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Meet Your New Best Friend: Your Car

by Bianca Bosker on January 12, 2012

Huffington Post…

LAS VEGAS — The most striking innovation on display this week at the Consumer Electronics Show, the world’s largest consumer tech tradeshow, came not from Silicon Valley, but from Detroit. The vehicles on display underscored a sea change taking place in the automotive industry, one driven by carmakers’ relentless attempts to distinguish their wares by incorporating drivers’ demand for more convenience and customization in their cars. Automobiles are becoming more like computers than ever before. Carmakers are harnessing technology that has traditionally been the purview of gadget makers like Samsung and LG — touchscreens, software, apps and social media — to expand the capabilities of the car, even going so far as to transform it from a vehicle to a companion and entertainment hub. “Just like a smartphone can be so much more than a means of communication, a smart car can be so much more than just a mode of transportation,” Dieter Zetsche, chairman of automotive company Daimler AG, said during a keynote address . Though 4,000-pound automobiles might seem out of place at the Consumer Electronics Show, where most exhibitors display devices that can fit on a desk or in the palm of your hand, carmakers’ increasing emphasis on bringing tech to the dashboard have made them a growing part of the annual tradeshow. This year’s expo featured a record number of auto exhibitors, more than 400 in total , according to the show’s organizer, the Consumer Electronics Association. Many car companies have concentrated on delivering enhanced entertainment systems, navigation tools and safety features that are controlled from the dashboard by the driver’s voice, much like the virtual personal assistant Siri in Apple’s iPhone 4S. And the sales pitch for a sedan and a smartphone have become more alike in recent years. Both boast apps, touchscreens, GPS, voice recognition software, personal assistant capabilities, and the ability to place calls. The evolution of the vehicle marks manufacturers’ efforts to help cars keep up with their drivers’ constantly-connected lifestyles and their expectations that they can update their Facebook status, check their voice mail, or search the web any time, any place. Some automakers are going even further. Ford, which recently announced plans to open a research lab in Silicon Valley and has partnered with Microsoft on its in-car Sync software systems, boasts that it is building a “car that cares.” Ford’s engineers envision a vehicle that would assume more responsibility for the well-being of its passengers and evolve into a caretaker (or, perhaps more accurately, a “cartaker”) that can improve the lifestyle of its driver, both inside and outside the car. “The car that cares is taking shape as an exciting new platform for connectivity, innovation and transformation every bit as much as smartphones or tablets,” said Gary Strumolo, Ford’s global manager of health and wellness research, while speaking on a panel Wednesday at the Consumer Electronics Show. “We believe this will fundamentally broaden the way we understand automotive safety to mean not so much accident avoidance, but an integrated approach to ensuring the well-being of our customers.” Strumolo said Ford is researching ways to integrate sensors into the seats of its vehicles, so that a car could weigh its driver and track his or her body weight. A diabetic at the wheel could also sync his or her Bluetooth-enabled glucose monitor with the car, which would alert him or her when blood sugar levels drop. Strumolo additionally described a car that would track elevations in a driver’s stress levels and react accordingly to cut out distractions, such as sending all calls to voice mail until a driver is more relaxed. Strumolo said he hopes the new technology will not only improve drivers’ health, but also foster a more intimate bond between vehicle and driver. “The more that you talk to a car that understands you, understands your needs, and maybe even anticipates your needs, the more you’ll have an emotional bond with the car,” Strumolo said. “You’ll think, ‘This car is really concerned with my well-being. I feel it understands me, it’s helping me. It’s essentially a personal assistant.” A Ford engineer at the carmaker’s booth echoed the sentiment. “I think it’ll be much more fun to drive cars in the future because the car can be a friend, in a way,” research engineer Johannes Kristinsson said. In another attempt to help drivers outsource their concerns to the car, automakers such as Audi, BMW and Ford are testing mechanisms that would allow vehicles to “talk” with each other on the road. Using vehicle-to-vehicle communication, cars could track other cars’ locations and anticipate changes in their positions, potentially reducing the number of collisions. Dashboards are also giving way to screens powered by software that endows them with the capabilities of a tablet or smartphone. Cadillac’s CUE system, which will reportedly be available in cars later this spring, is equipped with a Pandora app and will be able to support other apps in the future, in addition to providing directions, hands-free calling and access to a driver’s digital music library. Mercedes-Benz is expected to likewise bring apps to its vehicles this spring. A Facebook app will be one of the first, offering a simplified version of the social networking site that restricts text input while the car is in motion. Yet regulators are wary of too many high-tech bells and whistles making their way into cars. The use of smartphones in automobiles has already prompted federal safety investigators to push for a nationwide ban on texting while driving. Approximately 3,092 people died in 2010 in distracted driving-related collisions , according to the National Highway Traffic Safety Administration. “We can’t take a backseat and we won’t. While new dashboards or handheld infotainment systems are introduced into commerce, these have too great a potential to create more and more distraction for the driver,” said Ron Medford, the deputy administrator of the National Highway Traffic Safety Administration. “As part of our NHTSA driver distraction plan, we are developing safety guidelines for these systems. We have challenged the auto industry and cellphone industry to work collaboratively with us to keep the driver safe and focused on the required task: driving.” Drivers’ unfamiliarity with this evolving breed of automobile can present additional obstacles for carmakers, which must coach consumers on how to handle the new vehicles. Switching from AM/FM radio to Pandora is a relatively minor adjustment. But accepting a car that can track your heart rate, monitor weight gains, or anticipate the position of other vehicles will come with growing pains, experts say. “My biggest concern in 2015 is the gap that opens up between the psychology of the consumer being able to accept something and the technology of automobile being able to provide it,” said Leo McCloskey, VP of marketing for Airbiquity, which helps automakers equip cars with software and wireless services. “I think people want many of these features today, but I think the psychology is not where needs to be. The technology is further ahead than the psychology.”

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Meet Your New Best Friend: Your Car

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PHOTOS: Salesforce’s Massive New Expansion Plans Revealed

by Robin Wilkey on January 9, 2012

Huffington Post…

On Friday, Mayor Ed Lee announced that Salesforce — a global enterprise software company — signed a lease with the City worth nearly $340,000 for 400,000-square-feet of office space on 50 Fremont Street in downtown San Francisco. The agreement marks the biggest long-term lease in the City in a decade. “Salesforce.com’s decision to continue their expansion in San Francisco is positive proof that our City and its workforce are perfect for growing technology and innovation companies,” said Mayor Lee in a statement . “I look forward to watching Salesforce.com’s continued success as we work together to continue to create jobs right here in San Francisco.” (SCROLL DOWN FOR PHOTOS) The new building at 50 Fremont St. is estimated to create space for about 2,000 employees, infusing much-needed jobs into San Francisco. Mayor Lee, who has pushed to expand San Francisco’s business presence with his Start Here, Grow Here, Stay Here campaign, expressed palpable excitement over the lease. Friday’s announcement came as the latest development in Salesforce’s massive expansion plan that now includes campuses in San Mateo, downtown San Francisco and Mission Bay. (Surely soon to be known as the business plan that ate San Francisco.) Though the acquisition of 50 Fremont St. will be a major move for Salesforce, the most impressive details of the company’s expansion plan are at the Mission Bay campus — Salesforce’s Global Headquarters. The 14-acre property (right near the ballpark) is set to include four separate buildings with two million square-feet of offices, retail spaces, plazas, restaurants, childcare, parking and an enormous outdoor television screen to broadcast public programming. Unlike other business campuses, the Salesforce headquarters will be open to the neighborhood, allowing residents to access the businesses, public space and childcare, supplying a major source of revenue for the area. Though the designs are not finalized, architecture firm Legorreta and Legorreta has released the initial plans for the Mission Bay campus. Check them out in our slideshow below:

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PHOTOS: Salesforce’s Massive New Expansion Plans Revealed

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Americans May Be Getting Back Into A Pre-Recession Habit

January 9, 2012

WASHINGTON — Americans are feeling confident enough in the economy to go back to a time-honored tradition – taking on a little extra debt. Consumer borrowing surged in November by $20.4 billion, the Federal Reserve said Monday. It was the third straight increase and the largest monthly gain in a decade. The jump in borrowing was largely because people took out more loans to buy cars and swiped their credit cards frequently to purchase holiday gifts. In November, total consumer borrowing rose to seasonally adjusted $2.48 trillion. That’s nearly at pre-recession levels and up from a post-recession low point of $2.39 trillion reached in September 2010. Borrowing had tumbled for more than two years during and immediately after the recession. Since then, consumers have increased their borrowing in 13 of the past 14 months. Americans are taking on more debt after seeing the unemployment rate drop and the economy improve, albeit modestly. Many are also leaning on their credit cards and loans to make up for wages that haven’t kept pace with inflation this year. Holiday sales were solid in November, and the U.S. auto industry had its two best sales months for the year in November and December. The Fed’s credit report appeared to reflect those sales. The category that measures credit card debt rose in November by $5.6 billion, the most since March 2008. The gauge that tracks auto loans and student loans increased $14.8 billion, nearly matching July’s gain that was the biggest since February 2005. Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University, said many consumers were likely persuaded by incentives that retailers and auto dealers offered to boost sales. Still, Paul Edelstein, director of financial economics at IHS Global Insight, expressed concern that consumers may have relied on their credit cards to finance holiday purchases. The rise in borrowing comes as many consumers are seeing little to no growth in their paychecks. Inflation-adjusted, after-tax incomes shrank by nearly 2 percent in the July-September period. To make up the difference, many consumers have reduced the amount they save. The savings rate fell in November to 3.5 percent – the lowest level since the recession began. The savings rate jumped in 2008 to 5 percent and stayed above that level until early last year. Sohn said he expects the savings rate to level off near November’s level. He also said the increase in consumer demand should prompt businesses to hire more workers. Those gains would allow consumers to finance their spending with rising incomes. In December, employers added 200,000 jobs and the unemployment rate fell to 8.5 percent, the government said Friday. It was the sixth month in a row that the economy had added at least 100,000 jobs, the longest streak since 2006. And the unemployment rate dropped to its lowest level in nearly three years. With more jobs and better pay, consumers could step up spending even further. That could lead more companies to add workers, which ultimately drives more spending and more hiring. Economists call that a virtuous cycle. Still, a recession in Europe could dampen demand for U.S. exports and weaken financial markets. The Federal Reserve’s borrowing report covers auto loans, student loans and credit cards. It excludes mortgages, home equity loans and other loans tied to real estate.

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Jurors Deadlocked In $1 Billion Antitrust Lawsuit Against Microsoft

December 17, 2011

SALT LAKE CITY — A federal jury on Friday failed to reach a verdict in a Utah company’s $1 billion antitrust lawsuit against Microsoft Corp. in a case so important to the computer giant that it put Bill Gates on the stand for two days last month. Novell Inc. sued the software giant in 2004, claiming Microsoft duped it into developing the once-popular WordPerfect writing program for Windows 95 only to pull the plug so Microsoft could gain market share with its own product. Novell says it was later forced to sell WordPerfect for a $1.2 billion loss. The trial began two months ago with jurors getting the case on Wednesday. After much confusion, and some perplexing questions from the panel, they told U.S. District Judge J. Frederick Motz they were deadlocked by early Friday evening. He repeatedly asked them if they could keep trying. “This has been a very long and expensive case,” Motz told the panel. Novell attorneys pleaded with Motz to give the panel just one more day. In the end, however, the 12 jurors told the judge they were “hopelessly” deadlocked, and they later told lawyers a single holdout refused to vote in Novell’s favor. “He had strongly held views about the technical evidence and refused to budge,” Novell attorney Jeffrey Johnson said. Jurors offered no comment after the trial. Novell was left with little to show for a decade of effort, but the company said it will seek to retry the case with a new jury. “Although it’s a technically complicated case, we’re hoping to convince another jury that our claims have merit,” Novell’s corporate counsel Jim Lundberg said. Microsoft said it would file a motion asking the judge to dismiss Novell’s complaint for good and avoid a second trial. “We remain confident that Novell’s claims don’t have any merit and look forward to the next steps in the process,” said Steven Aeschbacher, Microsoft’s associate general counsel. Novell waited until 10 years after Microsoft left WordPerfect behind to file the lawsuit. The company said it was waiting for the U.S. government’s antitrust enforcement against Microsoft to wrap up. At first Novell’s case was dismissed, but it was later reinstated on appeal. Microsoft lawyers have argued that Novell’s loss of market share was its own doing because the company didn’t develop a compatible WordPerfect program until long after the rollout of Windows 95. WordPerfect once had nearly 50 percent of the market for word processing, but its share quickly plummeted to less than 10 percent as Microsoft’s own Office programs took hold. Gates testified last month that he had no idea his decision to drop a tool for outside developers would sidetrack Novell. Gates said he was acting to protect Windows 95 and future versions from crashing. He said that the company’s preferred Word software was superior to WordPerfect, which was a “bulky, slow, buggy product” that did not integrate well with Windows 95. Novell could have worked around the problem but failed to react quickly, he said. Novell has argued that Gates ordered Microsoft engineers to reject WordPerfect as a Windows 95 word processing application because he feared it was too good. Novell’s lawsuit is the last major private antitrust case to follow the settlement of a federal antitrust enforcement action against Microsoft more than eight years ago. Novell is now a wholly owned subsidiary of The Attachmate Group, the result of a merger that was completed earlier this year.

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Federal Marijuana Crackdown Coming To Colorado?

December 15, 2011

Could a large scale medical marijuana crackdown be coming to Colorado like the one seen in California? That’s exactly what a law enforcement official told The Associated Press is being considered for Colorado next year. The official did not want to be identified and did not provide specific details because the the matter is still under review. CBS4 discovered that warning letters — similar to those that were sent out in California — will go out to dispensaries and grow facilities near schools (within 1,000 feet) and would be given 45 days to shut down or move their place of operations or face prosecution by U.S. Attorney in Colorado John Walsh . However, CBS4 also reported that it’s unclear when that process would begin and Walsh has not released a statement on the matter since it was first reported. The reasoning behind the 1,000 foot boundary stems from federal law which uses that measurement as a factor in drug crime sentencing. There are many dispensaries in Colorado that are within 1,000 feet of schools, according to High Times , because they were approved by local laws to do so. However, the federal law would trump the state law if and when a federal crackdown would begin. All of this comes just days after a new poll was released by Public Policy Polling that a large group of Coloradans believe that marijuana should not just be legal medically, but fully legalized. From the Public Policy report: Coloradans are even more strongly in favor of legalizing marijuana, and they overwhelmingly believe it at least should be available for medical purposes. 49% think marijuana use should generally be legal, and 40% illegal. But explicitly for medical use, that rises to a 68-25 spread. Just five years ago, a referendum to legalize simple possession by people over 21 failed by 20 points. On the medical question, Democratic support rises from 64% for general use to 78%; Republicans rise from 30% to 50%, and independents from 54% to 75%. The Colorado Independent reports that the Public Policy Polling data “flies in the face of statements made by a number of legislators over the past year that if voters knew what they were in for, they would never have approved medical marijuana in the first place.” Art Way, Colorado manager for the Drug Policy Alliance, went even further telling the Independent that, “decision-makers and elected officials really just don’t have the pulse of the people they represent. The average person considers the federal position that marijuana has ‘no medical value’ to be a joke.” Rep. Jared Polis (D-Colo.) echoed a similar sentiment when he told HuffPost, “There are more pressing issues facing federal law enforcement so it makes no sense for them to waste time and taxpayer money interfering with state-legal businesses that voters have approved, that are well-regulated, and that generate jobs and economic activity. Colorado has the nation’s strictest regulatory system, which means our dispensaries operate transparently and legitimately. I should hope that the federal government would focus its resources on keeping Americans safe from crime rather than interfering with a legal business that benefits Colorado’s economy.” Despite all this pressure from the feds, the Campaign To Regulate Marijuana Like Alcohol , a collective of marijuana activist groups and individuals including SAFER, Sensible Colorado, NORML and others are still pushing for an initiative to end marijuana prohibition in Colorado for the 2012 state ballot. The Regulate Marijuana Like Alcohol Act of 2012 would make the personal use, possession and limited home-growing of marijuana legal for adults aged 21 and older. It establishes a system in which marijuana is regulated and taxed similarly to alcohol is currently. The act also would allow for the cultivation, procesing, and sale of industrial hemp. Read the entire Regulate Marijuana Like Alchool Act of 2012 here .

