would be increased rental assistance to ensure that public housing is available to everyone who needs it. Citing Brown v. Board of Education, which ended segregation in public schools more than 50 years ago, as evidence that segregation in public housing must end, Secretary Donovan declared that it was time to put an end to a “separate but equal housing” policy. Lack of access to opportunity prohibits communities that need support the most from getting it. Angela Glover Blackwell , Founder and CEO of PolicyLink , said that the location of where someone lives has become a determinant of opportunity. She felt that all aspects of a region–from public transportation and affordable housing to job training and employment opportunity–should be a coordinated effort to enable every community to have a chance at succeeding. Mayor Julián Castro of San Antonio underscored this point in his comments about his city, noting the Trinity Project , a holistic effort to improve neighborhoods by bringing public education, public transportation, and utilities closer together. With record-high foreclosure and unemployment rates, addressing the needs of communities of color is not only essential to restoring financial stability to Blacks and Latinos but also vital to the health of our national economy. While these initiatives are steps in the right direction, Americans need to call their senators and let them know that despite the positive headlines and bright forecasts, our communities continue to shoulder the burden of a stalled economy. Let them know the importance of implementing and enforcing local hiring to boost employment in communities that are desperate for jobs. Remind them of their responsibility to all communities by marching on Washington as part of the One Nation rally this October to call for an increased national focus on jobs. It’s true that the deck is stacked against us. It’s true that there is a long road ahead to real recovery for communities of color. But it is also true that the nation’s economic recovery — the very future of this country — depends on financially stable communities of color. Our needs cannot and will not be ignored.

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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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Abercrombie Bedbug Outbreak Closes SECOND Store: South Street Seaport Location Found With Infestation

July 2, 2010

NEW YORK — Abercrombie & Fitch Co. said Friday that it closed a second store in New York due to a bed bug infestation. The preppy teen clothing seller said it closed a Hollister store on Thursday in the SoHo neighborhood of New York. That location is expected to open at 10 a.m. on Saturday. It closed a second location, an Abercrombie & Fitch store in the South Street Seaport, on Friday for the same reason. Abercrombie’s flagship New York store on Fifth Avenue has been tested and is not affected by bed bugs, the New Albany, Ohio, company says. Abercrombie says it asked New York City’s Mayor’s office how it should deal with the problem. Eric Cerny, a spokesman for the chain, said that the company tested all three stores in Manhattan, and there was no infestation at the A&F Fifth Avenue store in midtown. “It appears focused in lower Manhattan,” though the company is still investigating the issue by “conducting its own testing and analysis,” he said. Cerny said that the normal return policy is in place and noted that as a precaution returned products will be quarantined and tested. Inquiries from customers have been “minimal,” he added. The city’s health department said it offered guidance to the company and that it is proactively treating the store. While the department said it knew of no other instances of bed bugs at city stores, it is the responsibility of companies to treat bed bug problems. Shares fell 64 cents, or 2 percent, to $31.27 during afternoon trading.

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Utah Oil Spill: Chevron Vows To Pay

June 18, 2010

SALT LAKE CITY — Salt Lake City attorneys expect Chevron Corp. will quickly agree to a financial settlement related to last weekend’s pipeline spill that dumped 33,000 gallons of crude oil into city waterways, a spokeswoman for Mayor Ralph Becker said Friday. Becker has vowed to make Chevron pay for the cleanup, and the company has repeatedly pledged to cover the city’s expenses, as well as damage or reimbursement claims from others. A deal could be announced next week, said Lisa Harrison Smith, the mayor’s spokeswoman. “We won’t be satisfied until it’s done,” she said. San Ramon, Calif.-based Chevron believes an improbable series of events led to last Saturday’s spill, which sent crude oil into pristine Red Butte Creek. A short in an overhead 46,000-volt power line traveled to a fence post that acted like an electric arc welder, melting a quarter-size hole in the pipeline, the company said. The bottom of the fence post was anchored just inches above the buried pipeline – an obvious danger that went unnoticed for 30 years, Chevron said. “It would be highly unusual, but it’s a plausible theory,” Rocky Mountain Power spokesman Dave Eskelsen said. Some of the spilled oil traveled in the creek through Salt Lake City to the Jordan River, which drains into the Great Salt Lake. Chevron said it has cleaned up 21,000 of the 33,000 gallons of spilled oil. Much of that has been mopped and vacuumed from city waterways. Absorbent booms on the Jordan River have been capturing traces of oil, and workers were seen digging up oil-soaked soil Wednesday and sucking up residual oil from Red Butte Creek near the spill site. Chevron said it plans to flush the Red Butte Creek with water Saturday to capture residual oil with absorbent booms. It warned residents the flushing could stir up oil fumes for three or four hours. But the latest samples from 13 locations along Red Butte Creek and the Jordan River show no danger to human health or aquatic life, Utah Division of Water Quality officials said. The U.S. Department of Transportation has jurisdiction over oil pipelines and is investigating what caused the spill, said Patricia Klinger, a spokeswoman for the department’s pipeline-safety group. A metallurgist is examining the pipe, she said. The department’s Pipeline and Hazardous Materials Safety Administration can fine Chevron, but has no authority over Rocky Mountain Power, which owns the nearby fenced compound and power lines near the pipeline, Klinger said. Chevron officials said earlier this week that more than 30 claims had been filed with the oil company. The company is taking full responsibility and expects to get hit with a large amount of bills for damages and expenses, Chevron spokesman Dan Johnson said Friday. “We think that’s appropriate,” he said. “People who pay their bills are trusted.” The Utah Rivers Council on Friday called for Chevron to deposit $15 million into an escrow account to pay for damages and cleanup expenses. But the expected settlement agreement would make an escrow account unnecessary, Smith said.

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Utah Oil Spill: Chevron Vows To Pay

June 18, 2010

SALT LAKE CITY — Salt Lake City attorneys expect Chevron Corp. will quickly agree to a financial settlement related to last weekend’s pipeline spill that dumped 33,000 gallons of crude oil into city waterways, a spokeswoman for Mayor Ralph Becker said Friday. Becker has vowed to make Chevron pay for the cleanup, and the company has repeatedly pledged to cover the city’s expenses, as well as damage or reimbursement claims from others. A deal could be announced next week, said Lisa Harrison Smith, the mayor’s spokeswoman. “We won’t be satisfied until it’s done,” she said. San Ramon, Calif.-based Chevron believes an improbable series of events led to last Saturday’s spill, which sent crude oil into pristine Red Butte Creek. A short in an overhead 46,000-volt power line traveled to a fence post that acted like an electric arc welder, melting a quarter-size hole in the pipeline, the company said. The bottom of the fence post was anchored just inches above the buried pipeline – an obvious danger that went unnoticed for 30 years, Chevron said. “It would be highly unusual, but it’s a plausible theory,” Rocky Mountain Power spokesman Dave Eskelsen said. Some of the spilled oil traveled in the creek through Salt Lake City to the Jordan River, which drains into the Great Salt Lake. Chevron said it has cleaned up 21,000 of the 33,000 gallons of spilled oil. Much of that has been mopped and vacuumed from city waterways. Absorbent booms on the Jordan River have been capturing traces of oil, and workers were seen digging up oil-soaked soil Wednesday and sucking up residual oil from Red Butte Creek near the spill site. Chevron said it plans to flush the Red Butte Creek with water Saturday to capture residual oil with absorbent booms. It warned residents the flushing could stir up oil fumes for three or four hours. But the latest samples from 13 locations along Red Butte Creek and the Jordan River show no danger to human health or aquatic life, Utah Division of Water Quality officials said. The U.S. Department of Transportation has jurisdiction over oil pipelines and is investigating what caused the spill, said Patricia Klinger, a spokeswoman for the department’s pipeline-safety group. A metallurgist is examining the pipe, she said. The department’s Pipeline and Hazardous Materials Safety Administration can fine Chevron, but has no authority over Rocky Mountain Power, which owns the nearby fenced compound and power lines near the pipeline, Klinger said. Chevron officials said earlier this week that more than 30 claims had been filed with the oil company. The company is taking full responsibility and expects to get hit with a large amount of bills for damages and expenses, Chevron spokesman Dan Johnson said Friday. “We think that’s appropriate,” he said. “People who pay their bills are trusted.” The Utah Rivers Council on Friday called for Chevron to deposit $15 million into an escrow account to pay for damages and cleanup expenses. But the expected settlement agreement would make an escrow account unnecessary, Smith said.

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Buffett, Gates Press Billionaires to Give Half Their Wealth to Charities

June 16, 2010

By Andrew Frye and Katya Kazakina June 16 (Bloomberg) — Warren Buffett and Bill Gates are pressing fellow billionaires to commit at least half their wealth to charity in an effort to draw attention on the responsibilities the wealthiest have for aiding the needy. Buffett and Gates started a drive called “ The Giving Pledge ” to encourage high-profile philanthropic promises, according to the initiative’s website. A pledge of the majority of an individual’s fortune is “an understandable and quite reachable bar for the wealthiest — many will exceed it,” according to a document posted on the website. Buffett, the world’s third-richest person and chairman of Berkshire Hathaway Inc. , has pledged more than 99 percent of his wealth to philanthropy. The greatest part of his fortune, estimated in March at $47 billion by Forbes magazine, is being given in annual installments to the foundation established by Microsoft Corp. co-founder Gates and his wife Melinda Gates . “Bill and Melinda Gates and I are asking hundreds of rich Americans to pledge at least 50 percent of their wealth to charity,” Buffett wrote today in a pledge on Fortune’s website. Buffett said 1 percent of his wealth is enough for him and his family, and “neither our happiness nor our well-being would be enhanced” by keeping more. The initiative kicked off with a meeting in New York on May 5, 2009, that was organized by the Gateses, Fortune magazine reported, citing interviews with the couple and Buffett. The leaders of the effort may have a minimum goal of about $600 billion in commitments, Fortune said, based on the calculation of half of the $1.2 trillion in net worth of the 400 richest individuals compiled by Forbes magazine. ‘The Giving Pledge’ “It would easily double or triple the amount of philanthropy in America,” said Melissa Berman , president of Rockefeller Philanthropy Advisors, a non-profit organization that has advised the Bill & Melinda Gates Foundation on “The Giving Pledge” initiative. “If we would be able to get this influx for philanthropy from billionaires, it would inspire other Americans,” she said in an interview today. “And then we could really change what the world is like.” The idea to assemble a group of billionaire philanthropists to discuss strategies and encourage giving was Buffett’s, Fortune said. The meeting was hosted by David Rockefeller and included George Soros , Oprah Winfrey and Michael Bloomberg . Bill Gates ranks second on the Forbes list of billionaires. Bloomberg, the mayor of New York, is the majority owner of Bloomberg LP, the parent of Bloomberg News. The Gates Foundation, with an endowment of about $35 billion, combats disease and global poverty, and funds U.S. education initiatives. Those who take the pledge are invited to pick the causes that they fund. The effort will initially focus on U.S. billionaires and may expand to other countries. To contact the reporters on this story: Andrew Frye in New York at afrye@bloomberg.net ; Katya Kazakina in New York at kkazakina@bloomberg.net .

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Video: Liu Says NYC Job Cuts Won’t Reach 11,000 as Proposed: Video

June 4, 2010

June 4 (Bloomberg) — New York City Comptroller John Liu talks with Bloomberg’s Betty Liu about the outlook for Mayor Michael Bloomberg’s proposed jobs cuts in the municipal government. Liu also discusses municipal debt, the city’s economy and growth prospects for Wall Street jobs. Bloomberg is founder and majority owner of Bloomberg News parent Bloomberg LP. (Source: Bloomberg)

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Mall Maestro Caruso Eludes Retail Slump, Ponders Run for Los Angeles Mayor

