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Greece Nears Bailout Deal To Stave Off Disaster

by AP on February 11, 2012

Huffington Post…

ATHENS, Greece — The leaders of the two parties backing Greece’s coalition government made dramatic appeals to their deputies Saturday to back legislation that calls for harsh new austerity measures – essential if Greece is to get a new bailout deal worth euro130 billion ($171.6 billion) and stave off bankruptcy. Prime Minister Lucas Papademos is expected to give a televised address later Saturday to defend the deal. Debate on emergency legislation approving the new bailout and a debt-swapping deal with private creditors began in committee Saturday afternoon. A plenary session will debate and vote on it Sunday. Further legislation detailing the measures demanded by, and agreed with, Greece’s public creditors, the European Union and the International Monetary Fund, will be up for vote a few days later. The exact time has not yet been set. Both leaders – socialist George Papandreou and conservative Antonis Samaras – as well as Finance Minister Evangelos Venizelos, a socialist, used stark images of a country under bankruptcy to warn their respective parliamentary groups of the importance of their vote. “If we do not dare today, we will live a catastrophe,” Papandreou said. “What do you want, a country where food will be handed out with food stamps and where we will have no fuel?” Samaras angrily told a dissenting deputy. “The battle is now. The war is now. If we falter, nothing will be left standing…The real dilemma is between painful measures and crushingly painful ones,” Venizelos told socialist lawmakers. Deputies are wary of voting for the measures, which include wage and pension cuts and the prospect of more to come, along with the firing of several thousand civil servants and the shutdown of several state agencies, including welfare agencies. The demands of the EU and the IMF have caused one of the original coalition parties – the populist right-wing Popular Orthodox Party – to quit the government and withdraw its four members from the cabinet. Two more cabinet members – both socialist deputy ministers – have also quit, citing their disagreements with parts of the austerity package. Both Papandreou and Samaras made it clear that dissenters would have no place in the party. Samaras was more emphatic, threatening to expel those who did not vote in favor and exclude them from the lists of party candidates in the next election. “I want to make it absolutely clear … rebels or ‘bravehearts’ have no place in (the party’s) candidate lists,” he said. “I call on you to fall in line and vote for this difficult and painful deal that will help (the country) stand on its feet. Whoever has a conscience problem, can resign,” Papandreou told his lawmakers. Despite their leaders’ calls, at least four deputies from each party openly declared they would vote against, while two socialist deputies – both former ministers – hinted they might do so. None offered to resign. Together, the socialists and the conservatives have 236 deputies in the 300-member parliament. Samaras also called for an immediate election once the bond swap deal with Greece’s private creditors is over, saying he would not agree to the extension of the mandate of the coalition government beyond that date. Elections are normally due in October 2013. The bond swap deal with Greece’s private creditors is expected to help Greece get rid of some euro100 billion of its debt. The bond swap must be completed before March 20, the redemption date for euro14.5 billion worth of bonds. Elections could then be held about three weeks later than that, at the earliest. While the two parties met, union leaders staged a demonstration outside parliament that attracted about 4,000 protesters, according to the police – while 5-6,000 policemen patrolled the streets of Athens. The protest ended with some scuffles that left two people injured when police tried to clear the street in front of parliament. Authorities are bracing for a much larger, and possibly violent, one on Sunday evening. Another 4,000 turned out for a peaceful demonstration in Thessaloniki, Greece’s second city. ___ Costas Kantouris in Thessaloniki contributed to this report.

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Fishermen Meet Amid Potentially Disastrous Cod Prospects

by AP on February 11, 2012

Huffington Post…

PORTSMOUTH, N.H. (AP) — Fishermen and federal officials grappled Friday with the increasingly bleak prospect of finding some way for the historic New England industry to avoid collapse amid troubles with the health of Gulf of Maine cod. Their meeting came in the week after regional regulators bought fisherman a yearlong reprieve from what would have been devastating cuts in 2012. But projections discussed Friday showed fishermen still face disastrous cuts in 2013 that most won’t survive. “It’s going to be hard to preserve the industry at those low numbers (in 2013) and that’s something that concerns us a great deal,” said Sam Rauch, the head of the National Oceanic and Atmospheric Administration’s fisheries arm, who led the meeting of fishermen, scientists and regulators. “This truly is one of the iconic fisheries,” he said in an interview after the meeting. “When you think of what the U.S. fisherman is, it’s an inshore Gulf of Maine cod fisherman. That’s why we are so devoted to working through this process to try to overturn every possibility we can. But the future, 2013, does not look rosy.” The cod in the Gulf of Maine has been crucial to New England fishermen from Cape Cod to Maine for hundreds of years, and four years ago, after a major assessment, it was thought to be one of the region’s strongest species. It brought in $15.8 million in 2010, second highest amount behind Georges Bank haddock among the region’s 20 regulated bottom-dwelling groundfish. But data released last year indicated the fish was so severely overfished that even if all fishing on it ended immediately, it wouldn’t rebound by 2014 to levels required under federal law. As a result, fishermen were looking at an 82 percent cut in what they were allowed to catch in 2011, a catastrophic reduction that would have wiped out fishermen around the region — not just those who rely on cod. That’s because major restrictions on cod severely limit fishing on the other key groundfish species, such as flounder and haddock, in order to protect the cod they swim among. Last week, regional regulators at the New England Fishery Management Council asked NOAA to adopt a one-year emergency rule that would enable regulators to avoid the massive cut. And they recommended allowing fishermen to catch either 6,700 metric tons or 7,500 metric tons of Gulf of Maine cod in 2012. On Friday, Rauch signaled that NOAA would allow the 6,700 catch limit in the 2012 fishing year, which starts in May. That would mean a tough 22 percent cut from what they were allowed to catch in 2011, though not nearly as deep a reduction as first feared. The problem, according to new projections discussed Friday, is that after the emergency rule expires in 2013, fishermen are again looking at a cut in cod catch just as severe as the huge reduction they were originally facing. From the first indications of cod trouble, fishermen and their advocates have questioned the science behind the new data and Friday was no exception. “We don’t trust your data,” New Hampshire charter boat fisherman Bill Wagner told regulators. “We don’t believe there’s a shortage of codfish. We don’t believe there’s a crisis in codfish.” Massachusetts Rep. Ann-Margaret Ferrante, who represents the port of Gloucester, criticized what she characterized as the constant, massive swings in scientific assessments on the size of fish populations. “We’re always in the same dilemma and I don’t understand why,” she said. Gloucester fisherman Al Cottone said the new assessment has put the fishing industry “on death row.” “The anxiety the industry feels is unprecedented,” he said With so much doubt about the science behind the new data, Cottone said, regulators should give fishermen as much fish to catch as possible while they try to remove uncertainties in the numbers. “To basically flip the switch on the industry with so much reasonable doubt would be irresponsible,” he said. Rauch said the verifying and improving the science is a top priority, and no one can predict if the new work can find something in the next year that significantly improves the assessment of cod health. “It’s always possible we’ll find something there, but even if we don’t, this year allows us time to better plan … for where this industry may end up,” Rauch said. “Fishermen are resilient, they figure out ways to adapt. But this will be hard to adapt to.”

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Fishermen Meet Amid Potentially Disastrous Cod Prospects

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Dennis Santiago: FDIC Shutters Banks in Illinois and Indiana

February 11, 2012

On Friday, February 10, 2012 the FDIC shifted bank closure activity from the South to the center of the country this week failing Charter National Bank and Trust in Hoffman Estates, Illinois and SCB Bank of Shelbyville, Indiana. SCB at $200B assets was the larger of the two and began to hemorrhage significantly in the 2nd quarter of 2011. It will reopen as part of First Merchants Bank, National Association on Monday. Charter National Bank and Trust was down to $98M in assets as of 3Q2011 and had been living with elevated stress indications from Institutional Risk Analytics (IRA) since March of 2009. Like SCB, Charter also experienced an increase in operating loss rates beginning around the 1st to 2nd quarter of 2011. Charter will reopen as part of Barrington Bank & Trust Company, National Association on Monday. Complete forensic reports can be found here, Charter National Bank and Trust – Hoffman Estates, IL SCB Bank – Shelbyville, IN

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‘Joe The Plumber’: ‘I Don’t Have To Try’ To Stand Out At CPAC (VIDEO)

February 11, 2012

WASHINGTON — HuffPost’s Zach Carter and Howard Fineman on Friday spoke with Joseph Wurzelbacher at the 2012 Conservative Political Action Conference. Wurzelbacher is also known as ” Joe the Plumber ,” a name he was dubbed during the 2008 presidential campaign when he was portrayed as a symbol of middle-class America. CPAC is a major annual event for the conservative movement, and on Friday GOP presidential candidates Rick Santorum, Mitt Romney and Newt Gingrich all addressed large crowds. Yet Wurzelbacher told HuffPost he has no problem distinguishing himself. “I don’t have to try,” he said. “My name is Joe Wurzelbacher. I’m going to speak the truth. And I don’t have to remember what I said five years ago or three years from now because it’ll always be the same thing — because it’s the truth.” Wurzelbacher is now running as a Republican candidate for Congress in the 9th District of Ohio.

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Daniel Wagner: China-Bashing Is a Tiresome Sport in American Politics

February 11, 2012

China bashing has become as much a part of the modern American political tradition as criticizing foreign producers of oil, yet it seems few have actually stopped to think about whether it is justified. The American electorate has become accustomed to the predictable torrent of anti-Chinese rhetoric from politicians of a variety of political persuasions — in large part because of a subtle and uncomfortable recognition that China is beating the U.S. at its own game; Some would even say the Chinese are better capitalists than Americans will ever be. Indeed, China has made remarkable economic progress over the past twenty years — in large part because of its embrace of ‘socialism with Chinese characteristics’ — otherwise known elsewhere as capitalism. A decade ago, American politicians bashed China largely for political reasons. Today, it is for primarily economic reasons. With China having become the second largest economy in the world last year, and poised to overtake the U.S. in economic size in the next decade, it is no wonder American politicians are on the offensive. It should be no surprise that Americans may bristle at the notion that capitalism has helped China slowly dominate the global economy. China is, of course, not above criticism, just like any other country, and American politicians do raise some valid points in criticizing China. For example, the Chinese yuan is undoubtedly overvalued, given that it does not freely float in the foreign exchange markets. And the Chinese government does control large parts of the Chinese economy through state-owned enterprises, which distorts the domestic market and gives some Chinese companies unfair competitive advantages. But China must compete in the global marketplace like any other country and it pays a price for supporting companies that should otherwise fail as a result of being poorly run, inefficient, and bloated. If the U.S. does not like the way China does business, it is free to do business somewhere else. What goes left unsaid, however, is that China has become too important for the U.S. do that, and what U.S. politicians fail to acknowledge is that the U.S. is becoming increasingly irrelevant to the economies of Asia, while China has become the cornerstone of Asia’s fantastic economic growth. China’s trade with the ASEAN countries jumped six-fold between 2000 and 2009, to US$193 billion, surpassing that of the U.S. China’s share of Southeast Asia’s total commerce for the period increased to 11.3 percent from 4 percent, whereas the U.S.’s share of trade with the bloc fell to 10.6 percent from 15 percent. Another thing that gets left unsaid is how important China has become as a destination of U.S. exports. According to the U.S. Treasury’s own report, “in the second half of 2009, U.S. exports to China increased by 15 percent on a year-over-year basis, while U.S. exports to the rest of the world fell by 13 percent. In the first quarter of 2010, U.S. goods exports to China rose by more than 40 percent compared to the same period the year before, while U.S. exports to the rest of the world rose by less than 20 percent.” China’s rapidly growing middle class is the single most important factor for the success of President Obama’s Nation Export initiative. The U.S. not only needs to tap China’s vast foreign currency reserves ( in excess of $3 trillion — more than 10 times that of the U.S.) in order to finance its trade deficit and fiscal deficit, it also needs access to China’s vast market in order to sustain its economic recovery and create much needed jobs for American workers. When was the last time you heard a U.S. politician admit that? Of course, both countries have legitimate criticisms of the other, but they know they need each other, and neither country is going to disappear. So instead of following predictable (and boring) scripts, why not turn the page on Cold War-esque rhetoric and find ways to join hands with China so as to mutually benefit from each other’s comparative advantages? The fact is, China needs and wants the U.S. to succeed economically — as the largest holder of U.S. Treasury Bills — and the U.S. should want China to succeed, so that it has a long-term marketplace for its exports. We are not talking here about some starry-eyed vision of utopia, but rather, a realistic and sensible approach to future bilateral economic relations. Rather than bashing China, U.S. politicians would be well advised to forge a stronger relationship with China. President Obama gets it. Last year he said : “I believe there is much to be gained from a closer working relationship with China. Indeed there are very few global challenges, if any, we can address effectively without China’s active cooperation. They are a global economic power, and engagement with China’s government is an important step in stemming the financial crisis that has devastated economies around the world. Both of our nations seek to lay a foundation for sustainable growth and lasting prosperity. My Administration is also working with China on a number of security issues, including stopping North Korea’s nuclear program, rolling back the advance of extremists in Pakistan, and ending the humanitarian crisis in Dar fur. The United States and China share common interests on a host of issues — including energy security and climate change, food safety and public health, and nuclear non-proliferation and counter-terrorism. We want to work with them to address these issues in the years ahead. Improved relations with China will require candor and open discussion about those issues on which we may disagree. We must address human rights, democracy, and free speech. We must also work to ensure that our nations play by the rules in open and transparent economic competition. These important matters will be essential elements of our ongoing dialogue with China.” The only Republican candidate for president we heard that kind of approach from was John Huntsman, who unfortunately failed to connect with American voters. A sustainable economic recovery in the U.S. cannot be achieved by isolating China. The U.S. and China may seem like the odd couple: the leading proponent of democracy and most individually-oriented nation and the leading communist and most communal-oriented nation. But considering what we can achieve together and what we will lose if we are pitted against each other, forming a Sino-American strategic alliance is critical to the future economic viability of both nations. American politicians, and the American people, would be much better off recognizing this, rather than using demagoguery to sow divisiveness between China and the U.S. The 21st century has no place for tiresome dated Cold War rhetoric. President Obama has the right approach. * Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk consulting firm based in Connecticut (USA), Director of Global Strategy with the PRS Group, and author of the new book Managing Country Risk. Dee Woo is a lecturer in economics at the Beijing Royal School.