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Feds Sue Chicago For Requiring Banks To Take Care Of Vacant Properties

December 15, 2011

This summer, residents and community organizers called on Chicago’s City Council to do something about the vacant, foreclosed properties that were becoming magnets for gangs, drugs and violent crime in their neighborhoods . Though the city has laws requiring owners of vacant properties to maintain the area, houses in foreclosure are another story. As the Huffington Post reported in August, many families walk away from the home as the foreclosure churns through the legal system — which could take up to 490 days. Banks argue that they shouldn’t be responsible for maintaining the vacant property during that time, and now a federal housing agency is suing Chicago for forcing them to do so. “We’ve seen cases where the bank will go through foreclosure, someone will leave the home, the building is vacant, everything gets stripped and then they deed the home back to the owner, so at no time is the bank at all responsible,” Braden Listmann, housing policy director at Action Now told the Huffington Post. “Being able to secure these vacant properties is very important for the neighborhoods.” To help solve the problem, the City Council passed a Vacant Buildings Ordinance, making banks responsible for the vacant homes before the foreclosure is complete, taking property maintenance out of legal limbo. Banks and lenders would be saddled with steep fines for failing to maintain the property — saving the city millions. According to the Chicago Mayor’s Office, the city spent more than $15 million to deal with vacant buildings in 2010. The ordinance was enthusiastically supported by Mayor Rahm Emanuel, though some suspected that a lawsuit would be coming eventually. “Let the banks sue over it,” Alderman Bob Fioretti told HuffPost. “We do have the authority to hold them responsible.” On Monday, the Federal Housing Finance Agency did just that. The lawsuit (scroll down to read it) claims that the city can’t impose fines or regulations on the federal government and that the ordinance interferes with FHFA’s oversight of mortgage giants Fannie Mae and Freddie Mac. As the Wall Street Journal points out, rescuing Fannie and Freddie has cost taxpayers $151 billion so far. “In substance, U.S. taxpayers are funding [Fannie and Freddie's] losses, which will be exacerbated if [Fannie and Freddie] are required to submit to the Ordinance’s registration fee and other numerous burdensome obligations,” the lawsuit reads. The suit also claims that the mortgage agencies should not have to mow lawns, shovel snow or board up windows on properties that are still going through the foreclosure process. “We question the constitutionality of holding a secured lender or a servicer as liable for maintaining that property,” Linda Koch, president and CEO of the Illinois Bankers Association, told HuffPost in August, adding that banks can’t be considered legal owners of the property until a foreclosure is complete. “You can’t just make a secured lender an owner because there’s a word changed in the law.” Despite the lawsuit, Cook County commissioners this week passed a similar ordinance, making lenders responsible for vacant properties going through foreclosure county-wide . One commissioner called the federal lawsuit against Chicago “shameful” and “a disgrace,” the Chicago Tribune reports. On Tuesday, Mayor Emanuel told WBEZ that the feds don’t have a case . “We did exactly what we were supposed to do, rightfully, for our neighborhood, our community, and our residents of our city,” Emanuel said. Photo via Flickr by Zol87 Read the lawsuit here:

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Businesses Face A ‘Devastating’ New Threat

December 15, 2011

WASHINGTON — With the economy still weak, businesses may face a fresh blow from insurance companies next year, according to a new report published Thursday by the Center for Justice and Democracy at New York Law School . The report claims that insurance companies are colluding on major rate hikes that could send premiums skyrocketing for businesses in 2012. “It’s a completely unnecessary, unjustified, and devastating possible crisis that we may be facing next year,” said Joanne Doroshow, one of the co-authors of the report, titled “Repeat Offenders: How The Insurance Industry Manufactures Crises And Harms America.” Since 2006, the insurance industry has been in a “soft market” that benefited consumers. Premiums remained low as insurers fought to attract new customers and pad their cash reserves, which they then invested. But industry representatives are now pushing companies to raise premiums and create a “hard market,” where rates rise but coverage declines as insurers push for larger profits. Companies claim that the industry now faces mounting losses from the combination of difficult economic times and years of low rates. In order to stay solvent and provide customers with continued protection, they say, insurers must raise premiums. But the center’s report charges that the insurance industry is simply manipulating the numbers to provide the appearance of financial instability. The losses that insurers use to justify rate hikes include a category called “losses incurred but not reported,” which are only estimates of future payouts on claims. Companies then use these hypothetical numbers to ask state regulators for rate increases, demanding more money without actually paying out any more in premiums. Far from being short on cash, the insurance industry had a surplus of $580 billion in 2010, according to data from Best’s Aggregates and Averages included in the report. That figure does not include the money insurers set aside to cover the estimated costs of future claims. The rate hikes will fall more heavily on businesses than customers with personal insurance, but the costs would still be substantial for both groups. Doroshow told The Huffington Post that, in line with past “hard market” cycles, “these rates could be going up 100 or 200 percent for businesses.” Insurance companies are able to demand such hikes because of their unique legal protections. The industry has had an antitrust exemption under the McCarran-Ferguson Act since 1944, which, according to the report, allows insurers to “pressure their own competitors to stop competing for premium dollars and to raise rates and reserves as an entire industry.” The ability to collude is backed up by weak regulation. “Businesses don’t have the ability to fight, and because states are not properly regulating, the industry simply gets away with it,” said Doroshow. She said that most states do not have any disclosure laws at all, allowing insurance companies to block information that could benefit policyholders. The National Association of Insurance Commissioners did not return a request for comment. The hard market-soft market cycle is a common occurrence, according to both the report and insurance executives. There have been three such cycles since the mid-1970s, each one creating its own premiums crisis. But insurance companies have used the specter of damages from Hurricane Irene this year to justify higher premiums, saying the industry is in a uniquely dangerous financial situation. Insurers claimed that the storm had the potential to cripple the industry and ruin its ability to pay claims in a year that already had seen a decrease in profits. However, given its large surplus, the industry was well-equipped to handle the resulting claims, according to the report. The storm’s cost to insurers, initially estimated at as much as $14 billion, fell to approximately $2.6 billion after the damage was more accurately assessed. According to recent data, insurers’ efforts to move toward higher rates may have already paid off. MarketScout, an insurance underwriting and distribution company, reported that the insurance industry entered a hard market in November. That month, property and casualty premiums increased by an average of 1 percent — the first composite premium rate jump since February 2005. The Center for Justice and Democracy is urging legislators to beef up regulatory powers and repeal the industry’s antitrust protections. A repeal of the exemption has been proposed in the past but has never passed, and stands little chance of doing so in 2012. But Doroshow is hopeful that the study will help draw public attention to the problem and force congressional action. “Maybe eventually there will be enough pressure on them to take a look at what’s happening,” she said, “because right now they haven’t.”

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Exactly How Hard Does Santa Work?

December 15, 2011

Granted, it seems… impractical. Over the course of one night, St. Nick has to stop by the home of every Christian child in the world. Of which there are a lot – an indeterminately large number of kids waiting for their gifts. I decided to figure out how many, how big a task Mr. Claus faces as he races west across the face of the globe, staying ahead of the sun. And I did. Or, anyway, I came up with a pretty solid estimate.

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Uh-Oh! Huge Yahoo Partner Reportedly Wants Out

December 8, 2011

By Stephen Aldred and Prakash Chakravarti HONG KONG (Reuters) – Alibaba Group is seeking up to $4 billion in debt financing, sources said on Thursday, in a deal expected to help the Chinese e-commerce giant buy back a 40 percent stake in the company owned by Yahoo Inc. As Alibaba Group is private, there is no public figure on what Yahoo’s stake is worth, though some analysts say its worth at least $9 billion. Sources close to the matter said Rothschild, which is acting as debt adviser to Alibaba, had sent out term sheets to banks requesting underwritten proposals for the debt financing. The tenor of the debt is expected to be up to three years. Reuters was unable to obtain a copy of the term sheets. Alibaba Group, founded by billionaire entrepreneur and former English teacher Jack Ma, declined to comment. Alibaba, which counts a hugely popular business-to-business platform among its services, has long signalled its intention to buy back the Yahoo stake. Ma’s feud with Yahoo and his plans for the stake gained renewed attention lately with Yahoo the subject of takeover interest. Blackstone Group and Bain Capital are preparing a bid for all of Yahoo Inc, Reuters reported earlier this month, with Alibaba among its partners for the roughly $25 billion deal. Japan’s Softbank Corp is also part of that consortium. A source familiar with the matter cautioned on Thursday that the entire situation between the consortium and Yahoo remains fluid, and that no final decision has been made on any move that Alibaba or the other corporates plan to make. For the Alibaba debt financing, banks have been asked to provide underwritten commitments of $1 billion with an expected final hold of $400 million, according to one of the sources on Thursday. In November, Yunfeng Capital — co-founded by Alibaba’s Ma — Silver Lake and other investors completed the purchase of a 5 percent stake in Alibaba Group worth $1.6 billion. Alibaba, as a parent company, holds a 73.12 percent stake in Hong Kong listed Alibaba.com Ltd. A Rothschild representative was not immediately available for comment. (Reporting By Stephen Aldred and Prakash Chakravarti; Additional reporting by Lee Chyen Yee; Editing by Michael Flaherty and Chris Lewis)

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eBay Makes New Acquisition

November 21, 2011

SAN FRANCISCO (Reuters) – EBay (EBAY.O) said it acquired the data analysis firm Hunch to help it develop more recommendation technology for its online marketplace. Chris Dixon, Tom Pinckney and Matt Gattis, who founded Hunch in 2009, will stay on at eBay and remain based in New York. The purchase price was not disclosed. Hunch analyzes data from social networks like Facebook and from questionnaires to make personal recommendations. EBay said Hunch will help it suggest relevant products for shoppers on its online marketplace. This is the latest in a string of acquisitions by eBay as it tries to revive its online marketplace, which has lost market share in recent years to Amazon.com Inc (AMZN.O), the world’s largest retailer. Most retailers, like Amazon, have inventory that they can catalog and use to recommend related products to customers. In contrast, eBay’s Marketplaces business offers items from other sellers, and a lot of the products are used and unique. This creates a lot of unstructured data that is harder to analyze for search and recommendations. “Hunch was solving a similar problem with unstructured data,” said Mark Carges, chief technology officer at eBay. “The type of technologies were similar enough that this makes sense.” Hunch’s Dixon said the company was attracted by the large amount of data eBay has amassed. Becoming part of eBay will give Hunch unfettered access to analyze this information. (Reporting by Alistair Barr; editing by John Wallace) Copyright 2011 Thomson Reuters. Click for Restrictions

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Software Maker To Lay Off Hundreds As Part Of Restructuring Plan

November 8, 2011

Adobe Systems Inc plans to lay off 750 positions and take a charge of up to $94 million as part of a restructuring to re-focus the company on digital media and marketing. Shares in the design software maker, which is updating its suite of products to keep pace with new trends and moving to support the increasingly popular HTML5 programing language, fell almost 7 percent in after-hours trade. Adobe said in a statement on Tuesday it expects to record pre-tax charges of $87 million to $94 million for consolidation and severance, of which $73 million to $78 million would be booked in the fiscal quarter ending December 2. Adobe said it was sticking with previous estimates for the fourth quarter for both revenue and earnings excluding items. In September, Adobe projected revenue of $1.075 billion to $1.125 billion, and earnings excluding items of 57 cents to 64 cents a share, on a non-GAAP basis. Shares in Adobe slid to $28.30 in extended trading, from a close of $30.42 on the Nasdaq. (Reporting by Edwin Chan; editing by Carol Bishopric) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Fannie Mae Seeks Additional Federal Aid To Stay Afloat

November 8, 2011

WASHINGTON – Fannie Mae , the biggest source of money for U.S. home loans, on Tuesday reported a $5.1 billion third-quarter loss and said it would seek $7.8 billion in additional federal aid to stay afloat. Fannie Mae, which was seized by the government in September 2008, said the loss was attributed to continued weakness in the housing market and credit-related expenses on home loans made prior to the 2008 financial collapse. In the year-earlier quarter it had a loss of a $1.3 billion. Fannie Mae has drawn $112.6 billion in bailout funds from the Treasury Department since 2008 and has paid $17.2 billion to the government in the form of dividends. Fannie Mae and its smaller rival Freddie Mac were seized by the government as losses on subprime mortgages threatened insolvency. The government has pledged unlimited funds to keep the firms afloat through the end of 2012. (Reporting by Margaret Chadbourn; Editing by Leslie Adler) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Fed: Half Of Top U.S. Banks Made Loans To Europe Banks, Heightening Risk

November 7, 2011

WASHINGTON (Reuters) – Around half of top U.S. banks surveyed by the Federal Reserve reported making loans or extending credit to European banks, which are under massive pressure from an ongoing political crisis. The findings from a quarterly lending poll suggest that the U.S. banking system faces significant risks from Europe, despite relatively small direct exposure to the troubled sovereign bonds of southern European states like Greece. “About one-half of domestic banks respondents, mostly large banks, indicated that they make loans or extend credit lines to European banks or their affiliates or subsidiaries, and about two-thirds of the foreign respondents indicated the same,” the U.S. central bank said in its Senior Loan Officer Survey, published on Monday. Of the domestic banks, about two-thirds reported having tightened standards on loans to European financial institutions in the third quarter, many considerably. Euro zone governments rushed to placate feverish bond markets on Monday as the currency bloc’s debt crisis threatened to accelerate out of control, with Italy overtaking Greece as the prime threat to stability. Italian government bond yields rose to their highest since 1997 — approaching levels regarded as unsustainable — as political turmoil in Rome threatened to drag the euro zone’s third largest economy deeper into regional debt crisis. Copyright 2011 Thomson Reuters. Click for Restrictions .