May 21, 2010

By Daniel Taub and Nadja Brandt May 21 (Bloomberg) — Mall developer Rick Caruso plans to take his success in retail to distressed shopping centers, apartments, luxury hotels, airports and maybe a run for Los Angeles mayor. The Grove, Caruso’s town square-like shopping center in Los Angeles that attracts 17 million shoppers a year, had few vacancies through the recession, he said. Sales at the Americana at Brand, his first retail-residential complex, have grown since its 2008 opening. Caruso plans to use profits to buy distressed properties he can rehabilitate. Caruso’s Los Angeles-based company, closely held Caruso Affiliated, last month announced a $750 million debt-and-equity venture with TPG Capital, David Bonderman ’s buyout firm, to make retail and mixed-used purchases. The venture has looked at about 100 properties in cities including San Francisco, Seattle and Portland, Oregon, and intends to announce a retail acquisition in Orange County, California, within 30 days, he said. “There’s a lot of junk that we won’t touch, that I don’t think you can fix,” Caruso, 51, said in an interview at Bloomberg’s Los Angeles offices. While there’s “a ton of money on the sidelines” for properties worth saving, many buyers are passive investors while Caruso is interested in redevelopment, he said. Caruso is expanding beyond retail centers while considering a mayoral candidacy in cash-strapped Los Angeles. He is building luxury apartments outside Beverly Hills, planning a beach resort in Montecito, California, and seeking to develop stores and restaurants at Los Angeles International Airport. ‘Guest Experience’ “Why can’t the airport experience actually be pleasant?” Caruso said. LAX travelers should have a “guest experience” similar to the Grove, and to shopping choices at London’s Heathrow Airport, he said. “We’re going to come up with a pretty compelling proposal,” Caruso said, declining to discuss details. “Hopefully we start in L.A. and it will be the first of many.” Caruso hopes to open his first luxury resort, the redeveloped Miramar Beach Resort and Bungalows in Montecito, near Santa Barbara, by 2013. “I like beach resorts. I love the water,” Caruso said. “If you find a great property that’s tough to duplicate, you have inherent value.” Caruso faces a challenge making his entry into high-end lodging pay off. He purchased Miramar in 2007, the height of the commercial real estate market, for an undisclosed amount. Hurdles in getting entitlements to redevelop the planned 192- room hotel have delayed groundbreaking, and construction won’t start before next year. Hotel Comeback? Luxury hotels have been hurt by a decline in business and leisure travel during the U.S. recession. The average daily rate among hotel chains with the costliest rooms fell 16 percent in 2009 from a year earlier to $242.99, according to Smith Travel Research Inc. in Hendersonville, Tennessee. A recovery of the U.S. hotel industry isn’t likely until 2011 because room rates are down and commercial real estate values have plunged, Fitch Ratings Ltd. said in December. In California, hotel foreclosures climbed 27 percent in the first quarter. “It’ll prove to be a very good investment,” Caruso said. “Luxury hotels will come back.” Caruso, who has nine shopping centers in the Los Angeles area, has thrived in retail while other mall owners were hurt by the recession. Vacancies at the largest U.S. malls reached 8.9 percent in the first quarter, the highest rate since at least 2000, New York-based real estate research firm Reis Inc. said. Grove Shoppers At the 20-acre Grove , adjacent to Los Angeles’s historic Farmers Market, the average shopper spends $179, about triple the industry average, Caruso said. Net operating income has risen over the past 18 months, and the facility is “99 percent leased,” he said. Caruso said he adds touches to encourage shoppers to stay longer . The Grove has a free trolley, and the open-air Americana in Glendale has grassy slopes for relaxing. “Many of his projects are anything but plain vanilla,” said Jim Sullivan , managing director at real estate researcher Green Street Advisors in Newport Beach, California. “His projects are fun places to go.” Caruso has had his stumbles outside of retail. At the Americana, opened in 2008 during the housing-market collapse, he has struggled to sell its 100 condominiums. Buyers are being enticed with discounts and half-price association dues for two years. “It was a really tough time to come out,” Caruso said. While Caruso Affiliated is responsible for management and sales, the condos’ backer is Barrow Street Capital LLC. “We did not have anything at risk financially,” Caruso said. Nicholas Chermayeff , co-chief executive officer of Stamford, Connecticut-based Barrow Street, declined to comment. Mayoral Run? A Republican who has served as board president at the Los Angeles Department of Water and Power and the Los Angeles Police Commission, Caruso has flirted for years with a mayoral run. “I’m leaning towards it” when Mayor Antonio Villaraigosa is termed out in 2013, Caruso said. “I have to make a decision probably sometime next year.” The city needs to do a better job keeping and attracting businesses, rework its pension system and encourage development, he said. He also imagines a monorail along Interstate 10 from downtown Los Angeles to the coast going up faster than a planned “subway to the sea,” which could take decades to build. Caruso’s chances of winning would depend in part on the competition, said Sherry Bebitch Jeffe , a senior fellow at the school of policy, planning and development at the University of Southern California. “There is a long list of tested Latino leaders who probably will be looking at the office,” Jeffe said. Caruso, who is married with four children, said family and business obligations will factor in to the decision. He also will weigh the Los Angeles mayor’s limited powers. “I’ve got to get convinced that, if I did it, that I can actually make a meaningful difference,” Caruso said. “If the city is so structurally hamstrung that I’m going to go waste four years of my life, I don’t want to do it.” To contact the reporters on this story: Daniel Taub in Los Angeles at dtaub@bloomberg.net ; Nadja Brandt in Los Angeles at nbrandt@bloomberg.net .

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John Petro: Growth of Low Wage Jobs Puts City Economy on Shaky Ground

May 18, 2010

With the Senate on the verge of voting on financial reform legislation , there are many who fret about the impact that reform will have on New York City’s economy. After all, the city has already lost about 48,000 financial sector jobs since 2007. Mayor Bloomberg has warned that the city’s economy is “very dependent” on the financial sector, and that new regulations will hurt the city’s ability to grow back high-paying finance sector jobs. But there is another trend in the city’s job market that should be keeping the Mayor up at night: the growth of low-paying service sector jobs in New York City. Already one in three working New Yorkers are in jobs that pay less than $24,000 a year. And the city’s fastest growing occupations are also those that pay poverty-level wages, like home health aides and retail workers. This growth has the potential to destabilize the city’s economy, as more and more families are dependent on poverty-level jobs to make ends meet. I’m not talking about pure altruism here. Poverty-level jobs hurt everyone, from Mom and Pop business owners to fat-cat bankers. When every dollar goes towards basic necessities like food and rent, families supported by low-wage work are unable to contribute more to the city’s economy, hurting neighborhood retailers and the city’s tax base. Low-wage work has serious impacts on consumer spending in the local economy. Economists at the Federal Reserve Bank of Chicago found that boosting wages for low-income families by $1 an hour results in nearly $3,500 in new spending at local businesses over the course of a year. Multiply that by thousands of families and it adds up to a tremendous amount of new spending flowing to small neighborhood businesses. Instead of relying on Wall Street bonuses to trickle down to small businesses, we’re talking about generating wealth from the bottom up. Currently low-wage jobs act as a millstone around the city economy’s neck. Less consumer spending by working families in poverty means fewer tax dollars flowing to city coffers, and families that earn poverty-level wages are forced to rely on public assistance to make ends meet. The growth of low-wage work is not just a New York phenomenon. Richard Florida, professor and author of the new book The Great Reset , notes that more than 40 percent of Americans work in low-wage service sector jobs. Asked what we can do about it, Florida replies, “Companies need to try to engage workers and ask them to think innovatively about their work processes.” But cities across the country are taking control of low-wage work, transforming poverty-level jobs into good paying jobs that help families get by and stimulate economic growth. In Los Angeles the city ensures that every job that is created through economic development subsidies is a good job with good wages and benefits. But in New York, Mayor Bloomberg has resisted efforts to create good jobs through economic development subsidies when he flatly refused to support living wage jobs at the Kinsgbridge Armory redevelopment earlier this year. Other cities are going even further. Santa Fe and San Francisco both have citywide minimum wages that are above the federal minimum wage. According to Paul Sonn of the National Employment Law Project, “The 2004 increase in San Francisco’s minimum wage is estimated to have boosted spending in low-income communities by as much as $70 to $90 million annually.” With New York ten times the size of San Francisco, the benefit for local businesses could potentially be ten times as great. Any attempts to raise wages through a citywide minimum wage would likely be fiercely opposed by Mayor Bloomberg. Instead, the mayor is putting his hopes on the financial sector to save the city’s economy–the very same sector that brought the national and city economies to their knees. But even if the financial sector employment grows back to where it was before the financial crisis, the prevalence of low-wage work will still keep the city’s economy from reaching its full potential.

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James Zogby: Business Confidence Up in Gulf States

May 17, 2010

Dubai — Ed Koch, the colorful and often controversial former Mayor of New York City, made it a practice as he walked the streets of his city to stop and ask average citizens “How am I doing?” in an effort to learn how they viewed the performance of his administration and its delivery of services. Asking and listening are always useful exercises. Sometimes the results can be surprising. More often then not the results of such an effort affirm what we have assumed to be true, providing data to validate our assumptions as well as additional valuable insights. A recent survey of business executives in the Arab Gulf countries is a case in point. Conducted by Zogby International (ZI), the survey found that optimism has returned to the business community in the Gulf, a sign that the region may have turned a corner following the global economic downturn of 2008-2009. Overall six in ten executives now say that business conditions have improved in their countries, with over eight in ten expressing confidence that conditions will improve even further in the next two years. These are but a few of the findings from the survey of “C-Suite” executives in Saudi Arabia, UAE and Qatar, which ZI carried out for Oliver Wyman (an international management consulting firm with a strong presence throughout the Middle East). It is the second in a continuing series of semi-annual measurements of business confidence in the Gulf region. The mood was positive in all three countries covered in the survey, with the most notable changes occurring in the UAE. Business leaders in that country were especially hard hit by what one prominent Emirati businessman referred to as the “bursting of Dubai’s utopic bubble.” It is significant, therefore, that while in our October 2009 survey 57% of respondents in the UAE reported that their economy was in decline, today that figure has dropped to just 39%; and while in October only 45% of business leaders in the UAE anticipated an improvement in business conditions in the country during the next two years, now 74% are optimistic. Overall, the executives expressed some satisfaction with their governments’ response to the 2008-2009 crisis with those in Saudi Arabia, Qatar and Abu Dhabi indicating strong confidence in their governments’ performance. Only in Dubai was there a somewhat negative mood with over 50% reporting that their attitude toward government had been undermined by its handling of the crisis. When asked to identify the areas that provided the greatest opportunities for the Gulf Cooperation Council countries to improve competitiveness, almost one-half of the surveyed business leaders pointed to the region’s need to diversify its economy. And four times as many executives saw greater opportunity in deepening ties with the emerging economies of China and India than with their traditional partners in the developed West. Some indicated that they saw China’s dramatic growth and the relative ease of doing business in that country as obvious attractions, especially in the face of the uncertainties now facing Europe. In the April survey, as in our earlier October effort, labor and education reform were once again identified as both the most immediate and long-term challenges to the region’s competitiveness. Other problem areas the business executives pointed to as requiring government attention included: improving transparency (especially noted in Dubai and Saudi Arabia’s Eastern Province) and reducing bureaucracy (a major concern in Abu Dhabi). Another major concern noted in all three countries was the difficulty associated with starting new businesses – pointing to excessive regulations and problems obtaining loans at reasonable rates. The utility of surveys of this type is that they provide business leaders with an unofficial sounding board from which they can identify concerns. The results also provide governments with indices by which they can measure the mood and needs of a critical sector of the society that will be the driver of future growth and development. And so getting back to answering the New York Mayor’s question, in the Gulf it would be “quite good”. The bottom line here is that business confidence is up, and significantly so when compared to many other regions of the world, including the U.S. And no wonder. The region weathered a difficult world-wide downturn with governments wisely using reserves both to insure stability and promote growth. Nevertheless, concerns remain in important areas. Singled out for attention were: the region’s dependence on foreign labor; the challenge of modernizing the educational system (especially in the areas of primary education, basic math and science skills and technical training); and easing the way for entrepreneurs to start new businesses – a key to needed job creation. These are issues that the business leaders say must be addressed to insure both future competitiveness and continued prosperity.‬

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Aquino Heads for Victory in Philippine Presidential Ballot, Leads Estrada

May 10, 2010

By Francisco Alcuaz Jr. and Joel Guinto May 11 (Bloomberg) — Philippine Senator Benigno Aquino , whose mother helped oust former dictator Ferdinand Marcos , was headed for victory in the country’s presidential elections, according to early tallies of the votes. Aquino, 50, had 8.96 million votes, or 41 percent of the ballots tallied in 57 percent of precincts as of 11:11 p.m. local time last night, the Commission on Elections said in Manila. More than 50 million Filipinos were registered for yesterday’s election. Former President Joseph Estrada had 26 percent, and Senator Manuel Villar had 14 percent. The winner gets to lead a country that snares less than a quarter of the foreign investment going to its neighbors, holding back economic growth and forcing more than a million Filipinos abroad every year to look for work. Decades of graft since Marcos took power in 1965 saw the Philippines slump from being Asia’s fourth-biggest economy to the 13th out of 17 tracked by Bloomberg. “It’s going to be quite a daunting task,” said Vishnu Varathan , an economist at Forecast Ltd. in Singapore. “He needs to tighten the fiscal purse strings at a time the recovery is not coming through at the hoped for pace. He needs to broaden the tax base and take away tax breaks.” The Asian Development Bank forecasts growth of 3.8 percent this year, slower than that of Thailand, Malaysia and Indonesia. Unemployment is 7.3 percent, second to Indonesia’s 7.9 percent. Aquino, 50, who campaigned on the slogan “If there’s no corruption, there’s no poverty,” had no plans to stand for election until the death of his mother Corazon Aquino in August. His father, Benigno, was jailed by Marcos and assassinated in 1983 on his return from the United States, where he had heart surgery after falling sick in prison. No Experience Besides being his parents’ son, Villar and other critics have said Aquino is unqualified for the challenge facing him, having accomplished little in 12 years as a legislator. Aquino said none of his bills has passed because he picked unpopular causes and refused to compromise. Aquino supporters maintain vice presidential candidate Senator Manuel Roxas would help make up for any deficit in experience. Roxas, a two-time trade secretary, was the Liberal Party’s presidential candidate until he gave way to Aquino. Roxas knows the “twists and turns of legislation,” former Finance Secretary Ramon del Rosario wrote in an opinion article last week. Aquino last week said he’d share “50 percent or 80 percent of the job” with Roxas. Roxas was trailing Jejomar Binay, the mayor of Makati business district, by 37 percent to 40 percent. Economic Team Aquino may still be able to count on Cesar Purisima , a finance secretary under outgoing President Gloria Arroyo . He quit and called on Arroyo to step down in 2005 amid allegations she rigged her election the year before. Purisima helped spearhead an increase in value-added tax that narrowed the budget deficit , which averaged 200 billion pesos ($4.4 billion) from 2002 to 2004, to 12 billion pesos in 2007. Last year the deficit was a record 298.5 billion pesos. Finance Secretary Gary Teves said Arroyo and Congress gave away the 2005 VAT increase with tax breaks. The Department of Finance says it may take six years — a presidential term — to balance the budget and proposes another VAT raise to get there. Higher taxes and a narrower deficit may help the Philippines reduce local and overseas borrowing. The government plans record borrowing of 718.5 billion pesos this year, a third of it from abroad. Foreign Investment Funds are also needed for the roads, ports and airports needed to compete for foreign investment. The Philippines received $1.5 billion in foreign direct investment in 2008, against $7.3 billion for Malaysia, $9.8 billion for Thailand, and $7.9 billion for Indonesia, Association of Southeast Asian Nation statistics show. A reputation for corruption hasn’t helped attract investment. The Philippines was ranked 139th out of 180 by Berlin-based watchdog Transparency International. Arroyo has faced three impeachment attempts over allegations of graft, human rights violations and vote-rigging. She ousted Estrada, 73, a former movie star, who was later convicted on corruption charges and jailed for life. Arroyo pardoned him. Aquino has vowed to prosecute Arroyo when she loses presidential immunity. Villar, 60, was ousted as Senate president after a fellow member alleged he used his influence to divert a highway to his property. He has denied any impropriety and the Senate hasn’t voted on the motion laid by 12 of the 23 senators, including Aquino. As a result of underinvestment, one in four Filipinos live on less than $1.25 a day, according to the World Bank . In 2008, 1.2 million left to work abroad, many of them taking lower-level jobs abroad for higher pay. “The poor state of political governance is affecting economic development,” said Paul Joseph Garcia , chief investment officer at ING Investment Management Ltd. in Manila “The labor force remains highly skilled. Unfortunately, we’re exporting people.” To contact the reporter on this story: Francisco Alcuaz Jr . in Manila at falcuaz@bloomberg.net