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Devon Swezey: Romer Misses the Mark on Manufacturing

February 10, 2012

A healthy manufacturing sector is essential to America’s economic prosperity in the 21st century. But you wouldn’t know that reading last Sunday’s New York Times , where former Obama Administration CEA Chair Christina Romer writes that there are no compelling reasons for U.S. manufacturing policy. According to Romer, the recent hubbub about manufacturing is due to the fact that people have a “feeling” that “making things” is important. In reality, she writes, consumers “value haircuts as much as hair dryers.” To be sure, all of us need haircuts, some of us more than others. But Romer ‘s argument that we should value all industries of the economy the same is just not true. It’s reminiscent of economist Michael Boskin, another former CEA chair, who said it doesn’t matter whether a country makes computer chips or potato chips. The fact is that some industries are characterized by high productivity and economies of scale that reduce costs and drive economic growth throughout the economy. As Clyde Prestowitz writes of Romer’s own example: Production of hair dryers can be done in large factories that produce economies of scale. Such scale economies lead to lower prices, lower inflation, higher productivity and thus higher wealth creation for the whole economy. In addition, producers of hair dryers invest in research and development to foster innovation of new, more efficient, less energy using, and easier to produce dryers. Investment in new product and process innovations is what drives economic growth over the long-term. And as we discuss in ” Manufacturing Growth: Advanced Manufacturing and the Future of the American Economy ,” manufacturing is absolutely central to innovation, something that many economists like Romer and economic commentators like Matt Yglesias don’t seem to understand. The manufacturing sector comprises two-thirds of the nation’s industry investment in research and development (R&D) and employs nearly 64 percent of the country’s scientists and engineers. But Romer doesn’t mention manufacturing’s importance to innovation in her article. Instead, she prefers to argue with what she sees as the common rationales for manufacturing policy — market failures, jobs and inequality — none of which she finds “completely convincing.” On the first issue, she writes that market failures in manufacturing — where positive spillovers mean that some benefits of a new manufacturing plant go to other companies in the area, thus providing a rationale for government investment — are small, citing two academic studies on the subject. But many other studies have found that manufacturing is a central component of regional industrial ecosystems, and that being near manufacturing can accelerate innovation and strengthen regional competitiveness. As President Bush’s Council of Advisors on Science and Technology wrote in 2004 , “design, product development, and process evolution all benefit from proximity to manufacturing, so that new ideas can be tested and discussed with those ‘working on the ground.’” Indeed, recent research suggests that losing high-tech manufacturing can imperil a nation’s capacity for future innovation. Harvard’s Carl Pisano and Willy Shih write that America’s “industrial commons” — the collective engineering, R&D and manufacturing capabilities that sustain innovation — are being hollowed out and the United States can no longer produce many high-tech products. Moreover, research and design are starting to follow high-tech manufacturing abroad, imperiling America’s historic advantages in innovation. Next, Romer writes that the impact of manufacturing on jobs relative to the employment needs of the economy is small and that we should focus on boosting aggregate demand instead: Unemployment today is high, but not because of a decline in manufacturing. That decline has been going on for 30 years — and for most of the 1990s and 2000s, the unemployment rate was less than 6 percent. Put aside that this obscures the fact that manufacturing employment generally followed the business cycle with only modest declines until 2000 when it fell off a cliff — declining by 5.5 million jobs from 2000 to 2008, or 32 percent. Romer understates the impact of manufacturing on jobs for two key reasons. First, she ignores the fact that manufacturing facilities have extensive backward linkages, generating output and employment throughout the economy. Indeed, manufacturing’s “multiplier effect” in terms of both output and employment is larger than any other sector of the economy. Specifically, studies demonstrate that every dollar in final sales of manufactured products supports $1.40 in output from other sectors of the economy. And the average job in manufacturing produces two to three spinoff jobs elsewhere in the economy. Even if employment on the factory floor never reaches levels of previous decades, when these effects are taken into account, manufacturing’s employment footprint is quite substantial. Second, Romer completely misses the connection between America’s persistent, massive trade deficits and our employment situation. In 2010 the trade deficit stood at nearly $500 billion, down from a record of $760 billion in 2006. With such large deficits, it’s difficult to see how more fiscal stimulus to boost aggregate demand, which Romer favors, will fill the jobs hole in the economy. It would certainly create some jobs, but much of that demand would be filled by imports, which creates jobs in other countries. Rather, eliminating the trade deficit would create millions of jobs in the United States. And the best way to close the trade deficit is by expanding manufactured exports. This is because the large majority of U.S. trade — nearly 70 percent of exports and 83 percent of imports — is still in goods. Manufactured goods in particular comprise 57 percent of U.S. exports. Can exporting services help reduce the trade deficit? Absolutely, and the United States enjoyed a $149 billion surplus in services in 2010. But it took 11 years for service exports to double to its 2010 level of $543 billion. The simple arithmetic shows that the current positive balance in services would need to quadruple to eliminate the deficit in goods. This is implausible, to say the least. What about inequality? Romer writes correctly that while manufacturing pays higher-than-average wages, it is no longer a source of high-paying jobs for less educated workers. Manufacturing is a technologically sophisticated enterprise and today’s manufacturing workers must have a wide array of abilities, including the production skills to set up and operate processes, design and development skills to continuously improve those processes, as well as proficiency in maintenance, repair and supply chain logistics. But then the policy response should not be to ignore manufacturing but ensure that workers have the skills for advanced manufacturing industries. Romer ends by implying that manufacturing policy is driven by economic nostalgia for an earlier age, writing, “public policy needs to go beyond sentiment and history.” To be sure, policy must account for the ways in which manufacturing has changed over previous decades. Some labor-intensive industries are likely gone for good, while the increasing use of information technology, robotics, and high-precision tools means that today’s factory workers must have much greater skills than previous generations. Fortunately, advanced manufacturing policy need not be about sentimentality or history, but about creating the next generation of advanced technologies that spur innovation, drive productivity, and power economic growth in the 21st century. It is about strengthening a sector that is a key catalyst of employment and economic growth. And it’s about ensuring the international competitiveness of the U.S. economy, closing the trade deficit and out-competing other nations whose governments rightly view high-tech manufacturing as a strategic industry. The good news is that the Obama administration has recently recognized that advanced manufacturing is critical for the future prosperity of the U.S. economy, even if its former chief economist does not. For more on the importance of advanced manufacturing to the U.S. economy, see ” Manufacturing Growth, ” a joint report by the Breakthrough Institute and Third Way.

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WATCH: Tilted Kilt Employees File Sexual Harassment Lawsuit

February 10, 2012

Nineteen employees of the Celtic-themed “breastaurant” Tilted Kilt’s Chicago Loop location on Wednesday filed a lawsuit alleging that the eatery’s bar manager sexually harassed them. The lawsuit [ PDF ] contains disturbing details of incidents that allegedly occurred between the manager, the location’s owners and their scantily-clad staff at the restaurant, located at 17 N. Wabash Ave. According to CBS Chicago, Mark Roth, an attorney representing the women, accused the location’s former manager, whom he described as a “predator,” and the location’s owners of making numerous disturbing comments to his clients . “There were requests for sex,” Roth told CBS. “There were degrading comments that were made. Something that no woman should have to put up with anywhere, let alone by their manager in the workforce.” As the Chicago Tribune reports, the women in June filed a sexual harassment complaint with the U.S. Equal Employment Opportunity Commission, upon which they received “right to sue” letters . The women, according to the Tribune , allege a “sexually hostile, offensive, humiliating and degrading work environment” where, among the 30 incidents outlined in the lawsuit, the location’s manager and owners made comments such as “Meow, meow, you’re a dirty kitty” and “You don’t know what I’d like to do to you” to the employees. Women who spoke out against these remarks alleging were giving less busy shifts. According to Fox Chicago, other incidents included grabbing employees’ breasts, putting licking employees’ ears and attempting to kiss the women . The manager and many of the plaintiffs in the lawsuit no longer works at that specific Tilted Kilt location, according to the Tribune. A company spokeswoman said in a statement that Tilted Kilt “does not tolerate sexual or other types of harassment either within its own organization or within its franchisees’ organizations” and pointed out that the company utilizes a franchise model where each location is independently owned and operated , NBC Chicago reports. The chain is no stranger to controversy in its Chicago-area operations. When the chain opened a Schaumburg location, it was met with complaints from several area residents, including one who argued that the restaurant attracted “men that come in there want more than just hot wings .”

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Fake Suicide Call Prompts Woman To Sue Big Bank

February 10, 2012

These days, debt collectors are putting some people through so much pain that it’s landing them in the hospital. Anne Sessions of Lane County, Oregon is suing Wells Fargo after one of its debt collectors reported to police that that the 85-year-old was threatening suicide, a claim she maintains was false, The Oregonian reports . After hitting financial trouble, Sessions says she arranged a payment plan for her credit card debt with Wells Fargo last year, but just days later she allegedly received a call from a debt collector who badgered her with a “contemptous tone,” according to the lawsuit. Sessions told the collector that such abuse may cause other customers to take their own lives, which allegedly prompted a line of questioning that included the collector asking Sessions: “But…if you did [commit suicide], how would you do it – hurt yourself?” Courthouse News reports . Within a half hour police arrived at Sessions’ door and forcibly took her to the hospital. She was released hours later after hospital staff said they “strongly” believed Sessions was not a threat to herself or others, ABC News reports . But the incident left Sessions stuck with a hospital bill worth $1,055, for which she is seeking compensation, as well as $250,000 in punitive damages. Sessions’ suit may involve one of the more puzzling instances of debt collector abuse recently, but harassment of its kind is far from uncommon. Complaints filed to the Federal Trade Commission about debt collectors rose to 140,036 in 2010, up from 119,609 in 2009 . The boost may be explained in part by the industry’s growth in a troubled economy that’s caused many Americans to delay debt payments. Over the next three years, the debt collection industry is expected to expand by 26 percent . Indeed, all the negative reports — collection agencies are responsible for the most complaints to the FTC of any industry — may be beginning to take a toll. The FTC has begun cracking down on illegal debt collecting tactics , including repeated calls to the debtors, failure to notify consumers in writing of their rights, misrepresenting the debt in question as well as using profanity or threats. Last month it settled with Michigan-based debt collection company Asset Acceptance for $2.5 million on charges of misconduct . It also took action against two California-based collection agencies last year, one for attempting to collect debts that didn’t exist and the other for threatening to kill debtors pets and desecrete the bodies of deceased family members .

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White House Proposes Tax The Rich, Chop Medicare, In Election-Year Budget

February 10, 2012

WASHINGTON — The White House will propose deep cuts and modest tax hikes Monday in a budget that aims to stick to last summer’s debt deal by trimming Medicare and other programs while making the well-off pay more. Senior administration officials said the spending blueprint would lower tax rates overall. But it would end the Bush-era tax cuts for the rich enacted in 2001 and 2003. It would do that by cutting tax loopholes — or tax expenditures, as they are called — for high earners and corporations. Part of that is implementing the Buffett rule, named for billionaire investor Warren Buffett, which would ensure that no one earning more than $1 million in a year pays less than 30 percent in taxes, as Buffett does now. Overall, the plan calls for $2.50 in spending cuts for every dollar raised in taxes on people making more than $250,000 a year. The proposal cuts the budget by $1 trillion over 10 years, and trims $4 trillion from the deficit. For the first time in five years, the deficit would fall below $1 trillion, at $901 billion in 2013, according to the proposal. The White House projects that by 2018, the deficit would drop to $575 billion, or 2.7 percent of the nation’s gross domestic product. A large chunk of the deficit reduction over the next decade — $1.5 trillion — would come from still-unspecified tax reforms, although the expiring Bush tax cuts would account for much. The largest cuts would come from the defense budget and Medicare. Defense spending would be slash some $487 billion from the Department of Defense’s projected budget, including savings from winding down wars in Iraq and Afghanistan. Health programs, primarily Medicare, would be targeted for $360 billion in savings, with most expected from cuts to providers, not beneficiaries. Another $278 billion in cuts would come from farm subsidies, federal worker retirement and other programs. The numbers in the White House blueprint would look a lot like the assessment unveiled in September. The budget is likely to get a cold reception from Republicans in an election year, and reads itself like the political message President Obama has been delivering since his speech in Kansas late last year. “We now face a make-or-break moment for the middle class and those trying to reach it,” says the introduction to the “fact sheet” summarizing the plans. “After decades of eroding middle-class security as those at the very top saw their incomes rise as never before and after a historic recession that plunged our economy into a crisis from which we are still fighting to recover, it is time to construct an economy that is built to last,” the document says, repeating the president’s State of the Union theme. Officials said the budget to be proposed on Monday was the third part of a three-act play that started with the Kansas speech and continued with the State of the Union address. “We must transform our economy from one focused on speculating, spending, and borrowing to one constructed on the solid foundation of educating, innovating, and building,” the budget introduction says. “That begins with putting the nation on a path to live within our means –- by cutting wasteful spending, asking all Americans to shoulder their fair share, and making tough choices on some things we cannot afford, while keeping the investments we need to grow the economy and create jobs.” The plan calls for more than $350 billion in short-term spending to spur job growth, including extending the payroll tax cut that Congress is battling over now, $30 billion to modernize 35,000 schools, and $30 billion to help keep and hire new teachers, police and firefighters. There is also a commitment to building research, development and manufacturing, with $140.8 billion slated for research and development. Such spending is a sign the president is not backing off initiatives like the green-energy push that has been tarred by the failure of solar company Solyndra. The budget will recommend boosting spending for the National Science Foundation, the Department of Energy’s Office of Science, and the National Institute of Standards and Technology Laboratories. It also calls for a six-year, $476 billion transportation reauthorization bill that the administration says would “create thousands of new jobs and modernize a critical foundation of our economic growth.”

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Mohamed A. El-Erian: "Half-Time in America" Highlights Our Political Dysfunctionality

February 10, 2012

Viewed as a standalone, the controversy generated by the Clint Eastwood Superbowl commercial is really silly. Yet it points to something profound that has and, if left unaddressed, will continue to undermine America’s ability to regain economic dynamism, create ample jobs, and deal with growing inequalities. In the event that you are one of the few who missed it, Clint Eastwood starred on Sunday in a commercial that NBC aired at half time. The message was powerful. Yes, America has stumbled, with people out of work, hurting and scared. But, by pulling together and acting as one, Americans will come from behind and win. “That’s what we do.” The concluding remarks were particularly potent: “This country can’t be knocked out by one punch. We get right back up; and when we do, the world will hear the roar of our engines.” Given that it was financed by Chrysler, the commercial’s direct reference was, of course, to the impressive recovery in Detroit’s car industry. But the intention, and the impact, went well beyond that. What Detroit has done, America as a whole can and will do. Coming on the heels of a series of favorable economic data releases — which will hopefully persist though this is far from certain unfortunately — the ad spoke to the hope that America is recovering and that our economy is building encouraging momentum. This is particularly important for the job market where we need to improve on the 243,000 positions created in January to meaningfully address our unemployment crisis, tackle the problem of long-term joblessness, counter the mounting obstacles to youth employment, and stop the worsening of income and wealth inequalities. You would think that this feel good message would be a unifying one for our political class. Far from it. Several Republicans complained this week that Clint Eastwood was implicitly supporting Barack Obama. After all, the commercial could be interpreted as suggesting that, under President Obama, America has turned the corner and is now embarking on a path to prosperity — something that most Republicans dismiss. Democrats were quick to counter. On the contrary they shouted. If anything, “Half Time in America” was pro-Republican. It could easily be viewed as implying the need for a change in game plan and personnel substitutions — similar to what a losing team would discuss in the locker room at half time in order to regain control of the game and win. This morning on CNBC’s Squawk Box , Clint Eastwood shared his views. His message was direct and unambiguous: Take the commercial for what it is — a message about Americans’ ability to overcome our problems and march forward to a better future. It is easy, indeed tempting, to dismiss all this political squabbling as indicative of the silliness that is inevitable during an election season. I certainly would like to do so. Yet I fear that it goes well beyond that. This is yet another illustration of the deep political dysfunctionality that continuously undermines DC’s willingness and ability to move forward with the much-needed revitalization of the economy. The longer this continues, the greater the costs and the harder the solutions. In the short-term, the cyclical economic bounce of the last few months — powered by large injections of global central bank liquidity and a once-for-all decline in the personnel savings rate — would end up suffering the same fate as in early 2010 and 2011: fizzling out rather than handing off to durable engines of investment, growth and jobs. In the longer-term, America would find it even more challenging to overcome structural impediments that, each day, are getting more deeply embedded in the construct of our economy. For the sake of both current and future generations, let us hope that Clint Eastwood’s “Half Time in America” commercial will be remembered for more than just igniting yet another round of political bickering and finger pointing.