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The Center for Public Integrity: As they lobby for a tax holiday, some big multinational players say they’ve got plenty of cash on hand

November 4, 2011

By John Aloysius Farrell and Aaron Mehta , iWatch News As select U.S. multinational corporations push for a tax holiday on a trillion dollars parked overseas, their own recent financial reports undermine the arguments they are making for preferential treatment on Capitol Hill. Proponents of the tax break for “repatriated” overseas earnings say that bringing the money home will give U.S. corporations an infusion of cash, stimulating investment and creating jobs. But an iWatch News survey of some major players in the tax repatriation debate found that corporations, far from being cash-starved, are sitting on billions of dollars of liquid assets. In new filings with the Securities and Exchange Commission and conference calls with Wall Street analysts, some big players flatly say they don’t need the tax holiday. Firms like Microsoft and Oracle, Google and Apple have tens of billions in cash stashed offshore, and lots more here at home. “We currently do not intend nor foresee a need to repatriate these funds,” the Microsoft Corp. said in its latest quarterly report . “We expect existing domestic cash, cash equivalents, short-term investments, and cash flow from operations to continue to be sufficient.” Microsoft said it had $57.4 billion in cash and other liquid sources on hand, with $51 billion of that kept overseas. Though it rests in offshore accounts, the lion’s share of Microsoft’s money is already invested in U.S. assets. The firm says it has socked 83 percent of the billions it holds offshore in U.S. government securities, U.S. corporate bonds and U.S. mortgage-backed securities. The story was much the same at Google Inc., which reported its corporate coffers held $42.6 billion, with $20.2 billion of that stashed overseas. “Our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not demonstrate a need to repatriate them,” Google said. “Our sources of funding will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months.” Google and Microsoft are members of WIN America , a coalition of US multinationals and trade groups pushing for the tax break. The holiday could cost the U.S. Treasury as much as $80 billion , one reason why its prospects are mixed as Washington remains inundated by a lake of red ink. Yet 80 members of Congress, both Republicans and Democrats, have signed up as co-sponsors . Some 70 of those co-sponsors have received almost a million dollars in campaign contributions from WIN-affiliated companies since the start of 2009. WIN and its members have spent millions lobbying Congress, and employ dozens of lobbyists, to press for the tax break, iWatch News has reported. Need aside, the payoff could be huge. A similar tax holiday in 2004 cut the 35 percent corporate tax rate to 5.25 percent for repatriating companies. American firms face a 35 percent corporate income tax at home, but money earned overseas is taxed only by the country of origin until it is returned to the United States, at which time an additional tax is levied to make up any difference and restore the rate to 35 percent. If the rate was dropped to 5 percent, “the amount of corporate cash that would come flooding into the country could be…used for creating jobs, investing in research, building plants, purchasing equipment and other uses,” wrote John Chambers, the CEO of Cisco Systems, and Safra Catz, the president of Oracle Corp., in an op-ed last year in The Wall Street Journal . However, after a number of deductions and tax breaks are employed, the effective tax rate for U.S. corporations is often much lower. And critics of the repatriation proposal, pointing to a previous tax holiday in 2004 , say that the influx of cash will not create jobs, but will be spent instead to benefit shareholders and corporate executives, via higher dividends and stock repurchasing plans. “They should use the cash they already have here at home to invest in America rather than ask for still another break,” Sen. Carl Levin, D-Mich., chairman of the Senate Permanent Subcommittee on Investigations, told iWatch News . U.S. firms are flush with cash, analysts from the Heritage Foundation noted last month, and can easily borrow at bargain rates if they need to raise funds. “The repatriation holiday would have little or no effect on investment and job creation, the key to the whole issue, simply because the repatriating companies are not capital-constrained today,” the Heritage report said. “Any investment, any action that they would deem worthwhile today can be and is being financed by current and accumulated earnings.” Apple Inc. is a prime example. In its latest annual report , filed on Oct. 26, Apple noted record sales and profits, and plans to expand its network of retail stores and its lines of iconic products. But Apple does not need a tax break to finance its plans for expansion. The firm’s report shows that it is sitting on some $81 billion in cash and cash equivalents, up 60 percent during 2011. America’s education system, not taxes, is what keeps Apple from employing more Americans, according to a new biography of the late Apple founder Steve Jobs. Author Walter Isaacson recounts that Jobs told President Obama that the company employed 700,000 workers in China, instead of the United States, because of a lack of qualified American engineers. Other cash-rich firms have been acquiring new subsidiaries and letting go “redundant workers,” or distributing wealth to shareholders and corporate executives. Another prominent member of the WIN America coalition is Pfizer, the pharmaceutical firm that manufactures such popular products as Lipitor and Viagra. Speaking to Wall Street analysts on Tuesday, the firm’s executives were focused on slimming down its workforce, and buying back shares – not creating jobs. “We are…focused on shareholder value,” CEO Ian Read told the analysts. The company hopes to boost its dividends, and has spent $6.5 billion this year repurchasing shares of the company’s stock as part of an ongoing buyback program that it hopes will reach $9 billion this year. Meanwhile, the Pfizer executives said they cut 4,100 jobs in 2011, as part of an ongoing company-wide purge of redundant positions from recent acquisitions. Pfizer was the single biggest benefactor of the 2004 tax holiday, when it took advantage of a cut-rate “one time” 5.25 percent tax rate to bring back $37 billion from overseas. In a paper for the nonpartisan New America Foundation , cited by WIN America, economist Laura D’Andrea Tyson and two Berkeley associates say that the trickle-down effects from rewarding stockholders could be significant. Tyson and her colleagues acknowledge that 74 percent of the money brought back to the US in a tax holiday would probably be distributed to shareholders in the form of dividend payments or stock repurchases. But for every dollar returned to a stockholder, Tyson says, from 25 to 40 cents will be used by higher-income Americans to go shopping. The boost to the economy, when combined with direct hiring and investment, could ultimately lead to the creation of between 1.3 million and 2.5 million jobs. Tyson serves on the board of directors of Kodak, a member of the WIN America group. Eric Schmidt, the executive chairman of Google, serves as chairman of the New America Foundation. WIN America, when asked to comment, declined. Microsoft also rewarded shareholders. It spent $1 billion in the 90 days prior to its Sept. 30 report buying 38 million shares as part of its ongoing stock repurchase program. A similar tale was told by software giant Oracle. “Our current cash…will be sufficient to meet our working capital, capital expenditures and contractual obligation requirements,” Oracle reported to the SEC. And “we could fund any future acquisitions, dividend payments and repurchases of common stock or debt with our internally available cash, cash equivalents and marketable securities, cash generated from operations, additional borrowings or from the issuance of additional securities.” Oracle is in the midst of an $8 billion stock repurchase program, and purchased 27.5 million shares for $823 million in the three months ending Aug. 31. It is paying dividends and has its own robust merger and acquisition strategy, which in recent years has led to thousands of layoffs. Though not as flush as Apple, Cisco Systems reported that it held $44 billion in cash, with $39.8 billion of that stashed overseas. The company used $6.8 billion last year to benefit shareholders in the latest stage of a long term $82 billion stock repurchasing plan. At the same time, Cisco said, it was paring its workforce by 6,500 employees to beef up its bottom line. Requests for comment, by phone to Microsoft and Pfizer and by email to Google, were not returned. Continue this story and read more investigations at iWatch News

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Groupon Reportedly Cutting Back Size Of IPO

October 19, 2011

(Reuters) – Daily deals site Groupon is set to raise less than the amount it initially filed for in its IPO paperwork, two sources familiar with the situation said on Wednesday. Groupon in June filed to raise up to $750 million in its IPO. One source familiar with the situation said it is now planning to raise less than that amount, but not significantly less. A second source familiar with the situation said it is now planning to raise about $500 million. The information is not public and the sources declined to be named. Groupon was not immediately available for comment. Groupon is expected to launch its IPO roadshow early next week, sources told Reuters on Tuesday. The IPO is expected to value the Chicago-based company at over $10 billion, likely in the range of $11 billion to $12 billion, the sources said. Copyright 2011 Thomson Reuters. Click for Restrictions .

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AT&T Asks Judge To Throw Out Sprint’s Antitrust Suit

September 30, 2011

NEW YORK — AT&T Inc. on Friday asked a court to eject rival Sprint Nextel Corp. from the process that looks at whether AT&T should be allowed to buy T-Mobile USA. Sprint, the nation’s third-largest cellphone company, and a smaller phone company, C Spire Wireless (known as Cellular South until last Monday), both want to be parallel participants in the Justice Department’s suit against AT&T’s acquisition on antitrust grounds. Participating would give them a chance to affect the proceedings, even if the Justice Department is the most important objector to the deal. AT&T filed a motion Friday to have the complaints by the two phone companies dismissed, saying Sprint and C Spire are speaking in their own interests, not the public’s. Sprint said AT&T’s motion is without merit, and it will respond next week. AT&T, the No. 2 cellphone carrier in the United States, announced in March its $39 billion deal to buy T-Mobile USA, the No. 4 carrier, with a view to closing it early next year. The Justice Department filed suit to stop the deal a month ago in U.S. District Court in Washington, saying it would concentrate too much market power in one company, leading to higher prices for consumers. AT&T says the deal will allow it to better serve customers and expand its wireless network. Several states have joined the suit. Puerto Rico joined on Friday. AT&T on Friday said Sprint has “spoken disingenuously” about its motives for the merger, and has suggested that Sprint be allowed to buy T-Mobile USA. C Spire has suggested that it would not oppose the merger if AT&T agreed to use its network in Mississippi and surrounding states, C Spire’s home territory. “Such an extraordinary and inappropriate proposal simply confirms that what Cellular South fears is competition, not an alleged lack of competition,” AT&T said. “Today’s motion will provide us with another good opportunity to demonstrate why AT&T’s proposed takeover of T-Mobile is blatantly anticompetitive,” said Eric Graham, C Spire’s vice president for strategic and government relations. AT&T shares fell 32 cents to close at $28.52 in trading Friday.

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Microsoft Sued By Customers

August 31, 2011

By Dan Levine SAN FRANCISCO (Reuters) – Microsoft allegedly tracks the location of its mobile customers even after users request that tracking software be turned off, according to a new lawsuit. The proposed class action, filed in a Seattle federal court on Wednesday, says Microsoft intentionally designed camera software on the Windows Phone 7 operating system to ignore customer requests that they not be tracked. A Microsoft representative could not immediately be reached for comment. The lawsuit comes after concerns surfaced earlier this year that Apple’s iPhones collected location data and stored it for up to a year, even when location software was supposedly turned off. Apple issued a patch to fix the problem. However, the revelation prompted renewed scrutiny of the nexus between location and privacy. At a hearing in May, U.S. lawmakers accused the tech industry of exploiting location data for marketing purposes — a potentially multibillion-dollar industry — without getting proper consent from millions of Americans. The lawsuit against Microsoft cites a letter the company sent to Congress, in which Microsoft said it only collects geolocation data with the express consent of the user. “Microsoft’s representations to Congress were false,” the lawsuit says. The litigation, brought on behalf of a Windows Phone 7 user, claims Microsoft transmits data — including approximate latitude and longitude coordinates of the user’s device — while the camera application is activated. It seeks an injunction and punitive damages, among other remedies. The case in U.S. District Court, Western District of Washington is Rebecca Cousineau, individually on her own behalf and on behalf of all others similarly situated v. Microsoft Corp., 11-cv-1438. (Reporting by Dan Levine, editing by Bernard Orr) Copyright 2011 Thomson Reuters. Click for Restrictions

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Brian Kahin: The Age of Disablement

August 12, 2011

The Great Patent Bubble of 2011 I recently wrote about the $4.5 billion auction for Nortel’s portfolio of 6,000 patents that went to a consortium that included Apple, Microsoft, and RIM (Blackberry) — three of four smartphone platforms. In the wake of this sale, Interdigital has contemplated monetizing its portfolio of 8,500 patents, perhaps even putting the company up for sale. Google announced that it has bought over 1,000 patents from IBM for defensive purposes. Perennial investor Carl Icahn suggested that Motorola cash in on some of its immense portfolio of 18000 patents. Analysts have noted that Kodak’s patents may be worth more than Kodak itself. The value of these patents is not in the technology. These prices are being paid for the power to block others from using technology they have developed independently. Or for the power to block others from blocking you by threatening to block them from using their technology — “assertion” and “counter-assertion.” The IT sector has learned to live with these practices at some cost, but the patent mania and litigation around smartphones is unprecedented. Nothing like this happened as the personal computer came of age. In Silicon Valley, suing for patent infringement was not part of the culture. Knowledge spread quickly and informally. Employees of rival firms socialized and exchanged ideas — and moved from company to company. The Valley’s unique form of social capital beat out the culture of control along Boston’s Route 128 and made Silicon Valley world famous. Too many companies are now embracing legal weapons on large-scale — and social capital is suffering. Times change. When hearings were held on software patents in 1994, Oracle was vehemently opposed to software patents: Our engineers and patent counsel have advised me that it may be virtually impossible to develop a complicated software product today without infringing numerous broad existing patents. That was in 1994. The number of software patents issued annually went up five-fold in the next 15 years to nearly 40,000/year. The number of lawsuits over software patents has gone up eight-fold. Having recently acquired Sun and its vast portfolio of patents, Oracle is suing Google over Android’s implementation of Java. Yet when Google adopted Java for Android four years ago, Sun’s CEO Jonathan Schwartz blogged about how delighted he was. Oracle recently deleted the posting. And Schwartz’s entire blog… Why now? The opportunities for patent arbitrage, ambush, and hold-up are plentiful and enticing. Businesses, including trolls, are simply exploiting opportunities presented, including the government-created opportunities of the patent system. Disclosure failure Paradoxically, in an age where search engines allow free instant access to information, the patent system suffers from massive cognitive failure. We can find a few words among trillions, but we don’t know who owns what process. Mission creep has expanded the system far beyond the areas where it works with reasonable precision (molecules) into areas where it generates huge costs and massive uncertainty. Hundreds of thousands of patents are written to secure the broadest possible claims while revealing as little as possible, with dozens of claims per patent to guard against the risk of invalidation while maximizing the opportunities for infringement. Despite the touted goal of public disclosure, these patents are written by lawyers for lawyers. Engineers and developers cope by ignoring patents , a perfectly rational response if they don’t want to spend their productive years trying to make sense of tactical legalese. Yet each patent is a government grant of the power to stop technology and commerce dead. Companies are hauling each other before the International Trade Commission, a federal tribunal that issues automatic exclusionary orders against infringing imports. You just need to show inadvertent infringement of a single inconsequential patent to keep an entire product line out of the U.S. The ITC blatantly discriminates against imports, but global value chains in information technology make all smartphones imports. And with all the innovative things that smartphones do, they face hundreds of thousands of possible patents. Where does this lead? More patents, larger portfolios, more and larger aggregators, and bigger markets for patents as weapons against products. Intellectual Ventures, the shadowy aggregator founded by Microsoft executives, has led the way and now has an estimated 30,000 to 50,000 patents. IV’s investors are bound to silence by non-disclosure agreements, and many of its patents are sold to subsidiaries or third parties who can take the rap for patent aggression. IV tried to keep its investors secret but was recently forced to reveal that they included Stanford and Cornell, two of the universities that developed Nine Points to Consider in Licensing University Intellectual Property. Point Eight of these guidelines admonishes: Be mindful of the implications of working with patent aggregators. Respectable patent aggregation Backing from prestigious universities puts IV on the verge of respectability. Public universities like the University of Minnesota and the University of Texas System invest in IV, why not public pension funds and other sovereign wealth funds. Why shouldn’t governments invest in government-granted rights? After all, the Fed buys treasury bonds. Last year, France announced the first sovereign patent fund, France Brevets . But France Brevets has only 100 million Euros to play with — barely 3 percent of the price of the Nortel portfolio. France has since suggested a European patent fund , presumably much bigger. Surely there is a compelling case to be made in light of the post-Nortel frenzy. But given the debt crisis, perhaps government grants should be left to private investors… Google has some $35 billion in cash equivalents, and a number of commentators have argued that Google should be shelling out cash to protect Android. After all, $35 billion is much larger than the reputed $5 billion capitalization of counter Apple and Microsoft, and keep Android phones coming into the U.S. But defensive portfolios are utterly ineffective against trolls and despite the conspicuous attacks on Android by Microsoft and Apple, most of the lawsuits are filed by trolls. As for money, Apple has nearly $80 billion in cash reserves, and if it join forces with Microsoft, as in the Nortel auction, that’s another $50 billion plus. They can easily outbid Google for abandoned portfolios and failed companies flooding the market. If patents are all about money, $130 billion beats $35 billion any day. Apple/Microsoft wins. Game over. But as portfolios show real clout, they could look very attractive to sovereign wealth funds that might want to diversify. Shouldn’t be controversial. Patents are only property, right? Norway’s sovereign wealth fund owns prime real estate in the centers of London and Paris. Having stakes in an aggregator or two looks like a smart strategic investment, especially if it can help ensure access to the lucrative U.S. market. Talk of real money inevitably turns to China. While China has a $350 billion sovereign wealth fund, China also has currency reserves of $3.2 trillion, up 33 percent in the last year. Like Apple’s cash reserves, these are highly liquid assets held for strategic purposes. China’s reserves are mostly in U.S. dollars, the world’s reserve currency — and most of that in U.S. Treasury obligations. But how much liquidity does China really need? With patent portfolios looking surprisingly liquid and China’s need for access to the U.S. market, why not invest in the ” world’s currency of innovation ?” What does this look like? Markets for government granted rights to stop commerce — in which governments themselves are major players, using government-granted rights to stop others from using government-granted rights to stop commerce…