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London Air Pollution Is Worse Than Frankfurt, Beats Athens: Chart of Day

May 7, 2010

By Alex Morales May 7 (Bloomberg) — London, host of the 2012 Olympic Games, missed European Union air pollution goals three days a week on average in 2008, almost five times more failures than is allowed by EU law and seven times as often as Frankfurt. The CHART OF THE DAY shows London’s number of “days in exceedance” for particle pollution was 156 in 2008, the most recent year for EU air-quality data. That compares with 22 in Frankfurt and 35 for the bloc’s regulatory limit. London hasn’t dipped below 100 violations in any of the eight most recent years of data. Athens missed the target every year since 2001 except 2004, when it was the last European city to host the Summer Olympics. The pollutants can hamper breathing and stem from vehicle emissions, construction sites, factories, dust and sea salt. Volcanic ash can also contribute. “Worryingly, it looks likely that air-quality laws will be breached in London every year up to and including the 2012 Olympics,” said Simon Birkett, founder of the Campaign for Clean Air in London. An estimated 4,300 people die each year in London from long-term exposure to dangerous particles, he said. Failure to meet the EU goals in force since 2005 could result in fines of 300 million pounds ($449 million). The European Commission in December rejected the U.K.’s request for a compliance extension until 2011. After Mayor Boris Johnson published a new air strategy for London in March, the U.K. now plans to re-apply for an extension for the capital by summer. The figures for 2009 are due in September, and new measuring methods may help London. One monitoring station, at Marylebone Road, recorded 115 breaches in 2009 using techniques in place since the 1990s, according to the London Air Quality Network website. Under the new system, that would fall to 60 and the 21 violations so far this year would be reduced to 14. To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net .

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American Citizen From Pakistan Faces Charges Over Times Square Bomb Plot

May 4, 2010

By Henry Goldman and Mark Tannenbaum May 4 (Bloomberg) — A U.S. citizen of Pakistani origins is due in a New York court today to face charges over the attempted car bombing in Times Square on May 1. Faisal Shahzad will appear in Manhattan federal court on “formal charges,” the U.S. attorney’s office for the southern district of New York said in an e-mailed statement, without being more specific. Agents from the Department of Homeland Security arrested Shahzad at New York’s John F. Kennedy International Airport last night as he was attempting to board a flight to Dubai, U.S. Attorney General Eric Holder said at an early morning news conference in Washington. The announcement came less than three days after a botched bombing attempt that led police to evacuate parts of Times Square. “This investigation is ongoing, as are our attempts to gather useful intelligence, and we continue to pursue a number of leads,” Holder said. “But it’s clear that the intent behind this terrorist act was to kill Americans.” Shahzad had recently returned from a five-month trip to Pakistan, where he had a wife, the Associated Press reported citing unidentified law enforcement officials. Pakistan’s Dawn television reported today that the suspect had family links in the port city of Karachi, and visited it last year. Homeland Security Secretary Janet Napolitano , in an interview on NBC TV, said it’s “premature to rule in or out” links to international terrorism. Investigators have no evidence that Pakistani Taliban sympathizers were responsible for the attempt, although a group describing itself as such took credit for it, Police Commissioner Raymond Kelly said. Passengers Removed Dubai-based Emirates Airlines said in an e-mailed statement today that U.S. authorities removed three passengers from a New York to Dubai flight last night and carried out “full security procedures” including the screening of the plane, passengers and baggage. Agents from the Federal Bureau of Investigation and New York City police detectives arrested Shahzad for “allegedly driving a car bomb into Times Square on the evening of May 1,” the Department of Justice said in a statement today. The 1993 Nissan Pathfinder was sold for cash about three weeks ago at a Connecticut shopping mall in a sale arranged through the Craigslist website, CNN reported, citing an unidentified person in law enforcement with knowledge of the investigation. Investigators interviewed the former owner of the bomb- carrying sport-utility vehicle, New York City Mayor Michael Bloomberg said. The person was tracked through the car’s vehicle identification number, which was stripped from the dashboard, Police Commissioner Raymond Kelly said. The number is also typically stamped on parts such as the engine block. ‘Intended to Terrorize’ The attempted bombing “was intended to terrorize,” Robert Gibbs , the White House press secretary, said yesterday. Gibbs said today that President Barack Obama was notified about Shahzad’s arrest at around midnight. The intended detonator, Kelly said, was a can filled with consumer-grade fireworks. The car also held two containers of gasoline and three propane tanks, wired with two clocks, the commissioner said. A man described as about 40 years old was seen on a neighborhood surveillance camera as he hurried through Shubert Alley , a pedestrian walkway between West 44th and West 45th Streets, steps from where the explosive-laden car was parked on May 1, he said. The man can be seen on the video removing a dark shirt, revealing a red T-shirt underneath, Kelly said. He placed the outer shirt in a bag and walked from the scene “in a furtive manner,” the commissioner said. Safe as Ever Police also collected images of the vehicle as it traveled along West 45th Street before being left at a curb near several Broadway theaters, the mayor said. “This city is as safe as it’s ever been,” Bloomberg said. “Is it perfectly safe? No, but we always will have events, we’ve had 11 or so in the last eight years, and every time we have responded appropriately. We keep changing our procedures, we keep studying what happens overseas, and we so far have done the right thing.” The police presence has been increased in the Times Square area. Bloomberg urged tourists and New Yorkers to continue visiting the area and “enjoy a Broadway show.” The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP. To contact the reporters on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net ; Mark Tannenbaum at mtannen@bloomberg.net .

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American Citizen From Pakistan Faces Charges Over Times Square Bomb Plot

May 4, 2010

By Henry Goldman and Mark Tannenbaum May 4 (Bloomberg) — A U.S. citizen of Pakistani origins is due in a New York court today to face charges over the attempted car bombing in Times Square on May 1. Faisal Shahzad will appear in Manhattan federal court on “formal charges,” the U.S. attorney’s office for the southern district of New York said in an e-mailed statement, without being more specific. Agents from the Department of Homeland Security arrested Shahzad at New York’s John F. Kennedy International Airport last night as he was attempting to board a flight to Dubai, U.S. Attorney General Eric Holder said at an early morning news conference in Washington. The announcement came less than three days after a botched bombing attempt that led police to evacuate parts of Times Square. “This investigation is ongoing, as are our attempts to gather useful intelligence, and we continue to pursue a number of leads,” Holder said. “But it’s clear that the intent behind this terrorist act was to kill Americans.” Shahzad had recently returned from a five-month trip to Pakistan, where he had a wife, the Associated Press reported citing unidentified law enforcement officials. Pakistan’s Dawn television reported today that the suspect had family links in the port city of Karachi, and visited it last year. Homeland Security Secretary Janet Napolitano , in an interview on NBC TV, said it’s “premature to rule in or out” links to international terrorism. Investigators have no evidence that Pakistani Taliban sympathizers were responsible for the attempt, although a group describing itself as such took credit for it, Police Commissioner Raymond Kelly said. Passengers Removed Dubai-based Emirates Airlines said in an e-mailed statement today that U.S. authorities removed three passengers from a New York to Dubai flight last night and carried out “full security procedures” including the screening of the plane, passengers and baggage. Agents from the Federal Bureau of Investigation and New York City police detectives arrested Shahzad for “allegedly driving a car bomb into Times Square on the evening of May 1,” the Department of Justice said in a statement today. The 1993 Nissan Pathfinder was sold for cash about three weeks ago at a Connecticut shopping mall in a sale arranged through the Craigslist website, CNN reported, citing an unidentified person in law enforcement with knowledge of the investigation. Investigators interviewed the former owner of the bomb- carrying sport-utility vehicle, New York City Mayor Michael Bloomberg said. The person was tracked through the car’s vehicle identification number, which was stripped from the dashboard, Police Commissioner Raymond Kelly said. The number is also typically stamped on parts such as the engine block. ‘Intended to Terrorize’ The attempted bombing “was intended to terrorize,” Robert Gibbs , the White House press secretary, said yesterday. Gibbs said today that President Barack Obama was notified about Shahzad’s arrest at around midnight. The intended detonator, Kelly said, was a can filled with consumer-grade fireworks. The car also held two containers of gasoline and three propane tanks, wired with two clocks, the commissioner said. A man described as about 40 years old was seen on a neighborhood surveillance camera as he hurried through Shubert Alley , a pedestrian walkway between West 44th and West 45th Streets, steps from where the explosive-laden car was parked on May 1, he said. The man can be seen on the video removing a dark shirt, revealing a red T-shirt underneath, Kelly said. He placed the outer shirt in a bag and walked from the scene “in a furtive manner,” the commissioner said. Safe as Ever Police also collected images of the vehicle as it traveled along West 45th Street before being left at a curb near several Broadway theaters, the mayor said. “This city is as safe as it’s ever been,” Bloomberg said. “Is it perfectly safe? No, but we always will have events, we’ve had 11 or so in the last eight years, and every time we have responded appropriately. We keep changing our procedures, we keep studying what happens overseas, and we so far have done the right thing.” The police presence has been increased in the Times Square area. Bloomberg urged tourists and New Yorkers to continue visiting the area and “enjoy a Broadway show.” The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP. To contact the reporters on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net ; Mark Tannenbaum at mtannen@bloomberg.net .

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Police Query SUV Owner Over Failed New York Bomb; Mayor Pledges More CCTV