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BP Wins Ruling To Keep Old Accidents Out Of Gulf Spill Trial

February 10, 2012

* Evidence of Texas, Alaska incidents excluded * Judge: Older cases too dissimilar from Gulf spill * Feb. 27 trial expected By Jonathan Stempel Feb 9 (Reuters) – BP Plc won a court order to keep references to some previous accidents out of this month’s trial to assess blame for the 2010 Gulf of Mexico oil spill, the oil company’s second victory in as many days to bar potentially damaging evidence. Thursday’s ruling by U.S. District Judge Carl Barbier in New Orleans followed a ruling Wednesday by U.S. Magistrate Judge Sally Shushan to keep out some emails questioning some of BP’s activities before and after the spill. Barbier blocked the introduction of evidence related to two accidents involving BP facilities: a 2005 explosion at a Texas City, Texas refinery that killed 15 people, and a 2006 rupture of a corroded pipeline at Prudhoe Bay, Alaska. In the Texas case, BP pleaded guilty to violating the Clean Water Act and accepted a $50 million fine. BP pleaded guilty to a criminal Clean Water Act violation and was fined $20 million in the Alaska case. Barbier, however, ruled that the prior incidents were “not sufficiently similar” to the April 20, 2010 explosion of the Deepwater Horizon drilling rig and blowout of the Macondo oil well, which BP mainly owned. “The prior incidents were all land-based, while the Macondo incident occurred in the Gulf of Mexico,” Barbier wrote. “Additionally, the circumstances of oil refinery disasters and (an) exploratory drilling disaster are vastly different.” James Roy, a lawyer for some of the plaintiffs, who include people and businesses harmed by the accident, did not immediately respond to a request for comment. BP was also fined a record $87 million by the federal Occupational Safety and Health Administration for safety problems at the Texas refinery. Barbier is scheduled on Feb. 27 to preside over a non-jury trial to assign blame for the Deepwater Horizon accident, which killed 11 people and caused the largest offshore oil spill in U.S. history. Other corporate defendants include rig owner Transocean Ltd and Halliburton Co, which provided cementing services for the well. Plaintiffs also include the U.S. government, Alabama, Louisiana and Mississippi. BP has set aside roughly $42 billion for spill costs. Chief Executive Bob Dudley this week said the London-based company is preparing for trial, but willing to settle on reasonable terms. The case is In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

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The Most HIlarious #FedValentines

February 10, 2012

Whoever said monetary policy isn’t sexy just doesn’t know what they’re talking about. In anticipation of Valentine’s Day, the twitterverse is abuzz with economics nerds tweeting sweet nothings using the hashtag #FedValentines , of course in reference to the Federal Reserve. You can’t blame them. With the Fed’s head, Ben Bernanke, constantly discussing stimulus tactics like quantitative easing, the urge for double entendre is hard to resist. The trend comes as Bernanke addressed the National Association of Homebuilders International Builders’ Show Friday, saying that the Fed’s efforts at spurring economic growth are being thwarted by obstacles to mortgage lending, according to Bloomberg. Tragically, the bearded, bald hearthrob didn’t offer his own #FedValentine during the speech, but rest assured we’ll update this post if that changes. That’s not to say the regional federal reserves themselves can’t have some fun on a Friday. According to its twitter feed , the San Francisco Federal Reserve is “going through extraordinary measures to increase your stimulus.” Check out some of our favorite #Fedvalentines, to get a sense of love in the time of near-record low interest rates:

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Alabama’s Largest City Looks For Alternatives To Payday Lenders

February 10, 2012

The biggest city in Alabama is putting its payday lenders on notice. Bankers and community leaders in Birmingham, Alabama met Thursday to discuss developing new financial resources for cash-strapped residents , according to The Birmingham News . The meeting was part of the city’s broader effort to relax the influence of payday lenders — small loan shops where borrowers can get quick cash, but often end up sucked into a cycle of debt thanks to the lenders’ high interest rates. While Birmingham leaders say they can’t force the payday lenders to close up shop, they are talking about adopting a program similar to San Francisco’s Bank On initiative , which aims to offer safe, non-exploitative resources — including financial counseling, online pay options and inexpensive checking and savings accounts — to people who are hesitant to use traditional banks. Nearly 8 percent of U.S. households are “unbanked,” or don’t have a checking or savings account, according to Federal Deposit Insurance Corporation data cited by The New York Times . Another nearly 18 percent of Americans have a checking or savings account, but still use alternative financial services. In Alabama, more than 20 percent of households have sought loans from payday lenders, according to the Associated Press. Birmingham’s pushback against payday lenders comes at a moment when a vast number of Americans are cash strapped, pushing them to turn to an off-brand loan shop. Thanks to high unemployment and flat wages, a growing number of Americans are struggling to simply put food on the table and cover other basic household expenses . Nearly half of all households in the U.S. are only one financial emergency away from the poverty line . Amid such a weak economic climate, payday lenders have thrived . But consumer-protection advocates are beginning to take a hard line against the industry. Richard Cordray, who recently assumed control of the Consumer Financial Protection Bureau, has put payday loan regulation front and center on his agenda, despite protests from lenders that they provide a valuable service to borrowers in a tight spot. Payday lenders have come under particular criticism for allegations that they target and take advantage of minority borrowers. A study by the Center for Responsible Lending found that in some regions, payday loan shops are clustered disproportionately in African-American and Latino neighborhoods , and that minorities form a large part of their customer base.

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Nathan Gardels: Democracy Is Not Self-Correcting

February 10, 2012

Recently, I wrote an article posted here about the protests in Italy against the “undemocratic” government of meritocrats in Italy led by Prime Minister Mario Monti. Many responders, following the German philosopher Jurgen Habermas, worry that Europe is entering a “post-democratic” phase, not just because of a government like Monti’s, but because European institutions, such as the appointed European Commission, are seen to be beyond the accountability of the public. Behind such sentiments is a suspicion of delegated authority of any kind in democratic societies. My response is to consider this: The argument against the delegated authority of meritocracy based on experience and expertise is that it can get it wrong without adequate feedback. Without the capacity to self-correct it can end up oppressing the people instead of serving them. The argument for one-person-one-vote democracy always is that it gets is right because, like the free market,it is self-correcting. But that is no truer for democracy than for the market, as we saw in the 2008-09 financial crisis. Democracy, both representative and direct, also has its rigidities (ideology, populism, self-interest of voters, money as free speech). Often the accumulation of individual choices produces unintended consequences against the public good. As I pointed out in my earlier article, after a series of direct democracy initiatives to curb property taxes and punish criminals, California now spends more on prisons than higher education, thus undermining the foundations of its future. What matters for good governance is an open society — freedom of expression and the rule of law to protect feedback — not whether the system is meritocratic, democratic or a hybrid. Is China’s “monitory webocracy,” where the Communist government is acutely responsive to the public clamor over weibo on everything from tainted milk or toys to train wrecks to pollution, any less self-correcting than American democracy where the Wall Street banks that precipitated the financial crisis and were bailed out because they were “too big to fail” are now even larger and remain unregulated?

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Greek Police Union Threatens To Arrest EU, IMF Officials

February 10, 2012

Greece’s largest police union has threatened to issue arrest warrants for officials from the country’s European Union and International Monetary Fund lenders for demanding deeply unpopular austerity measures.

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Lehman Brothers Suing Citi Over Huge Account

February 10, 2012

NEW YORK — Lehman Brothers Holdings Inc. and its creditors are suing several units of Citigroup Inc. to recover $2.5 billion the failed investment bank transferred to a backup account at Citi months before seeking bankruptcy court protection. In the complaint filed on Wednesday with the U.S. Bankruptcy Court for the Southern District of New York, Lehman claims that Citibank is wrongfully withholding the money as a potential source of funds in a dispute over derivative contracts. Lehman also is asking the court to disallow what it says are $2 billion of “inflated and legally unsupported” claims that Citibank has asserted against it. In a statement Thursday, Citigroup vowed to defend itself and its right to recover losses from Lehman’s collapse. It called the lawsuit unjustified and accused Lehman of trying to renege on its obligations and claw back assets to which it has no right. According to the lawsuit, Citi demanded on June 12, 2008, that Lehman transfer between $3 billion to $5 billion into an account to cover potential overdrafts by Lehman subsidiaries that were using Citi’s clearing and settlement services. Lehman agreed that same day to set aside $2 billion from its account at Citibank into a segregated account, on the condition that the bank would have no lien or other rights to the funds. In its statement, Citi said that it tried to help Lehman prior to its bankruptcy filing, but needed to obtain the guarantees and cash deposits from Lehman in order to protect its shareholders from potential losses. Lehman claims that by holding on to the $2 billion, Citibank is violating the U.S. bankruptcy code, state law and going against the conditions both agreed to when the funds were set aside. In addition, Lehman asserts that Citibank has refused to return another $500 million in cash that was transferred into its broker-dealer subsidiary just hours before Lehman filed for bankruptcy protection. Lehman’s bankruptcy filing in September 2008 was the biggest in U.S. history and triggered more than 75 separate bankruptcy proceedings. The company listed more than $600 billion in debts when it filed. Lehman Brothers Holdings is the company that controls what’s left of the investment bank’s assets. Citigroup shares ended regular trading down 57 cents to $33.66 on Thursday. The stock slipped another 8 cents to $33.58 in extended trading.

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The States Where Companies Are Hiring

February 10, 2012

From 24/7 Wall St.: Companies across the country are hiring more workers, at least if you ask their employees. In 2011, 31 percent of U.S. workers reported that their employers were hiring, according to Gallup’s Job Creation Index . Only 18 percent said that their employers were laying workers off. Of course, residents of some states report much higher rates of job creation than others. 24/7 Wall St. reviewed the Gallup Index, as well as a number of other economic indicators, and identified the eight states where residents think companies are hiring most. Read The Eight States Where Companies Are Hiring To develop the Job Creation Index, Gallup asked those surveyed whether companies are hiring or letting employees go. While the national score reflects that most states believe employers are hiring, 24/7 Wall St.’s analysis suggests that self-reporting by workers may not perfectly align with reality. These states are not experiencing the greatest recoveries — including in employment — as they have little to recover from. The states’ strong economies may be affecting their residents’ perception of the economy. Five of the eight states on this list are among the top nine states on another recent Gallup poll ranking states’ confidence in the national economy. Those who live in states that are doing well see the entire country as doing well. The majority of states where high percentages of workers reported job creation also have extremely low unemployment rates to begin with. Six of the eight states have among the 10 lowest unemployment rates in the country. North Dakota, the state where the largest share of workers reported that their employers are hiring, has the lowest unemployment rate in the country. And while unemployment rates are low, the majority of these states have had relatively low unemployment rates for some time. Most did not have particularly impressive improvements in unemployment last year. Other than Utah and West Virginia — the only states with exceptionally large drops in unemployment — the rest have had low unemployment rates since 2006 and throughout the recession. Housing markets in most of the states where respondents believe jobs are plentiful also have been stable. Seven of the eight states on the list are among the 15 markets that suffered the least from the third quarter of 2006 to the third quarter of 2011. Five of the states actually experienced increases in home prices over this period. These are the eight states where workers say companies are hiring, according to 24/7 Wall St. :

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Sources: GOP Congressman Faces Insider-Trading Investigation

February 10, 2012

The Office of Congressional Ethics is investigating the chairman of the House Financial Services Committee over possible violations of insider-trading laws, according to sources familiar with the case.

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Guess Which Local University Shattered Fundraising Records?

February 10, 2012

SAN FRANCISCO — Stanford University’s latest five-year fundraising drive netted $6.2 billion, the largest amount ever raised in a higher education campaign, school officials said Wednesday. Money from the Stanford Challenge is being used to fund an interdisciplinary approach to teaching and research on areas such as education, environment, human health and international affairs, officials said. “We’ve undertaken a new model in higher education, with experts from different fields joining together,” school president John Hennessy said in a statement. “This kind of collaboration has enabled Stanford to assume a larger role in addressing global problems.” The money is providing funding for more than 160 endowed faculty positions, 360 graduate student fellowships, the construction or renovation of 38 campus buildings, $27 million in seed grants for innovative research and more than $250 million for need-based undergraduate scholarships. The $6.2 billion raised by the Stanford Challenge is the most collected by a university in a single fundraising campaign, said spokeswoman Lisa Lapin, citing the Council for Advancement and Support of Education. That total surpasses the $4.3 billion goal set when the campaign was launched in October 2006. During the campaign that ended Dec. 31, the university received donations from more than 166,000 alumni, parents and community members. The university received contributions of more than $50 million from Stanford alumni such as Yahoo Inc. co-founder Jerry Yang, Nike Inc. co-founder Phil Knight and Silicon Valley venture capitalist Robert King. Stanford is the latest university to announce a successful multibillion fundraising campaign. Last year, Yale University said it had raised $3.9 billion, and the University of Pennsylvania said it collected $3.5 billion. “It’s an impressive drive for funds that most public universities can only dream to eventually match,” said John Aubrey Douglass, a researcher at the Center for Studies in Higher Education at the University of California, Berkeley. “Donors are attracted to the big-name universities, but I worry some that the rich keep getting richer.”

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North Dakota Walmart Evicts Workers Living In Parking Lot

February 9, 2012

Apparently one Walmart isn’t cool with people squatting in its parking lot. Dozens of workers who have flocked to Williston, North Dakota to benefit from the region’s oil boom have been living in tents and trailers for months outside of a local Walmart, but last Monday, the retail chain’s management told the squatters to go or be towed, The Bismarck Tribune reports . Lines of RVs accommodated workers shoulder-to-shoulder but after receiving a variety of complaints, including from female customers who said they feared walking through the camp to shop, Walmart officials say they’ve had enough. “It’s just not appropriate for people to be living in our parking lot,” Walmart spokeswoman Kayla Whaling told The Bismarck Tribune . And it seems that the town’s residents agree. “Walmart is hell. You just don’t want to go there,” said one member of the Nehring family, a group of sisters who have been featured in a reality TV show Boomtown Girls that’s being shopped to networks like TLC and MTV. “You can’t find anything because it’s all cleared out,” another Nehring sister explains. The camp is just one result of a huge population influx into Williston, thanks to a promise of plentiful — and well-paid — work in the oil industry. North Dakota currently boasts the lowest unemployment rate in the nation at 3.3 percent. No doubt because of that, housing has become scarce in the town and the apartments that are available have seen huge jumps in rent , with prices sometimes increasing threefold. More than 1,000 longtime Williston residents have abandoned the town in the past two years due to crowding and the boost in living expenses. The oil rush has had other negative impacts as well. Drunken bar fights have become more common as workers try to blow off steam after long hours. Charges of Driving Under the Influence have also grown more typical, while instances of theft more than doubled in 2011 compared to the year before. Exotic dancing has also become a thriving industry in the town, with some strippers making up to $3,000 per night in tips alone . The popularity of the clubs may be due in part to the low ratio of women to men in the town, which may explain why some are “feeling like a piece of meat” in Walmart’s parking lot, as one Nehring sister put it.

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Marc Joseph: Is It Time To Be an Entrepreneur?

February 9, 2012

Open Forum reports that there is an 11% increase in the number of small businesses closing and a 17% decline in the number of small businesses opening. Get Busy Median reports 69% of small businesses survive at least two years, 44% of new firms survive four years and 31% survive at least seven years. The Orange County Register states that new employer businesses has fallen 27% since 2006, which means that startups, which 10 years ago would have created 4.6 million jobs, are only creating 2.5 million jobs now. Also, 10 years ago the average new business opened with 7.5 jobs and today it is 4.9 jobs. Smart Money states that in 2009, there were 552,600 new businesses created while 721,737 small firms closed or went bankrupt. They go on to report that in 2007, 75% of angel funded deals came at the start up stage, while in the first half of 2011 only 39% of companies backed by angels were in the startup phase. This trend is just one more sign of how hard the recession has been on entrepreneurs. This recession has not only hurt sales, sending many small businesses under, it has also obstructed the ability to raise money for the next great idea. So why would anyone in their right mind risk their money and reputation for only one in three chance of being in business after seven years? Bloomberg Businessweek reported this week that the Wal-Mart greeter job, which has been around for 30 years, has been removed from the overnight shift of its stores. Obviously they will be using those hours more productively for tasks like stocking shelves or just eliminating the hours all together. Every generation loses entire job categories — think milkmen. So are today’s entrepreneurs desperate and opening a business because they just can’t find a job? Let’s hope not, because that is almost a guarantee your business will fall into the two thirds that fail. Clearly you need a good idea, product or service before even thinking about opening up your own business. Assuming you have this great idea, then the next hurdle is: do you have the traits to run your own business? Some needed traits include being a self-starter, not getting intimidated easily, being adaptable to change, enjoying competition, being able to address risk, making decisions quickly, and not seeing mistakes as failures. Then you need to overcome the basics of starting a business like cash flow (make sure you have at least six months of savings to live from), time management, a sound business plan and the ability to wear all the hats yourself. Reading all these numbers and knowing you don’t have the equity now in your house to fund a business may be one of the most depressing things you do today. But the optimistic glass half full American entrepreneur doesn’t read these numbers like a normal human being. They say “I am going to be in the one third that succeeds and I am going to make a lot of money doing it”! We are just one small company doing our part to help grow the American dream. The rest of America needs to wake up and bring the small business numbers back to where they were at the beginning of the 21st century. Banks need to actually begin loaning money again to small businesses. The government bailed out the big businesses, and now must focus on building up Main Street again through backing small business loans, giving tax break incentives and giving government contracts to small businesses. The average American needs to support their local small business rather than running to the big box store. The numbers don’t lie. Supporting small businesses is an American team effort and we need to get those numbers back to where they were … together.

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Morty Lefkoe: Do You Have a Fear of Public Speaking?