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David J. Skorton: Immigration Reform: The Economic Argument

August 1, 2011

Last week, in the midst of the turmoil related to the nation’s debt ceiling, I testified at a hearing of the Senate Judiciary Committee Subcommittee on Immigration, Refugees, and Border Security , chaired by Senator Charles Schumer (D-NY), focusing on the economic imperative for enacting immigration reform. The thrust of the hearing was to explore the economic benefits of immigration reform, with provisions to make it easier for foreign nationals to work in selected sectors of the U.S. workforce. What? Won’t those foreign workers displace equally qualified Americans? How can more immigration be good for America’s economy? The answer, simply put, is that foreign workers make a substantial contribution to our country, particularly in the growing high-tech areas of science, technology, engineering and mathematics, the so-called STEM disciplines. The hearing was a lively interchange among individuals of varying backgrounds and experiences. I was joined on the panel by Robert Greifeld, CEO and president of NASDAQ OMX Bradley Smith, general counsel of Microsoft Puneet Arora, M.D., clinical research medical director of Amgen, who has waited 15 years, so far, for a green card to allow him to live and work in the U.S permanently. Ronil Hira, professor at the Rochester Institute of Technology, who has focused much of his academic work on high-skill immigration policy, the American workforce and the U.S. economy. I had the privilege of testifying on behalf of the Association of American Universities, a 110-year-old consortium of over 60 research-intensive universities. As in any such hearing, there were substantial differences of opinion: Mr. Greifeld indicated that NASDAQ companies often have trouble finding sufficient numbers of American workers with the skills and experience to fill vacancies. Mr. Smith concurred, stating that in May of this year, Microsoft had over 4,000 unfilled jobs. I pointed to data gathered by the Partnership for a New American Economy — a national bipartisan group of over 300 mayors and business leaders created by New York City Mayor Michael Bloomberg — that confirms staggering projected shortages of workers in fields like industrial engineering and math as well as reminding us of the many hugely successful companies started by immigrants. Professor Hira disagreed, pointing to high current unemployment rates among American high-tech workers. He suggested that one motivation for easing restrictions on immigration was to entice lower-paid workers from abroad to take jobs that would cost employers more if filled by Americans. This apparent contradiction highlights the mismatch between the skills of many American workers and those needed by some of America’s most tech-intensive firms. I believe that, as we sort through these differences of opinion and perspective and work to improve the immigration system, we must simultaneously attend to the inadequate and leaky pipeline of STEM students in our K-20 educational system. American students’ lack of interest in and qualifications for high-tech careers is a problem in its own right that needs urgent attention. But it cannot be fixed overnight. Meanwhile (as I noted in a previous post ), our nation’s growth in this innovation economy will depend in no small measure on agile access to the most talented foreign students and scientists — access that, in turn, depends on a well-functioning immigration system. All witnesses agreed, and the senators concurred, that our current system is not working well. Professor Hira pointed to major problems in the “guest worker” programs: those involving the H-1B and other visas. Dr. Arora gave moving testimony to the demeaning delays and bureaucratic hurdles. Mr. Smith told of Microsoft opening a research center in British Columbia to overcome barriers of the U.S. system in nearby Washington State. And I pointed to the roughly 50 percent of our current graduate students in high-tech disciplines who are foreign nationals. Based on what I have learned as a member of the National Security Higher Education Advisory Board (a group of some 20 university presidents/chancellors who meet regularly with senior officials of the FBI and other agencies), I also acknowledged the infrequent but potentially very serious national security challenges posed by the presence of foreign nationals in the laboratories of U.S. research institutions. These sobering statistics and observations led the witnesses on the panel to conclude that only broad immigration reform would allow our country to maintain and even enhance national security while increasing the supply of skilled workers and entrepreneurs from around the world to populate our high-tech companies, large and small. Without the contributions of highly educated and skilled immigrants, the U.S. will lose ground in critical and robust high-tech areas such as the life sciences, nanotechnology, and sustainable energy systems. Can our currently gridlocked political environment produce the bipartisan cooperation needed to design and enact broad immigration reform? Hard to imagine. But here are three things that we could urge our elected leaders to tackle: Create a streamlined green card process for international students who graduate with STEM degrees from U.S. institutions, especially advanced degrees. Reduce the backlog of skilled immigrants waiting to become permanent residents by increasing the number of employment-based visas and lifting the per-country caps on green cards. Pass the DREAM Act, giving undocumented children who are in the U.S. through no fault of their own the chance for citizenship through hard work in college or the military. Here’s hoping that Senator Schumer’s hearing will help Congress to focus on this imperative of fairness and economic development. Here’s hoping.

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Minnesota Shutdown Has Republican Lawmakers Facing Angry Voters

July 4, 2011

EAGAN, Minn. — Minnesota legislators are facing angry voters but also finding some support as they spend time in their districts on a holiday weekend that coincides with the state’s government shutdown. Three freshman Republicans marched in an Independence Day parade in Eagan. The suburb south of St. Paul has traditionally elected Republicans, but in recent years grown more hospitable to Democrats. State Sen. Ted Daley and Reps. Doug Wardlow and Diane Anderson unseated incumbent Democrats last year. They also backed a Republican budget that Democratic Gov. Mark Dayton calls unacceptable. Dayton let Minnesota’s government shut down rather than accept the refusal of Republican lawmakers to raise income taxes on the wealthy. Some parade-goers shouted “Get back to work” and “End the shutdown” to the Republicans. But others shouted words of support.

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Bing Inks Huge Deal With China’s Largest Search Engine

July 4, 2011

By Jason Subler and Georgina Prodhan SHANGHAI/LONDON (Reuters) – China’s Baidu is to partner with Microsoft for English-language search, giving the U.S. software giant a chance to expand its tiny Web presence in a market Google has stepped back from, and helping the Chinese company’s international ambitions. The tie-up will direct English searches from Baidu to Microsoft’s Bing, which will deliver the results back to Baidu’s Web pages, Baidu said in an emailed statement on Monday. Baidu has about 80 percent of the search market in China — a nation with almost half a billion Internet users and still only about 30 percent penetration — after Google left mainland China in a high-profile fallout with Beijing over censorship. Bing — which filters out results in China relating to controversial subjects, such as political dissidents, Taiwan or pornography, to be able to operate in the country — has a negligible share of the market, while Google has nearly 20 percent counting visits to its offshore sites. Baidu spokesman Kaiser Kuo said Bing was not submitting to any further censorship or restrictions on its English search as a result of the deal “than they already do.” Microsoft had no immediate comment beyond confirming the partnership. Google is losing share to Baidu but is still number two in China. Worldwide, Google runs about 84 percent of Web searches, followed by Yahoo with 6 percent and Bing with 4 percent, according to analytics firm Net Applications. “Google has potentially shot itself in the foot when it comes to cooperations in the Chinese market,” said Daniel Knapp, analyst at media industry research firm Screen Digest. “Chinese local players like Baidu would be very wary about striking up a relationship with Google, a rogue authority in the eyes of the Chinese authorities. Microsoft has always been very diffident — for Baidu it’s much safer,” he added. The new tie-up, due to be launched later this year, builds on existing cooperation between Baidu and Bing on mobile platforms and page results. Baidu is beginning to diversify from its core search business to compete in the fast-growing segments of mobile and social networking. [ID:nL3E7HO1IY][ID:nN27174987] It also has a Japanese search service that is currently loss-making. Search engine marketing company Greenlight said it saw the deal as positive for both sides, and could envisage the new partners dominating the Chinese search-advertising market. “Whilst it represents an opportunity for Bing to make more money from the Chinese market, Baidu gets what it needs to expand overseas when it is ready to do so,” said Greenlight Chief Operating Officer Andreas Pouros. “Microsoft has entered the Chinese market slowly and has made some friends, in a way that the Chinese government will have no issue with. This should leave Baidu and Bing to control the Chinese search ad market without too much difficulty.” Baidu made $1.2 billion in online marketing revenues last year, up 78 percent from 2009. Microsoft’s total online advertising revenue in fiscal 2010, including a small contribution from Bing, was $1.9 billion. Some analysts were skeptical over how much demand there would be for English search on Baidu. “It’s a good thing, but I see very minimal impact for Baidu. I don’t see a lot English keywords going through Baidu. It goes through Google,” said Wallace Cheung, a Hong Kong-based analyst at Credit Suisse. (Additional reporting by Melanie Lee and Samuel Shen; Editing by Matt Driskill and Louise Heavens) Copyright 2011 Thomson Reuters. Click for Restrictions

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

July 4, 2011

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

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Bant Breen: The Revealing Conference Call

June 26, 2011

Today we live in an always-on world of networked PC’s and mobiles. As these digitally connected devices continue to add more cameras it is important to remember that we live in an always-seen age as well. Last summer I arrived at my in-laws farmhouse for a vacation. But before my holiday could begin I had one last web conference call presentation with several my colleagues that needed to be attended. I set up my computer and logged into the conference call. The meeting was going to start in about 15 minutes so at the urging of my wife and kids I ran outside and jumped into the pool to cool down and wash the long trip and my worries away. I was having a great time playing with my kids in the water and was shifting into rest and relaxation mode when I remembered about the conference call. I jumped out of the pool and ran back to the house to join the meeting. I sat there in the dark bedroom as my colleagues made presentations about their monthly activities followed by discussion. Finally my name was called and I was asked to speak. My presentation appeared on the screen and in a professional voice I started outlining our corporate progress on various initiatives. My associates were strangely silent as I presented. Finally one of my coworkers from England piped up, “Uh, mate, uh, are you naked?” This was followed by several other affirmative murmurs and chortles. I had not put on a shirt after being in the pool, did not realize the webcam was on and appeared to the global conference call as if I was sitting there au naturale. My colleagues had a field day with this gaffe and I still receive e-mail invitations to conference calls with the line at the end, “Remember to wear a shirt.” There are numerous examples of our connected video cameras capturing the good, bad, funny and ugly. Earlier this year, a Wyoming couple accused a national rent-to-own chain of spying on them at home using their rented computer’s webcam without their knowledge. ‬Thousands of people followed Joshua Kaufman’s saga in Oakland as he took pictures of the thief that had stolen his MacBook from his Oakland apartment in March until the criminal was apprehended. I cannot see the usage of connected video abating. I am a heavy user of virtual meeting technologies and love the ability to share my screen and work with collaborators all over the world. Certainly there are significant privacy concerns and limitations will need to be established. Just remember, if there is a connected camera on your computer or mobile, it is advised to wear a shirt to the virtual meeting.

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Harvard Business School’s New Class Will Have Highest-Ever Percentage Of Women

June 26, 2011

(AP) CAMBRIDGE, Mass. — Early statistics are showing that this year’s incoming MBA class at the Harvard Business School will have its greater percentage of women. The school said this week that of the 918 students in the MBA class of 2013, 39 percent will be female. Women comprised 36 percent of the enrolled MBA students in the two previous classes. School spokesman Brian Kenny said the school’s admissions strategy has evolved over the last several years on trying to find ways to increase diversity He said Harvard Business School has no fixed targets when it comes to industry, geographical, or gender representation. In addition, the class of 2013 will see greater representation from students with backgrounds in science, engineering, and manufacturing, leading to fewer students hailing from consulting and finance. ___ Information from: The Harvard Crimson, http://www.thecrimson.com/

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Departing Regulator: Government, Banks Suffer From ‘Short-Termism’

June 25, 2011

Sheila Bair, outgoing chair of the Federal Deposit Insurance Corp., said on Friday that the American government and financial system are in danger of forgetting the lessons of the 2008 financial crisis, according to The Wall Street Journal . Bair, who plans to step down as FDIC chair on July 8 , said that some leaders in finance and government are suffering from a case of “short-termism”: a focus on reaping short-term gains at the expense of maintaining long-term economic stability. “The alternative is to risk another financial crisis that could someday throw millions of people out of work and wreck our public finances,” she said, according to The Wall Street Journal . Banks recently have been pouring money into lobbying against the implementation of the Dodd-Frank Act, which imposes more limits on financial institutions. Congressional Republicans also have hardened their push to weaken the Dodd-Frank Act, with U.S. Representative Michele Bachmann even introducing a bill that would repeal it altogether. Key regulators, most prominently the Securities and Exchange Commission, have also have made concessions, delaying and watering down rules set to be imposed on the derivatives market and hedge funds. Bair, like Elizabeth Warren, has called for better laws to rule over risk-prone banks, in order to maintain economic peace. “The history of the crisis shows many examples when regulators acted too late, or with too little conviction, when they failed to use authorities they already had or failed to ask for the authorities they needed to fulfill their mission,” she said in late May . “As the crisis developed, too many in the regulatory community were too slow to acknowledge the danger, and were too slow to act in addressing it.” Bair also suggested in April that the United States follow a British proposal to solve the problem of too-big-to-fail financial institutions. She said she would like the FDIC to follow the same proposal and section off the risk-prone investment banking portion of banks from the section of banks that lend to retailers and consumers. More recently, however, she has focused on the issue of requiring banks to hold a certain amount of capital in case of an emergency, warning that European capital requirements do not go far enough, particularly since some European countries are facing debt crises and banks are exposed to that debt. She said it is “troubling” that European banks “continue to effectively set their own capital requirements using internal risk estimates, unconstrained by any objective hard limits.”