May 3, 2010

By Henry Goldman and Allison Bennett May 3 (Bloomberg) — New York City police interviewed the owner of a bomb-carrying sport-utility vehicle discovered in Times Square, Mayor Michael Bloomberg said. He pledged to add scores of video cameras to bolster security in the most populous U.S. city. The 1993 Nissan Pathfinder’s owner was tracked through the car’s vehicle identification number, which was stripped from the dashboard, Police Commissioner Raymond Kelly said. The number is typically stamped on other parts of a car or truck, such as the engine block. “We have no information whatsoever, no sense that they are involved,” Bloomberg said of the SUV’s owner. “We’re talking with everybody. We’ll continue to do that.” The attempted bombing “was intended to terrorize, and I would say that whomever did that would be categorized as a terrorist,” White House press secretary Robert Gibbs said. U.S. officials still don’t know who was responsible, he said. Several people in a plot with international links may have coordinated the incident, the Washington Post said, citing unidentified officials in President Barack Obama ’s administration. Bloomberg had “no immediate comment” on the report, said Jason Post , a spokesman for the mayor. The city will spend $110 million to add video cameras in Midtown Manhattan between 30th and 60th Streets, from the Hudson River to the East River, to expand a security network centered on Wall Street downtown, Bloomberg said today. ‘Whatever Is Necessary’ “I commit to you we will spend whatever is necessary in either federal or, if need be, city funds, to complete this project and to protect New York,” Bloomberg, 68, told reporters at a press conference in the Bronx. U.S. Senator Charles Schumer will seek federal funding for a system using security cameras and license-plate readers to record and track “every vehicle moving between 34th and 59th Streets,” the New York Democrat said in a press release. A man described as about 40 years old was seen on a neighborhood surveillance camera as he hurried through Shubert Alley , a pedestrian walkway between 44th and 45th Streets, steps from where the explosive-laden car was parked May 1, Kelly said. Red T-Shirt The man can be seen on the video removing a dark shirt, revealing a red T-shirt underneath, Kelly said. He placed the outer shirt in a bag and walked from the scene “in a furtive manner,” the commissioner said. Police also collected images of the SUV as it traveled along 45th Street at Times Square before being left at a curb near several Broadway theaters, the mayor said. While the police department has 82 cameras in the Times Square area, there are many more, he said. “There are hundreds of cameras, mostly in private buildings,” Bloomberg said. “This is a function that government should provide and to the extent that the private sector has information that would augment that, that is great, and we certainly take that into account.” The 1,949-room Marriott Marquis , across the street from where the car was parked, said it was cooperating with authorities. “We did provide the authorities access to all video content as needed,” said Kathleen Duffy, a spokeswoman for Marriott International Inc.’s hotels in New York City. The Marriott Marquis evacuated 800 to 1,000 people to ballrooms for about seven hours during the bomb scare, she said. ‘My Home Town’ It’s too early to call the case a “terrorist incident” or to say “who might ultimately be responsible and who’s involved,” Attorney General Eric Holder told reporters in Arlington, Virginia, today, according to a Justice Department transcript. There are “a number of leads” in addition to surveillance video, he said. “New York remains a target,” Holder said. “There’s a determination by those terrorists to try to inflict damage on my home town.” Transit officials and some Times Square building owners said they had already upgraded security in the aftermath of the Sept. 11, 2001, terrorist attack on the World Trade Center. “NYC Transit has remained at the highest state of alert since 9/11, reminding employees to report any suspicious activity,” said Paul Fleuranges , a spokesman for New York City Transit, which operates the subways and buses. Heightened Awareness He cited an April 30 incident in which track workers spotted someone in a tunnel near Bowling Green in lower Manhattan and turned the individual in to police as “an example of that heightened state of awareness.” In response to the bombing attempt, the Transportation Security Administration began conducting operations at East Coast airports to find explosives in vehicles, a Department of Homeland Security official said. Authorities also were doing more random screenings as passengers went through security checkpoints and at departure gates, said the official, who requested anonymity. “The past five weeks, there’s been a noticeable increase in military and police,” said Scott Froseth, 30, a business consultant, in Manhattan’s Penn Station. He travels from Hartford, Connecticut, to Brooklyn every Monday. “Guys in fatigues with their hands on their guns. It’s the same as usual today.” New York City “should increase video surveillance,” said cabdriver Nana Sarfo, 41, a Bronx resident and Ghana native. Interviewed along Eighth Avenue in midtown Manhattan, Sarfo said he hadn’t seen police searching cars today. Tourist Video Police travelled to Pennsylvania, where a tourist reported that he may have unintentionally photographed the person while taking snapshots of Times Square, Kelly said. Investigators have “no evidence” that a group of Pakistani Taliban sympathizers were responsible for the attempt, although a self-described group took credit for it, Kelly said. He noted authorities have ruled out the group’s involvement in other attempted and successful attacks around the world after receiving similar messages in the past. “Cops aren’t going to make me feel any safer because we’re not addressing the source of the problem: what motivates these people,” said Pepe Palikis, 55, a cattle trader for Australian Agriculture Co. who travels from New York to Philadelphia via Penn Station three times a week. “Right now I’m more concerned with the U.S. dollar going down.” Improvised Explosive Investigators have examined bags of a granular material found in a gun box in the car, which they believe might be fertilizer, Kelly said. Timothy McVeigh used about 5,000 pounds of ammonium nitrate fertilizer ingredient in the improvised explosive device in the 1995 truck bombing of a federal building in Oklahoma City. The intended detonator of the Times Square bomb, Kelly said, was a 16-ounce can filled with consumer-grade fireworks. The car also held two five-gallon containers of gasoline and three propane tanks, wired with two clocks, the commissioner said. Obama , speaking in Louisiana where he had gone to inspect damage from the Gulf of Mexico oil spill, praised the city’s police and fire departments, the Federal Bureau of Investigation, and the street vendor who alerted police to the smoking car. ‘Every Step Necessary’ “My national security team has been taking every step necessary to ensure that our state and local partners have the full support and cooperation of the federal government,” Obama said. “We’re going to do what is necessary to protect the American people to determine who’s behind this potentially deadly act and to see that justice is done.” U.S. Homeland Security Secretary Janet Napolitano , in an interview on NBC’s “Today” show, said it’s “premature to rule in or out” that the bombing attempt is linked to international terrorism. Plans to host foreign ministers in New York at a United Nations conference on nuclear non-proliferation won’t be disrupted, said U.S. State Department spokesman Philip Crowley . The gathering, which will draw participants from Europe, the Middle East and Asia, starts May 4. Businesses Respond Among businesses stepping up security was Bank of America Corp. , whose 54-story tower is about two blocks from where the vehicle was parked. “Our corporate security team has increased uniform presence at One Bryant Park,” spokesman T.J. Crawford said in an e-mail. The building “was built with 9/11 in mind,” said its owner, Douglas Durst , co-president of The Durst Organization, in a phone interview. Completed in 2008, the structure “has extra-wide staircases, it has pressurized stairs to keep smoke out, and it’s surrounded by bollards,” or protective traffic guards, he said. Durst, whose properties also include the Conde Nast building at 4 Times Square, said his company had installed security cameras and refitted buildings with blast-resistant glass and traffic buffers to protect against car bombs. “This city is as safe as it’s ever been,” Bloomberg said. “Is it perfectly safe? No, but we always will have events, we’ve had 11 or so in the last eight years, and every time we have responded appropriately. We keep changing our procedures, we keep studying what happens overseas, and we so far have done the right thing. And you can never guarantee 100 percent.” Police presence has been increased in the Times Square area today. Bloomberg urged tourists and New Yorkers to continue visiting the area and “enjoy a Broadway show.” The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP. To contact the reporters on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net ; Allison Bennett in New York at abennett23@bloomberg.net .

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New York Police Seek Man Filmed Close to Failed Car Bomb in Times Square

May 2, 2010

By Henry Goldman May 2 (Bloomberg) — New York detectives sought to identify a person seen in Times Square around the hour of yesterday’s attempted car bombing, while police and building owners stepped up security in midtown Manhattan. Police Commissioner Raymond Kelly said investigators are looking for a man caught on a video camera walking away from the site near Times Square where they found a Nissan Pathfinder SUV with an explosive device inside. Police plan to make the video public, Kelly said. As forensic experts examined the car, gathering fingerprints and its owner history through a recovered vehicle identification number, Kelly said he intends to deploy more officers than usual in midtown Manhattan and elsewhere to help ease tourists’ minds. “It wasn’t an accident; it was someone who brought this to the area to send a message,” Kelly told reporters, defining the crime as terrorism. “If this had detonated, it would have caused casualties, a significant fireball, and would have ripped the vehicle in half.” Transit agency officials said they expected the morning commute to be normal. They and some building owners said they had already upgraded security in the aftermath of the Sept. 11, 2001, terrorist attack on the World Trade Center. “NYC Transit has remained at the highest state of alert since 9/11, reminding employees to report any suspicious activity,” said Paul Fleuranges , a spokesman for New York City Transit, which operates the subways and buses. Heightened Awareness He cited an April 30 incident in which track workers spotted someone in a tunnel near Bowling Green in lower Manhattan and turned the individual in to police as “an example of that heightened state of awareness.” Kelly said the person police are looking for, described as about 40 years old, was captured on a neighborhood surveillance camera as he hurried through Shubert Alley , a pedestrian walkway between 44th and 45th Street, steps away from where the explosive-laden car was parked. The person can be seen on the video removing his dark shirt and placing it in a bag, and while dressed in a red T-shirt, he walked from the scene “in a furtive manner,” Kelly said. Police were also on their way to Pennsylvania, where a tourist reported that he may have unintentionally photographed the person while taking snapshots of Times Square, Kelly said. ‘No Evidence’ of Taliban Investigators have “no evidence” that a group of Pakistani Taliban sympathizers were responsible for the attempt, although a self-described group took credit for it, Kelly said. He noted authorities have ruled out the group’s involvement in other attempted and successful attacks around the world after receiving similar messages in the past. New York Mayor Michael Bloomberg , speaking to reporters this evening in Times Square as a crowd of tourists watched, said there is “no evidence” of a link to terrorist groups. The mayor, founder and majority owner of Bloomberg News parent Bloomberg LP, thanked the federal government for assistance from the FBI and the Department of Homeland Security. Relations between the city and federal authorities “have never been tighter,” Bloomberg said. “This is the crossroads of the world and people will continue to come here,” the mayor said before escorting Wayne Rhatigan, the police officer who was first on the scene, and his wife, to dinner several blocks from where the incident occurred. Federal Support     President Barack Obama , speaking in Louisiana, where he had gone to inspect damage from the Gulf of Mexico oil spill, praised the city’s police and fire departments, the FBI, and the street vendor who alerted police to the smoking car.      “My national security team has been taking every step necessary to ensure that our state and local partners have the full support and cooperation of the federal government,” Obama said. “We’re going to do what is necessary to protect the American people to determine who’s behind this potentially deadly act and to see that justice is done.” Plans to host foreign ministers in New York at the United Nation’s Nuclear Proliferation Conference won’t be disrupted by the bomb scare, said U.S. State Department spokesman Philip Crowley . The conference, which will draw participants from Europe, the Middle East and Asia, starts May 4. Among businesses stepping up security was Bank of America Corp., whose 54-story tower is situated about two blocks from the corner of West 45th Street and Broadway where the vehicle was parked. “Our corporate security team has increased uniform presence at One Bryant Park,” spokesman T.J. Crawford said in an e-mail. ‘9/11 in Mind’ The building “was built with 9/11 in mind,” said its owner, Douglas Durst , co-president of The Durst Organization, in a phone interview. Completed in 2008, the structure “has extra-wide staircases, it has pressurized stairs to keep smoke out, and it’s surrounded by bollards,” or protective traffic guards, he said. Durst, whose properties also include the Conde Nast building at 4 Times Square, said his company had installed security cameras and refitted buildings with blast-resistant glass and traffic buffers to protect against car bombs. At the 1,949-room Marriott Marquis Hotel , where 800 to 1,000 people were evacuated to ballrooms for about seven hours, “everything returned to normal” after guests were permitted to return to their rooms at about 2 a.m., said Kathleen Duffy, a spokeswoman for the hotel chain’s New York operations. The hotel is across the street from where the car was parked. ‘No Complaints’ “Guests were all very cooperative,” she said. “They understood why this was happening and we received no complaints.” Forensic investigators have examined eight one-pound (0.45- kilogram) bags of a granular material found in a gun box in the car, which they believe might be fertilizer, Kelly said. Timothy McVeigh used about 5,000 pounds of ammonium nitrate fertilizer ingredient in the improvised explosive device in the 1995 truck bombing of a federal building in Oklahoma City. The intended detonator of the Times Square bomb, Kelly said, was a 16-ounce can filled with consumer-grade fireworks. The car also held two five-gallon containers of gasoline and three propane tanks, wired with two clocks, the commissioner said. Kelly said officials have identified the owner of the vehicle and are trying to find and talk to the individual. To contact the reporter on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net

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Stop Robert Rubin Before He Kills Again

April 30, 2010

Robert Rubin is poisoning Washington again. The former Treasury Secretary who presided over the nearly-fatal deregulation of the financial industry — then made $126 million nearly killing Citigroup — had been keeping an appropriately low profile in the nation’s capital ever since everything he wrought went pear-shaped. But now he’s back, and once again trying to influence public policy. On Friday he made his third major (and apology-free) Washington appearance in two weeks, delivering opening remarks at a conference that his pet think tank, the Hamilton Project, co-sponsored with the liberal Center for American Progress. But the last thing Washington needs right now is another infusion of Rubinomics — by which I mean the combination of deregulatory zeal, deficit obsession, free tradeism and general coziness with fat-cat Wall Street bankers that Rubin epitomizes. It’s long been troubling that so many of Obama’s top economic advisers are former Rubin proteges, but the return and rehabilitation of the man himself is particularly unwelcome right now. Mild signs of recovery aside, we remain very much in the midst of an unemployment crisis that is devastating American families and that requires active, urgent government intervention — not hand-wringing about the federal budget deficit. Financial regulation, to be effective, needs to limit what Rubin and his friends want to be able to do. The Rubin effect could be felt at Friday’s event, which was ostensibly about ” The Future of American Jobs ,” but which — with a few notable exceptions — lacked a sense of urgency about the current unemployment crisis, focusing instead on long-terms “structural problems.” Asked by feisty moderator Chrystia Freeland of Reuters to explain why, if our capital markets are the best in the world, job creation is so weak, panelist and Berkeley economics professor Alan Auerbach instead launched into a disquisition on tax policy and the need to reduce corporate income taxes. The centerpiece of Friday’s event, a new report by MIT economist David Autor, did a commendable job of relating the polarization of job opportunities and contraction of the middle class to the feeble state of the America’s public education system, but it glossed over the key role played by rapacious financial titans. Panelist Ron Blackwell, chief economist for the AFL-CIO, was almost alone in giving more than lip service to the current jobs crisis. Blackwell said he had never seen a labor market “in worse condition than exists at present.” He pointed out that the U.S. is an outlier country — “No other country is experiencing anything like this,” he said. He decried the way “globalization and financialization” has “changed the balance of power between workers and employers.” And generally speaking, he made no bones about the government’s essential role in both creating and fixing America’s unique economic problems. What’s needed, he said, is nothing less than a “sustained public-investment led recovery that rebuilds the capacity of the American economy.” His cause was not taken up by his fellow speakers, however — including Larry Summers, President Obama’s chief economic adviser, and one of the event’s two headliners (along with New York Mayor Michael Bloomberg.) Summers began his remarks with an acknowledgment of the terrible trauma being caused by high unemployment. Then he pivoted. “This is a profoundly important problem for our society, but it’s the task of economists to analyze it in a more bloodless way.” And bloodless he was. For the next several years, he said, “What I think is safe to say is that even on optimistic assumptions, there is going to be substantial unused capacity in this economy,” measured by, among other things, the unemployment rate. Asked when that high unemployment would abate, he explained that it would depend upon “the pace of the economic recovery in terms of GDP” [Gross Domestic Product] and whether the formula that economists have historically used to predict job growth based on GDP would continue to be skewed by unusually high productivity. “Make your judgment about the GDP forecast over the next several years. Take your guess about whether the formula is going to snap back, or continue to be off, and you can form a view about the unemployment rate,” he suggested. “Maybe things will restore to normal,” he said — in which case job growth would actually outpace GDP. “That would be my guess, though not one I would hold confidently.” Summers did endorse some new government measures to spur job growth. “I don’t see how anyone can look at the wholesale destruction of construction jobs [and] the state of our infrastructure in many spheres and not think that something ought to be done to increase the extent of our national effort around public investment,” he said. But asked if the country needs another stimulus, he replied: “I don’t think framing the question in terms of a ‘stimulus’ is very helpful.” He said he favored continuing unemployment insurance, new funding for local governments and investments in energy efficiency — three major progressive goals. But beyond that, he said: “Is this the moment for some major new experiment in Keynesian pump-priming? Absolutely no.” Rubin’s public rehabilitation tour started last week, with a Hamilton Project event devoted to the principal that “it is vital that we begin to confront the challenges that pose a greater risk to our long-run prosperity than the Great Recession.” Vice President Joe Biden was the keynoter at that event, but, in a turnabout, used the occasion to challenge the Wall-Street friendly Democrats Rubin had assembled to join President Obama in making sure that this economic recovery, unlike the last one, actually benefits the middle class. Rubin’s second major appearance was on Wednesday, at a gala “Fiscal Summit” organized by fellow deficit hawk (and fellow Wall Street mogul) Peter Peterson. (The two men even joked onstage about their relative net worths.) That was a lovefest — and a deeply disturbing one at that. Although Biden didn’t play along, Rubin has some highly placed enablers in his rehabilitation. The deficit summit’s keynoter, former President Bill Clinton, had warm words for Rubin. “He’s taken a few licks lately, like all of us have,” Clinton said. But “I think he’s the finest Treasury Secretary since Alexander Hamilton, and I still believe that.” At Friday’s event, I asked Center for American Progress head John Podesta, who is close to the Obama White House, if he was concerned about enabling Rubin. He responded: “I think he has a track record, much of which is successful, some of which is not successful.” At last week’s event, I asked Rubin about his role in deregulating derivatives — one of the critical steps in the series of events that led to the country’s financial meltdown. He replied that he had always favored regulating them. I wrote that even were this the case, his claim to fame remains that he killed the one serious attempt to regulate them . Jumping to his defense Friday afternoon in Newsweek was Jacob Weisberg , the Washington Post Co. executive who co-authored Rubin’s 2003 autobiography (talk about intimate relationships between journalists and their sources). Weisberg insists that Rubin supported regulation, but was just powerless to do so given the opposition from Wall Street and other members of the Clinton administration. Similarly, Weisberg argues, despite multiple reports to the contrary, that Rubin wasn’t involved in the decisions that led to Citigroup needing a massive federal bailout to survive. Is anything disqualifying from public life these days? Given the chance to weigh in, the voters evidently think so — consider the parable of soon-to-be-former Sen. Chris Dodd . In Washington public policy circles, however, the answer is apparently not — certainly not if you’re rich and well connected. But as Rubin’s literally disastrous track record so clearly suggests, Washington would be better off shorting Rubinomics than investing in it. ************************* Dan Froomkin is senior Washington correspondent for the Huffington Post. You can send him an e-mail , bookmark his page ; subscribe to RSS feed , follow him on Twitter , friend him on Facebook , and/or become a fan and get e-mail alerts when he writes.

