opinion

Huffington Post…

“Never prophesy, especially about the future.” That nicely captures the perils of predictions – so nicely, indeed, that the saying or a version of it has been credited to numerous people, from the movie mogul Sam Goldwyn to baseball’s Yogi Berra. But in practice, we do have to prophesy, however imperfectly. Take climate change, an issue that involves assessing what could happen decades ahead, and how to respond to it. Or take defence planning: despite the difficulty of forecasting the nature of future conflicts, decisions have to be taken today that will affect how wars are fought for years to come (the F-13 Joint Strike Fighter, for example, the most expensive defence-industrial project ever, is planned to be a mainstay of American and Western air forces until at least 2060). Similarly long horizons are involved in planning for our energy needs and our pensions. So we need to look at the long term. Where to begin? A good place to start is with population trends – which is why this is the subject of the first of the 20 essays brought together in Megachange: The World in 2050 , a book published by The Economist this month. The world’s population is changing very fast. It took 250,000 years for it to reach 1 billion, around 1800. The latest billion, taking the number of people on the planet to 7 billion, took just a dozen years (a landmark the United Nations said was reached last October). By 2050 the global population will have risen to a little over 9 billion, according to the UN’s central projections. And by then the global population will be older (the median age will rise from 29 to 38) and more urban, with nearly 70% living in cities and towns, compared with just over 50% today. It will also be more African: about half the extra 2.3 billion people on the planet by 2050 will be in Africa. In 1950 Europe accounted for over a fifth of the world’s population, and Africa for a tenth; those proportions are on their way to being reversed. By 2050, there will probably be nearly as many Nigerians (close to 400 million) as Americans. Very broadly, from the point of view of population patterns, the world will fall into three groups between now and 2050. The first consists of younger-than-average countries where the share of the economically active population relative to that of dependent children and elderly will be very favourable. These countries will potentially enjoy a ‘demographic dividend’, if there is enough productive work for their large numbers of working-age people (or they could face instability if jobs are scarce). In this group are India, the Middle East and Africa. In the second category of countries are those where the average age is rising, but not by much, and where the share of the working-age population relative to the young and old is deteriorating, but only modestly. The United States is in this group, as are Latin America and South-East Asia. The third group – and the big losers from the demographic changes in the next four years – includes Europe, Japan and China. Japan will be the oldest society ever known, with as many dependents as people of working age. And China, thanks not least to the legacy of its one-child population, will start to age rapidly. By 2050 its population will be older not only that America’s, but even than Europe’s. China really is in a race to grow rich before it grows old. All this has big consequences: for the economy, business, security, migration, health and the demands on resources, not to mention for culture and social change. It should inform many of the policy decisions taken today. The sooner we start preparing for the coming demographic changes and all that flows from them, the better our long-term prospects will be. Megachange: The World in 2050 is available now.

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Daniel Franklin: Why Now is a Good Time to Be Thinking About 2050

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Huffington Post…

(Carmel Crimmins and Gavin Jones) – Europe’s “no pain no gain” attitude to solving its sovereign crisis risks exacerbating the bloc’s problems, choking off the very growth needed to raise the money to pay down the debt. From Athens to Dublin, and almost everywhere in between, administrations are imposing wave after wave of spending cuts and tax increases to persuade investors they are serious about improving their public finances and persuade them to start buying euro zone sovereign debt again. The austerity zeal risks tipping the continent back into recession and a downward spiral of austerity as pitiful growth prospects undermine budgetary targets and ramp up debt burdens, meaning further austerity is required. “The expansionary fiscal contraction story says that you cut, you show you are serious about cutting and then the confidence fairy will come along and she will start pulling in private investment,” said Stephen Kinsella, professor of economics at the University of Limerick. “The expansionary fiscal contraction story is a lie. You don’t cut your way to growth.” With the crisis spreading like wildfire through the currency bloc’s core, pushing up borrowing costs to unsustainable levels, countries are relying more on blunt budget cuts, than time-consuming and difficult structural reforms, to get results. The upshot is ballooning dole queues, shuttered businesses and public services stretched to breaking point. On the streets of Athens and Dublin poverty has visibly increased with more and more homeless people huddling in doorways. In Spain, emergency wards have been shut and in Italy, retailers are struggling to get by. “Consumption has been falling pretty steadily since the winter of 2008. Normally in a crisis, it starts with menswear and goes to womenswear and children. This time, it’s hit them all at once,” said Attilio Lebole, head of Textura, a mid-range clothing wholesaler based in Florence. “Demand is falling, there’s no doubt about that. Only foreigners are still shopping.” Despite having an estimated budget deficit this year of 3.8 percent of GDP, below the European average of four percent, Italy has been piling on austerity since the summer, destroying its already poor growth prospects and then responding with still more austerity to make up for the weaker growth. Italy’s dismal growth prospects and an inability to pass growth-enhancing reforms have been the key reasons given by ratings agencies for downgrading the country, not deficit slippage. “Italy is paying a very high price for lending credibility to Germany’s push for greater fiscal discipline across the eurozone,” said Nicholas Spiro, head of Spiro Sovereign Strategy. TERRIFIED OF SPENDING In the pre-euro days, currency devaluation was the quick-fire route to getting overblown economies back on track. What’s needed now is “internal devaluation” to get wages and domestic prices down. But if everyone is cutting back where will the demand come from? Global growth was meant to be the secret ingredient that kept the Irish economy ticking over while it slashed household income — down by an estimated 16 percent so far and counting — but the spread of austerity measures across the euro zone has shrunk its growth prospects and forced Dublin to cut even harder. Held up as a role model for other indebted nations, the irony is that Ireland’s recovery story looks set to be tripped up as others follow suit. In Spain, the incoming government is hoping that changes to a labor laws, which would untie wages from inflation, as well as measures to aid new businesses would help spur growth despite painful cutbacks. But analysts are unconvinced and say inevitable austerity measures needed to make tough public deficit targets in 2012 will serve to trim growth even further. A Reuters poll on November 24 showed the economy not growing at all in 2012. Others like savings bank foundation FUNCAS predict the economy will contract 0.5 percent next year as a result of the impending austerity measures. “The deficit objectives are so tough that in the short-term it’s not going to allow the government room to stimulate the economy or create jobs. There is no fiscal margin to do so,” said Angel Laborda, head of research at FUNCAS. Across the euro zone, retailers are bracing themselves for yet another drop in Christmas cheer as sales taxes are hiked in Italy, Greece and Ireland. The Greek Commerce Confederation (ESEE) is predicting a 22 to 30 percent fall in retail sales, with per capita spending seen dropping to 288 euros from 410 last year and 550 euros in 2009. And the New Year isn’t looking much better. Last week’s European summit laid out plans for balanced budgets implying austerity budgets for years ahead for many European states. Hilary Behan has already closed three of her six children’s clothes stores in Ireland, cut her staff from 38 to 20 and asked her store managers to take pay cuts of between 10 and 15 percent. Sales are down by over a third since 2008. “It just keeps getting worse and that’s the worrying thing there is no sign of any recovery. Every time the government get a chance they remove any chance of there being any sort of a recovery,” she said. “It’s not even the amount of money that they are taking from people it’s the constant battering. People are terrified to spend.” (Additional reporting by Giulio Piovaccari in Rome, George Georgiopoulos in Athens and Nigel Davies in Madrid. Editing by Jeremy Gaunt.) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Europe Austerity Ruining Chance Of Recovery