February 9, 2012

If you fear public speaking more than going to the dentist, or even death, you are not alone. This fear is so common that surveys indicate that over 50 percent of the adult population of the United States experiences fear when speaking in public. As Jerry Seinfield put it quite accurately on one of his shows: Most people would rather be in the casket than delivering the eulogy. We have had a number of clients whose fear of speaking in pubic was so great that they turned down promotions rather than take a job that required them to speak in public on a regular basis. The saddest call we ever had was from a man who called to say his daughter had just announced to him that she was about to get married… and this news made him petrified. Why? Because he realized he was going to have to make a toast at the wedding. Interestingly enough, there is nothing inherently scary about talking to a few people who are there to hear what you have to say. And why does merely having to introduce oneself at a meeting lead many people to go to the bathroom just before it is their turn. What makes speaking in public so common and so frightful? If you’ve been reading my regular blog posts, you won’t be surprised to learn that my answer is: beliefs. In fact, after helping over 3,000 people eliminate this problem, we’ve discovered the specific beliefs that cause this fear. Let me tell you what they are and why they result in this widespread fear. Here are the beliefs that cause a fear of public speaking in most people: • Mistakes and failure are bad. • If I make a mistake or fail I’ll be rejected. • I’m not good enough. • I’m not capable. • I’m not competent. • What I have to say is not important. • People aren’t interested in what I have to say. • I’m not important. • What makes me good enough and important is having people think well of me. • Change is difficult. • Public speaking is inherently scary. To make it real that these beliefs could cause such terror in so many people, ask yourself this question: Imagine someone, whom you don’t know, who really had all the beliefs I listed above. Do you think she would be afraid to speak in public? In fact, wouldn’t you be willing to wager that she would have public speaking anxiety? Why these beliefs cause a fear of speaking in public I think most people would agree that anyone with these beliefs would fear public speaking. And here’s why: A belief is nothing more than a statement about reality that we feel is true. And if we think it is true that it is bad to make mistakes and if we do we’ll be rejected, and if our sense of importance is dependent on others thinking well of us — then we would have to be terrified when we stand up to speak in front of others because we could make a mistake, leading to rejection, and because we would feel less important if people thought less of us. But you might be thinking: I am afraid to speak in public but I don’t agree with most of these beliefs. Here’s a strange thing about beliefs: It is possible to intellectually disagree with a belief we hold. In other words, early in life we might have concluded as a result of interactions with our parents that it’s bad to make a mistake (because mom and dad got upset when we didn’t live up to their expectations). Now, today, we might realize that innovation is possible only if we are willing to try new things that might not work out. Mistakes are part of the process of doing something new and different. So we “know” that it’s okay to make mistakes and learn from them. But merely knowing that does not get rid of beliefs. If fear is not inherent in public speaking and if the fear is caused by specific beliefs, then eliminating the beliefs will eliminate the fear. Not reduce it or make it easier to deal with. Eliminate it. Research proves eliminating beliefs eliminates public speaking fear A study conducted by the University of Arizona several years ago determined that if the beliefs listed above (and a few conditionings) were eliminated, the mean level of fear of the subjects studied fell from 7 to 1.5 on a scale of 1-10, one being no fear whatsoever and 10 being terror. To prove this to yourself, get rid of three of the 11 beliefs that cause a fear of public speaking (and a bunch of other unpleasant feelings) by using a free belief-elimination process at http://recreateyourlife.com/free . Your fear of speaking in public is not due to “human nature.” You can rid yourself of that terrifying prospect once and for all.

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Steve Blank: Two Giant Steps Forward for Entrepreneurs

February 9, 2012

While entrepreneurship is in the news fairly regularly, I seldom make news myself. Today, however there are two important updates for entrepreneurs everywhere. Let me be brief… The “Startup Owner’s Manual” goes On Press Tuesday 2/14 Two years in the making and literally ten years in development, I’m proud to announce that my new book, The Startup Owners Manual , goes onto the printing press next Tuesday. This 608-page work is, as its subtitle says, “the step-by-step guide for building a great company.” It’s the result of a decade of me learning from 1,000 of entrepreneurs, corporate partners, students and scientists the best practices of what wins in startups. I’ve spent the last two years cramming knowledge into this new book. In brief, The Startup Owners Manual is far more detailed and more readable than Four Steps to the Epiphany, (most of the sentences are even finished!). In fact, you could say that all that remains from my last book are the four steps of Customer Development. Briefly, the new book Integrates Alexander Osterwalders “Business Model Canvas” as the front-end and “scorecard” for the customer discovery process. Provides separate paths and advice for web/mobile products versus physical products Offers a ton of detail and great tips on how to get, keep, and grow customers, recognizing that this happens very differently between web and physical channels. and finally it teaches a “new math” for startups: “metrics that matter. While MBA’s have had a stack of texts to help them “execute” a business model, this book joins the growing library of books for practitioners in “search” of a business model. The Lean LaunchPad Online Class My online Lean LaunchPad class has created a lot of buzz this week. As you may have heard, I was deep into the production of the lectures when I realized I was producing the wrong class. The online class was originally based on my book The Four Steps to the Epiphany . Only when I held the draft of my latest book, The Startup Owner’s Manual , in my hands, did it dawn on me that my online students deserved all the latest best practices of entrepreneurship and Customer Development. Not the stuff I taught a decade ago, but all that I’ve learned teaching the Lean LaunchPad in front of students at Stanford, Berkeley, Columbia and the National Science Foundation in the last year. And I particularly wanted to incorporate I’ve spent two years integrating into The Startup Owner’s Manual . So apologies to all of you who were expecting the class this month. I hope to get the updated version online in the next 60 days. I’ll keep you updated on this blog as we record our lectures. In the meantime, if you want to prepare for the class…or get a jump on your startup competition, you can start reading the “recommended text” for the online class right now by ordering my new book. It is recommended–not required–reading for the free online course, and I believe it will be immensely helpful to the startup community at large. Lessons Learned Startups search for business models, exisitng companies execute them There are tons of texts about execution, but a paucity of practical ones for founders on how to search The Startup Owner’s Manual is the definitive reference book for founders, investors and everyone interested in startups The Lean Launchpad on-line class will be based on the new book Steve Blank’s blog: www.steveblank.com

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Foreclosure Settlement Reached: Largest Bank Payout By Far Since Financial Crisis

February 9, 2012

As early as Thursday the government is expected to announce a roughly $25 billion deal with some of the nation’s largest banks to settle charges of systemic and widespread mortgage fraud, according to multiple sources close to the negotiations. The deal would be the largest payout to date from banks in the wake of the financial crisis. The settlement, 16 months in the making, could bring significant relief to those in danger of losing their homes and also much needed stability to the long-suffering housing market. Those who already lost their home, however, would receive just the smallest fraction of the money: a one-time cash payment of about $1,800 as compensation. “Their entire lives have been turned upside down and changed,” said Philip Robinson, the acting executive director of Civil Justice, a Baltimore-based nonprofit that has worked with thousands of Maryland families fighting for their homes. “Does $1,800 sound fair? Does that seem like compensation for a financial and emotional tragedy?” The Department of Housing and Urban Development, one of the Obama administration’s lead negotiators on the deal, could not be reached for comment. Late Wednesday night, as the terms were being finalized, more than 40 states had signed on, including New York, which had been vocal in its opposition to any deal that was soft on the banks. A source close to the negotiations said that California also was on board, but a representative from Attorney General Kamala Harris’s office would not confirm its participation. The deal between federal officials, the state attorneys general and Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial is an attempt to close the book on a scandal that erupted in 2010, freezing the housing market as the legality of thousands of bank-initiated foreclosures were called into question. The announcement is expected to crank up the pace of bank foreclosures, which has slowed as government officials investigate whether some institutions have forfeited their right to repossess homes after forging key real estate documents. As part of the deal, participating states would agree not to pursue a variety of independent lawsuits against the banks. Some consumer advocates argue that the deal is inherently too lenient on banks because the administration chose to negotiate a settlement without first conducting a full investigation into the nature and magnitude of the banks’ alleged fraud. “Any partial settlement is fraught partly because we don’t know the scope of the damages,” said Robert Borosage, founder and president of the Institute for America’s Future, a left-leaning nonprofit organization. “If the banks get broad immunity, homeowners get screwed because the next investigation won’t be able to get around that.” Under the terms of the settlement, the banks would pay $25 billion to participating states. California is reportedly receiving a total of $6 billion to $15 billion in the settlement. Potentially more significant, the banks would agree to forgive some mortgage debt owed by struggling borrowers through what’s called “principal reduction.” The remedy is nearly universally hailed by economists on the right and left as a way to revive the ailing housing market and rescue the nation’s struggling underwater borrowers: More than 20 percent of mortgage holders in the United States owe more on their loan than their home is worth. Citigroup, Wells Fargo and Ally Bank declined to comment while requests for comment from JPMorgan Chase went unanswered. Bank of America declined to discuss the terms of the deal, instead saying, “We’re interested in finding a path forward with a comprehensive settlement that benefits homeowners and communities.” The settlement has the potential to prevent future wrongdoing through new bank guidelines that have been crafted as part of the deal. The effectiveness of these new rules will rely heavily on whether the states can enforce them. The Obama administration pushed forcefully for the deal to present it to voters in 2012 as evidence that the president is helping homeowners and getting tough on banks. Splitting a $25 billion deal between five banks, however, will amount to little more than the cost of doing business and is too small a penalty to deter future fraud, many housing advocates say. “Compared to what these [banks] literally stole, it’s just eyewash,” said Margery Golant, a Florida-based attorney who represents homeowners and formerly served as assistant general counsel at subprime mortgage giant Ocwen Financial. “These are such serious crimes and for everybody to get a pass like this, it just encourages them to think that they always will.” Also unclear is how far the agreement can go in helping borrowers who are trying to hold onto their home. In addition to granting principal reduction, the deal would offer struggling homeowners relief by changing the terms, or refinancing, loans. Those dollars amount to a pittance when you consider the millions of homeowners in need of help, Golant said. “If you do the math, that’s a few hundred million per state. That’s not enough to change anything.” Consumer advocates supportive of the deal argue that while the settlement dollars are small, the principal reduction piece is critical. A handful of lenders have already begun offering such assistance, but mortgage giants Fannie Mae and Freddie Mac have fiercely resisted such a move. “This settlement could be a starting point for principal reduction,” said Ira Rheingold, president of the National Association of Consumer Advocates. “Hopefully it will demonstrate how principal reduction can and should benefit homeowners. If it is done well, maybe it will shame Fannie and Freddie into doing what it should have been doing all along.” Economists are also excited about the potential for principal reductions to boost the housing market. “If $15 to $20 billion is devoted to principal reduction modifications over the next year, that would significantly reduce the number of properties that ultimately end up hitting the market in a distressed sale, thus supporting housing prices,” said Mark Zandi, chief economist at Moody’s Analytics. Included in the settlement are new rules designed to reform the policies and practices among the mortgage companies, mainly banks, that manage the loans on a daily basis and assist struggling borrowers. These new rules could finally shut down any excuses previously put forward by the banks for wrongful foreclosure — if the rules are adequately enforced, said Jared Bernstein, a senior fellow at the Center for Budget and Policy Priorities. “The fact that the settlement has the state attorneys general behind it means that we really should see an end to some of these nefarious mortgage servicing practices,” he said. The states’ ability to enforce the deal remains one of the great unknowns. Nearly four years ago, 11 states signed an $8.4 billion settlement with Bank of America over predatory lending practices by Countrywide Financial. (Bank of America acquired Countrywide in 2008.) Most housing experts agree that the deal has significantly underperformed in large part because the states didn’t have a good mechanism for holding the bank accountable. This settlement will be different because it has a “very robust enforcement mechanism,” said Patrick Madigan, Iowa assistant attorney general and one of the lead negotiators for the Countrywide settlement and the current deal. Banks will pay substantial cash penalties if they do not deliver the full amount of homeowner assistance agreed to under the deal, according to Madigan. North Carolina’s Banking Commissioner Joseph Smith will serve as the “independent monitor” to enforce the deal’s terms. “There’s no comparison between the enforcement and monitoring of this case and Countrywide,” Madigan said. It remains to be seen, however, if these enforcement mechanisms have any teeth. Settlement supporters have high hopes for the deal, though success has to be measured against very narrow expectations, cautioned Rheingold. “In the absence of sufficient federal action, sufficient regulatory action, sufficient congressional action, what we have left is a bunch of state attorneys general saying, ‘Our homeowners are getting hurt. We have to do something.’ “But the state resources are fairly limited, so you have to look at this in terms of what the attorneys general can accomplish within their own set of powers,” Rheingold added. “Does it provide the justice necessary? Clearly not. But will it provide an opportunity for homeowners to be treated fairly? I think it will.”

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Employment Rate For Young Adults Lowest In 60 Years

February 9, 2012

Are you young and looking for work? You’re in good company. Just 54 percent of Americans ages 18 to 24 currently have jobs, according to a study released Thursday by the Pew Research Center. That’s the lowest employment rate for this age group since the government began keeping track in 1948. And it’s a sharp drop from the 62 percent who had jobs in 2007 — suggesting the recession is crippling career prospects for a broad swath of young people who were still in high school or college when the downturn began. “They had the misfortune to be born at a time that would dump them into this labor market as young people,” said Heidi Shierholz, a labor market economist at the Economic Policy Institute. “If we stay on the track that we’re on, this cohort is not going to outpace their parents.” The Pew study arrives just days after the Labor Department’s monthly jobs report, which showed the national unemployment rate trending down for a fifth straight month — a change that many took as a sign that the economy is finally beginning to right itself. Yet joblessness is still high, and financial security remains out of reach for millions more people than just a few years ago. Young adults were largely spared the collapse in wealth that many older Americans went through when the housing market imploded. Still, in some ways they have it the worst of any demographic. Besides the historically low employment rate for people in their late-teens and early-20s — which is, incidentally, about 15 percentage points below the general employment rate for working-age adults, according to Pew — the recession has eroded young workers’ paychecks to a far greater degree than any other age group. Among adults ages 18 to 34, more than a third say they have gone back to school in the face of a tough labor market, the Pew study notes. Nearly a quarter have taken an unpaid job or moved back in with parents. One in five have put off having a child or getting married due to economic concerns. Still, the young people surveyed by Pew seem remarkably optimistic. A full 88 percent say they’re either making enough to suit their needs now, or expect to in the future. And 60 percent of people ages 18 to 34 say their children will have a better standard of living than them. That prediction is notably more confident than that of people ages 35 and older, of whom only 43 percent have a similarly hopeful view. Young people are probably correct to say that their earning power will grow as they age, said Shierholz. But a wealth of research suggests that young people who enter the job market during a recession face years of wages that are lower than people who got there slightly sooner and had a chance to establish themselves. People who graduated and kicked off their job search in 2009 or 2010 are likely to experience pay 10 to 15 percent lower than their peers’ , for as much as a decade after leaving school. If all of this seems like grim news for young people, they can at least take comfort knowing that older generations seem to recognize their struggles. The Pew study found that among the general population, 41 percent of people think young adults have it tougher than anyone in the current job market, and a growing number of parents say they believe children should aim for economic independence by age 25, rather than a younger age. Part of that cross-generational commiseration may come from the fact that huge segments of the national population are struggling financially right now. Shierholz told The Huffington Post that the obstacles faced by young job-seekers reflect the muted health of the overall economy. “Things were not so great even before the recession hit,” she said, citing the growth of the wage gap and the decline of labor unions — trends that predate the current slump by several decades — as factors keeping the lower and middle classes from achieving greater economic buoyancy. “If you want to move the dial on what’s going on with young workers’ unemployment, you need to help the labor market more broadly.”

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American Airlines Rumored To Be Considering Huge Move