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Greater New York Launch A Victory Party In The Middle Of A War

April 27, 2010

Last night’s Wall Street Journal blowout had all the makings of a victory party. As a few hundred of New York’s most prominent personalities looked on, faces alternating the colors of the lights shining beneath the dome of Gotham Hall, Rupert Murdoch spoke of the launch of the paper’s new Greater New York section as if he’d just found the final piece to an unsolvable puzzle. With the new section, Murdoch told the crowd, the paper would bring a “fresh, robust perspective” on the “city, the country, and the world.” It will be, Murdoch continued, “New Yorkers’ essential source for news and information.” Bold words for something less than 24-hours old, but coupled with the earlier announcement that the Journal had overtaken USA Today as the country’s number one paper, there were more than a few in the audience who believed it. To drive that last point home, Murdoch couldn’t help but reference a certain Gray Lady whose name was on everyone’s minds, mentioning with barely constrained smugness that the New York Times local circulation had “declined by 40 percent over the past several years.” The audience laughed and cheered, and looking around at the top shelf open bar, the three types of smoked salmon, and endless assortment of delectables and delicacies, one could understand why: in a sense, they had won. New York loves an up-and-comer, a rookie to cheer for, even if that newcomer is part of a hundred-year-old company and related to Fox News. The Times is fading, scaling back and reformatting. Nobody loves a loser. Just ask the Knicks. The Journal is moving forward, somehow, and in many minds that means progress, and progress means not having to look too hard at the barren wasteland of New York’s once-fertile media landscape. It means that the last three years didn’t really happen. Or if they did, then that they weren’t really the harbingers of doom that all had predicted. Murdoch was pushing forward as only he and a handful of others in the world could. And the crowd, no matter how prominent or small the personality, wanted to come too. Everyone (save perhaps the mayor himself) wanted to hitch their wagons to the near-octogenarian Australian: they wanted to believe. So, for an evening Murdoch and the Wall Street Journal truly had won. Not a war, as many in the company would surely like to believe, but just one battle in what will surely be a long line of them. Will Murdoch be able to keep people believing? Only time will tell. (For photos from the event, CLICK HERE )

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Quadrangle Settles With Cuomo, SEC in Probes of Pension Fund Pay-to-Play

April 15, 2010

By Karen Freifeld and David Glovin April 15 (Bloomberg) — Quadrangle Group LLC, the private- equity firm co-founded by Steven Rattner , will pay $7 million to settle an investigation by New York Attorney General Andrew Cuomo into the state’s pension fund. Cuomo announced the settlement in a statement today, along with agreements by three other firms including GKM Newport General Capital Service LLC. He said that firm will pay the equivalent of $1.6 million. The U.S. Securities and Exchange Commission today announced a related lawsuit against Quadrangle in Manhattan federal court, accusing the firm of “a wide- ranging” kickback scheme involving the state pension fund. The SEC said the firm agreed to settle the suit for $5 million. “We wholly disavow the conduct engaged in by Steve Rattner, who hired the New York state comptroller’s political consultant Hank Morris, to arrange an investment from the New York State Common Retirement Fund,” Quadrangle was quoted as saying in Cuomo’s statement. Cuomo said his office’s agreement with Quadrangle “expressly does not cover” Rattner. State and federal prosecutors have been investigating whether money managers illegally paid politically connected placement agents and made political contributions for access to $2 trillion in U.S. public retirement funds, a practice known as pay-to-play. Rattner headed New York-based Quadrangle when the private- equity firm paid Morris, former chief political consultant to then-New York state Comptroller Alan Hevesi , about $1.1 million in finder fees for a $100 million investment from the pension fund. Placement Agent The firm retained Morris as a placement agent to get its investment from the New York pension fund increased from $25 million to $100 million, Cuomo said. The firm also arranged for a DVD distribution deal for a movie produced by the brother of David Loglisci , then chief investment officer of the state retirement fund. Adam Miller , a spokesman for Rattner, didn’t immediately return a call seeking comment. Andy Merrill, a spokesman for Quadrangle, said the firm would issue a statement today. As part of the settlement with Cuomo, Jon Silvan, chief executive officer of the political consulting firm Global Strategy Group, will pay $2 million to settle the probe by Cuomo. California lobbying firm Platinum Advisors will pay $500,000 and unlicensed placement agent Kevin McCabe will pay $715,000, according to Cuomo. Treasury Department Rattner served until July in the Obama administration’s Treasury Department as chief adviser on auto-industry restructuring. Quadrangle Asset Management has handled the personal and philanthropic finances of New York Mayor Michael R. Bloomberg, whom Rattner supported through his chairmanship of Democrats for Bloomberg during the 2005 re-election campaign. Last month, the New York Times reported that the mayor had decided to move about $5 billion out of the firm. The mayor is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News. To contact the reporter on this story: Karen Freifeld in New York at kfreifeld@bloomberg.net and; David Glovin in New York federal court at glovin@bloomberg.net .

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Jeb Bush, Henry Paulson Tapped By Bloomberg For Charity Board

March 31, 2010

NEW YORK — New York City’s billionaire mayor has tapped former Florida Gov. Jeb Bush, former U.S. Department of the Treasury Secretary Henry Paulson, Newark, N.J., Mayor Cory Booker and 16 others to serve on the board of his philanthropic foundation. Mayor Michael Bloomberg got his start on Wall Street and founded the financial information company Bloomberg LP. His fortune is estimated at $18 billion by Forbes magazine. The three-term mayor recently began shaping a foundation to concentrate full time on his giving. He gave $254 million to 1,300 charities last year. He was ranked No. 4 on the Chronicle of Philanthropy’s list of 50 Americans who gave the most. The board also includes his two daughters, former Miami Mayor Manny Diaz and artist Maya Lin.

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Fortune’s Stanley Bing: Good Census Makes Good Neighbors

March 25, 2010

When I was a kid, there was a concept that was taught to us in school. It was called Citizenship. It was part of an ideal of cordiality and common interest that held us together as a nation. Of course, much of it was bushwah. The world back then was just as full of injustice, prejudice and rotten losers who didn’t care about anyone but themselves as it is today. Perhaps we were just more cordial about it. There were several aspects to citizenship that were drummed into us. First, it carried with it a host of benefits. You were an American. Americans were part of a great, ongoing experiment that had something to do with personal freedom, opportunity for all, hot dogs and baseball, education as a common right, and something about lifting the lamp beside the golden door to all the tired and poor. No matter how we might disagree on a host of things, we were all citizens, and that, along with television, bound us together. Citizenship, it was quickly pointed out, came with certain responsibilities. You had to vote, for instance, when the Mayor, Governor, or Uncle Sam told you it was time to do so. Those who didn’t vote were not being good citizens. This being America, we weren’t going to punish them for not voting. But we didn’t appreciate them, either. As a citizen, you also were supposed to bring your library books back on time, obey rules about crossing the street and spitting in public places, not run people over on your bike, even if they were crossing in the middle of the block, and eat a good breakfast every day. These weren’t onerous obligations. They were just part of good Citizenship. And exercising them, it turned out, gave one a certain good feeling that was unlike any other. It was a little like collecting money for Unicef at Halloween, particularly if you actually gave the money you got for that exercise to the teacher on November 1. But it was a quieter feeling than that. I still get it when I vote, even though sometimes I feel like I’m choosing between a block of stinky cheese and an old sock whose mate was long ago lost in the laundry. This brings us to the Census form that came in the mail last week. It had been sitting on my kitchen table for a while and this morning I filled it out. It made me feel quite good in a way that transcends the kind of glow I get when the stock goes up a few points, or somebody tells me I look thinner. For a few minutes, as I checked off the boxes that told my Government a little bit about myself, I felt like I was part of the big collective American people in a way I haven’t for some time. For just a few minutes, I forgot about Wall Street and health care and unemployment and tea parties and people who think that those who work for social justice are Nazis, for God’s sake, or how the President is doing in the polls or whether Twitter is the new Facebook or vice versa. I felt like I was doing something nice with the rest of my neighbors. I’m aware that not everybody sees it this way. A few of my friends looked at me like I was slightly demented when I started talking about this stuff. And last year some idiots actually killed a census worker in what I guess they thought was some kind of twisted, anti-Government patriotism of some kind. Or maybe he just stumbled on their still. But me, I liked filling out my census form. Actually, it made me wonder what other good citizenship things are going on out there for me to do. Once you get started, the possibilities seem kind of endless. I’ll bet you could come up with a few. Although this might not be the proper venue for that discussion, being concerned with business and free enterprise and all.

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Detroit Sells $250 Million of Its Debt Without Recent Disclosure Filings