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Iran Condemns Decision By Consumer Nations To Tap Oil Reserves

June 25, 2011

TEHRAN – Iran condemned on Saturday a decision by oil consumer nations to release strategic crude stocks as politically motivated interference in the market that would not have a sustained impact on prices. “The measure by the International Energy Agency in consuming their oil stockpile is meddling in the natural oil market trend and the drop in oil prices will not be sustainable,” Iran’s OPEC governor Mohammad Ali Khatibi was quoted as saying by the Oil Ministry website SHANA. The 28-member IEA said on Thursday it would release 60 million barrels a day over an initial 30 days to fill the gap created by the disruption to Libya’s output. Earlier this month, OPEC failed to reach consensus to increase production, which consumer countries wanted and leading exporter Saudi Arabia had pushed for, but which other producers, including Iran, opposed. After the OPEC meeting, Saudi Arabia said it would unilaterally increase output to meet the needs of the market. Iran said the move was politically motivated as Saudi Arabia was under western pressure. “After the United States and Europe failed to raise the organization’s output in the recent OPEC meeting, they used their utmost efforts to lower the global oil price. The consumption of stocks by the IEA to compensate for the oil shortage will push down prices in an artificial way,” Khatibi said. Khatibi reiterated Iran’s hawkish position about the current situation of the market. “The international oil market is not facing any shortage and supply and demand are balanced and any measure to increase output is a political act and maneuver,” said Khatibi. “The Americans’ meddling in the oil market and the consequent drop in its price is an attempt to influence the outcome of the presidential election next year ,” Khatibi said. (Reporting by Hashem Kalantari; Writing by Ramin Mostafavi; Editing by Sugita Katyal and Toby Chopra) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Global Regulators Agree To Impose Extra Capital Charge On Biggest Banks

June 25, 2011

BASEL (Huw Jones) – Global banking regulators have agreed on a proposal to slap an extra capital charge on the world’s biggest banks to make them safer by 2019. The surcharge is part of a series of regulatory reforms launched in response to the financial crisis, which forced countries worldwide into costly bailouts of their banking sectors to prevent systemic collapses. The Group of Governors and Heads of Supervision (GHOS) said after a meeting in Basel on Saturday the proposal would be put out to public consultation next month. “The additional loss absorbency requirements are to be met with progressive common equity tier 1 capital requirement ranging from 1 percent to 2.5 percent, depending on a bank’s systemic importance,” the group said in a statement. An additional 1 percent surcharge would also be imposed if a bank becomes significantly bigger, pushing the total to 3.5 percent. The plans, which need approval from world leaders (G20) in November, would be phased in between January 1 2016 and end of 2018. The capital surcharge will come on top of the new 7 percent minimum core capital all banks across the world will have to hold under new Basel III rules being phased in over six years from 2013. However, many of the world’s biggest banks already hold core tier 1 capital ratios of 10 percent or more and therefore easily meet or exceed the top end of the surcharge band. The central bankers have opted for a smaller surcharge than forseen but, in return, the surcharge will have to be in the form of top quality capital — retained earnings or common equity. This marks a victory for hardline countries such as Britain and the United States but will disappoint some banks that have been hoping to use hybrid debt such as contingent capital (CoCos) to pad out the surcharge band. Dirk Jaeger, Managing Director for supervision matters at Germany’s banks association BdB said the decision was not much of a surprise: “But we regret that bank levies and CoCo bonds do not count for the additional capital buffer.” COCOS REVIEWED The proposal, which was due to be finalized by last November but faced opposition from banks and some countries, will apply initially to so-called globally systemically important banks (G-SIBs). “These measures will strengthen the resilience of G-SIBs and create strong incentives for them to reduce their systemic importance over time,” the statement said. The consultation paper in July will indicate how many banks face a capital surcharge but it is not clear yet if their names will be published. The number of banks affected is likely to change over time as lenders grow or shrink and the consultation will spell out how often a snapshot of the sector will be taken. Banks will face a surcharge according to an indicator that draws on five elements — size, interconnectedness, lack of substitutability, global (cross-jurisdictional) activity, and complexity. The group of central bankers and the Basel Committee it oversees said they will continue to review the use of contingent capital. The central bankers said they would support the use of contingent capital to meet higher national requirements than the global minimum surcharge. However, even then, there would have to be a high-trigger for converting the debt into equity to help absorb losses on a going concern basis, the central bankers said. (Additional reporting by Alexander Huebner in Germany; Editing by Toby Chopra) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Cost Of Childcare Has Skyrocketed In Last 50 Years

June 25, 2011

It cost $25,299 to raise a child from birth to age 18 in 1960. The amount rose to $226,920 last year. This may be one of the reasons many reasons Americans are having fewer children these days. Adjusted for inflation, the 1960 sum equals about $192,497 compared to $235,996 in 2010, about a 22% increase. Neither number paints a complete picture. Median household income rose 25% between 1960 and 2010. The cost of raising a child is, in comparison to income over the 50-year period, up very modestly.

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Americans Have Never Been More Distrustful Of Banks: Poll

June 24, 2011

The recession might be officially over, but American views toward the institutions that brought the economic system close to collapse have never been worse. According to a new poll by Gallup , 36 percent of Americans now say they have “very little” or “no” confidence in U.S. banks, the highest percentage on record since Gallup first started tracking that data. Those saying they have a “great deal” or “quite a lot” of confidence in banks has also stagnated, stuck at 23 percent for the second straight year, after falling to a low of 22 percent in 2009. Safe to say it’s been a tough year in the banks’ public relations departments. U.S. banks have spent much of the past year aggressively lobbying against the implementation of Dodd-Frank financial reform. This week, Treasury Secretary Timothy Geithner called out banks for the “huge amount of money [spent by banks] to erode, weaken, walk back” financial reform. Indeed, the largest-lobbying institutions of last year spent 2.7 percent more in the first months of this year in an attempt to combat rules including higher capital requirements and restrictions on swipe fees. The nation’s five largest mortgage servicers — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — have also been the focus of a federal investigation into whether the banks defrauded taxpayers in their handling of foreclosures, first reported by The Huffington Post in mid-May. In addition, in April, Goldman Sachs, the nation’s first-largest bank by assets, was accused in a Senate report of systematically misleading clients by selling them assets known to be junk and then subsequently betting against that junk. So this year’s Gallup results only further emphasize the growing animosity toward banks in America. Never before 2009 had more Americans expressed more distrust than trust in banks. That has not only been the norm for three years now, but the gap is widening. Gallup, who has been tracking confidence in banks for over thirty years now, notes the steady decline of confidence in their release, pointing out that 60 percent of Americans had at least “quite a lot” of confidence in banks in 1979. That fell to 30 percent in the early 1990s, but then steadily rose to 53 percent in the mid-200s. The percentage of Americans with a good deal of trust in banks has been nearly halved since 2007: Although levels of confidence have fallen in all regions since the first years of the financial crisis in 2007, confidence is again on the rise in the Midwest and West. This year, it is the East that has the least confidence in banks, at 20 percent. The below graph charts levels of confidence since the financial crisis:

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Rick Robinson: What the Groupon Cat Should Have Said, Were it Not Such a P*ssy

June 24, 2011

After a couple weeks of virtual waterboarding by just about everyone from mainstream media to “recovering journalists” to an army of bloggers , Groupon used its blog for something of a response . The critics filled the mandated Quiet Period with all kinds of noise about unhappy local businesses victimized by the Groupon model to deconstructed formulas demonstrating how the Groupon numbers add up to poorer local merchants and a very rich Daily Deals company. On the blog “Groupon the Cat, slouching majestically across a cloud of pure wisdom,” doles out wisdom to all the Goupies. The Cat meowed: The “Quiet Period” is the time right before a company “goes public,” during which it is legally prohibited from saying anything to the press that may make the company look “good,” “successful,” or “not currently on fire.” During this sensitive time, it is the duty of the press to force the adolescent company through a series of brutal hazing rituals, designed to desensitize it to public criticism. This tough love helps the naively optimistic company to thicken its skin, atrophy its soul, and finally grow up into a real corporation. Groupon the Cat mentioned several morsels of what companies in a quiet period can expect from people raining hate (or logic) while the company is tied and gagged by mandated silence. I’ve offered an interpretation: WHAT CAT SAID: Wait until the company is sleeping to smear scream-activated bees on its face. Lesson Learned: Don’t believe your company’s own “buzz.” WHAT CAT MEANT TO SAY: Take the names of all who belittle you and hide in the bush for right time to pounce and claw their bloody eyes out. WHAT CAT SAID: Photoshop the company’s logo to appear to be shaking hands with James Buchanan, America’s worst president. Lesson Learned: Everything you see or read about a company is true, if it’s on a computer. WHAT CAT MEANT TO SAY: Take pictures of all who belittle and Photoshop them inside Cat’s mouth, speared by bloody incisors. WHAT CAT SAID: Kick sand in the company’s face. Lesson Learned: If the company survives, it’s time to move on to sand’s close relative, powdered glass. WHAT CAT MEANT TO SAY: Take faces of all who belittle and grind them open-mouthed in the moist bloody center of Cat’s litter box. WHAT CAT SAID: Write disparaging articles about the company. Lesson Learned:That’s what they get for trying to be a company. WHAT CAT MEANT TO SAY: Never try. Instead, take a long afternoon nap and wait for someone else to invent stuff. Then claw their bloody fucking eyes out.

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Why It’s Hard To Predict Bubbles

June 24, 2011

The recent sky-high IPO of LinkedIn, along with eye-popping valuations for other social networking and shopping companies, has raised concerns that we are now in the midst of another technology bubble, this one fueled by excessive investor enthusiasm for all things social. No sooner have these concerns been raised, however, than they have been countered by an array of arguments, all of which are variations on the basic claim that this internet boom is unlike the previous one. This debate illustrates one of the central causes of financial bubbles: Although after the fact it seems obvious that prices were irrational and an unhappy end was inevitable, bubbles are neither obvious nor inevitable at the time.

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Stocks Fall On Concerns Over Greece

June 24, 2011

NEW YORK (Edward Krudy) – Stocks headed for three days of losses on Friday on worries about the Italian banking sector and Greece’s austerity plan, but the S&P 500 managed to hold its 200-day moving average in a sign of market strength. Italian banks UniCredit SpA (Milan:CRDI.MI – News) and Intesa Sanpaolo (Milan:ISP.MI – News) fell sharply on concerns about their capital positions alongside uncertainty about the euro-zone crisis. Trading in the banks’ shares was briefly suspended. Greece’s government faced an electorate vehemently opposed to austerity measures that must be passed in parliament next week to avert default. But progress is being made in persuading banks to take part in a second bailout. “They (politicians) may not believe that financial markets are as sensitive to their decisions as they actually are, and there is a worry that somewhere along the line, some political vote goes against the market,” said Nicholas Colas, chief market strategist of the ConvergEx Group in New York. The S&P 500 remained within striking distance of its 200-day moving average — a line that has been tested twice in recent trading and has so far acted as a springboard for stocks. The level was at 1,263.49. “Every time you test a resistance or support level, you make it weaker,” Colas said. “It’s almost like a piece of metal. Every time you hit it, it grows more fragile and that’s why people are really worried the third or fourth time.” The Dow Jones industrial average (DJI:^DJI – News) dropped 82.04 points, or 0.68 percent, to 11,967.96. The Standard & Poor’s 500 Index (^SPX – News) fell 10.82 points, or 0.84 percent, to 1,272.68. The Nasdaq Composite Index (Nasdaq:^IXIC – News) lost 26.51 points, or 0.99 percent, to 2,660.24. The KBW Banks Index (Philadelphia:^BKX – News) lost 0.8 percent and the S&P Financial Sector Index (^GSPF – News) shed 0.7 percent. On Thursday, the market welcomed Greece’s agreement to a five-year austerity plan. The euro declined against the dollar for a third straight session on worries Greece’s parliament might not pass austerity measures needed for the country to secure more bailout funds. In the latest economic data, new orders for long-lasting U.S. manufactured products, known as durable goods, increased 1.9 percent in May after dropping 2.7 percent in April as bookings for transportation equipment rebounded strongly. Oracle Corp (NasdaqGS:ORCL – News), off 3.9 percent at $31.21, was the biggest drag on both the S&P 500 and Nasdaq 100 indexes (Nasdaq:^NDX – News) a day after the world’s No. 3 software maker posted disappointing results, especially in hardware sales. Oracle’s results sparked concerns about a bigger slowdown in technology spending. Micron Technology Inc (NasdaqGS:MU – News) tumbled 13.8 percent to $7.27 after the memory chipmaker recorded results below expectations late Thursday. (Reporting by Edward Krudy; Editing by Jan Paschal) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Marty Zwilling: You Never Learn Anything While You Are Talking

June 24, 2011

When you are not presenting to investors or your team, try to spend more time listening than talking. You can’t learn anything new while you’re talking, yet many entrepreneurs seem to never stop. It’s a sad spiral, since the more you talk, the less people really hear, meaning they don’t learn anything either. If someone left this article on your desk, read extra carefully. Building a business is all about building relationships, and one of the most important elements of a relationship is effective communication. Communication doesn’t happen unless both parties practice the art of effective listening. Check to see if you are practicing the key disciplines of listening, as outlined by Brian Tracy in No Excuses: the Power of Self-Discipline : Listen attentively. Listen as though the other person is about to reveal a great secret or the winning lottery number and you will hear it only once. Since you always pay attention to what you most value, when you pay close attention to another person, you tell that person that they are of great value to you. You will be remembered. Pause before replying. When you pause, you avoid the risk of interrupting the other person if they are reformulating their thoughts. It also enables you to hear not only what was said, but what was not said. Then you can respond with greater awareness and sensitivity. Ask for clarification. Never assume that you automatically know what the other person is thinking or feeling. It is when you ask questions and seek clarity that you demonstrate that you really care about what he or she is saying, and that you are genuinely interested in understanding how he or she thinks and feels. Feed it back. The acid test of listening is to see if you can paraphrase what you heard in your own words. It is only when you can repeat back what the other person has just said, in your own words, that you prove you are really listening, and understood the message. For all feedback, be sure to mirror the other person’s pace and communication style. Even good communicators average only about half their time listening. Yet experts assert that most people listen with only about 25 percent of their attention, hear about 25 percent of what is said, and after two months, remember only half of that. That’s not effective communication. There are also things you can do to encourage others to listen to you, when you do speak, to improve the overall communication: Lower voice, no emotion. This causes the other party to listen more carefully, and facilitates a more pleasant and more effective conversation. Adapt to listener interests. Use analogies and terminology that are easy for the other person to relate to, and they will respond with attention and higher comprehension. Choose the right environment. Wait for the right opportunity, when you can be easily heard and understood, and the listener is in the right mood. Address people by name. This gets their attention and focus. Sometimes it helps to bring others into the conversation to support your input. In business, you need to always be listening – to customers, to advisors, to investors, and to your team members. When you do talk, concentrate on making it effective. You don’t have the time to have things repeated to you four times before you really hear and understand them. Responsible, effective listening is a rare skill that will give you a sustainable competitive advantage over your peers and your competitors. It’s also a skill that can be developed with practice. You can never know enough in business, so even top entrepreneurs find time to listen. Are you learning anything these days?