February 9, 2012

* AMR creditors committee open to exploring merger * Want merger-resistant managers to look at all options * AMR has exclusive right to submit reorganization plan By Soyoung Kim and Kyle Peterson NEW YORK/CHICAGO, Feb 8 (Reuters) – Some American Airlines unsecured creditors increasingly feel the bankrupt airline should explore a deal with US Airways Group or another carrier, after hearing parent company AMR Corp’s plan to remain independent, people familiar with the situation said. Members of the unsecured creditors committee — which includes banks representing bondholders, labor, vendors and the U.S. pension protection agency — are concerned about the third-largest U.S. carrier’s prospect of staying competitive as a stand-alone airline after sitting out the latest round of mergers. They want AMR management to explore other options that may lead to a better recovery of their claims, including a potential combination with another carrier, according to people who requested anonymity because they were not authorized to speak publicly on the matter. US Airways has said it is considering an eventual bid for its larger rival. While different creditors have different economic interests at stake, the sources said consensus is growing at the committee on the need to look at other alternatives. Even labor unions, which traditionally do not like mergers because they come with job cuts, want to explore how a deal with a rival carrier would affect their members even though they may not necessarily favor it, the sources said. AMR’s three largest unions — pilots, flight attendants and ground-workers — all have seats on the creditors committee. For now, AMR management has the exclusive right to submit its own plan to reorganize under bankruptcy court protection, and the airline has said it wants to emerge as a stand-alone company. But creditors could petition the bankruptcy judge to terminate that right to make way for competing plans, and the committee would ultimately also need to sign off on any reorganization plan. There is no offer on the table currently, and it remains to be seen if any merger proposal by US Airways or anyone else will require concessions less painful to creditors than what is sought by AMR management. But creditors’ frustration in the ongoing restructuring talks and their interest in exploring alternatives could provide the opening for a potential suitor to step in. AMR, however, has shown no interest in a merger with US Airways or anyone else. “AMR will continue to pursue the objectives of Chapter 11 to restructure and build a new, better, more efficient and profitable airline in the best interests of all of its economic stakeholders, passengers and the public,” the company told Reuters. Industry insiders say high anti-trust hurdles make Delta an unlikely buyer for AMR. They also question how US Airways would benefit American outside of the East Coast, where US Airways has a particularly strong route network. American already has plenty of cash, a strong domestic route network and service to Europe and Asia as well as related oneworld alliance partners in London and Tokyo. Labor troubles at US Airways dating to its 2005 merger with America West are also a red flag for heavily unionized American. NO DIRECT TALKS The creditors committee has not had any direct formal talks with US Airways or any other potential merger partner, the sources said. Aside from unions, the committee includes the Pension Benefit Guaranty Corp (PBGC), the government agency that protects underfunded pension plans; Boeing Co, Hewlett Packard ; and the banks acting for AMR bondholders — Wilmington Trust Co, Bank of New York Mellon Corp and Manufacturers & Traders Trust Co. Representatives for all these parties declined to comment. AMR’s unionized pilots, the Allied Pilots Association, would not comment on the prospect of a specific merger scenario. A spokesman for the group, Gregg Overman, said the union would review any proposal if “something comes up” and “we’ll evaluate it on the merits.” AMR’s flight attendants also declined to comment. But a source familiar with the group’s thinking said that while the union prefers to see the airline “grow and succeed” as a stand-alone company, it has so far not seen a business plan from management that would allow that to happen. The flight attendants’ union believes a merger with US Airways is “dicey at best” due to the fact that it has yet to fully integrate its labor groups after its 2005 merger with America West Airlines. The Transport Workers Union of America, which represents many ground-workers at American, is currently focused on examining AMR’s business plan released last week and will fully assess it before considering other proposals, the union said in a statement to Reuters. EXCLUSIVE RIGHT AMR filed for Chapter 11 on Nov. 29, citing a need to trim uncompetitive labor costs. The company told employees last week that it aims to cut expenses by $2 billion a year, slash about 13,000 jobs and terminate pensions. AMR also intends to generate $1 billion per year in new revenue. Delta Air Lines has hired advisors to explore its merger prospects with AMR, which would bring the No. 2 and No. 3 U.S. carriers together. US Airways is the fifth largest U.S. airline. AMR has the right to submit a reorganization plan without outside interference for 120 days after its bankruptcy filing. The judge can extend that right for up to 18 months. The exclusive period makes it difficult for an unwanted suitor to attempt a merger unless the creditors back such a move. US Airways has had a similar experience in the past. In January 2007 the airline withdrew its $9.75 billion hostile takeover bid for Delta, which was bankrupt then, after the creditors committee refused to support the move. Delta management convinced the panel the carrier would be stronger if it emerged from bankruptcy independent. Among the big carrier bankruptcies of the last ten years, only US Airways came out of Chapter 11 with a merger, and that was with smaller America West. Delta and Northwest aligned their restructurings and merged in 2008 only after each stepped out of bankruptcy. (Reporting by Soyoung Kim in New York, Kyle Peterson in Chicago and John Crawley in Washington, additional reporting by Caroline Humer; Editing by Phil Berlowitz)

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Pamela Yellen: Five Tips for Relationship Fiscal Harmony

February 9, 2012

Money is the leading cause of marital and relationship troubles.  40% of married couples have serious, recurring arguments about money, according to Matt Bell, author of Planning for Fewer Fights with Your Spouse . 49% of those battles have to do with what to buy or not buy, 33% are about debt and 26% about savings. According to a survey by American Express , 27% of those who responded have lied about the amount of a purchase to their partner, and 30% have hidden purchases from their partner. And would it surprise you to learn that some people admitted to knowing their partner’s weight but not their salary? How compatible are you and your partner when it comes to money and finances? Many couples have different values where money is concerned and neglect to take the time to hash out issues that can potentially ruin their relationship. Just in time for Valentine’s Day, I’ve put together five tips for improving the fiscal harmony in your relationship… Tip #1:  Hold a monthly financial discussion night Since so many couples don’t talk openly about money, when money issues do come up, it becomes a sensitive subject and leads to conflict. The solution is to sit down with your partner every month and go over your spending and savings plan.  Look at everything you bought during the past month and everything you’re thinking of buying soon, and ask yourselves, “Is this really a need or a want”?   Awareness is the key to taking control of your spending habits, and asking questions like this one is very powerful. Also discuss and update your long-term and short-term financial and savings goals, and then ask yourselves if the purchases you’re considering will truly move you closer to those goals. Tip :  If you have children over age 6 or 7, include them in your monthly family finance night — it’s a great way to prepare your kids to be financially successful and responsible adults. Learn more about how to teach teens financial responsibility .  Tip #2:  Share responsibility It’s common today for one partner to play the primary role in managing finances.  But both partners should be aware and involved.  Make all decisions about major purchases together. Trap :  Allowing the partner with the biggest income to make major financial decisions alone. Tip #3:  Eliminate debt to outside financial institutions Debt is deadly to many relationships, and a top priority should be to reduce and eliminate debt to banks and credit card companies. One way to speed up that process is to make your spending decisions more consciously.  (See Tip #1 above.) Another key is building an emergency fund that can help you weather life’s emergencies. For tips on creating a rainy-day fund, including how much you should be setting aside, see the video, The Secret to a Financially Stress-Free Life .  Tip #4:  Have a “Plan B” One topic to be sure to cover during your family finance discussion night is what’s your back-up plan if things change.  What if one partner loses their job?  Or what if one partner wants to go back to school?  What if one of you gets a job in another part of the country? Tip #5:  How to take the first step There’s no time like the present to start or deepen the money conversation with your partner.  And here’s a fun, non-threatening way to do that… Begin by taking our Love and Money Financial Self-Assessment . I encourage you and your partner to take the 3-minute assessment , either separately or together, and see how your money values differ from one another.  I think you’ll find this to be eye-opening! As a consultant to financial advisors, Pamela Yellen investigated more than 450 savings and retirement planning strategies seeking an alternative to the risk and volatility of stocks and other investments. Her research led her to a time-tested, predictable method of growing and protecting savings now used by more than 400,000 Americans. Pamela’s book, Bank On Yourself:  The Life-Changing Secret to Growing and Protecting Your Financial Future is a New York Times Bestseller. Learn more at www.BankOnYourself.com

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Dennis M. Kelleher: More Unconscionable Wall Street Whining

February 8, 2012

I can barely write this as tears for the poor, picked-on Wall Street bankers fill my eyes as they are comforted by Obama’s campaign manager, who reportedly met yesterday with his big donors on Wall Street. Until we fix the sickening campaign finance system, I don’t like, but I understand that all fundraising politicians have to raise money and meet with donors and I understand why the campaign manager did, but how anyone on Wall Street could feel picked-on by Obama is beyond reason. Every single Wall Street bank would have been bankrupt, broken up and/or liquidated in 2008-2009 due to their recklessness, greed, incompetence and arrogance. The only reason that didn’t happen is because the US government, with taxpayer dollars, bailed them all out and, indefensibly, did so with no strings attached so they quickly began stuffing their pockets with billions in bonuses in mere months. Most of these “demoralized” Wall Streeters would have lost everything: their bank accounts, their multiple homes at the world’s hottest locations, their many sports cars, Italian designed wardrobes, yachts, club memberships, jets, helicopters, cooks and legions of house help and personal assistants and everything else they purchased with the tens of billions of dollars they sucked out of the economy as they created the bubble of toxic, worthless assets in the years before the financial collapse that they caused. True, they didn’t create it alone, but, in the hierarchy of those who caused the financial crisis, any fair-minded, unbiased list would put them at the top. That is particularly true if one looked at who benefited the most from the bubble and who was treated the best once the bubble popped. No one was treated better before, during and after the crisis that Wall Street. The government didn’t open the treasury and taxpayer pockets with no strings attached for anyone other than the financial industry (compare the demands and concessions forced on the auto industry). Anyone not directly or indirectly on the payroll of Wall Street or their ideological fellow travelers (who are almost all coincidentally also on the payroll) sees this and understands this. They see that no accountability only applies on Wall Street. They see that no-strings bailouts only apply to the already-rich Wall Street bankers. They see the unlevel playing field created and sustained by a federal safety net that looks a lot like a hammock for the filthy rich. (The Wall Streeters and their allies like to say such criticism is an attack on wealth, entrepreneurs and capitalism itself. That baseless, self-serving attempt to distract and distort the debate is laughable. No one is attacking Silicon Valley, Bill Gates, Apple, Caterpillar, Procter and Gamble, Hewlett-Packard, AT&A, IBM or the rest of the Fortune 500 — or celebrities, athletes or other super-wealthy people. No — the criticism is focused on the biggest Wall Street banks and bankers that enriched and engorged themselves at the expense of the rest of the country, that caused the crisis, got bailout out by taxpayers and just can’t stop claiming they are picked on, and that still benefit from a taxpayer-funded federal safety net that subsidizes their current too-big-to-fail operations.) It is also obvious to see that Main Street, not Wall Street, has paid and is paying for the costs of the financial crisis . They see a hollowed-out middle class struggling just to get by, having lost most of their stock value, home value, savings and retirement funds. These are the people living paycheck to paycheck with gnawing insecurity that at any moment it can all disappear and they too could join the ranks of the unemployed and, even, the homeless. Food stamp use is at an all time high and, most tellingly, the ramp up in use is in what used to be solid middle class neighborhoods. The same is true for free and subsidized school lunches. The distinction between the poor and the middle class is evaporating in far too many communities in America. Sadly, hope and the American Dream are also slowly receding from the horizons of too many hard-working American families. And, yet, in the midst of all this pain, suffering and wreckage, Obama’s campaign manager has to go to the oh-so-exclusive “Core Club in Manhatten” to reassure the bonus-bloated bankers that “Obama won’t demonize Wall Street as he emphasizes populist appeals in his re-election campaign ….” As if that wasn’t enough, this was reported to be “the latest in a series of hand-holding sessions.” It was also reported that one anonymous banker stopped going to these meetings because “the actual White House message of locking up fat cat bankers and raising their taxes never actually changes.” Er, ok, could anyone, please, identify a fat cat banker that got locked up? Nooooooooooooooo. There have been none. Not one. THAT actually is part of the problem . They are almost all still right where they were when they were creating the bubble or have departed Wall Street to the comfort of their billions or millions. (And, their taxes remain historically low.) Every single sane employed person on Wall Street should be sending a check to Obama — they would all be an empty shell of themselves but for him and the actions his administration took to stop the collapse of the financial system and our economy. Yet, ignoring all evidence and facts, Wall Street is reported to be “an industry that the White House has thoroughly and repeatedly demonized and demoralized” — what? That’s so ludicrous that it could be a “Seriously” skit on Saturday Night Live . Or an Onion headline. But, no, Wall Street, its bankers and its allies everywhere, including in the media, actually think that Obama has “thoroughly and repeatedly demonized and demoralized” Wall Street. Can they really be that thin-skinned? Can they really be that out of touch with reality? Can they really be that narcissistic to not see their “plight” relative to what is happening to the rest of the country ? Sadly, the answer to all those questions is yes. Wall Street and those who make fact-free assertions from their mahogany-line corner offices, 30,000 square foot mansions and spacious limousines about their plight live in a parallel universe that begins and ends in the mirror they gaze in and apparently mistake for the entire world. Until they look beyond their reflection in the mirror and until one of the titans on Wall Street actually becomes a statesman , then Wall Street’s whining won’t end and no amount of “hand-holding” meetings will satisfy them.

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Is The Dow Jones Still Relevant?

February 8, 2012

One day in October 2006, my editor gave me the same assignment that hundreds of other editors were giving their business writers. He told me to go to a trading floor to witness the magical moment when the Dow Jones Industrial Average passed 12,000 points. He may have envisioned cheers, shouts, balloons, traders cutting one another’s ties and (this being 2006) dousing one another in Cristal. Instead, the traders obliviously entered orders into their computers while I stood around looking for the story. It got me thinking: Why do we still care so much about the Dow?

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Super Bowl: Online Viewership Ratings Are In

February 8, 2012

The 2,105,441 viewers who watched NBC’s first live stream broadcast of the Super Bowl discovered that the Internet experience still can’t entirely replace the television one. And that’s exactly what the network intended. Before NBC shared the ratings for the online broadcast, which set a record for a sporting event, NBC spokesman Christopher McCloskey told The Huffington Post that the live stream was meant to complement the traditional television broadcast, not replace it. Viewers tend to use the best screen in the house, and that’s usually the TV, McCloskey said, citing NBC research. “There’s a small number using [the computer] as a television,” he said. “That’s why we construct it as a two-screen experience.” Viewers watching NBC’s live stream of the Super Bowl got to see all the plays that took place during the game. But they missed out on the commercials that accompanied the network’s TV broadcast and couldn’t watch Madonna’s halftime show either. Given the numbers released Tuesday night, the online broadcast is not yet a threat to the televised version. NBC had little motivation to stray from its previous policy of offering alternative content in its live streaming of sporting events. The strategy reinforces TV’s primacy when it comes to mega-events such as the Super Bowl. It also gives advertisers exactly what they paid $3.5 million per 30 seconds for — the chance to reach a large television audience. NBC will not air the Super Bowl again until 2015, so McCloskey said he wouldn’t speculate on any changes the network might make in the future. Many news outlets reported less-than-satisfied reviews from critics and viewers who watched the Internet version . Instead of the much-hyped line-up of Super Bowl commercials on TV, online users got a running loop of five advertisers. They could, however, click on the TV commercials after their broadcast. “We know that the television commercials are part of the entertainment experience,” the spokesman said. “That’s why we have the on-demand component.” Rather than having the opportunity to view Madonna and M.I.A.’s wayward finger, Internet spectators got NBC Sports’ and ProFootballTalk.com’s Mike Florio, who hosted a halftime analysis show. Asked if NBC was prohibited by law from showing the regular roster of commercials as they aired, McCloskey reiterated that the network designed the streaming as a companion medium. NBC has followed the same online protocol in covering the Olympics, Notre Dame football and Sunday night NFL football, he said. The interactivity, on-demand video and social media connections available online are mostly designed to enhance the broadcast experience, McClowskey said. The idea of viewers using a computer monitor to watch the game because they don’t own a TV or don’t want to pay hefty cable bills is yet another matter that networks might have to tackle more aggressively in coming years. The Nielsen ratings indicated that 111.3 million viewers watched the broadcast of the New York Giants beating the New England Patriots. But in the future, the live stream of the Super Bowl could take on far more prominence. Said McCloskey: “It’s possible that one day the online stream will require its own production.”

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In Minnesota, Missouri, Colorado, Economies Languish As GOP Candidates Vie For Votes

February 8, 2012

When Republicans in Minnesota, Missouri and Colorado cast their votes for presidential candidates Tuesday, many will no doubt have the economy on their minds. Tying the three economies together is government, among the top three employers in all three states. And in all three states, government employment is falling too. Missouri particularly struggled last year, losing jobs while nationwide employment grew. And nearly a third of Missouri’s mortgages are underwater — a larger share than the national average. The state is also less confident about the future of the economy than 35 states. Though Minnesota and Colorado’s economies are doing better than average, they are still far from healthy. Minnesota’s home prices plunged 20 percent over the past five years. And Minnesota’s unemployment rate is lower than the national average largely because of slow population growth, said Troy Walters, an economist at IHS Global Insight. Coloradans may feel a bit wealthier than the nation as a whole since the same housing bust has not been as severe there. Home prices have fallen just 5 percent over the past five years, and 16 percent of Colorado mortgages are underwater — far below the national average.