March 11, 2010

By Darrell Preston March 11 (Bloomberg) — Detroit, the largest U.S. city whose debt is rated below investment grade, will ask investors today to buy $250 million of its debt without having filed annual financial reports on time for five years. The city, which warned investors in its preliminary official statement of the possibility of filing for Chapter 9 bankruptcy protection, is providing a June 30, 2008, financial statement, its most recent, to investors. A fiscal 2009 report is expected to be complete by May 31, said city spokesman Dan Lijana, in an e-mail. “This issue is not for the faint of heart,” said Richard Ciccarone, chief research officer of Oak Brook, Illinois-based McDonnell Investment Management, which oversees $6.8 billion of municipal debt. “It certainly raises eyebrows.” Detroit will provide backing by payments of state aid from sales taxes to the general obligation issue, which enabled the issue to maintain investment grade. Michigan’s state treasurer can pay the aid directly to the trustee for the bonds, bypassing the city to ensure the debt is serviced, according to offering documents. The treasurer also agreed not to withhold payments when the city is late filing financial statements, as it has in the past. The municipality is selling the same week that state and local governments are scheduled to bring more than $11 billion of long-term securities to market. The largest deals include $2 billion from California and $696 million from the District of Columbia. Goldman Sachs Detroit is selling $250 million of bonds through investment banks led by Goldman Sachs Group Inc. to help cover budget deficits expected to total $280 million this year. The deal will probably appeal to investors seeking high-yield municipal debt, predicted Ciccarone, precluding the city from a market with tax- exempt yields near three-month lows . The city lost its investment-grade ratings as automobile makers in Michigan began cutting jobs and the tax revenue declined, which led to an expanding budget gap covered by short- term borrowing. The new bonds will spread repayment of the deficit debt across a longer period. Detroit general obligations maturing in 2024 traded yesterday at a yield of 7.56 percent, according to Municipal Securities Rulemaking Board data. That compares with yields of 3.36 percent to 3.5 percent for top-rated 14-year municipal debt yesterday, according to Municipal Market Advisors Inc. State Revenue Detroit will benefit in pricing from the state revenue added to its general obligation backing, said Ciccarone. Moody’s Investors Service, which rates the city’s general obligation debt Ba3, its third-highest rating below investment grade, assigned an A1 rating to today’s issue because of the legal structure that protects state payments to bondholders. Standard & Poor’s, which carries a BB rating on the city’s general obligation debt, assigned an AA- rating to the new issue. Michigan has previously withheld payments because the city has been late filing financial statements, according to the offering documents. Detroit disclosed that it expects state aid to be withheld for February and April this year because its 2009 financial statement is late. Money for bondholders isn’t expected to be withheld, according to the bond documents. Detroit also disclosed there’s no precedent for how its state aid payments would be handled in the event of a Chapter 9 bankruptcy filing because there’s never been a local instance. “The lack of precedent in Michigan makes the risks associated with such a filing difficult to assess,” the preliminary offering statement said. Financial Crisis While the city is still in a financial crisis, “insolvency isn’t on the horizon or on the agenda,” said Mayor Dave Bing , in a prepared statement provided by Lijana. A request to make finance officials available for comment was declined by Lijana. The delay in financial statements occurred under previous mayors and Bing plans to submit on time the 2010 audit, the first full budget cycle under his administration, Lijana said. Following are descriptions of pending sales of municipal debt in the U.S.: FLORIDA’S CITIZENS PROPERTY INSURANCE CORP. , the state’s largest real estate insurer, plans to sell $2 billion in tax- exempt senior bonds next week. Proceeds from the debt, secured by pledged revenue deposited to the insurer’s high-risk account, will provide financing to pay claims during the 2010 hurricane season. Underwriters led by JPMorgan Chase & Co. will market the securities. They are rated A+ by S&P and A2 by Moody’s. (Added March 9) ORLANDO-ORANGE COUNTY EXPRESSWAY AUTHORITY , which operates 100 miles (161 kilometers) of toll roads in the region, plans to sell $350 million of tax-exempt revenue bonds next week. Proceeds from the sale will help finance the authority’s capital program. JPMorgan Chase & Co. will underwrite the securities, rated A1 by Moody’s and A by S&P. (Added March 9) CALIFORNIA , the lowest-rated U.S. state, intends to raise as much as $5 billion from investors this month with its first debt sales since November, according to Treasurer Bill Lockyer . JPMorgan Chase & Co. and Morgan Stanley were selected to manage a tax-exempt deal of as much as $2 billion today, and Citigroup Inc. and Bank of America Merrill Lynch will handle a taxable offering later in the month, according to the state treasurer’s Web site. California is rated A- by S&P, Baa1 by Moody’s and BBB by Fitch. (Updated March 11) MASSACHUSETTS , the second most-indebted state per capita after Connecticut, plans to sell $538.9 million of floating-rate general obligations as early as this week. The date of the sale will be determined by market conditions, according to the state treasurer’s Web site. Proceeds will help refinance outstanding variable-rate demand bonds supported by an agreement from Citibank that expires later this month, according to Moody’s. Underwriters led by Morgan Stanley will market the issue. The state’s general obligations are rated Aa2 by Moody’s, while Fitch and S&P rate them AA, the third-highest of 10 investment grades. (Updated March 9) UNIVERSITY OF TEXAS , with nine academic locations and six health institutions, plans to sell $373.3 million of fixed-rate revenue bonds next week. Proceeds from the sale of the tax exempts will be used to refinance outstanding debt. It sold $331.4 million of tax-exempt securities last week with yields ranging from 0.66 percent on securities maturing in 2012 to 3.5 percent on securities due in 2024. The sale will be marketed by RBC Capital Markets, a unit of Royal Bank of Canada. The securities are rated AAA by S&P and Fitch and Aaa by Moody’s. (Added March 11) ILLINOIS, the second-lowest rated U.S. state after California, will take bids today from banks seeking to underwrite $300 million of Build America Bonds and $56 million of non-subsidized taxable notes. The deal will finance school construction, according to John Sinsheimer , the state’s director of capital markets. Illinois, which last sold Build America securities in a $1 billion deal on Jan. 28, is rated A2 by Moody’s, A+ by S&P and A by Fitch. A statutory requirement calls for 25 percent of all state debt to be bid competitively, Sinsheimer said. Banks led by William Blair & Co. will negotiate the sale of an additional $700 million in Build America securities in mid-March, he said. (Updated March 11) To contact the reporter on this story: Darrell Preston in Dallas at dpreston@bloomberg.net .

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Sharpton Calls `Emergency’ Leaders Meeting Amid Paterson, Rangel Scandals

March 4, 2010

By Brendan A. McGrail March 4 (Bloomberg) — The Reverend Al Sharpton called an “emergency leadership” meeting tonight in Harlem to discuss how to “protect issues that are of major concern” related to New York Governor David Paterson and U.S. Representative Charles Rangel . Paterson faces charges from a state ethics panel that he violated a gifts ban, as well as an investigation by the state attorney general into allegations he interfered in the domestic- abuse case of an aide. Rangel told reporters yesterday that he asked for a leave of absence as chairman of the House Ways and Means Committee after being admonished for breaking rules on accepting gifts. The Associated Press, citing an unidentified state Democrat, reported that black Democratic leaders in Harlem will call on the governor to resign. “When a politician’s closest supporters deliver a message of that sort, it’s very hard to ignore,” said Kenneth Sherrill , a professor of political science at Hunter College in New York. “When the people you rely on tell you it’s time to go, it’s difficult to stay.” Prominent Politicians Paterson and Rangel are two of the state’s most prominent Democratic black politicians. Paterson, 55, represented Harlem in the state Senate for 21 years. Rangel, 79, in his 20th term, represents parts of Manhattan, including central and east Harlem. Sharpton, 55, the Harlem-based political activist, said in an e-mailed press release that former New York Mayor David Dinkins is among those who have been invited to the gathering at Sylvia’s Restaurant. “What’s to be served by trying to force him from office now?” Dinkins said today outside the Yale Club, according to the New York Times. Peter Kauffmann , the governor’s communications director, resigned today, saying “as recent developments have come to light, I cannot in good conscience continue in my current position.” Marissa Shorenstein , a Paterson spokeswoman, wasn’t available for comment. The National Organization for Women called for Paterson’s resignation this week, after the New York Times published a report alleging that the governor had directed two state employees to contact the woman at the center of the aide’s domestic-abuse case. The case was dismissed after the woman didn’t appear for a hearing the day after she and Paterson spoke by phone, the Times said. ‘Rush to Judgment’ Members of a black law enforcement group today criticized what they described as a “rush to judgment” on Paterson, the state’s first black governor. He took over in March 2008 after Eliot Spitzer resigned. “Why are we asking the governor to step down when these things haven’t been proven true?” said Michael Greys, a retired New York corrections officer and co-founder of 100 Blacks in Law Enforcement Who Care , at a Harlem press conference. “Let’s go with innocent until proven guilty.” Paterson became Democratic Senate minority leader in 2002, before Spitzer chose him as his running mate. Rangel is the first black to head the tax-writing committee. A New York state ethics panel yesterday said Paterson violated a ban on gifts by soliciting and taking five free tickets from the New York Yankees to the first game of the 2009 World Series. Kauffmann Testimony Testimony from Kauffmann indicated that the governor’s initial response to a press inquiry was that Paterson didn’t need to pay for the tickets because he had gone to the game on official business, the ethics panel said in a report. Paterson didn’t participate in opening ceremonies and wasn’t announced to the crowd, the report said. The Commission on Public Integrity asked state and county prosecutors to determine whether Paterson or others may have committed a crime by giving false testimony during interviews related to the tickets, “and by causing a check to be back- dated.” Paterson “intends to challenge the findings of the commission both with respect to the law and the facts,” his office said in a statement yesterday. “The governor takes this matter very seriously and intends to fully cooperate with any further inquiries or investigations, but believes the commission has acted unfairly in this matter.” To contact the reporter on this story: Brendan A. McGrail in New York at bmcgrail@bloomberg.net .

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Chile Steps Up Search for Survivors as Earthquake Death Toll Surpasses 700

February 28, 2010

By James Attwood Feb. 28 (Bloomberg) — Chile stepped up efforts to find survivors of an earthquake registering 8.8 magnitude that struck before dawn yesterday, killing more than 700 people, severing the country’s main highway and damaging 1.5 million homes. The Chilean Air Force began ferrying rescue workers, police and other security forces in hourly flights to the city of Concepcion, close to the epicenter of the quake. Special forces troops and police with sniffer dogs are among the rescue workers entering worst affected areas of southern Chile. Authorities are setting up field hospitals and deploying additional rescue workers to the most affected areas, President Michelle Bachelet told reporters today. The army is sending 10,000 troops, Defense Minister Francisco Vidal said. More than 50 aftershocks followed yesterday’s quake, which was stronger than the one in Haiti last month that may have killed 300,000. A temblor measuring 6.2 hit the Libertador O’Higgins region, 90 miles south of Santiago, at 6:25 a.m. New York time, the U.S. Geological Survey said on its Web site. “It’s much worse than I thought it would be,” Public Works Minister Sergio Bitar told reporters yesterday. “It’s not something we can solve quickly. This will take several months.” Bachelet held meetings with armed forces personnel, ministers and emergency agency officials in Santiago. President- elect Sebastian Pinera visited the city of Talca by helicopter, calling on private companies to assist the emergency efforts and reconstruction. Yesterday’s quake was centered 200 miles (317 kilometers) southwest of Santiago near the main winemaking region and close to Concepcion, a metropolitan region of over 500,000 people. Highways and airports were shut by damage and some copper mines closed. The total economic damage may be as much as $30 billion, or about 15 percent of the South American country’s gross domestic product, according to estimates by disaster-scenario modeler Eqecat Inc. ‘State of Catastrophe’ Bachelet declared a “state of catastrophe.” She said in a televised address yesterday about 2 million people have been affected by the earthquake, which the USGS said is the world’s fifth strongest since 1900. The 90-second temblor severed the Pan-American highway, the country’s main thoroughfare, at several points south of Santiago. Bridges collapsed and embankments have subsided, rendering long sections of asphalt impassable. Bypasses have been set up to reconnect roadways, Abumohor said today. An estimated 1.5 million homes may have been damaged, a third of them severely, Housing Minister Patricia Poblete said. “We are talking almost about a cataclysm,” Poblete said in remarks broadcast on TVN. Santiago Palace Damaged In Santiago, people slept in cars, their yards and outside apartment buildings, concerned that aftershocks would further damage their homes. The facade of the fine arts museum collapsed and Bitar said there was damage to part of the La Moneda presidential palace. The worst problems are near the epicenter of the earthquake close to Parral, more than 300 kilometers from Santiago. The tower of the pink church at Pelequen, a place of pilgrimage 130 kilometers south of Santiago, was gone and the roofs of several colonial-style houses had collapsed. Pinera, who is to be sworn into office on March 11, vowed to reassign spending to finance reconstruction. Television images showed collapsed buildings across Concepcion. Rescue workers with specially trained dogs worked through the night to rescue 100 people believed to be trapped inside a 14-story apartment building that toppled onto one side, following the cries of those trapped inside, TVN reported. Water System Destroyed Tanker trucks distributed drinking water to the city, whose water system was destroyed by the quake, Mayor Jacqueline Von Rysselberghe told TVN, as rescue workers drilled into the toppled building behind her. Food is running out in the city because it’s impossible for supplies to reach the city, she said. Riot police patrolled the streets in Concepcion, firing teargas on people looting a supermarket, TVN images showed. “People are running out of food at home and that encourages looting,” the mayor said. “If we don’t solve that problem tonight will be very hard, the social tension will be very high.” In towns closer to the epicenter, including Curico and Talca, more than 80 percent of buildings were flattened, CHV Television reported. Offshore Epicenter The temblor struck at 3:34 a.m. offshore from the province of Maule at a depth of 22 miles (35 kilometers), according to the USGS Web site . It carried a force 500 times stronger than the magnitude 7.0 earthquake that last month devastated Haiti, in terms of the energy released, according to the USGS. “We literally bounced around the room,” Patricia Bustamante, 61, said from the emergency room at the Salvador hospital in Santiago where her daughter was being treated for multiple concussions. “I’ve been through the earthquakes of 1960, 1971 and 1985 and this one felt different. It was like a galloping horse.” Stringent building codes and the most highly-engineered building inventory in Latin America helped mitigate damage, Boston-based Air Worldwide, a catastrophe modeling firm that estimates damages for insurers, said in a press release. Power and phone connections were disrupted. Chilectra , the electric utility for the Chilean capital of Santiago, said electricity has been restored to 80 percent of the city’s homes and businesses. At least four copper mines responsible for 16 percent of the country’s output halted operations after the quake struck. Chile is the world’s largest copper producer. Mines to Reopen Codelco’s El Teniente and Andina mine in central Chile will reopen “shortly” after inspectors failed to find major damage, Mining Minister Santiago Gonzalez said without providing a timetable for them to restart. Most of Chile’s copper deposits and port facilities are located in the northern half of the country and had no reports of damage. These include Escondida, the world’s largest copper mine, operated by BHP Billiton Ltd. and in which Rio Tinto Group is a shareholder. Secretary of State Hillary Clinton still plans to visit Chile during her previously planned five-country tour of Latin America this week, department spokeswoman Megan Mattson said in a telephone interview today. “The secretary is still planning on stopping in Chile to show solidarity with the Chilean people,” Mattson said. “At this time, we have not received a formal request for aid.” Finance Minister Andres Velasco said it was too early to estimate the economic cost of the quake. He said Chile’s policy of funneling windfall copper profits into a $14.7 billion rainy- day fiscal savings fund would help shoulder the cost of rebuilding. “Chile has saved for a very long time in order to have the savings to be able to face situations like this,” he told reporters. To contact the reporters on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net ; Michael Smith in Santiago at mssmith@bloomberg.net ; James Attwood in Santiago at jattwood3@bloomberg.net .