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U.S. Manufacturing Orders Rose Last Month, Easing Fears Of Slowdown

June 24, 2011

New orders for U.S. manufactured goods and a gauge of business spending plans rose in May, easing fears of a sharp slowdown in factory activity. Durable goods orders increased 1.9 percent after dropping 2.7 percent in April, the Commerce Department said on Friday. Economists had expected orders to rise 1.5 percent in May. Durable goods orders are a leading indicator of manufacturing health. An improvement across the board in May and revisions to April’s figures, which showed smaller declines than previously reported, pointed to underlying strength in a sector that has powered the economic recovery. The report came as a relief to investors after recent regional factory data had shown some signs of fatigue. Supply chain disruptions after the March earthquake and tsunami in Japan are constraining manufacturing. The report was “a little better than you might have expected given the gloomy news that’s coming out of the manufacturing surveys. So that’s a small plus,” said Nigel Gault, chief U.S. economist, IHS Global Insight in Lexington, Massachusetts. U.S. stocks extended gains on the data, while prices for Treasury debt fell. The report also supported views the sluggish economy would regain momentum in the second half of the year. The economy grew at an annual rate of 1.9 percent, the department said in another report, up from the previously estimated 1.8 percent. The revision was in line with economists’ expectations. The economy expanded at a 3.1 percent rate in the fourth quarter. Orders were a buoyed by a 36.5 percent jump in volatile aircraft bookings. Boeing received 27 aircraft orders, up from just two in April, according to information posted on the plane maker’s website. Motor vehicle orders rose 0.6 percent after plunging 5.3 percent the previous month, suggesting some improvement in auto production, which has been hit by a shortage of parts from Japan. Excluding transportation, durable goods orders increased 0.6 percent after a revised 0.4 percent decline in April, previously reported as a 1.6 percent fall. Economists had expected this category to rise 0.9 percent. Outside of transportation, orders for machinery, primary metals, capital goods, computers and electronic products all rose. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rebounded to increase 1.6 percent last month after a revised 0.8 percent fall in April. Economists had expected a 1.0 percent increase from a previously reported 2.3 percent drop. Shipments of non-defense capital goods orders excluding aircraft, which go into the calculation of gross domestic product, increased 1.4 percent after falling 1.5 percent in April. (Reporting by Lucia Mutikani; Editing by Neil Stempleman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Erika Shaker: The Attack on Workers: Back(sliding) (in)to the Future

June 24, 2011

The public response to recent labour disputes has been a disturbing sideshow to the return of Parliament. What’s remarkable is the level of nastiness that gets tossed around, littered with references to “union stooges” and the ubiquitous “socialist dinosaurs.” Perhaps the most obvious line of attack is based on a backdrop of selfishness — “I don’t have benefits/vacation/job security, so why should they?” It is an argument borne of misplaced resentment. The understandable anger at an increasingly stratified society is being directed not at the handful of people who are benefiting handsomely from an increasingly unfair and unequal economy, but rather at those individuals and organizations trying to make that same economic system a little less unfair for themselves and eventually for others. As a strategy, though, it’s completely backwards: rather than resenting unionized workers for what they have achieved, doesn’t it make more sense to say, “What great benefits — I would like to have them too” (or maybe, “I would like my kids to have those opportunities, even if I don’t”)? Isn’t that how we improve living and working conditions for all of us? I don’t understand the apparently pervasive rationale that unless everyone (or at least the person doing the complaining) has these rights, no one should. How does that guarantee any kind of social progress? Do we reject social improvements out of sympathy for those who didn’t benefit from them? Or do we initiate social progress by creating examples of good policy and practice to which we all collectively work to aspire? Like, for example, paid maternity leave — which many of us now have as a direct result of the postal workers’ fight for that benefit in the 80s. If the founders of Medicare thought that establishing public health care would be unfair to those who grew up without it, where would we be today? But there’s also another theme that’s been percolating on message boards (following news stories about what has become a full-fledged lockout of postal workers by Canada Post, and the recent tabling of back-to-work legislation by the federal government) — one deeply rooted in elitism and adherence to a rigid class system. “What makes them think they deserve more?” “You only need a grade 6 education to do their job.” “Why should unskilled labour get paid $50,000 a year?” Funny, isn’t it, how people claim to respect those who do “an honest day’s work.” Yet when that “honest day’s work” comes with decent wages, benefits, vacation days, a pension and job security — you know, if it’s unionized — suddenly those same hardworking folks are “coddled,” their work somehow not so “honest” anymore. Workers are universally loved (or at least they get some rhetorical “props”) when they’re downtrodden… but the moment they have the gall to look beyond their “place,” they’re met with a wave of righteous indignation: who do they think they are, anyway? “They think they work harder than you and me,” someone responded on facebook when I voiced my support for postal workers. “Well, maybe they do,” I said. I’m certainly not out there every day carrying upwards of 35 lbs of mail for hours at a time, trudging through Ottawa streets in minus-40 winters and plus-40 summers, and dealing with the realities of a job that has the second-highest rate of work-related injuries in the federal sector. The implication is that some jobs (and the people who do them) just aren’t deserving of a good wage, security, or safe working conditions. Times are tight (for working people, though not for CEOs), they have a job, and that should be enough for them. Living wages are for slackers, and unions have to get with the times. Really? So this is the new definition of progress: household debt is at record levels and working people (particularly the younger ones who are just entering the job market) are told they have to do more and expect less while paying off student loans, raising families, and caring for aging parents. Ironically, in resisting this so-called “new reality” for their current and future members (and more broadly, for society) unions are painted as obstructionist and out of touch. But it’s our increasingly stratified system — the one so many people, against even their own best interests, tie themselves into knots defending — that’s truly untenable. Erika Shaker is Director of the Canadian Centre for Policy Alternatives ‘ Education Project.

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European Banks, Finance Officials Discuss New Greek Rollover Plan

June 24, 2011

LONDON/FRANKFURT (Alex Chambers, Jonathan Gould and Philipp Halstrick) – European banks and finance officials are discussing a proposal to replace existing Greek debt with a different type of bond to get around ratings agencies’ reservations about a planned rollover, two senior European banking sources said on Friday. The proposal foresees a voluntary rollover of debt into securities of a different and not comparable credit composition to avoid agencies moving Greece to default status, the sources told Reuters on Friday. “Only by a completely different composition of the bonds would the rating agencies see the restructuring as voluntary and not declare Greece insolvent,” said one senior banker. Banks, insurers and national finance officials have held meetings this week to seek a solution to Greece’s sovereign debt crisis. A senior German banking source said that banks were still examining a variety of proposals and that they would not agree to commit to any rollover deal without a signal from ratings agencies that there would be no default. French President Nicolas Sarkozy said on Friday that French banks and insurance companies were willing to participate in a voluntary rollover of Greek debt. German private creditors have been asked by the country’s finance ministry to submit data on their Greek exposure and their intentions to roll over the debt by early next week, two other sources familiar with the meetings said. Euro zone governments are discussing a second bailout package for Greece that would run from 2011 to 2014 and could amount to 120 billion euros ($170 billion) , including up to 30 billion euros from the private sector. Germany and France, along with Greek banks themselves, are the biggest holders of Greek state debt and therefore most exposed to any default. There has been rising pressure in countries like Germany, Finland and the Netherlands for aggressive steps to force banks to share the burden of a new aid package, after taxpayers coughed up all of the money in the previous round. (Editing by Patrick Graham) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Obama To Announce A New High-Tech Manufacturing Effort

June 24, 2011

PITTSBURGH — Imagining advances from lighter cars to smarter robots, President Barack Obama is announcing a $500 million project to spur high-technology manufacturing, a sector of U.S. industry that presidential advisers say has lost ground to such competitors as Germany and Japan. On Friday in Pittsburgh, Obama is to call for a joint effort by industry, universities and the federal government to help reposition the United States as a leader in cutting-edge manufacturing, including biotechnology, robotics and nanotechnology – the development of new materials at the molecular level. The initiative represents yet another effort by Obama to promote job-creation in the midst of an economic slowdown that has reduced hiring and weakened his job approval standing with the public. The president has tried to elevate his profile on the economy with weekly job-related trips to states that are key to his re-election. In 2008, Obama beat John McCain, his Republican opponent, by a 55-45 percent margin in Pennsylvania. But presidential elections are usually competitive there, making the state a 2012 battleground. He is to launch his new high-tech plan at Carnegie Mellon University, one of six universities in what the administration is calling the Advanced Manufacturing Partnership. The plan also features 11 manufacturing companies, including Ford Motor Co., Caterpillar Inc., Procter & Gamble Co. and Northrop Grumman Corp. Leading the effort will be Andrew Liveris, chairman, president and CEO of the Dow Chemical Co., and Susan Hockfield, president of the Massachusetts Institute of Technology. “The idea here is that we’re bringing together all of the key players in a collaborative partnership to help identify these promising technologies, to invest in these promising technologies and to use them to drive a revitalization of American manufacturing,” said Ron Bloom, assistant to the president for manufacturing policy. Obama will be touring the Carnegie Mellon Robotics Institute, which is building machines that can help with bomb disposal, brain surgery, lawn mowing and paint scraping. Ultimately, some scientists at the institute are trying to figure out whether robots and humans can “treat each other as equal partners or teammates.” The administration’s plan includes $70 million for a robotics initiative. It also is aiming $300 million toward national security industries and $100 million for research and training to more quickly develop advanced materials at lower costs. Some of the $500 million would come from existing allocations to government agencies, but other money is only reflected in Obama’s 2012 budget request and would require approval by Congress. Bloom envisioned nanotechnology that could create stronger but lighter materials. “And what that means is, if we can be the leader in creating these kinds of materials, then we’re going to have cars that are lighter, but yet as strong; we’re going to have airplanes that are light and consume less energy in order to power them,” he said. The initiative is the brainchild of the President’s Council of Advisors on Science and Technology. In a report issued Friday, the council warned that U.S. leadership in manufacturing is at risk. It said the United States has been losing research and development associated with manufacturing to other countries. Most importantly, the council noted, the United States is losing the manufacturing competition for products that were invented in the U.S., including laptop computers, flat panel displays and lithium ion batteries. In a teleconference with reporters, Bloom rejected a suggestion that the effort could be criticized because it could single out beneficiaries at the expense of others “We’re not trying to pick a winner,” Bloom said. “We just want to give entrepreneurs and innovators tools to work with.” ___ Associated Press writer Kevin Begos contributed to this report.

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Controversial Anti-Union Bill Poised To Become Law In New Jersey

June 24, 2011

TRENTON, N.J. — The New Jersey Assembly has passed landmark employee benefits legislation requiring public workers to pay sharply more for pension and health benefits. The divisive bill passed 46-32 Thursday with support from all Republicans who were present and a smattering of Democrats. The Senate approved the bill Monday. Republican Gov. Chris Christie is expected to quickly sign it. The measure requires 500,000 teachers, police, firefighters and other public workers to pay a portion of their health insurance based on income. It also increases pension contributions. The state’s retirement funds are underfunded by $110 billion. The bill’s backers say higher contributions are needed to ensure solvency. Opponents object to the four-year suspension of bargaining over health benefits. More than 8,000 rallied at the Statehouse Thursday to oppose the bill.

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Minnesota Government Shutdown Looms As Judge Weighs Budget Dispute

June 24, 2011

ST. PAUL, Minn. — The budget spat between Minnesota’s Democratic Gov. Mark Dayton and Republican state lawmakers moved from the Capitol to a courtroom Thursday, with a judge warning that the stalemate threatens a state constitutional crisis with a government shutdown a week away. Ramsey County Chief Judge Kathleen Gearin urged the two sides to keep trying to resolve their differences over raising taxes and cutting spending. “It feels a little bit something almost like a game of chicken,” Gearin said. The failure to agree on a budget creates “far more sweeping a crisis and more significant an issue than ever before,” Gearin said, calling it “a constitutional disagreement of extreme importance.” Most of Minnesota’s state government functions would be suspended starting July 1 if the governor and Legislature don’t enact a new two-year budget. It would be the state’s second shutdown in six years, and the closure would be far more extensive than the partial shutdown in 2005. Budget talks have stagnated for weeks. Dayton wants to raise new taxes while Republicans seek a definite ceiling on state spending. Gearin denied Dayton’s request to order the talks into mediation, and ruled against four GOP senators who argued that court involvement in the budget process would violate the constitutional separation of powers. Gearin is charged with sorting out conflicting views between Dayton and his fellow Democrat, Attorney General Lori Swanson, over how to determine which state services are critical to preserving public health and safety and should be continued during a shutdown. Swanson is asking that the court appoint a retired judge as referee empowered with making those decisions. “We ask you and this court to step in and protect the constitutional rights of the people of Minnesota,” Swanson said. But Dayton’s attorney David Lillehaug said that would be an unconstitutional step for the courts and that only the governor can decide what state funding would continue in a shutdown. “If July 1 arrives, and there is no state appropriation, the governor will take action,” Lillehaug said. “He will not allow the prisons to be opened. He will not allow sex offenders to be released from supervision. He will not allow the State Patrol to be pulled over to the side of the road. He will not allow veterans homes to close.” Gearin also heard appeals from a parade of attorneys representing interests ranging from subsidized health care patients to highway contracts to local government officials to keep money flowing to their groups during a shutdown. Hennepin County Attorney Mike Freeman argued that his county, the state’s largest, needs the $1 million a day in federal Medicaid dollars that get passed through the state for hospitals and medical programs. “We need word from this court that in a shutdown, they will continue,” he said. Former Attorney General Mike Hatch spoke about a 24-year-old Medicaid patient named Jenny Taylor, who got notice last week with almost 600,000 others that a shutdown could interrupt state-subsidized health care coverage. “She is the face of what government is about,” Hatch said. “Jenny is what we are talking about here today.” As the pleas wore on, Gearin showed frustration. “At some point, people have to realize it’s not the court’s role to make everything better,” she said. Gearin repeatedly warned of the danger of the court intervening in a budget process the constitution reserves for the executive and legislative branches. The judge said the legal proceedings that would spring forth from a shutdown would present a “complex conundrum” and compared the likely fallout to the Charles Dickens novel “Bleak House,” the dark tale of a lawsuit that lasted for decades. She implored attorneys for Dayton and the House and Senate to urge their bosses to dedicate themselves anew to settling the budget dispute before July 1. “The people want them to keep talking,” Gearin said. “Please, keep talking.” Still, she quickly declined Dayton’s request to appoint a mediator to help him and Republicans reach a budget deal. Gearin said she concluded that the executive and legislative branches have the “institutional competency” to resolve the standoff. As the court hearing unfolded, however, the two sides still bickered a few blocks away at the Capitol – over whether negotiations tentatively scheduled for Friday and Saturday would include the leaders of Democratic legislative minorities. Gearin said she probably wouldn’t rule until next week on Swanson’s request for a shutdown referee. “It would be far better if this were resolved by the legislative and executive branches getting together,” she said. ___ Associated Press writer Martiga Lohn contributed to this report.

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Larry Magid: Report: Twitter to Place Ads in Timeline

June 24, 2011

The Financial Times is reporting that Twitter will include advertisements in users’ message streams “according to people with direct knowledge of its plans.” The newspaper’s site also said that Twitter is likely to launch a Groupon-like service to provide discount offers to Twitter users. Twitter already offers “promoted Tweets” which are placed “at the top of some Twitter.com search results pages,” according to a Twitter help page . The Tweets are labeled as “promoted” but “in every other respect they exist initially as regular Tweets and are organically sent to the timelines of their followers.” The difference between what the company now offers and what it is reportedly considering is that the new ads would be part of the user’s regular Twitter stream among the Tweets of the people or organizations users follow. In March Twitter introduced a “QuickBar” in its iPhone app which displayed ads, but withdrew it a few weeks later after user complaints . Likely to generate complaints I certainly respect Twitter’s need to sell advertising. Without ads, the company couldn’t stay in business — unless it started charging people to send and read Tweets which isn’t going to happen. But the question is whether they can come up with an advertising strategy that isn’t intrusive. Google, for example, has proven that it’s possible to put clearly labeled ads on the side or above search results and on the side of a user’s Gmail page without actually interrupting what the user is doing, That type of creative placement of ads has earned Google plenty of money without alienating its user-base. If Twitter winds up interrupting users with ads, the reaction will be loud, swift and not pretty. I don’t see any downside to a Groupon-like discount program as long as it’s something people subscribe to or see outside of their regular Twitter stream.