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Dan Solin: Your Broker Has No Clue

February 8, 2012

I am fascinated by the way most people invest, because it is demonstrably wrong. Here’s how you probably pick your mutual funds. Your broker calls and tells you about a mutual fund he believes is right for your portfolio. The pitch usually involves a discussion of the stellar past performance of the fund. He encourages you to sell funds that have underperformed and buy ones with better performance. The process repeats endlessly. You fall for it every time. Does this make sense? In a thoughtful blog, Brad Steiman, a vice president of Dimensional Fund Advisors, discusses the many problems with this approach. Recent performance can be misleading Steiman notes that a few years of outperformance may not be indicative of skill. The fund manager could just be lucky. For example, a fund that had an average “alpha” (positive return above its benchmark) and a standard deviation (measurement of volatility) of 6%, would require a track record of 36 years before you could be 95% certain the fund manager was skillful and not just lucky. A 6% standard deviation of alpha is representative in the Morningstar data of actively managed US equity mutual funds. Just for fun, ask your broker this question the next time he recommends a mutual fund: How long a track record would I need in order to determine if the performance of the fund manager was evidence of skill? He won’t know the answer, but the blank look will be worth your effort. Finding the needle in the haystack may not be enough Let’s assume you have a terrific broker who has a modest understanding of statistics. The broker tells you he has found a fund manager with a long enough track record to indicate skill and not luck. Should you buy that fund? Probably not. According to Steiman, one out of 40 managers is expected to meet this criteria based on luck. He concludes that even with this impressive track record, “[T]here is still a 2.5% probability the outperformance was due to good luck, and the true alpha of the manager is zero.” The Fund Manager’s Skill May Not Persist It gets worse. Even with a statistically impressive past performance, Steiman notes that “…winners do not continue to win, and even when there is alpha in the extremes, it does not persist.” You can’t expect your broker to understand how to evaluate statistical data. They are salesmen (and women). But you can — and should — educate yourself with a basic understanding of how to determine whether the next “hot” fund manager shows evidence of skill or is the latest false prophet hyped by the financial media and the securities industry. I agree with Steiman. You need to get off “the manager selection merry-go round”. Dan Solin is a senior vice president of Index Funds Advisors. He is the New York Times bestselling author of The Smartest Investment Book You’ll Ever Read, The Smartest 401(k) Book You’ll Ever Read, The Smartest Retirement Book You’ll Ever Read and The Smartest Portfolio You’ll Ever Own. His new book, The Smartest Money Book You’ll Ever Read, was published December 27, 2011.The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

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Chrysler Super Bowl Ad Raises Questions About Underlying Political Message

February 7, 2012

On Monday, responding to a barrage of criticism from conservative pundits and some football fans, Chrysler chief executive Sergio Marchionne denied there had been any political message in the company’s Super Bowl aired during Sunday’s night’s halftime show. “It had zero political content,” Marchionne told a Detroit radio station . “It was not meant to be any type of a political overture on our part; we are as apolitical as you can make us.” The two-minute commercial starring Clint Eastwood compared Detroit’s comeback to the ongoing recovery of the American economy. Many viewers came away from Sunday’s ad thinking the two-minute spot was a pro-Obama ad; others did not. Yet at the Detroit auto show last month, it was clear that Marchionne felt indebted to the president for Chrysler’s very survival. “I owe the president a lot,” Marchionne said then. “The reason we are here is because he gave us the [bailout] money, right?” Marchionne was talking with a small group of reporters about Chrysler’s bid for $3.5 billion in loans from the Department of Energy, as part of a program created by Congress in 2007 to help automakers retool old plants to make fuel-efficient vehicles. The loans still hadn’t come through, despite consistent negotiating between Chrysler and the government. Marchionne said he hoped the process wasn’t being delayed for political reasons. His comment about the president, though, came in response to a reporter’s question, “Doesn’t Obama owe you one?” Nonetheless, knowing how carefully automakers ponder, weigh and debate official communications, it’s hard to imagine Chrysler’s top brass did not consider that its Super Bowl ad could be interpreted as a pro-Obama spot. Typically auto executives are very careful to not pick sides in political battles, for fear of alienating customers on any given side. Although they often have their own political agendas, such battles are waged with lobbyists and campaign donations, not overtly in political ads. A spokesman for Chrysler declined to comment further on the company’s commercial or Marchionne’s earlier comments. “The ad pretty clearly invokes the comeback due to the bailout, without mentioning those controversial words,” said Ted Brader, a University of Michigan political science professor. “And given that message — we made the most of the bailout and it was a success — I did think, Huh, one could read that as a tribute to Obama’s decision to bail out GM and Chrysler.” Brader said Chrysler’s commercial is vaguely similar to a 1984 political ad for Ronald Reagan, “It’s Morning Again in America.” This year’s Chrysler ad, which aired just moments after Madonna finished her halftime show, started with Eastwood’s telling the audience that it’s halftime and the football teams are in their locker rooms figuring out how they can win. “It’s halftime in America, too,” Eastwood said, as an image showed the sun rising over a misty mountain range. The commercial continued with scenes of people waking up, getting ready for the day. “People are out of work, and they’re hurting, and they’re all wondering what they’re going to do to make a comeback.” The people of Detroit, he said, have already faced that fear. They almost lost everything. But the country pulled together and “after those trials, we all rallied around what was right and acted as one,” he said. And now Detroit is back, Eastwood said. Reagan’s earlier ad also started with a sunrise, except the opening scene included a boat in a bay. Various vignettes depicted people commuting to work, moving into new homes and getting married, while a narrator talked about how much better life was in 1984 compared with in 1980, before Reagan took office. “Under the leadership of President Reagan, our country is prouder, and stronger, and better,” the narrator said. “Why would we ever want to return to where we were?” The wounds of the automakers’ collapse and subsequent bailout are still fresh in Detroit, where bewildered citizens looked on as the rest of the nation debated whether it was worthwhile to help save the industry. Michigan slipped into a recession four months before the rest of the country and suffered the hardest. Unemployment there was the highest in the nation for all of 2009, and people left the state looking for jobs. Michigan was the only state to shrink in population size from 2000 to 2010, losing 54,000 people, according to Census counts. But now things are starting to turn around. Ford and Chrysler both posted profits for 2011, and GM is expected to do the same. That’s the message Eastwood said he was hoping to tap into with the commercial, in a bipartisan fashion: “I think ” all politicians will agree with it,” he told Fox News. “I thought the spirit was OK.” The commercial was vague enough to give Chrysler “plausible deniability about any political implication of the ad,” Brader said. Eastwood was a good choice (although, according to the Wall Street Journal , he may have been the second choice; Al Pacino also shot a version of the ad) because people connect him with hardscrabble Westerns and tough, flawed heroes. Eastwood’s background as a Republican who opposed the bailout (but favors gay marriage) makes the message even less clear. “So, all in all, the whole thing is rather nicely ambiguous,” Brader said. Watch Sunday’s Chrysler ad and the 1984 Reagan ad below:

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Taxing Casinos Could Help Detroit’s Financial Woes

February 7, 2012

The tentative agreement Mayor Dave Bing brokered with many of Detroit’s unions last Wednesday requires the city seek out new revenue sources in exchange for worker concessions. One of those provisions says the city should lobby the state to tax the casino winnings of non-Detroit residents. After agreeing to significant concessions less than two years ago , city workers are looking to avoid future cuts to their pay and benefits. The union side of the new bargain with Bing would include health care and pension concessions and a 10 percent across-the-board wage cut , the Detroit News reports. Police and firefighters have yet to come on board with the concessions, and the city is waiting for their support before finalizing the agreement. Proponents say a strengthened casino tax would allow the city to bring in revenue, rather than continue cutting to balance the budget. Interpretations of city and state laws currently exempt non-residents’ casino winnings from Detroit’s city income tax , according to Fox 2 News. AFSCME attorney Richard Mack, who represents city workers, told the TV station the law should be changed so Detroit can “do some long-term structural things to bring in revenue.” Looking at all available options, including new revenue sources, is necessary to avoid a state takeover of Detroit. The city is currently under financial review , and new sources of revenue could persuade the review board to recommend against a state-appointed emergency manager. State Rep. Rashida Tlaib (D-Detroit) believes an agreement between the city and its workers to seek out revenue could spark new life into a related bill she introduced last year that would increase the taxes Michigan cities can collect from casinos. House Bill 4648 would not affect casino winners, but would raise the casino’s business tax rate to 23 percent and would raise the city tax on casinos’ gross receipts to 12.9 percent. If the bill becomes law, Tlaib said the increased tax rate would raise about $28 million for the state — funding K-12 education — and $42 million for the city of Detroit. The bill is still in committee. Tlaib introduced the bill last May with co-sponsors Harvey Santana (D-Detroit) and John Olumba (D-Detroit). She told The Huffington Post she is a firm supporter of Detroit’s casinos, but she also expects them to pay their fair share. “Just like I expect my neighbors to pay their taxes, I expect corporate neighbors to pay their taxes, too,” she said. “I believe we need to say yes to Detroit and make this a true shared sacrifice.” This isn’t the first time politicians have tried to raise taxes on Detroit gaming houses. Mayor Bing unsuccessfully pushed for a casino tax increase in April of last year . He argued that gambling establishments in Michigan paid much lower taxes than other states, noting that Ohio had a 33 percent tax rate. In 2004, Public Act 306 raised Detroit casino taxes by 6 percent with 2 percent of the new revenue going directly to the city. While the city has struggled with its finances, Detroit’s three casinos had a record year of profits in 2011 . They earned a combined $1.42 billion in gross revenue , an improvement of 3.4 percent over 2010, according to Crain’s Detroit Business . The city took in $183 million in tax revenues from casino wagering in 2010 , including a $9.6 million back settlement on taxes owed by Greektown Casino.

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Liz Ryan: How to Help a Hiring Manager Remember You After the Interview

February 7, 2012

“My gosh, Liz,” said my friend Kortney, “I’m six feet off the ground.” “What’s the story, Kort?” I asked, and she said “I just came from the greatest job interview ever. The manager and I really connected. He loved my thinking and vice versa. It was like interview nirvana.” “This is magnificent news!” I said. “Let’s write a thank-you letter right now. We want to imprint a huge KORTNEY message in this guy’s mind.” “Imprint?” she asked. “This manager and I are tight. We solved half the world’s problems in a two-hour interview. I’m sure I’m getting the job.” Kortney waited a week and heard nothing. She started to get antsy. On the 10th day after her interview — the conversation she had left with the boss’ words “I can’t wait to talk again” ringing in her ears — she called the guy. He picked up the phone. She told me later, “I got the worst feeling in the pit of my stomach as we talked and I realized he had no idea who I was.” There’s a happy ending — Kortney got back on track with the manager, and is moving through the process now. The incident jarred her into a realization she’d always understood deep down, but hadn’t thought about consciously before: namely, the realization that people are goldfish. Their minds are like steel traps sometimes, and like sieves the rest of the time. The same guy who spent a rapt two hours with Kortney completely forgot her name, her story, and her amazing problem-solving skills just a few days later. Let’s be easy on the guy: he had plenty of other fish to fry. Undoubtedly, he left the interview thinking Kortney was a terrific candidate, but the next day he met someone else, and then someone else after that. Too much data in too little time creates overload conditions, and when that happens, all bets are off. I’m looking at a hoodie right now. It’s draped over the back of my chair. I bought it last year at Target, for my eight-year-old. There’s absolutely nothing wrong with it; it’s a standard kid’s hoodie. I remember when I bought it. My 17-year-old daughter was with me. “Look at that hoodie,” I said to her that day. “Your brother would love that.” Target had just brought in some new Spring merchandise, and my son’s hoodie on the rack looked like something I couldn’t live without. The colors were bright, and different from the colors in the store at my last visit — Target had changed its lineup of Spring fashions. What fun! A year later, it looks like just another hoodie to me. “Mom, you are truly invertebrate,” scolded my daughter. “Look! Shiny colors! All Target has to do is put some bright-colored thing on the rack, and my mom throws it into her cart.” “Don’t hate,” I said, and snapped up some irresistible chili-red bath towels. People are limbic nerves wrapped in frontal-lobe’s clothing, and the sooner we realize it, the better. That hiring manager didn’t make a conscious decision to wipe all traces of Kortney’s existence from his mind. He just forgot. If we realize that the people who meet us and even brainstorm with us in the fast-paced interview pipeline are all but certain to forget us shockingly quickly, we won’t get affronted when the inevitable failure-of-recollection takes place. We can build it into our planning. It’s no big deal to be forgotten, as long as you’re ready for it and can adjust accordingly. It happens to all of us. I found one of my dearest summer-camp-mates on Facebook, and sent her a friend request. “Did we go to camp together?” she asked in reply. She couldn’t remember me. We slept in the same cabin with six other girls for five years running. My name is the same as it was then. That’s okay. I withdrew. A year from now, she’s likely to write “Say, did we go to camp together?” At times I struggle to put names to my own children, so how could I blame my old friend for a little memory lapse? In a job interview situation, we can’t assume that a great interview will lead to a job offer. We have to stay top-of-mind for a hiring manager. In a thank-you letter, the very first thing we must do is bring ourselves back to mind for the recipient. We do that by mentioning a specific conversation the two of us had (about model cars, or Beyonce’s baby, or who knows what). I’ve heard hiring managers confess “I just spent twenty minutes talking with a brilliant applicant, one of the four people I met last Friday. The whole time we talked, I was trying to remember which guy it was. He told me his name when he called, and I had his resume in front of me — but I couldn’t get the face back, or the guy in general. It was awful!” That unfortunate candidate spent twenty minutes on the phone, certain he was winning big points for his sparkling observations on the hiring manager’s issues. But he got no bounce from that pithy conversation, because the hiring manager couldn’t match the guy on the phone with the memory of a person he’d met the week before. It’s easy to overlook the fact that until the manager has you firmly back in mind (your face, your voice, and your back story) you can’t advance in the selection pipeline. You can’t even make points for brilliant observations on the telephone. Don’t take a hiring manager’s memory for granted. Keep your brand and story front and center in every interaction. Maybe the hiring manager made a comment about you at some point, or maybe you’ve noticed that he thinks of you in a certain way (“the ex-Navy guy” or “the guy with the supply chain background,” for instance). If so, use that. When you write to the hiring manager at any point in the selection process, start with “Dave Smith here — the Navy guy.” You’d be amazed how that quick descriptor cuts through the fog that plagues every overstressed hiring manager. Seeing yourself through another person’s eyes and helping the other person snap you back into focus isn’t just useful in job-hunting. It’s good training for lots of situations. As long as we’re living among goldfish disguised as humans, we may as well get used to communicating the way (or at least we’ve always imagined) our fishtank-dwelling fellow creatures do.

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Melissa Richer: How Millennials Are Shaping the Future of Social Entrepreneurship and Technology

February 7, 2012

In 2011, the terms ‘social entrepreneurship’ and ‘social business’ began to make weekly appearances in mainstream media (see recent Huffington Post coverage here , here , and here ). These startups are at the forefront of the ‘new economy.’ They make money by solving social and environmental problems, and they do not fit into the traditional nonprofit or for-profit mold. When I entered the workforce 5 years ago, I mostly heard that my generation was ‘difficult to work with,’ ‘savvy with that social media thing,’ and ‘free-spirited.’ Now people see us differently. In 2011, we were the entrepreneurs, survivors, and ‘ generation sell .’ Oftentimes people ask me about the future of social entrepreneurship. This is because I founded Ayllu , an organization that tracks social businesses in 80+ developing countries and reports on market trends. I tell them that right now social entrepreneurship is a hot trend and there are funders, conferences, university departments and newspaper sections devoted to it. I believe that in the not-too-distant future, social entrepreneurship will become so prevalent that it will no longer be a niche sector. It will simply be part of the new economy that emerges from today’s convalescent markets. In the years ahead, social entrepreneurs will take advantage of innovations in the technology sector. Here are technology-related trends that have major social change potential in 2012 and beyond: Crowd-based Models : Crowd-funding brings people together online, and pools their money to finance a project. It is a big social entrepreneurship trend, which Kiva made famous a few years ago. Now many social entrepreneurs have innovated on this concept. Solar Mosaic makes it possible for anyone to fund community solar installations in places like schools or hospitals. inVenture realized small businesses in developing countries need growth capital, so they created a crowd-investing platform. And One Percent Foundation innovated on the giving circle concept by pooling 1 percent of its members’ income and donating it to charities. In the future, as technology becomes cheaper and more prevalent, social entrepreneurs will move beyond crowd-funding. They will use other crowd-based models to create social change. This trend is already manifesting itself in the mobile technology space. Mobile Technology: Today, nearly 70 percent of people in developing countries have mobile phones. In just a few short years, more than 1 billion people who were formerly ‘off the map’ are on it. This market opportunity is tremendous in terms of size and scale, as are possibilities for social innovation. Social entrepreneurs are building new models: Labor Voices combats human trafficking with a ‘yelp model’ where migrant workers can rate and review their employers anonymously. In developing countries, Medic Mobile uses mobile technology to help rural health workers coordinate with clinics and patients. In Kenya, people use their cell phones like credit cards, and Kopo Kopo helps business owners accept mobile payments from customers. Health Technology: Healthcare is one of the most diverse areas for social entrepreneurship. Lumoback , a mobile healthcare startup, designed a smart phone-powered device that improves posture and chronic back pain. Embrace developed a low-cost baby incubator to save premature infants in the developing world. And BioSense created a device that tests pregnant women for anemia in rural India, and can save thousands of lives each year. These trends are part of the big data and collaborative consumption movements. With so much information at our fingertips, solutions are emerging to analyze and organize information (big data). And thanks to the Internet, online collaboration is creating new kinds of marketplaces (collaborative consumption). In the past 10 years, we humans have become dependent on technology and it’s difficult to navigate life without it. Sometimes it feels as if our devices are in control of us, and not vice versa. But, in the next 10 years technology will become ‘smarter.’ It will adapt to us and become more integrated with our daily activities. Millennials will play a large role in evolving technology to create social end environmental benefits. Social entrepreneurship is our way of addressing the immense global challenges we inherited (see here and here ). We will use it to shift the global economy in a positive direction.