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Chile Earthquake Deaths at 708, Will Go Higher, President Bachelet Says

February 28, 2010

By Sebastian Boyd, Michael Smith and James Attwood Feb. 28 (Bloomberg) — Chileans awoke to aftershocks from an earthquake registering 8.8 magnitude that struck before dawn yesterday, killing more than 300 people, severing the country’s main highway and damaging 1.5 million homes. A temblor measuring 6.2 hit the Libertador O’Higgins region, 90 miles south of the capital Santiago, at 6:25 a.m. New York time, the U.S. Geological Survey said on its Web site. More than 50 aftershocks followed yesterday’s quake, which was stronger than the one in Haiti last month that may have killed 300,000. Chile’s death toll is more than 300 people, Jose Abumohor, a spokesman for the National Emergency Agency, said today during a televised news conference. “It’s much worse than I thought it would be,” Public Works Minister Sergio Bitar told reporters yesterday. “It’s not something we can solve quickly. This will take several months.” Yesterday’s quake was centered 200 miles (317 kilometers) southwest of Santiago near the main winemaking region and close to Concepcion, a metropolitan region of over 500,000 people. Highways and airports were shut by damage and some copper mines closed. The total economic damage may be as much as $30 billion, or about 15 percent of the South American country’s gross domestic product, according to estimates by disaster-scenario modeler Eqecat Inc. ‘State of Catastrophe’ Chilean President Michelle Bachelet declared a “state of catastrophe.” She said in a televised address yesterday about 2 million people have been affected by the earthquake, which the USGS said is the world’s fifth strongest since 1900. A Pacific- wide tsunami warning has been cancelled “for all countries,” the Pacific Tsunami Warning Center said in an advisory on its Web site. The 90-second temblor severed the Panamerican highway, the country’s main thoroughfare, at several points south of Santiago. Bridges collapsed and embankments have subsided, rendering long sections of asphalt impassable. Bypasses have been set up to reconnect roadways, Abumohor said today. An estimated 1.5 million homes may have been damaged, a third of them severely, Housing Minister Patricia Poblete said. “We are talking almost about a cataclysm,” Poblete said in remarks broadcast on TVN. Cars headed north toward the capital were near stationary in long columns threading their way through the vineyards and fruit orchards of Chile’s central valley as Bitar and Defense Minister Francisco Vidal flew overhead in an army helicopter to inspect the damage. The army may send two field hospitals to the south of Chile, Vidal said. Santiago Palace Damaged In Santiago, people slept in cars, their yards and outside apartment buildings, concerned that aftershocks would further damage their homes. The facade of the fine arts museum collapsed and Bitar said there was damage to part of the La Moneda presidential palace. The worst problems are near the epicenter of the earthquake close to Parral, more than 300 kilometers from Santiago. The tower of the pink church at Pelequen, a place of pilgrimage 130 kilometers south of Santiago, was gone and the roofs of several colonial-style houses had collapsed. Bachelet spent yesterday morning answering phones and huddling with the ministers in the control center of the National Emergency Office in Santiago before boarding a helicopter to Talca. Collapsed Buildings President-elect Sebastian Pinera , who is to be sworn into office on March 11, said he inspected the damaged area and vowed to reassign spending to finance reconstruction. Television images showed collapsed buildings across Concepcion. Rescue workers with specially trained dogs worked through the night to rescue 100 people believed to be trapped inside a 14-story apartment building that toppled onto one side, following the cries of those trapped inside, TVN reported. Tanker trucks distributed drinking water to the city, whose water system was destroyed by the quake, Mayor Jacqueline Von Rysselberghe told TVN, as rescue workers drilled into the toppled building behind her. Food is running out in the city because it’s impossible for supplies to reach the city, she said. Riot police patrolled the streets in Concepcion, firing teargas on people looting a supermarket, TVN images showed. “People are running out of food at home and that encourages looting,” the mayor said. “If we don’t solve that problem tonight will be very hard, the social tension will be very high.” In towns closer to the epicenter, including Curico and Talca, more than 80 percent of buildings were flattened, CHV Television reported. Offshore Epicenter The temblor struck at 3:34 a.m. offshore from the province of Maule at a depth of 22 miles (35 kilometers), according to the USGS Web site . It carried a force 500 times stronger than the magnitude 7.0 earthquake that last month devastated Haiti, in terms of the energy released, according to the USGS. “We literally bounced around the room,” Patricia Bustamante, 61, said from the emergency room at the Salvador hospital in Santiago where her daughter was being treated for multiple concussions. “I’ve been through the earthquakes of 1960, 1971 and 1985 and this one felt different. It was like a galloping horse.” Stringent building codes and the most highly-engineered building inventory in Latin America helped mitigate damage, Boston-based Air Worldwide, a catastrophe modeling firm that estimates damages for insurers, said in a press release. Power, Copper Mines Power and phone connections were disrupted and Santiago residents waited in the street amid fears of aftershocks. Chilectra , the electric utility for the Chilean capital of Santiago, said electricity has been restored to 80 percent of the city’s homes and businesses. At least four copper mines responsible for 16 percent of the country’s output halted operations after the quake struck. Chile is the world’s largest copper producer. Codelco’s El Teniente and Andina mine in central Chile will reopen “shortly” after inspectors failed to find major damage, Mining Minister Santiago Gonzalez said without providing a timetable for them to restart. Most of Chile’s copper deposits and port facilities are located in the northern half of the country and had no reports of damage. These include Escondida, the world’s largest copper mine, operated by BHP Billiton Ltd. and in which Rio Tinto Group is a shareholder. Airport Closed Lan Airlines SA , Latin America’s biggest carrier by market value and which is partly owned by the billionaire Pinera, diverted 17 flights after the Santiago airport closed because of damage. It is expected to remain closed for at least 24 hours, according to airport chief Eduardo del Canto. “The terminal is completely inoperable,” he said. “The aftershocks are scary,” said Susan Irvine, one of a group of tourists from Canada stranded in Santiago after the earthquake closed the airport. “We’ve gone from talking about hours to days.” U.S. Secretary of State Hillary Clinton is scheduled to arrive March 1 in Santiago on a regional tour. President Barack Obama , in a phone call with Bachelet, said the U.S. stands ready to assist Chilean rescue and recovery efforts. While Chile “has considerable assets of its own,” the U.S. has put together a disaster response team and has placed two urban search and rescue teams on alert, State Department spokesman Philip Crowley said in a statement. Economic Cost Finance Minister Andres Velasco said it was too early to estimate the economic cost of the quake. He said Chile’s policy of funneling windfall copper profits into a $14.7 billion rainy- day fiscal savings fund would help shoulder the cost of rebuilding. “Chile has saved for a very long time in order to have the savings to be able to face situations like this,” he told reporters. United Nations Secretary-General Ban Ki-Moon said his organization is monitoring the situation. The UN is on standby to provide emergency relief, the organization said yesterday in an e-mailed statement. Five people died and 11 are missing after a tsunami struck the Juan Fernandez archipelago, 420 miles west of the city of Valparaiso on Chile’s coast, according to images broadcast by TVN, while a sea surge reached the central plaza of port city Talcahuano, near Concepcion, leaving boats stranded in streets. Chile was struck by the most powerful earthquake on record in 1960, when a magnitude 9.5 temblor killed about 1,655 people, according to the USGS Web site. A further 211 people died when associated tsunamis struck Hawaii, Japan and the Philippines. To contact the reporters on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net ; Michael Smith in Santiago at mssmith@bloomberg.net ; James Attwood in Santiago at jattwood3@bloomberg.net .

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Local Gun-Control Restrictions Are Placed in Sights of U.S. Supreme Court

February 19, 2010

By Greg Stohr Feb. 19 (Bloomberg) — For gun-control advocates, defeat may be inevitable in the Chicago handgun-ban case before the U.S. Supreme Court . The question is whether they will get a consolation prize. The central issue in the case, set for argument March 2, is whether the Constitution’s Second Amendment applies to state and local gun laws, in addition to those enacted by the federal government and District of Columbia. When the court in 2008 struck down D.C.’s handgun ban and declared that the Second Amendment protects individual rights, the five justices in the majority suggested the court eventually would bind states and cities. How the court takes that step, known as “incorporation,” may prove as important as if it does so. Some gun-control groups are effectively conceding incorporation, instead asking the court to say that states and cities can still enact “reasonable” regulations. That might leave intact sales restrictions and bans on concealed weapons and particular types of guns. “Given that the five justices who ruled against D.C. are still on the court, it’s going to be tough to flip any one of those votes,” said Paul Helmke , president of the Brady Center to Prevent Gun Violence in Washington. “We want to make sure that if Chicago loses that other gun laws that Chicago might adopt or other cities might adopt are upheld.” Doctrinal Question The case also presents a major doctrinal question. Advocates from across the ideological spectrum are asking the justices to forge a new path in incorporating the Second Amendment, relying on the long-dormant privileges-or-immunities clause of the 14th Amendment. A decision relying on that provision would potentially create a new legal basis for a host of established constitutional rights, including abortion, and might provide the framework for stronger protections of property rights. Chicago is now the only major U.S. city with a blanket prohibition on handguns. The ban is being challenged by four Chicago residents, including Otis McDonald, a 76-year-old homeowner in the Morgan Park neighborhood on the city’s South Side. McDonald, who keeps a shotgun in his house, says he wants a handgun by his bed for protection. He says that his home has been broken into at least three times and that he was once accosted by three neighborhood youths after he called the police to report that one of them was brandishing a gun. ‘Gang-Bangers and Drug Dealers’ “We the law-abiding citizens are the ones who are being victimized by all the laws that are being devised,” said McDonald, a retired maintenance engineer who grew up in Louisiana as the son of sharecroppers. “These laws do nothing to the gang-bangers and drug dealers because their guns are gotten illegally anyway.” Chicago Mayor Richard M. Daley said his city’s laws help reduce gun violence. “People of all backgrounds and from every part of our nation — our mothers and fathers, brothers, sisters and children – needlessly lose their lives because guns are too easily available in our society,” he said in January. The Second Amendment, like the rest of the Bill of Rights, was originally aimed only at the national government. Three times in the 19th century, the Supreme Court refused to apply the Second Amendment to the states. More recently, the court has said that some, though not all, of the rights in the first eight amendments are so fundamental they are incorporated into the 14th Amendment’s due process clause, which binds the states. The established test is whether a right is “implicit in the concept of ordered liberty.” ‘Fundamental’ Right Although the court didn’t resolve incorporation in its 2008 decision, Justice Antonin Scalia ’s majority opinion referred to gun rights as “fundamental” and said the Second Amendment “codified a right inherited from our English ancestors.” The lawyer for the Chicagoans, Alan Gura , said incorporation wouldn’t necessarily mean invalidation of less restrictive laws. “Most states have regimes regulating the carrying of guns that are perfectly constitutional,” Gura said. Scalia’s opinion said the court wasn’t questioning laws barring handgun possession by convicted felons and the mentally ill or restrictions on bringing guns into schools or government buildings. Gura is urging the court to invoke the privileges-or- immunities clause, which he says was designed to provide broad protections in the aftermath of the Civil War. The provision says that “no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.” 1873 Precedent That provision was rendered all but meaningless in an 1873 Supreme Court decision known as The Slaughter-House Cases. That ruling has since come under academic criticism for eliminating the 14th Amendment’s most straightforward assertion of protected rights. “The biggest thing restoring the privileges-or-immunities clause would do is make the Constitution make sense again,” said Doug Kendall , president of the Constitutional Accountability Center , a Washington-based advocate for civil rights, the environment and voting rights. The potential ramifications worry some advocates of individual rights. Unlike other parts of the 14th Amendment, the privileges-or-immunities clause doesn’t protect non-citizens, says Lawrence Rosenthal , a professor at Chapman School of Law in Orange, California. “In the immigrant community, there’s enormous concern over this theory,” he said. The case is McDonald v. City of Chicago, 08-1521. To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net .