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Yahoo CEO Blasted By Shareholder, Called ‘Lame Duck’

June 23, 2011

SAN FRANCISCO — Yahoo Inc. Chairman Roy Bostock sought to defuse speculation about CEO Carol Bartz’s job security at the Internet company’s annual shareholders meeting Thursday, only to have it ignited again at the end of the session by an exasperated investor. After Bostock opened the meeting with an endorsement of Bartz’s performance, the unhappy investor ended it with a five-minute condemnation of Yahoo’s CEO and the entire board of directors. The investor identified himself as someone who personally owns some Yahoo stock and advises funds that own several million of the company’s shares. The Associated Press couldn’t verify his identify because Yahoo banned reporters from the meeting held at a Santa Clara hotel, telling the media to listen to a webcast of the event instead. During his unflattering critique, the investor described Bartz as a “lame duck” who should be immediately bought out of a four-year contract that expires in January 2013. He also called upon Yahoo’s board to consider a variety of dramatic steps, including breaking up or selling the company to lift the stock. Yahoo’s shares have been lagging the rest of the market for so long that Bartz still hasn’t hit any of the price targets set for her when she was hired nearly 2 1/2 years ago. “It’s time for a sense of urgency,” the investor said. Bartz thanked him for his opinion and then added, “That was certainly a downer.” No other shareholder lambasted Bartz during the 75-minute meeting. Shareholder backlashes contributed to the resignations of Yahoo’s two previous CEOs, Terry Semel and company co-founder Jerry Yang. Semel stepped down in June 2007 a week after he came under attack at Yahoo’s annual meeting. Yang stepped aside to make way for Bartz after months of ridicule for the way he handled a takeover bid from Microsoft Corp. Before Thursday’s question-and-answer period, Bartz defended the steps she has taken to streamline Yahoo’s operations and focus the company on delivering more services that will keep its audience of more than 600 million people on its website for longer periods. Sounding a familiar theme of her tenure, Bartz also asked for patience. “Companies don’t’ turn around just because someone wants them to turn around,” she said. “They turn around through hard work.” In his opening remarks, Bostock made it clear he intends to give Bartz more time to finish what she started. “This board is very supportive of Carol and this management team,” Bostock said in his opening remarks. “We are confident that Yahoo is headed in the right direction.” Bartz, 62, has boosted Yahoo’s earnings by cutting costs during her first 2 1/2 years as CEO, but so far hasn’t been able to revive the company’s revenue growth, even amid an upturn in Internet advertising that has enriched rivals Google Inc. and Facebook. The financial lethargy has dragged down Yahoo’s stock, which has been trading in a narrow range since Bartz’s arrival, while the market values of many other Internet companies have been soaring. Yahoo shares fell 14 cents to close Thursday at $15.08. When she was hired in 2009, Bartz received 5 million stock options that won’t start vesting until Yahoo’s stock closes at $17.60 or higher for at least 20 consecutive trading days. It looked like the shares might remain above that threshold until last month when Yahoo disclosed a surprising move that threatens to diminish the value of its 43 percent stake in the Alibaba Group, one of China’s most promising Internet companies. The investment suddenly looked less golden after Yahoo announced Alibaba had spun off its payment service, Alipay, into a company controlled by its CEO, Jack Ma, without compensating Yahoo. Yahoo’s stock price has plunged nearly 20 percent since the May 10 disclosure of the Alipay spinoff. Echoing remarks she made at a meeting with analysts a month ago, Bartz told shareholders Thursday that Yahoo is encouraged by the negotiations seeking compensation Yahoo for the loss of Alipay in its Alibaba investment. Bartz didn’t address unconfirmed media reports that Yahoo is interested in buying Hulu, a service that streams television shows on the Internet. Hulu, whose current owners include Walt Disney Co., News Corp. and Comcast Corp., has said it got an unsolicited buyout offer without identifying the bidder. The investor who spoke out against Yahoo urged the company not to buy Hulu unless the deal meant that Hulu’s CEO, Jason Kilar, would replace Bartz. Bostock faced stinging criticism three years ago when he was just starting out as Yahoo’s chairman and the company balked at a chance to sell itself to Microsoft for $47.5 billion, or $33 per share. Most shareholders are still backing Bartz and Bostock. Based on a preliminary count announced Thursday, Yahoo said about 80 percent of shareholders favored their re-election to the board. About 90 percent favor the re-election of the remaining eight members of the board. After the squandered Microsoft opportunity, only about 60 percent of shareholders backed Bostock’s election to the board in 2008.

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Federal Reserve Keeps Power On Reserve For Another Day

June 23, 2011

NEW YORK — Another major policymaker has decided to take a more detached stance toward the economic slowdown. Federal Reserve Chairman Ben Bernanke’s Wednesday media briefing resembled an economics lecture more than a press conference, as he dispassionately explained graphs that had been passed out to journalists, indicating slower economic growth than expected. “I’m a little more sympathetic to central bankers than I was 10 years ago,” he said in response to a question from a Japanese journalist about Bernanke’s 2000 and 2002 analyses of Japan’s lost decade, while he still was an economics professor at Princeton University. This seemed to betray a view of himself not as a central banker, but instead as an economics professor who left his secure perch at Princeton in order to serve his country. His stated sympathy for central bankers implies that he still is not a central banker at heart. Continuing his professorial analysis of the economy, Bernanke said that although the Federal Reserve expects the unemployment rate to continue to decline, the rate of decline remains “frustratingly slow.” The apparent message: Like other observers, Bernanke is frustrated by the fact that unemployment still is 9.1 percent. But he does not believe the Federal Reserve has much power left to bring unemployment down without losing its long-term credibility and power. And if the Fed were to lose its credibility as the central institution controlling the American economy’s inflation rate, it could lose its power over economic conditions altogether. “Keeping inflation low and keeping inflation expectations low and stable actually gives the Fed more leeway to respond to more short-term shocks,” Bernanke explained. The inflation rate is the one economic indicator that the Fed has nearly absolute control over, Bernanke said repeatedly. “The longer-run inflation outlook is determined almost entirely by monetary policy,” he emphasized. The implication: If the Fed loses its power over inflation and prices get out of control, or even if investors lose confidence in its commitment to keeping prices down, then the central bank would no longer be able to help rescue the American economy in an increasingly unstable world. With Greece at risk of potentially defaulting on its debt and ratings agencies contemplating a downgrade of U.S. debt as Congress spars over raising the debt ceiling — both of which are possible short-term shocks that could endanger the American economic recovery — it seems that history could vindicate Bernanke for safeguarding the Fed’s power and credibility. But now with Bernanke taking an increasingly detached view of the economic recovery, it seems that the millions of Americans who are unemployed and underemployed could be losing their last major champions on the mountain where policymakers decree economic policy for the masses. Bernanke tried to argue Wednesday that by keeping interest rates near zero and flooding the economy with $600 billion in a bond-buying program, the Federal Reserve has done all that it could do to meet its dual mandate of curbing inflation and promoting maximum employment. He seemed to try to place responsibility for the economic recovery outside the confines of the Federal Reserve. “I don’t think that sharp immediate cuts in the deficit would create more jobs,” Bernanke said in a poker-faced response to a journalist’s question. “I think what people will understand — should understand — is that our budgetary problems are very long-run in nature.” “The most efficient and effective way to address our fiscal problems is to take a longer-run perspective and to focus our cuts not on the near term but by taking a long-run perspective and by making it a credible plan,” he added. Bernanke spoke largely in terms of the economic principles that hold true in classrooms. But these facts have not played a major role in the current debate in Congress, where Republicans are threatening to not raise the debt ceiling unless Democrats agree to immediate, off-setting spending cuts. If Congress does not raise the U.S. borrowing limit, it could cause an economic crisis even worse than the 2008 crisis, warned the Treasury Department . Most economists think that Bernanke has been doing about as good as he can under the constrained circumstances. “I think at this point ‘wait and see’ really is the best thing that the Fed can do,” said Nigel Gault, chief U.S. economist at IHS Global Insight. The central problem, Gault said, is that the only economic policy that really could help the economy — a stimulus enacted by Congress and the White House — has become discredited as a force that would get in the way of an economic recovery, when in fact it could be the best way to revitalize the economy. “Normally you expect the center wings of both parties to be able to come to common ground, but that’s not possible because the center isn’t running things at the moment,” Gault said. “It’s the wings of the parties that are running things.” Gary Burtless, an economist at the Brookings Institution, agreed that a fiscal stimulus targeted at rebuilding infrastructure and encouraging private-sector employment would be the most effective economic policy. Barring that, however, he said that the Federal Reserve should consider raising its inflation target up to 4 percent to boost job growth. Nonetheless, Burtless said he believes it is unlikely for the central bank to change its stance, since the Fed seems to have decided to focus on its mandate to curb inflation at the expense of trying to bring down the unemployment rate. “I believe that the Federal Reserve thinks it has done as much as it can do, while maintaining its credibility as an inflation watchman to spur this particular recovery,” Burtless said. “They may be wrong, but I don’t think they’re wrong by a huge amount.” “I think really the burden of doing something about the current economic situation is for fiscal policy,” he added. “It is not for monetary policy.”

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Larry Summers Takes Seat On Startup Board

June 22, 2011

NEW YORK — Former Treasury Secretary and former Director of the White House National Economic Council Lawrence Summers will be taking a position on the board of Square , a San Francisco-based company that offers individuals and businesses a way to accept payments on their mobile phones. In an official announcement on Wednesday, Square CEO Jack Dorsey — also the Executive Chairman of Twitter — said, “We are proud to have Larry join our board and we welcome his insight and decades of leadership to our growing company. Square is at a key point in our trajectory and we know Larry will contribute tremendous wisdom and expertise toward our continued success.” Summers did not immediately respond to request for comment Wednesday. Founded in 2009, Square launched to the public in early 2010. Summers, also the former president of Harvard University, will likely increase the organization’s market clout, especially ahead of an expected IPO. “Square is certainly kind of a dream team — with Jack Dorsey, Keith [Rabois] and Vinod Khosla,” said Chris Dixon, the co-founder of Hunch , an online recommendation service, and Founder Collective , a seed stage venture capital company. “They already have a ton of momentum, and [the addition of Summers] just adds momentum.” With his considerable financial bona fides, Summers will likely provide strategic guidance to the Square management team. According to Dorsey , the company is processing $3 million in transactions every day. David A. Jones, Jr., chairman and managing director of early stage investment fund Chrysalis Ventures , said companies like Square are “growing at the intersection of the old established world-meets-really exciting mobility and tech.” Summers will be able to help the company navigate the “the pressure and opportunity of fast growth” — in an environment where Square must connect to the “old” economy, Jones said. “Things still have to be paid for, credit cards still have to be regulated,” he noted. “It’s not like Twitter or Facebook, where it’s an entirely new space.” Moreover, Jones explained, established board members like Summers would be able offer sense of context for the relatively young company, and help prioritize options during a time of rapid growth. “[Summers'] experience as a university president, counselor and treasury secretary could be very relevant,” he added. In the end, it will be the chemistry between board directors like Summers and the Square management team that will determine the company’s success, according to Tim Draper, a founder and a managing director of Draper Fisher Jurvetson , an early stage venture capital fund. “I believe that a good board can make a big impact on a company,” said Draper. “A bad board can kill a company. Ultimately, it is the entrepreneur and the team that make it all happen.”

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Val Brown: Pain Of Discipline Trumps The Pain Of Regret

June 22, 2011

Are delaying techniques the scourge of productivity or a necessary evil? I’ve never missed a deadline on a project or arrived unprepared for an investor pitch. Nor do I wait until the last minute to do my work. But that doesn’t mean I never suffer from pre-project paralysis when confronted with a challenging brief. Whether you’re sitting in front of a blank page, a newly-prepared canvas or a PowerPoint that awaits your bullets, the beginning of any creative or business project can be daunting and anxiety-ridden, though many of us may not be aware of it. It may manifest as procrastination. But in my case, and I think with most workers, it’s not laziness, but fear. What’s the root of this fear? It may be that it won’t be good (even though all our other work has been), or that we won’t finish on time (even though we always do). But in a word, it’s fear of judgment of our work — by our peers, our boss or the public. And worst of all, by ourselves. Of course, if we’re in business and have bosses we are risking judgment with every new piece of work we create. If we’re running the place, we may have fear of our employees’ opinions, and our customers pass judgment with each purchase they do or don’t make. As a brand development consultant, I risk it with each proposal, business plan or project result. As a writer, it’s worse. It’s just me out there. And with the internet, it’s me out there, forever. I recently begged The Huffington Post to remove a piece I wrote. I was young and foolish when I started blogging — all those four years ago — and hadn’t fully appreciated the permanency of the Internet. My most recent paralysis? The piece I’m writing here was originally intended to be about some very different aspect of productivity and creativity. But my delaying techniques were out in full force this morning, mostly because I hadn’t had what I thought was the “big idea.” So I actually sat down at my computer three times before typing the first word. What were my thoughts and actions in between? “Did I leave a light on in the bedroom? I’d better make a cup of tea. Need to check the weather. Those earrings sitting on my desk are going to annoy me, I’d better move them. Oh, I heard the dryer stop, better fold the clothes.” I regained my sanity momentarily and did not pick up a phone call that could’ve wasted 20 minutes. Like a dog who turns continuously in circles before finally laying down, I eventually settled in. And I had my idea. So maybe my delaying techniques were worthwhile this time, a time for incubation. Or maybe they’re just a part of my process. Excuse me a minute, I’m not sure what to write next. Think I’ll file a nail. As I was saying. All of us engaged in work — including work we love — must eventually get down to it. More often than not, I just dive in (especially easy when I have a clear brief and am not creating from “scratch”). But there’s another, more insidious delaying when no one is keeping tabs on us. It happens with the “extracurricular,” which is often around creative projects we’ve been threatening to do for months or years or even decades. And we’ve procrastinated to the point of never picking up our pen or brush or finishing that business plan for our start-up. We never finish the novel. Or we finish it but don’t try to get it published. Or we send a few letters to publishers and then give up. Because it wasn’t easy. Why do we expect things are supposed to be easy? Really, the first thing we should be taught is that life is work. It can be fun, too, but you’re going to have to work hard if you want results, or if you want financial or creative fulfillment. How do you combat this reluctance to commit to a creative project? With courage, discipline and a willingness to take risks. By taking action despite the fear and by holding yourself accountable. Perhaps the lucky ones are those who like to create just for themselves, who don’t seek the approval of others for their work and don’t wish to sell or make their work public. I finally started doing those things I had threatened — I had a little extra time during the recession. I did not want to turn around in a few decades and feel that I had lived a life, well, un-lived. I decided I preferred the pain of discipline over the pain of regret. With each action I’ve taken my fear of judgment became weaker than my fear of future disappointment in myself for not having taken risks. Sometimes, I don’t even care what people think. Wait, that’s going a bit far. But it’s better. So, how do I combat my tendency to delay the inevitable? I turn off my phone. Of course, this sounds like a no-brainer, but for a lot of people it’s putting down the pipe. And if you can’t do it because of responsibilities — such as kids or elderly parents — be very judicious in the calls you do pick up. Close my browser. No emails, Facebook or any other attention stealers. You don’t need to immediately know who “liked” your clever Facebook comment this morning. Set either the amount of time I’m going to write or other milestones (number of words, two new scenes, etc.). I do this at the beginning of the week and at the beginning of a day. If I have just an hour before work to write, that’s what I’ll do. Set attainable, not insanely-ambitious goals. I have a “creative partner” — we speak a few times a week and hold each other accountable. Some people prefer working in writing groups. Take breaks. After two hours, my mind needs a 15 minute breather. Reward achievement. When you reach an important milestone, do something nice for yourself. When you finish it, market it. Being a marketer, you’d think that would come easy, but it’s much more difficult doing it for yourself and putting yourself out there. Amazingly, gradually but surely, my creative projects get done, get edited, move forward and get pitched. And if rejected, they get pitched again. And even if I don’t make my fortune through this, I will not have to deal with the pain of regret, or for not having tried. It’s definitely not always easy. Writing is sometimes excruciating. As many writers have said, “I don’t like to write. I like having written.” I hear you. So, what are you waiting for? Are you struggling with this and, if not, if you joyfully skip to your desk or easel and commence work with wild abandon, what’s your secret?