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Key U.S. House Panel Advances Keystone Pipeline Plan

February 7, 2012

* House Energy and Commerce approves plan, 33-20 * Would give permit power to FERC * Next step for bill: vote in full House * Senate Finance won’t attach bill to highway bill By Roberta Rampton WASHINGTON, Feb 7 (Reuters) – A plan to fast-track the stalled Keystone XL oil pipeline was passed by a key committee in the U.S. House of Representatives, as Republicans made yet another attempt to spur approval of the project that has become a major issue in the 2012 elections. The bill would wrest decision-making on the pipeline from the Obama administration and hand it to the Federal Energy Regulatory Commission, which would be compelled to issue approval permits quickly on the Canada-to-Texas project. But the plan would need to clear several more congressional hurdles, including getting through Democratic opposition in the Senate, before it could land on President Barack Obama’s desk for approval. In a decision last month that pleased environmental groups, Obama blocked TransCanada’s $7 billion project, citing the need for further review of its route as the line would have traversed sensitive lands and an aquifer in Nebraska. Republicans have made the pipeline a symbol of what they believe are unnecessary regulations that are stifling job creation and energy production in the United States. On Tuesday, the House Energy and Commerce Committee voted 33-20 to send its Keystone bill to the full House, where it will likely become part of a highway and infrastructure funding bill that House Speaker John Boehner wants to see passed this month. Republicans also have not ruled out trying to attach a Keystone provision to must-pass payroll tax-cut legislation. “We’re going to use all options, so we’ll see,” said Fred Upton, the Republican chair of the energy committee, who is also part of a joint Senate-House conference panel working on the payroll tax-cut compromise. GLUT IN MIDWEST The latest Keystone debate comes as a glut of crude oil in the U.S. Midwest widens the discount between what refiners pay for oil around the key delivery point of Cushing, Oklahoma, compared to the price paid by refiners on U.S. coasts and the rest of the world. Meanwhile, Canadian production is surging on expanding output from the oilsands. With exports to the United States up 34 percent year-over-year, existing pipeline capacity is full. The lack of pipeline space has pushed the discount between Canadian crude and benchmark prices to multi-year lows, eating into the profits of the Canadian oil industry, including its two largest producers, Suncor Energy Inc and Canadian Natural Resources Ltd. Canadian oil producers are desperately looking for alternative markets in Asia and elsewhere, though it will be years before any new export lines can be built. Canada’s Prime Minister Stephen Harper is leading a large, high-level trade mission to Beijing this week, and told Reuters that Canada will focus on exporting oil to China even if the U.S. decision on Keystone is reversed. KEYSTONE ROUTE IN SENATE UNCLEAR Republicans in the Democratic-controlled Senate also are trying to resurrect a quick start for the pipeline, but have not yet determined a strategy for advancing legislation. On Tuesday, Republican Senator Orrin Hatch withdrew a proposal to link Keystone to the Senate’s highway funding bill. “It is absolutely tragic that the prime minister of Canada is now negotiating with the Chinese to take their oil because we’re too stupid to allow a pipeline to go through,” Hatch said at a Senate Finance Committee hearing. Max Baucus, the Democratic chairman of the powerful panel, convinced Hatch to withdraw his measure. “The inclusion of Keystone would take down the bill,” Baucus said, although he noted he strongly supports the pipeline. LAWSUITS AHEAD? On Tuesday, House Democrats tried but failed to amend the bill to block exports of oil and refined fuels from the pipeline, and to bar TransCanada from having the ability to expropriate land for the pipeline from private owners. Also defeated was a proposal to postpone action on the pipeline pending results of a study, expected sometime in 2013, on whether pipelines carrying petroleum from Canada’s oilsands are at greater risk for spills than those carrying other types of crude. John Dingell, a Democrat from Michigan who supports the pipeline, argued the authority to approve the line should remain with the president rather than being fast-tracked by Congress. Dingell said he worries environmental groups would tie up the pipeline with lawsuits if the Republican plan goes ahead. “It’s going to infuriate the environmentalists who are going to be on this like a duck on a June bug,” Dingell said. The Natural Resources Defense Council panned the bill, saying it attempted to “jam” the project ahead in a rush. “We hope the Senate will use common sense and avoid trying to undermine proper review using politically motivated legislative maneuvers,” said Frances Beinecke, president of the group, in a statement. But Lee Terry, a Republican from Nebraska, said the Obama administration has dragged out the process for too long, making it essential for Congress to take charge. “It is the president that made this a political football,” Terry said.

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Journalist Recovers Video Of Arrest After Police Deleted It

February 7, 2012

A Miami journalist has recovered video of police officers arresting him after it was deleted from his camera. The man was covering a police effort to evict Occupy Miami protestors. He plans to file a complaint with the police department and with the United States Department of Justice.

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Many With Only High School Degree Laid Off During Weak Recovery

February 7, 2012

For many in the United States, the two years since the end of the recession have been worse than the downturn itself. Among those Americans with only a high school degree who have lost a job since 2007, a third became unemployed after the official end of the recession, according to The Washington Post . It’s a troubling statistic in its own right — job seekers without a college degree are having serious difficulty finding work in the current market, and the unemployment rate for high school graduates is more than twice that of college grads — but it also underscores the fact that, for many Americans, the recovery hasn’t felt very different from the recession that preceded it. Economists consider the Great Recession to have ended in the summer of 2009, nearly three years ago. That’s the point when the economy stopped outright shrinking and began growing again . But the subsequent period of modest expansion has been marked by job cuts, uncertainty and a gradual erosion of financial security for many Americans. These conditions are expected to remain pronounced for a long time to come. U.S. employers cut 529,973 jobs in 2010 , according to the outplacement company Challenger, Gray & Christmas. In 2011, that number rose to 606,082 . At the same time, wages and benefits barely grew , with the high jobless rate giving employers little incentive to pay workers more. Today, there are still nearly 13 million Americans looking for work. It’s not that life has gotten much better for those with a job either. All together, median household incomes have now fallen more in the recovery than they did during the recession. Meanwhile, as many as 49 million Americans live in poverty — a record high — and almost half the households in the country lack the kind of savings necessary to weather a financial emergency. People without a college degree are having a particularly difficult time finding work , but they’re not the only demographic hard hit by the crisis. The unemployment rate among very recent college graduates is well above the national average . While Baby Boomers account for a huge percentage of the long-term unemployed . And African-Americans have a jobless rate of 13.6 percent — more than five percentage points above the national level.

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Neeta Pal: Foreclosure Dispatches: Views From Around the Country

February 7, 2012

Foreclosures aren’t going away. By now, the abuses that brought us to this point and continue to sink us further into the crisis — predatory lending practices, hastily securitized loans and mortgage servicing errors — are well known. Accountability for these abuses, however, remains an open question. As we await the outcomes of the 50-state attorneys general settlement and the Obama administration’s new federal Financial Crimes Unit led by New York Attorney General Eric Schneiderman, we must not lose sight of the homeowners and communities who suffer the collateral damages of foreclosure. The Brennan Center for Justice at NYU School of Law teamed up with the National Coalition for the Civil Right to Counsel and independent producer Sarah Reynolds to create a multimedia video series entitled Fighting Foreclosure: Why Legal Assistance Matters that tells the stories of homeowners around the country. The series focuses on the perspectives of people who have seen or experienced firsthand what happens when homeowners go up against banks and mortgage servicers without an advocate at their side. Time and again, with counseling and legal representation , homeowners are able to catch documentation fraud, lending violations and other unlawful practices, and negotiate a fair settlement to stay in their homes. Community groups, legal aid lawyers, and housing counselors continue to act as first responders in a slow-moving foreclosure disaster that, according to the Center for Responsible Lending, is not even half-way over . Fighting Foreclosure: Charles Guider from TheBrennanCenter on Vimeo . Dispatch #1 : Sarah Ludwig and Josh Zinner, Co-Directors, Neighborhood Economic Development Advocacy Project (NEDAP) in New York City NEDAP — a financial justice resource and advocacy center based in New York City — recently released a report showing that 345,435 mortgages were at risk of foreclosure in New York State in 2011. NEDAP’s analysis confirms that the state has a long way to go before the foreclosure crisis is over. The report shows that neighborhoods of color continue to be disproportionately affected. From where you’re sitting, what, in your view, is one of the main challenges facing homeowners in foreclosure? Servicers, servicers, servicers. We are years into the foreclosure crisis, and banks, through their mortgage servicers, continue to present serious obstacles to homeowners, resulting in millions of foreclosures that could and should have been averted. The problem should perhaps come as no surprise, since servicers generally continue to make more money from foreclosing on homes than from modifying mortgages, and public policy response has been slow at best in terms of requiring meaningful accountability by the industry. People who seek to negotiate effective loan modifications with servicers continue to get the major runaround, experiencing maddening delays and unreasonable denials of their loan modification applications. Meanwhile, the financial industry has spent millions upon millions of dollars lobbying against even the most basic reforms — to the profound detriment of families, communities, and the country. What is one aspect of the foreclosure crisis that has been overlooked by the media? The media, in general, have failed to address the fact that so little has been done to hold banks accountable — notwithstanding general consensus that banks and Wall Street caused the foreclosure crisis (enabled in no small measure by their regulators), and notwithstanding what we now know was a multi-trillion dollar bank bailout. Similarly, most media have categorically avoided core questions regarding the restructuring of our financial system to ensure fairness and equity going forward. Another glaring gap is coverage of the millions of people who’ve unfairly lost their homes to foreclosure. What’s happened to them? Where are they now? Where’s the redress? By some estimates, we are only halfway through our nation’s foreclosure crisis. What is the biggest change we need to make in addressing this problem going forward? Broadly speaking, we need to forge a coherent, comprehensive federal housing policy that is grounded in principles of fairness and equity, and that emphasizes non-speculative housing models, such as community land trusts, mutual housing, and limited equity cooperatives. It is also vital that we address pervasive unemployment, underemployment, and the lack of a living wage. In terms of the mortgage industry, servicers should be held to strict rules and legal standards, such as a fundamental duty to work in good faith with distressed homeowners. The rules should require servicers to reduce principal for people underwater on their loans, for example, and include meaningful enforcement mechanisms and strong penalties for non-compliance.

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Meet The World’s Highest Paid Supermodels

February 7, 2012

They’ve worked hard to be called “the hottest and most desirable women in the world” — you try spending your days walking along runways in high heels and keeping svelte for photographers . But there’s more than meets the eye when it comes to these 20 supermodels. According to Extra , these knockouts are also savvy businesswomen — amassing a huge fortune thanks to not only modelling gigs, but also side businesses, like developing fashion, beauty or accessory lines. In fact, these ladies make almost as much (maybe even more!) than some of today’s hottest celebs . Whether you love them, hate them or just hate to love ‘em, here are the world’s 20 most wealthy supermodels.

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Coca Cola Benefits From Price Hike

February 7, 2012

NEW YORK — Coca-Cola reported an effervescent fourth quarter Tuesday, as the company sold more of its drinks globally and its earnings beat analyst expectations. Coca-Cola is benefiting from raising prices in North America, where consumer sentiment is slowly improving, and expanding in emerging markets including Africa and Latin America. “Compared to 12 months ago, there are very early indications that the consumer (in North America) is feeling a little better, with more mobility, travel and eating out,” said CEO Muhtar Kent in a telephone interview with the AP. “That all translates into better business for us.” Coca-Cola Co.’s fourth-quarter net income dropped 71 percent, weighed down by restructuring charges and a difficult comparison with last year’s fourth quarter, when the beverage maker had a hefty benefit from buying its bottlers. But the Atlanta company said Tuesday its adjusted results topped Wall Street’s expectations as it sold more drinks in the U.S. and abroad, particularly in emerging markets. “Even as we believe that global market volatility will continue in the near term, the breadth of our global footprint and the strength of our brands create a resilient business that was built for times like these,” CEO Muhtar Kent said in a statement. Shares of Coca-Cola rose 91 cents to $68.94 in midday trading. Coke also said it will start a cost-cutting program in 2012 to save $550 million to $650 million annually by 2015 in part to help offset continued high commodity costs. Coca-Cola, whose brands include Sprite and Minute Maid, earned $1.65 billion, or 72 cents per share, for the period ended Dec. 31. That’s down sharply from $5.77 billion, or $2.46 per share, a year earlier. But a year ago, the company had a one-time net gain of $1.74 per share, mainly related to buying a bottler’s North American operations. Removing restructuring charges and other items, earnings were 79 cents per share. Analysts forecast 77 cents for the company, according to Fact Set. Revenue increased 5 percent to $11.04 billion. It was helped by higher prices, strength overseas and solid results from the Coca-Cola brand, juices and teas. The figure just topped Wall Street’s $11 billion estimate. Coca-Cola sold 3 percent more of its drinks during the quarter, including a 1 percent gain in Europe and North America and a 4 percent gain in Eurasia and Africa and Latin America. Coca-Cola, which has more than 500 brands including Fanta, Sprite, Dasani and Minute Maid, has weathered the downturn by spending more on advertising, new products and plants. The company, like many, also has turned overseas for growth, particularly emerging markets like India and China. And in North America, it is raising prices and offering smaller package sizes. For the year, net income fell 27 percent to $8.57 billion, or $3.69 per share. That compares with $11.81 billion or $5.06 per share last year. Revenue rose 33 percent to $46.54 billion from $35.12 billion. Global volume grew 5 percent during the year, helped by strength in emerging markets such as Latin America. Coke’s chief rival, Pepsico Inc., reports results Thursday.

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Chrome For Android Finally Here … Sort Of

February 7, 2012

Google has released a long-awaited beta version of its Chrome web browser for Android-powered phones and tablets, but the software only works on devices running the latest version of Android. The test version of Google’s popular Internet browser was made available for download today in the Android Market . Notable features of the software include the capacity for tabbed browsing, the option to browse the web in “incognito mode,” accelerated page loading, and the ability to sync bookmarks and passwords between users’ other devices on which they use the Chrome browser. Unfortunately, the acceleration technology these features require means the browser is limited to the few Android mobile devices that currently use Ice Cream Sandwich, the latest version of the Android operating system. Those devices include the Galaxy Nexus, Nexus S and Asus Transformer Prime, Business Insider reports . But experts expect Google Chrome to dominate Android devices in the future as users upgrade their phones to ones capable of running the newest Android operating system. “Even in beta, it’s a compelling browser at least on the Galaxy Nexus I tried it on, and it’s and a much better match for Apple’s Safari on iOS,” Stephen Shankland wrote in a review of the software for CNET . “And eventually, its success is all but assured when it simply becomes what ships with Android.” Today’s beta release caps off a three-year effort on the part of Google engineers to converge Android and Chrome , the company’s two fastest growing products, according to Mercury News . Both products were launched at the end of 2008 and soon became favorites of many users and developers. Android is currently the world’s most popular mobile operating system, while Chrome recently shot past Mozilla Firefox to become the second most popular Web browser behind Microsoft’s Internet Explorer. Early feedback from users reviewing the software on Android Market has been largely positive, with the first 500 commenters giving the software an average rating of 4.3 stars out of five. Check out a slideshow of screenshots below: WATCH:

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Qutenza, Chili Pepper Drug, Gets Mixed Review For Treating HIV-Related Pain

February 7, 2012

* FDA raises concerns of effectiveness of pain patch * NeurogesX seeks Qutenza approval for pain in HIV patients * US FDA panel to review proposed new use on Thursday * Shares fall 23 percent (Recasts first sentence with stock fall, adds details on approval process) WASHINGTON, Feb 7 (Reuters) – NeurogesX Inc’s pain treatment derived from chili peppers had only mixed success at treating pain in HIV patients, U.S. health regulators said on Tuesday, sending shares of the tiny company down 23 percent. NeurogesX won FDA approval in 2009 for its Qutenza patch as a treatment for pain related to shingles. The product’s active ingredient is a synthetic form of the agent that makes chili peppers hot, known as capsaicin. The company now hopes to get the nod to sell the product for peripheral neuropathic pain that afflicts as many as 40 percent of HIV sufferers. An FDA committee of outside experts will meet to discuss Qutenza’s use among HIV patients on Thursday. The FDA is expected to make a decision by March 7. On Tuesday, Food and Drug Administration reviewers said in a report that the Qutenza patch produced statistically significant pain reduction among people with HIV. But that success was due to a 90-minute application. FDA staff said company studies failed to demonstrate the efficacy of the 30-minute treatment the company proposed for use in treating HIV-related pain. Statistical concerns including a lack of evidence that the results can be repeated “have raised the question of whether evidence of substantial efficacy has been demonstrated for this proposed treatment regimen,” said Dr. Bob Rappaport, director of the FDA’s Division of Anesthesia, Analgesia and Addition Products. FDA staff said studies with HIV patients showed no new safety issues. European Union regulators have already approved Qutenza for controlling pain in nondiabetic adults including people with HIV. Shares in the San Mateo, California-based biopharmaceutical company were down more than 23 percent at 89 cents on Tuesday morning on the Nasdaq. The exchange has threatened to delist the stock unless it can be sustained at $1 a share or above between now and July 28. (Reporting By David Morgan; Editing by Gerald E. McCormick, Derek Caney and Matthew Lewis)