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Marissa Bronfman: We Are The World: Toronto’s 122nd Annual Board of Trade Gala

February 18, 2010

It was an inspiring night of much-needed storytelling, a night charged with frenetic excitement for a future brimming with possibility and prosperity, and a night humming with hope for a new era in which Toronto takes the world stage. The message on everyone’s lips? Toronto’s time is now. The Honorable Frank McKenna with presenting sponsor Carl Lovas and wife Kathy (Sonia Recchia, Pimentel Photo) Every year the Toronto Board of Trade Gala celebrates the individuals and corporations who pour their blood, sweat and tears into making Toronto one of the world’s greatest cities in which to live, work and play – and this year was no exception. Out from under the global shadow of economic failure and rabid financial uncertainty, Canada has emerged valiantly strong and secure, in great part thanks to Toronto’s dedicated financial players. Yet despite the many, many accolades that Toronto deserves, Canadians’ notorious penchant for modesty has crippled the reach of the city’s reputation abroad. President & CEO of Board of Trade Carol Wilding with Rod Barr and Gerry Millis (Sonia Recchia, Pimentel Photo) Frank McKenna, deputy chair TD Bank Financial Group and Premier Dalton McGuinty (Grant Martin Photography) I asked Toronto’s Mayor David Miller to tell me ‘the most important thing foreigners don’t know about Toronto but should’ and I got a zealous barrage of answers; when I pressed him for a single sentence he seemed stumped but then, perhaps divinely inspired, said “we are the world”. While this may seem an overly confident answer to outsiders, it bares an enormous amount of truth: Toronto is one of the world’s most diverse urban landscapes, a magnificent mosaic – not a maligned melting pot. Mayor Miller with Hazel McCallion, Mayor of Mississauga, and Phyllis Morris, Mayor of Aurora; Marissa Bronfman and Mayor Miller (Sonia Recchia, Pimentel Photo) The night’s keynote speaker, the Honourable Frank McKenna, let us all know that he’s not just telling Toronto’s story, he’s telling it with a megaphone! It was a passionate call to arms as he voraciously enumerated Toronto’s strongest traits, surprising even the most knowledgeable Torontonians I’m sure. To be fair he weighed his remarks with some serious criticisms of the city, chastising us for lagging productivity, a poorly aligned government and most of all, for not marketing ourselves and our city. “It’s not enough to have the steak”, said McKenna, “you have to have the sizzle…Toronto needs to get its swagger back!” Chair of Board of Trade Bill MacKinnon with politicians, members of the Board of Trade Board and Advisory Council (Sonia Recchia, Pimentel Photo) Toronto has fared exceptionally well through the torrent of economic hardship that has beat down even the world’s strongest players; the city must act now to nourish a flourishing future. The 2010 Olympics will reintroduce Canada to the world this month, and Toronto will soon host the G20 Summit, PanAm Games and Bollywood Festival. As Mayor Miller said, “the world will be watching”, and it’s about time they knew our story. George Smitherman, Toronto Mayoral Candidate with Senator Pamela Wallin and Andy Merchant, Presdient Canada-Pakistan Business Council (Sonia Recchia, Pimentel Photo); Rocco Rossi, Toronto Mayoral Candidate and John Tory (Grant Martin Photography)

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Biden, Cheney Square Off on Sunday TV Talk Shows Over War on Terrorism

February 14, 2010

By Mark Drajem and Heidi Przybyla Feb. 14 (Bloomberg) — Vice President Joe Biden and his predecessor, Republican Dick Cheney , squared off on the Sunday television talk shows over whether President Barack Obama ’s administration is keeping the nation safe from another terrorist attack. Biden sought to rebut criticisms from Cheney and from Republican lawmakers that the Democratic administration is not doing enough to combat terrorists, speaking on NBC’s “Meet the Press” program and on CBS’s “Face the Nation.” Obama is fighting al-Qaeda “with a vigor like it’s never seen before,” Biden said on NBC. “We’ve eliminated 12 of their top 20 people,” Biden said. “We’ve taken out 100 of their associates.” “We’ve sent them underground,” Biden said. “They are in fact not able to do anything remotely like they were in the past.” Cheney took aim at the Obama administration’s approach to treating terrorism as a criminal act and Biden’s skepticism that another Sept. 11-style attack will occur. “It’s the mindset that concerns me,” he said on ABC’s “This Week” program. “There’s a very high threat” that al-Qaeda is trying to acquire weapons of mass destruction, Cheney said. “You have to consider it as a war,” he said. “You don’t want the vice president of the United States running around saying it’s not likely to happen.” Sept. 11 Suspect Biden expressed confidence that Khalid Sheikh Mohammed , the self-proclaimed mastermind of the Sept. 11, 2001, terrorist attacks, will be found guilty. “There’s no doubt that he would not be acquitted; the facts we have are overwhelming,” Biden said on NBC. “He will be in jail and he will stay there.” Obama is deciding where Mohammed and other Sept. 11 suspects in U.S. custody should be tried, in the face of objections from members of Congress and local residents about holding the trial in New York City. New York Mayor Michael Bloomberg last month told U.S. Budget Director Peter Orszag it would cost more than $200 million a year to provide security for trials of Mohammed and four fellow Guantanamo Bay detainees. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP. Military Trial When asked whether Mohammed could be tried by a military commission, Biden called that avenue “the less preferable way to go” and added: “I am not ruling anything out.” Cheney predicted Mohammed will ultimately be tried in a military facility somewhere. In Congress, a bipartisan group of lawmakers is pushing to cut off funding to prosecute Mohammed and other Sept. 11 co- conspirators in civilian courts. The Bush administration prosecuted terrorism suspects in civilian courts, just as Obama is doing now, Biden said. “I don’t know what Dick’s been doing lately,” he said on CBS. “We did exactly what he did with the shoe bomber, Richard Reid .” The two also clashed over the use of waterboarding, or simulated drowning, to collect intelligence. Cheney said it’s a technique that should be kept on the table. Biden said it “is not effective,” and he insisted the government has gotten “incredible amounts of information” from Christmas Day bomber Umar Farouk Abdulmutallab by encouraging him to talk. Biden leveled criticism at the Bush administration for the war in Iraq, saying that President George W. Bush ’s decision to overthrow dictator Saddam Hussein was not “worth it in the sense that we paid a horrible price.” Because of Iraq, “we took our eye off the ball, putting us in a much different and more dangerous position in Afghanistan,” Biden said. “We lost support around the world. It’s taken a lot of hard work to get it back.” ‘Enormous Achievement’ Cheney called the war in Iraq an “enormous achievement” that should “go with a healthy dose of ‘thank you, George Bush.’” He labeled as “a little strange” Biden’s recent comment that Iraq will be one of the great achievements of the Obama administration. “I’m glad he now believes Iraq is a success,” Cheney said. “He opposed the policy from the beginning.” Biden said that, while Cheney is entitled to his opinion, “It’s almost like Dick is trying to rewrite history.” Biden said he doesn’t know why Cheney is being so critical of the Obama administration. “All I know is he’s factually, substantively wrong,” the current vice president said. “He either is misinformed or he is misinforming.” Cheney expressed approval of Obama’s handling of Afghanistan, in particular the dedication of more troops and resources to the conflict. “I’m a complete supporter of what they’re doing,” he said. “I think it took him a while to get there.” To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

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China May Choose to Increase Wages Over Yuan Gains to Narrow Trade Surplus

February 9, 2010

By Bloomberg News Feb. 10 (Bloomberg) — China, under international pressure to reduce its trade surplus , may choose to shrink it through raising workers’ wages rather than letting the yuan appreciate, Credit Suisse Group AG said. Higher labor costs would cut Chinese export competitiveness while boosting domestic spending power and sustaining economic growth, according to the bank. Premier Wen Jiabao ’s government has been pressed by U.S. and European officials to end a 19- month yuan peg to the dollar to help diminish trade and investment imbalances that contributed to the credit crisis. “Wage increases are a better option because they largely benefit Chinese workers,” Tao Dong , a Credit Suisse economist in Hong Kong who has covered the Chinese and Asian economies for more than 15 years, said in an interview yesterday. “Currency appreciation will only result in Chinese exporters losing out to competitors in countries such as Malaysia and Mexico.” The strategy may limit gains in the yuan to 3 percent this year, according to Tao. This month’s 13 percent increase in minimum wage in eastern China’s Jiangsu province indicates that higher pay will play an important role in officials’ efforts to rebalance growth in the fastest-growing major economy, Tao said. In Jiangsu, which was the nation’s third-largest exporting province in 2008, the government raised the minimum wage to attract workers, the local labor department said. Shanghai, the No. 2 exporter, is following suit from April 1, Mayor Han Zheng said. Beijing, Zhejiang and cities in the southern Guangdong province also plan increases, the China Business News reported Jan. 27, citing labor officials. Yuan Jump Unlikely The wage decision “argues against a large one-off yuan revaluation,” Ben Simpfendorfer , an economist with Royal Bank of Scotland in Hong Kong, wrote in a note this week. China has kept the yuan at about 6.83 per dollar since July 2008 to shield exporters from the global slump after a 21 percent gain in the previous three years. The foreign ministry last week rejected U.S. President Barack Obama’s call for the yuan to appreciate, saying the Chinese currency has little impact on American trade deficit. U.S. and European pressure will only delay appreciation because Chinese officials won’t let themselves be seen as buckling, Tao said. “Beijing will continue to resist pressure from the U.S. and other nations and look for ways that will benefit its own economy when it seeks to contribute to global rebalancing,” Tao said. “Higher wages will aid policy makers’ aim to boost domestic consumption and move away from depending on exports.” ‘No Delay’ President Hu Jintao on Feb. 3 urged “no delay” in efforts to reduce dependence on exports and investment and boost service industries and consumption. China’s current-account surplus fell 35 percent last year to $284.1 billion as exports declined because of the global slump. The government will need to manage inflation expectations as wages climb, Tao said. Consumer prices jumped 1.9 percent on year in December and may have climbed 2.1 percent in January, according to the median estimate of economists in a Bloomberg News survey ahead of a government report scheduled for this week. Improved global trade is boosting demand for labor in China, which overtook Germany last year as the world’s biggest exporter. China’s overseas shipments jumped a more-than-forecast 17.7 percent in December from a year earlier and imports surged to a record. — Li Yanping . Editors: Paul Panckhurst , Chris Anstey To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net

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Washington Closes Down, Flights Canceled in Northeast as Snowstorm Looms

February 9, 2010

By Brian K. Sullivan Feb. 9 (Bloomberg) — The U.S. House of Representatives has canceled votes for the week, hundreds of flights have been scrubbed and Amtrak still isn’t running a full schedule as a “paralyzing” storm packing as much as 20 inches of snow bears down on the East Coast. The storm, the second for the Washington-Baltimore area in less than a week, will be accompanied by cold and winds gusting from 35 to 55 mph (56 to 88 kph) in the Northeast, forecasters said. Ten to 20 inches could fall in Washington, where federal offices were closed for a second full day today, while 8 to 13 are forecast for New York. “Unfortunately, everything is coming together for another paralyzing winter storm event from D.C. up to Philadelphia, but this time it won’t spare New York City,” said Jim Rouiller , a senior energy meteorologist at Planalytics Inc. “This will probably shut down the East Coast cities for the next couple of days. This is definitely going to be one for the record books.” Heating oil advanced on speculation demand will increase as temperatures plunge in the U.S. Northeast, which consumes four- fifths of home heating fuel. Contracts for March delivery gained 5.18 cents, or 2.7 percent, to settle at $1.9373 a gallon on the New York Mercantile Exchange. Heating demand in Washington and Baltimore was 16 percent higher than normal last week and New York was up 6 percent, David Salmon , a forecaster for Weather Derivatives of Belton, Missouri, said in a note to clients. Amtrak Schedules Disrupted Amtrak canceled 14 of its Acela trains between Boston and Washington, as well as more than 20 out of New York, Chicago and other Northeast cities, according to a statement. The national passenger railroad hasn’t run a full schedule since last week’s storm, said Cliff Cole , a spokesman. The biggest air carriers including UAL Corp. ’s United Airlines and Delta Air Lines Inc. canceled at least 1,300 flights today in cities including Washington, New York and Chicago. Spokesmen for the airlines said more flights would likely be scrubbed tonight. US Airways Group Inc. halted 1,300 flights for tomorrow, or 42 percent of its entire schedule, while Delta said it cut “several hundred” and AMR Corp. ’s American Airlines trimmed 120. Continental Airlines Inc. said it will suspend all 400 of its Newark flights tomorrow. Heavy snow, from 10 to 20 inches and as much as 24 inches in some isolated areas, may fall from Washington to New York, Rouiller said in a telephone interview from Berwyn, Pennsylvania. Boston is likely to receive 6 to 10 inches, along with Chicago and Detroit, he said. Winter Records “The snow we are predicting for this will lift places like Philadelphia over the record for snowfall over the course of any winter,” Rouiller said. Washington is likely to get about 10 inches tonight and tomorrow, while the snowfall will deepen closer to Baltimore , where 20 inches are possible, said Jared Klein, a weather service meteorologist in Sterling, Virginia. A system moving in from the west is forecast to spark the creation of a major low pressure system off the mid-Atlantic coast that will drive the snow northward and into the cities, Rouiller said. “They call this a bomb in the meteorological community,” Rouiller said by telephone. Washington Snarled A winter storm warning was posted for Washington starting at noon today. Federal government offices remain shut, after more than 20 inches fell on parts of the city over the weekend, the Office of Personnel Management said in an e-mailed statement. The U.S. Senate won’t meet tomorrow because of the storm, Senate Democratic Leader Harry Reid announced on the floor today. The House has canceled votes for the rest of the week. In the New York City area, a winter storm warning goes into effect at midnight. The snow is expected to be heavy at times before tapering off tomorrow evening, the National Weather Service in Upton, New York, said. New York Mayor Michael Bloomberg said public schools will close tomorrow so parents don’t have to face half-day cancellations. “The forecast is for a much worse situation with blowing snow and possibly blizzard conditions by mid-afternoon tomorrow and we don’t want to subject students to those conditions as they travel home,” said the mayor, founder and majority owner of Bloomberg News parent Bloomberg LP. Watches, warnings and advisories stretch across much of the eastern half of the U.S. from Minnesota to New Hampshire and south to Kentucky, according to the weather service. Snow Costs In New York City, 365 plow-equipped salt-spreaders will begin operating at first snowfall tonight, said Kathy Dawkins , a spokeswoman for the Sanitation Department . The plan calls for some 1,600 plows to start work when 2 inches pile up. Snow removal usually costs the city about $1 million per inch of accumulation, Dawkins said. Delaware has spent $3.9 million since Jan. 30, which almost depletes its snow removal budget of $4.1 million, said Jim Westhoff, spokesman for the state Department of Transportation. If Delaware goes over budget from the storm, it will automatically shift funds from the state’s Transportation Trust Fund. “At no time are we ever out of money for snow removal and to keep our roads safe,” Westhoff said. Alpha Natural Resources Inc. , the third-largest U.S. coal company, said today that its Cumberland operation in Waynesburg, Pennsylvania, has been idled for three days because of power disruptions. The mine has capacity to produce about 7.3 million tons of coal annually, according to the company’s Web site. Dominion Virginia Power has just about restored all power to customers who lost it during the last storm and are now positioning crews to be ready for the next, said Karl Neddenien , a company spokesman in Richmond, where snow has begun to fall. “This is quite a string of challenges and we are prepared, but we would like to see some blue sky for a while too,” Neddenien said by telephone. To contact the reporter on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net .

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