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Despite New Health Law, Americans To Keep Job-Based Coverage

June 21, 2011

Even though the number of Americans with health insurance through employers has declined, most will continue to get coverage through their jobs after the new healthcare law takes full effect, studies released on Tuesday said. About 61 percent of non-elderly Americans got their healthcare coverage through employers in 2009, down from 69 percent in 2000, according to a study sponsored by the non-partisan Robert Wood Johnson Foundation. Low and moderate-income families employed by small firms were the most likely to be affected by a loss of employer-sponsored coverage. Julie Sonier, a senior researcher at the University of Minnesota who helped write the report, said the erosion in employer-sponsored insurance in the decade before the healthcare law was enacted underscored the need for action. “When people don’t have access to employer coverage, they might get public coverage, they might be uninsured, there might be a higher uncompensated care burden at their local hospital. The costs are in the system somewhere,” she said in a telephone interview. A second study by the centrist Urban Institute said it expects the healthcare overhaul signed into law last year by President Barack Obama to help small businesses provide medical coverage to employees. “Our results show significant health care cost savings (under the law) to firms with fewer than 50 workers, as well as a small increase in the number of people covered by their employer-sponsored plans,” the Urban Institute study said. The law includes some tax incentives for small employers to provide coverage and penalties for large employers with employees who receive subsidized medical coverage on state-based exchanges that will go into operation in 2014. “The evidence suggests the Affordable Care Act may have a stabilizing influence on small firm coverage,” the study said. The studies counter a recent report by Chicago consulting firm McKinsey that said about 30 percent of employers will “definitely” or “probably” stop offering health coverage once the state insurance exchanges begin operation, which are to provide a place for small businesses and individuals to shop for health insurance coverage. That report sparked a fresh round of criticism of Obama’s healthcare law by Republicans who are pushing to repeal it. Democrats demanded an explanation of the methodology, since other reports, including the Congressional Budget Office, said the law would have a small impact on employer coverage. On Monday, McKinsey clarified that its report was a survey of employer attitudes and “was not intended to be a predictive economic analysis” of the impact of the new healthcare law. The two studies sponsored by the Robert Wood Johnson Foundation that were released on Tuesday said most of the erosion in employer sponsored healthcare since 2000 was by small businesses. Four states, Mississippi, Indiana, Michigan and Minnesota saw a loss in employer-sponsored coverage that was twice as large a the national average, according to the studies. Copyright 2011 Thomson Reuters. Click for Restrictions .

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Even Hurting Banks Are Still Very Profitable

June 21, 2011

The latest out of Wall Street-land is a warning by analysts at Citibank that profits at Goldman Sachs and Morgan Stanley (and to a lesser degree at other banks as well) will show a sharp contraction for the second quarter of 2011. Leaving aside the inside baseball nature of one Wall Street firm issuing a negative report on other firms, the decline in profitability stands in contrast to the widespread perception that banks and investment houses are booming while the rest of the economy is suffering. Or does it?

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In The End, Fed’s Bond-Buying Likely Helped Economy

June 21, 2011

WASHINGTON — It would drop interest rates and lift stock prices. It would ignite inflation. It was useless. Opinions of the Federal Reserve’s program to buy $600 billion in Treasury bonds diverged sharply after the Fed unveiled it in November. Now, as the Fed wraps up its latest policy meeting Wednesday, the bond purchases are about to expire. In the end, most experts suggest, they probably didn’t hurt and might have helped the economy, at least temporarily. The bigger question, though, is: What happens now? The program was dubbed QE2 – not for the Queen Elizabeth ocean liner but as short-hand for “quantitative easing.” That’s the wonky term economists use for a tool the Fed can use to drive down long-term interest rates. It does so by buying Treasury bonds. QE2 marked the second round of such easing the Fed had taken; the first was in March 2009, at the depths of the recession. Supporters say the bond purchases worked, in part by keeping rates low and encouraging spending. Low long-term rates are vital for consumers who are buying homes and cars and for companies that are making investments. They also argue that those lower rates fueled a stock rally. When Fed Chairman Ben Bernanke outlined plans for QE2 in late August, the Standard & Poor’s 500 stock index had fallen 6 percent for the year. In the eight months that followed, the S&P 500 jumped 28 percent. Lower rates made stocks more attractive than bonds, whose yields were falling. Much of the boost from QE2 came before the bond buys actually began. Bond investors drove down long-term rates in anticipation of the purchases. From the time Bernanke revealed plans for QE2, for example, until the purchases began in November, the average rate on a 30-year fixed mortgage sank from 4.36 percent to 4.17 percent. That was a 40-year low. Mark Zandi, chief economist at Moody’s Analytics, said the bond purchases gave a sagging economy a lift by slightly reducing borrowing costs for businesses and consumers and by raising stock prices to make people feel wealthier. Still, it didn’t much energize home buying or other major purchases. “It wasn’t a slam-dunk success, but it was worthwhile,” Zandi said. Critics, including some Fed officials, saw things differently. They warned that by pumping so much money into the economy, the Fed increased the risks of high inflation later. They complained that the Fed’s outpouring of dollars lowered the currency’s value and contributed to a spike in oil and food prices. They also said they feared the bond purchases fed speculative buying that could inflate bubbles in prices of stocks or other assets. Some of the harshest criticism came from abroad. Officials in China, Brazil and Russia argued that by devaluing the dollar, the Fed’s efforts gave U.S. exports an unfair advantage. A lower dollar makes U.S. goods cheaper overseas and foreign goods more expensive in the United States. Brazilian Finance Minister Guido Mantega warned last fall that the Fed’s efforts could spur a global currency war. In April, Russian Prime Minister Vladimir Putin denounced monetary “hooliganism.” “They turn on the printing press and flood the entire dollar zone – in other words, the whole world – with government bonds,” Putin said. In a speech this month, Bernanke hit back at critics. He argued that higher oil prices were due to Middle East turmoil and demand in fast-growing countries like China. He said food-price inflation was due mainly to shortages caused by bad weather. And he said the falling dollar was caused mainly by slower U.S. growth and the U.S. trade deficit. Many critics have raised a more fundamental complaint: that the program didn’t achieve its goal of increasing growth. The economy grew only weakly in the first three months of the year, thanks to high gasoline prices, government budget cuts and sluggish consumer spending. And it may be growing only slightly better in the current quarter. Consumers remain squeezed by gas prices, scant pay increases and a depressed housing market. “There were some positive effects to the bond buying, but they were fairly transitory,” said David Wyss, former chief economist at S&P and now a visiting fellow at Brown University. Still, Zandi said critics should recall that a year ago, the economy faced the threat of deflation – a destabilizing period of falling prices. He said the bond buying helped banish that threat while strengthening the economy slightly. The purchases are set to expire June 30. Most economists say they don’t think loan rates will rise. They note that the Fed is hardly ending all its Treasury purchases. It will remain the biggest market buyer, by reinvesting in Treasurys as its existing holdings come due. Those purchases should help keep long-term rates low. Many analysts say they think the Fed won’t start reducing its Treasury stockpile until next year. And they don’t expect it to increase short-term rates until a year from now. The Fed’s key rate, the federal funds rate, has been at a record low near zero since December 2008. “Before this year’s economic slowdown, I would have said the first rate hikes would occur early in 2012, but I have put that off until June 2012,” Zandi said. One thing economists don’t expect: a QE3. Bernanke and other Fed officials have signaled there are no plans to invest new money in Treasurys, even though the economy has slowed. For one thing, critics within the Fed have become too concerned about inflation. Only a crisis that threatens to send the economy back into recession would likely lead the Fed to start a new Treasury-purchase program, most analysts say. “I would not totally rule out another round of bond buying, but it will only happen if there is a major crisis such as a loan default by Greece which causes global markets to melt down,” Wyss said. ___ AP Business Writers Derek Kravitz in Washington and Matthew Craft in New York contributed to this report.

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Tim Berry: Involvement vs. Commitment in Small Business

June 21, 2011

It’s an old joke: Question: In the classic bacon and egg breakfast, what’s the role of the chicken, and what’s the role of the pig? Answer: the chicken is involved. The pig is committed. Good joke or not, there’s nothing funny about involvement vs. commitment when it has to do with getting things done in a small business setting. Entrepreneurship isn’t always as simple as a bunch of mice eating a piece of cheese. Sometimes you need to get organized. Involved is when you struggle with something that isn’t working and you keep seeing a group. You see more than one face. There’s a mix of people with authority, another mix with responsibility, and another with related tasks. When more than one person is involved in a problem, it’s going to take more than one person to solve it. Committed, on the other hand, is when the face, and the task, and the authority, and the responsibility are all matched. That person is committed. She wins when it goes well, and loses when it doesn’t. And that, in a nutshell, is management.

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Andrea Learned: Business Unusual: Living Economies

June 21, 2011

“Living Economies.” Though the phrase is a mouthful, a lot more businesses, and businesspeople, should be seeing themselves as part of them. Perhaps because so much of what we hear and read about business today is reports on bad corporate (or corporate leader) behavior, “business” is getting a nasty reputation, and could definitely use a re-framing. That’s why “living economies,” as coined by the founders of BALLE (Business Alliance for Local Living Economies) , is an interesting place to now turn. The way business gets done within this alliance is something so much greater than business as usual. BALLE members are not content with the old-fashioned, silo-ed ways of doing business. The more local, living economies they participate in are interconnected networks of businesses working together to sustain themselves, the environment and all of the people involved (employees, customers, community members, and beyond). The organization itself exists because so many small- to medium-sized business owners believed in the power of bottom-up, networked change. As the BALLE site puts it: “In the age of the Internet and social networking and the emergence of ‘glocalism’ as a new form of social consciousness, we believe that never before have communities possessed as much power to determine their futures as they do today and in ways that are good for people, places and the planet.” So, what do these “glocalists” know that you don’t? After spending time at their annual conference last week, three things seemed key: 1) Women/Diversity: The BALLE take is by no means that women need to be helped or women’s groups need to be formed. Instead, the idea is to see women as a huge market and economy in and of themselves, and to also see them as an incredible resource for your businesses (both as employees and customers). Just ask David Berge from Canada’s largest credit union Vancity , who noted how today’s “women’s economy” will grow at a more rapid rate than that of the combined Chinese and Indian economies in the next five years. He also noted how crucial Vancity’s gender balance was as a support for identifying the true impact loans they’d be involved in (as opposed to those loans that might simply have a pretty business plan). Bottom-line? Women are not an initiative. 2) Communications: Telling stories well; about what the living economy means, what your company has to offer and why it matters, will be key for moving forward. Take for example, how energy efficiency (EE) is still so misunderstood. Even though, as a BALLE presenter from PSE (Puget Sound Energy) put it: “energy efficiency is a very inexpensive resource,” homeowners (and businesses) still seem to fall into this trap of solar panel lust – only to later realize the low-hanging, biggest bang for buck improvement is likely through EE. How do people not get that particular message? Every BALLE member business, including energy assessment businesses, is learning from one another. They are swapping experiences and mistakes about how to communicate challenging stories more effectively – and many are also enthusiastically using social media to help do that. 3) Collaboration: This may be the most difficult for “business as usual” to get to. As Simon Mainwaring puts it in a recent article : ” The corporate world is full of intellectual property and research departments that remain unnecessarily proprietary when they could be helping each other solve problems.” As evidenced by many of the “local first” organizations that have sprung up in communities all over the country – many of which were represented at the BALLE Conference – each business does that much better when efforts are combined. Unforeseen alliances are built. Unanticipated connections emerge. (The Somerville Local First organization in Massachusetts exemplifies this through its web site and social media efforts). So, I’m suggesting you consider things like women, communication and collaboration, because these days, business has to be unusual. The way that BALLE members believe in and contribute to living, and breathing, economies – truly interconnecting and supporting one another on a “glocal” scale – is the light in a dark tunnel.

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Ian Fletcher: What’s Really Wrong With the Thiel Fellowships

June 20, 2011

In case you missed it, the Thiel Foundation, founded by Peter Thiel of PayPal fame, just announced the first batch of winners for its “20 Under 20″ fellowship program to pay students to drop out of college for two years to pursue entrepreneurial ideas. Any number of people have criticized this venture for encouraging kids to drop out of college. Personally, while I think it would be terrible thing if this sort of thing becomes too hip and causes deluded average kids who think the next Google is locked inside their heads to drop out and ruin their educations, it appears that the group chosen is sufficiently elite that a) they may well actually do something useful and b) will succeed no matter what. Nonetheless, I still think this program is a bad idea, and unlikely to achieve its intended purpose of enhancing innovation in the U.S. (My apologies to the foundation if its purpose is otherwise.) Why? Because its essential strategy consists in smoothing the path of individual geniuses, and this is simply not where the bottleneck to innovation lies in America today. It’s easy to be distracted by the glamorous entrepreneurs who appear on the covers of business magazines into thinking that they are the sole essence of innovation. Obviously, what they do is important, and I hope they continue to do it. But unfortunately, individual technological entrepreneurship is only the third stage of an innovation “pipeline” whose stages are, roughly: Advances in basic science. Advances in infratechnologies. (I’ll explain what these are in a minute.) Development and sale of new technologies by entrepreneurs. In the U.S. today, the principal bottleneck in the pipeline is stage two, not three. What are infratechnologies? They are the crucial, but unpatentable and thus unprofitable, advances that must take place before salable new technologies can be developed. Because they are unpatentable (or if patentable, infeasible to commercialize directly for other reasons) private industry has little interest in developing them. Because they are not pure science, academic science funded by the National Science Foundation isn’t that interested either. America simply doesn’t have a bottleneck at stage three. Our culture and institutions are friendly to for-profit business generally, and entrepreneurship especially, in just about every meaningful way. (Granted, one can quibble about imperfections, but by any reasonable international comparison, we’re just about as friendly as one can get, pace politically motivated whining.) Similarly, America is probably not where it should be with regards to basic science, but we still lead the world. So there’s not really a bottleneck there, either. To understand infratechnologies, let’s take an example reported by Gregory Tassey, the economist at the National Bureau of Standards and Technologies (NIST) who is America’s foremost expert on them. In his book The Technology Imperative , he writes: Measurement-related infratechnologies are a prominent example. For example, a fundamental measurement method called isotope dilution mass spectrometry (IDMS), developed by NIST scientists and others, led to infratechnologies and associated standards in such diverse applications as measurement of sulfur in fossil fuels for compliance with environmental regulations and test methods for cholesterol and other blood elements. America’s investment in such things for civilian purposes, despite exceptions like NIST, the National Institutes of Health, and the Advanced Research Projects Agency – Energy, is relatively small, and far below what it should be. What happens when infratechnologies don’t get enough development? Tassey provides a case study: In 1982, Dr Ronald Levy and colleagues at Stanford University succeeded in treating a chemotherapy-refractory patient with low-grade follicular lymphoma by using high doses of MABs [monoclonal antibodies]. This initial success created hopes that the “magic bullet” against cancer had been found. However, subsequent efforts at developing therapeutic MABs for various cancers failed. The problem was that the generic mechanism of action was not adequately understood. Many guesses were made in order to rationalize proceeding with drug candidate development. For example, some researchers thought that the monoclonal antibody somehow activated the patient’s immune system because successful treatment provided protection long after the antibody was eliminated from the patient, but no proof of this conjecture was developed. Such guesses were forced by the fact that the generic technology of MABs was only vaguely understood. Without the underlying technology platform in place, subsequent drug development efforts failed. The result of multiple failures was that both companies and investors lost interest in MABs as a promising therapy. The risk of further failure for additional drug candidates was prohibitively high and therefore they became unattractive candidates for venture capital… Approximately 10 additional years of government funding by NIH [National Institutes of Health] were required to eventually advance the generic technology to the point that once again private capital was induced to flow into antibody drug development. Multiply this bioscience example across all our emerging technologies, from nanotech to biofuels, and you have the true bottlenecks to American innovation today. And this is a problem that nurturing young geniuses–whatever else that may accomplish–has very little to do with. Infratechnologies are, in the language of economics, quasi-public goods. That is, they fall into a difficult category between pure public goods like, say, national security, which it is impossible for any one individual to appropriate, and the pure private goods that are the province of ordinary profit-seeking businesses. Because they are partly public goods, there is a legitimate argument for — horrors! — big government to be involved in supplying them. This fact tends to drive Silicon Valley libertarians crazy. But if they would only be honest with themselves about the ultimate bases of their own fortunes, they would see it quite clearly.

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