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Chris Weigant: Romney’s "Very Poor" Choice of Words

February 7, 2012

I’m in this race because I care about Americans. I’m not concerned about the very poor — we have a safety net there. If it needs repair, I’ll fix it. I’m not concerned about the very rich — they’re doing just fine. I’m concerned about the very heart of America, the 90 to 95 percent of Americans who right now are struggling. … I’m not concerned about the very poor that have a safety net, but if it has holes in it, then I will repair it. — Mitt Romney , in an interview with CNN’s Soledad O’Brien Mitt Romney’s gaffe last week (reproduced in full, above) is going to wind up the “gaffe that keeps on giving” for Barack Obama and the Democrats in this election cycle. Because the more Romney’s comment is examined and dissected, the worse it looks for him. This could, in fact, be the defining moment for Mitt Romney as a national political presence. That phrase is often bandied about in politics, but I use it here in the full literal sense of “defining moment” — a point in time which absolutely cements an image in the public mind of who you are and what you stand for as a politician. The image, quite obviously, is not a good one for Romney. The statement caused an initial media frenzy, which almost exclusively focused on the sound bite — “I’m not concerned about the very poor” — which was being spliced into Democratic ads before the sun had even set. Even Newt Gingrich piled on that part of Romney’s statement, fulminating that anyone running for president should have the good sense to be concerned with all Americans (or at least say so in public , for Pete’s sake). This is Politics 101, folks, and the fact that it took Newt Gingrich to point it out to Romney was highly amusing to Lefties everywhere. Romney desperately tried to spin his statement, and wound up floundering : “You’ve got to take the whole sentence, all right, as opposed to saying — and then change it just a little bit, because then it sounds very different.” Um, well, that would be true of just about any political gaffe, wouldn’t it? If you got to go back and re-edit your own words in such a manner, then gaffes wouldn’t even exist. Unfortunately for Mitt, they do. Romney, of course, is going to complain loudly when the “not concerned about the very poor” soundbite is used against him in ads, but he simply has no leg to stand on when it comes to “context.” He has no credibility on the subject, and no moral high road to take. He has already, in this election, run an ad of Barack Obama saying: “If we keep talking about the economy, we’re going to lose.” What Obama said — with context — was actually the exact opposite : “Senator McCain’s campaign actually said, and I quote, if we keep talking about the economy, we’re going to lose.” Romney’s campaign, when the ad came out, defended its use , saying “We used that quote intentionally.” So good luck begging for context in political ads now, guys. Even more unfortunately for Mitt, the out-of-touch and elitist image this gaffe conjures up is exactly the image a lot of folks already had of Romney. He appears to many as the type of guy who has no idea who the “very poor” are, or how they live. The only way a guy like Mitt Romney interacts with poor people — when not actually on the campaign trail — is either in an employer/employee relationship (as with the domestic help in his multiple houses) or a patron/servant relationship (the valet parking his car, the busboy clearing his table, or perhaps a ski lift operator). Neither breeds any sort of real understanding of what it is like to occupy this rung of the social ladder in Mitt — or, for that matter, the fears many middle-class folks have of being one financial emergency away from a dive headfirst into that safety net. The man has lived in a bubble for almost his entire life — and it shows. But while most of the attention so far has been focused on the “out of touch” nature of Mitt’s “very poor” choice of words, the real damage to Mitt as a Republican candidate stems from how he attempted to explain what he really meant. Ignore the soundbite/gaffe part of Mitt’s statement, and things get even worse for him among his party’s base. Chalk this one up as a victory for the Occupy Wall Street movement, because all of a sudden the Republican Party as a whole was having a debate about their party’s poverty policies . In a million years, I never could have imagined that happening without the outside force of the Occupiers changing the frame of the nation’s political debate. Think about it: when is the last time any Republican used the word “poor” in any political speech? For the life of me, I certainly can’t remember it, unless it was some part of George W. Bush’s “compassionate conservatism” flim-flam that my subconscious has just completely blocked out. Which brings me to my main point — Mitt’s explanation for his bad soundbite was extraordinary because it used the framing of Democrats . Mitt is arguing his point on a field created and defended by Democrats — not the usual Republican language. This is stunning, because Republicans are normally so adept at speaking of just about any issue in their own private terminology. It’s also stunning because it is such a losing position for Romney to take. First, the language. Republicans never say “poor” (as I’ve already mentioned) much less “very poor.” As far as conservatives are concerned, poor people either (1) deserve what they get in life because of their own bad choices, (2) are lazy and cheating the system to get a free ride through life, or (3) are budding conservative heroes, because we all live in a Horatio Alger novel and just need to grasp strongly on those bootstraps and pull. But Mitt’s bigger error wasn’t saying “very poor,” it was in fact using the term “safety net” — over and over again. And then doubling down on his error, by promising to “fix the holes” in the safety net, if it “needs repair.” This is where Mitt’s playing ball on a Democratic field, and not just because it fits in so perfectly with the campaign Barack Obama is teeing up to run, either. Republicans, as a general rule, never speak of the “safety net” unless in seriously derisive terms. They prefer, instead, to speak of the “culture of dependence” or people who use “entitlements” (Marc A. Thiessen has a good example of this over at the Washington Post today, for reference, complete with reverent Ronald Reagan genuflections). The weakness for Romney is that his statement — ignoring the gaffe, and giving him all the context he wants us to consider — is absolutely laughable, on the face of it. This is what comes from playing on the opposition’s turf. Because Republicans today are all about “entitlement reform” — which means, stripped of its own spin, “less money for the safety net.” This basic disconnect cannot be reconciled with Romney’s statement, no matter how much context we add. It is necessary to commit an act of doublethink to even try. Romney is for Paul Ryan’s budget. The Ryan budget shrinks the safety net. So how, exactly, is Romney going to “fix” the safety net? How will making seniors pay an extra $6,000 a year for health insurance do that? How will cutting funds to Medicaid fix things? How is giving the ultra-wealthy (which you also say you’re “not concerned with”) another round of tax breaks going to fix the safety net, Mitt? Please explain, with figures and budget projections to back your claims up. Anytime you’re ready…. These are the questions some intrepid reporter needs to ask Mitt Romney, and soon. Because talking about the “safety net” was Mitt’s real “very poor” choice of words. You want to talk about the safety net, Mitt? OK, then let’s talk about the safety net — and your proposals to fix the holes in it. That would, indeed be a conversation worth having. And if the media doesn’t ask Mitt, I’m sure Obama eventually will — the first time they face each other in a debate.   Chris Weigant blogs at: Follow Chris on Twitter: @ChrisWeigant Become a fan of Chris on The Huffington Post  

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Two Occupy DC Activists Remain Jailed In McPherson Square Police Clash

February 7, 2012

WASHINGTON–Two members of Occupy DC will remain jailed until at least Thursday on charges they assaulted police officers during Saturday’s clash with police who razed a downtown encampment. A handful of others were arraigned on less serious charges that included failing to obey police and released. Charges were dropped against two. One person was arraigned down the street in U.S. District Court on a failing to obey police charge and released. Those arrested were rounded up early Saturday as U.S. Park Police razed activists’ months-long encampment at McPherson Square. Police raided nearby Freedom Plaza the next day, but left many tents in place. The moves, though anticipated by the Occupy activists, shocked them nevertheless as police arrived with a dump truck and protective hazmat suits. A D.C. Superior Court judge set a hearing for Thursday for the two charged with assaulting police officers and said they would remain jailed until then. One is Jeremiah Desausa, accused of throwing a Coke bottle that struck a police officer in the eye. Police said over the weekend that the activist had thrown a brick, but a court document described it as a soda bottle filled with liquid. About a dozen Occupy DC activists showed up to watch the arraignments, in a Superior Court basement. They included one legal observer as well as lawyer Ann Wilcox. Several took careful notes, some on newspaper. It was a contrast from McPherson Square. Instead of screaming Occupy chants, the activists had to obey the courtroom’s no-talking policy. Whispering was met with a courtroom minder’s stern warning and threat of eviction. It was a long afternoon. Those arrested face charges ranging from failure to obey an officer’s order to felonious assault of a police officer. One by one, they were brought into court in chains and cuffs, some in white jumpsuits. One appeared with his arm in a brace and sling; the activists said his arm was broken . Brian Eister, 25, who was charged with failure to obey, was one of the first released. He said he wanted to return to McPherson Square for some yoga exercise. Wade Simmons, 41, had been charged with making threats to a police officer. He denied wrongdoing and was released after being arraigned, pending his next court date. He was most upset over the judge granting a stay-away order, temporarily banning him from Freedom Plaza. “How long is this?” he asked the judge. She replied that he had to check with his lawyer. He had been camping with Occupy DC since Oct. 15. Michael Patterson , 21, an Iraq War veteran arraigned on a felony charge of assault on a police officer, said outside the courtroom that he “didn’t do anything.” Patterson said Occupy DC’s eviction did not matter. “The camp was just a tactic,” he explained. He had traveled from Anchorage, Alaska, to join to Occupy DC in early-October. Now, he can’t go near the place; he too got slapped with a stay-away order.

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As Minnesota, Missouri, Colorado Vote, Republicans Talk Cuts Not Investment

February 6, 2012

Most politicians would brush aside their mother if it meant scoring a photo-op with a Minnesota businessman like John Van Dine. His 22-year-old company, SAGE Electrochromics, is in the middle of a $150 million expansion to double its workforce to total 250, all in Fairbault, Minn., and pulling in a decent wage. SAGE, which makes glass plates with electronic sensors that turn lighter or darker depending on the time of day, is even exporting to Asia and the Middle East. But Van Dine isn’t look to share the stage with any politician; he’s just hoping for more government investment in infrastructure, education and health care, all needed for a sustained economic recovery, he said. But as voters head to the caucuses and primaries on Tuesday in Minnesota, Colorado and Missouri, those aren’t the kinds of initiatives making headlines. Instead, the leading Republican candidates are hammering home the idea that cuts to government spending and fewer regulations are key to an economic rebound. “It’s not that they are not aware of the problems; it is that they haven’t provided the leadership,” said Van Dine, adding that politicians in both parties are to blame for not having the courage to propose investing on a large scale to fuel economic growth. Minnesota is in better shape than most of the rest of the country, including Colorado and Missouri. Unemployment is relatively low, at 5.7 percent. The state’s manufacturing sector has seen 16 straight months of growth, according to the Minnesota Department of Economic Development. Yet, according to the Bureau of Labor Statistics, job growth in Minnesota is slow, just 1 percent in 2011 — slightly higher than the national average. The state’s manufacturers employ fewer workers than before the recession, and these types of jobs are unlikely to be fully restored to pre-2008 levels, said Troy Walters, an economist at IHS Global Insight. In addition, Minnesota is experiencing cutbacks in government spending. There were 1.4 percent fewer government workers in this state by the end of 2011, compared with the tally at the end of 2010, according to the Bureau of Labor Statistics. Local government layoffs have hurt economic growth in the state, said Thomas Stinson, an applied economics professor at the University of Minnesota and an economist for the state. When workers in the public or private sector are laid off, they spend less, which then reduces employers’ demand for workers — hurting consumer demand even more, Stinson said. “It really starts a vicious circle.” Missouri and Colorado also lost government jobs last year, and Republican presidential candidates have made government job cuts part of their platforms. Romney wrote in his economic plan that if elected, he would slice the size of the federal workforce 10 percent and cap federal spending at just 20 percent of the U.S. gross domestic product, which would mean trimming federal spending about 17 percent. Romney and Gingrich have both said they would slash regulations, corporate taxes and government spending as a means of addressing America’s economic woes. The campaigns did not immediately return requests for comment. The other Tuesday primary states would love to be in Minnesota’s position. The total number of jobs in Missouri declined 0.1 percent in 2011, according to the Bureau of Labor Statistics. And among all states, Missouri is the 15th most pessimistic about the economy, according to Gallup. Colorado’s economy is doing better than Missouri’s, but it is still not healthy. Many of its job gains last year came within the leisure and hospitality sectors, where positions tend to be low paying. Manufacturing in Missouri and Colorado is starting to rebound, however. Last year manufacturing in Missouri grew the most quickly of any sector — attaining a 3.1 percent job growth rate, according to the Bureau of Labor Statistics. In Colorado, jobs manufacturing, comprising less than 6 percent of its total, grew 0.7 percent last year. Despite of Minnesota’s improving economic situation, Minnesotans are still very concerned about jobs and the economy, Stinson said. “If you haven’t got a job, if you’re worried about your job, the national debt is not what you’re concerned about,” he said. While Republican candidates have mainly proposed cutting government spending and regulation, at a New Hampshire debate in January Gingrich mentioned that the United States should focus on developing its technological infrastructure. “You cannot compete with China in the long run if you have an inferior infrastructure. You’ve got to move to a 21st-century model. That means you’ve got to be technologically smart, and you have to make investments,” he said , according to the Daily Caller . For his part, President Barack Obama said during his Jan. 24 State of the Union address that he would like to cut taxes for high-tech manufacturing companies that hire in the United States while establishing a minimum corporate tax rate. But economists and labor leaders say rebuilding the economy takes more than incentives; it will require new investment. Damon Silvers, policy director at the AFL-CIO, estimated in January that the economy needs a $4 trillion public investment program over 10 years — with spending focused on education and infrastructure — to make the economy competitive enough to support the middle class.

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K. Sudhir: Firing Customers to Flatten the Whale

February 6, 2012

It’s called the whale curve — a schematic representation of profit, replicated below. It illustrates, among other things, how 200 percent of profit can come from only 10 percent of customers. Fifty percent of customers might account for 250 percent of profit. And the bottom half of customers can actually bleed the profits of the firm. Innovation in accounting, called activity based costing of individual customers, has led to this important insight. What should a manager do with this insight? The more a firm can flatten this hump, the more it will profit from customers who do not bleed the firm. So the question stands: when should a firm fire a customer? An undeniably strange question, but certain types of customers can prove costly enough that the relationship is worth terminating, as Sprint somewhat infamously demonstrated in 2007. For example, A Netflix customer with a 7.99 plan who turns around as many as 10 DVDs per month; A bank customer who insists on visiting the bank multiple times a month and never uses ATMs or online services; A retail customer who buys numerous items with the intent to return most of them; A business customer who exploits free delivery to order small quantities and minimize inventory costs. There are a variety of solutions available in each case above. Netflix, for example, could slow down its shipment rate; or banks could spend time educating customers about online resources. Generally, firms might raise prices to account for the increased cost of specific customers. But the essential riddle remains whether or not these actions make sense for profitability. To examine these tradeoffs, I worked with my colleagues at the Yale Center for Customer Insights , Jiwoong Shin and Dae-Hee Yoon, to develop an economic model based on game theory that clarified the relationships between a firm and its customers and aided understanding of how to improve profitability by flattening the whale curve. We discovered first that most business-to-consumer markets, like direct marketing and online retail, are structured such that every customer tends to be profitable. There is no need to fire any customers because a firm does not spend differentially to serve them; there are essentially no unprofitably high-maintenance shoppers, except those that have a chronic habit of returning items after trying them out. Zappos is famous for the ease with which it facilitates returns, but can be successful only if most of its customers don’t make a habit of it. But in many business-to-business markets, as well as those business-to-consumer markets that demonstrate differential customer costs (as in the examples above), it makes sense to selectively raise prices for high-cost customers, offer lower prices for low-cost customers, and fire the customers who cost more than they expend. Interestingly, firms can even benefit from selectively firing profitable customers if the cost to serve them is also high. A common fear of winnowing the customer base is that the average cost will rise for the remaining customers because much of the cost of doing business (e.g., the staff, the office, etc.) remains fixed over the short-term. We find that this is an unfounded fear. Rather, as long as new and profitable customers come in to replace the old, firms will not only be able to cover the cost of doing business, but find it more profitable. Our modeling approach shows the usefulness of looking at the whale curve from a dynamic perspective, though traditionally accountants look at this model in static terms. Common practice often strives to expand a consumer base, with the intuitive understanding that more customers equal more profit. Unfortunately, intuitive in this case is not also accurate, and selective customer management can flatten the whale curve over time and increase overall profitability. Not bad when things are lean. It might just be time to hand out a few pink hued receipts.

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You’ve Got… Personal Branding

February 6, 2012

TV Host and business guru Donny Deutsch discusses how individuals brand themselves in the digital age.

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Commentary: Was Chrysler’s Super Bowl Ad Pro-Obama?

February 6, 2012

For the second straight year in the Super Bowl, Chrysler took a big chance, spending millions of dollars to advertise a message that doesn’t have a lot to do with selling cars, but rather an idea, or ideal, and a message about the city of Detroit.

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