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Fox News: The Muppets Are Communist, Captain Planet Evil

December 5, 2011

It ain’t easy being green, but according to Fox Business, Kermit the frog and his Muppet friends are reds. Last week, on the network’s “Follow the Money” program, host Eric Bolling went McCarthy on the new, Disney-released film, “The Muppets,” insisting that its storyline featuring an evil oil baron made it the latest example of Hollywood’s so-called liberal agenda . Bolling, who took issue with the baron’s name, Tex Richman, was joined by Dan Gainor of the conservative Media Research Center, who was uninhibited with his criticism. “It’s amazing how far the left will go just to manipulate your kids, to convince them, give the anti-corporate message,” he said. “They’ve been doing it for decades. Hollywood, the left, the media, they hate the oil industry,” Gainor continued. “They hate corporate America. And so you’ll see all these movies attacking it, whether it was ‘Cars 2,’ which was another kids’ movie, the George Clooney movie ‘Syriana,’ ‘There Will Be Blood,’ all these movies attacking the oil industry, none of them reminding people what oil means for most people: fuel to light a hospital, heat your home, fuel an ambulance to get you to the hospital if you need that. And they don’t want to tell that story.” Indeed, there was no mention of the benefits of oil drilling in the Muppets, but there was also no discussion of any other aspect of the industry. Richman, played by Chris Cooper, was out to destroy the Muppets theater. Kermit and his friends, then, were not committed environmentalists (though one must imagine the frog is concerned with his swampy homeland) but simply puppets looking to save a place they once loved. Still, Gainor blamed the film, and its predecessors, for Occupy Wall Street and the environmental movement. “This is what they’re teaching our kids. You wonder why we’ve got a bunch of Occupy Wall Street people walking around all around the country, they’ve been indoctrinated, literally, for years by this kind of stuff,” Gainor said. “Whether it was ‘Captain Planet’ or Nickelodeon’s ‘Big Green Help,’ or ‘The Day After Tomorrow,’ the Al Gore-influenced movie, all of that is what they’re teaching, is that corporations is bad, the oil industry is bad, and ultimately what they’re telling kids is what they told you in the movie ‘The Matrix’: that mankind is a virus on poor old mother Earth.” The Teletubies were unavailable for comment. Mahna-Mahna.

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Citigroup Settlement Tossed: Judge Tells SEC To Get It Together

November 28, 2011

In a potentially precedent setting ruling on Monday, a federal judge in New York tossed out a settlement between the Securities and Exchange Commission and Citigroup, effectively telling the SEC — which is responsible for protecting investors and maintaining fair, orderly markets — that it isn’t going far enough in holding financial institutions accountable for their wrongdoings. The SEC accused Citigroup of selling investors mortgage-backed bonds that the bank knew would lose value. Citi netted roughly $160 million in profits from the sale of these bonds while investors lost more than $700 million. Under the proposed settlement with the SEC, the bank would have had to pay $285 million in penalties and fees, but would not have had to admit to any wrongdoing, according to the court decision. The lack of admission was the main reason Jed S. Rakoff, a Clinton-appointed U.S. district judge, said he decided to throw out the settlement. An admission of guilt or innocence is a matter of significant public interest, he said. “The court, and the public, need some knowledge of what the underlying facts are,” wrote Rakoff. “For otherwise, the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is prevented from ever knowing the truth in a matter of obvious importance.” In wording that sounds like it was written for those Occupy Wall Street protesters decrying the nation’s big banks and their outsized influenced, Rakoff wrote: “In any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. … The SEC, of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not.” The ruling “is precedent setting,” said a prominent securities lawyer who has represented investors in class-actions suits against financial institutions and is familiar with the decision. The SEC often settles with large financial institutions without requiring an admission of guilt. And it’s extremely rare for a judge to throw out a settlement — though Judge Rakoff did once previously, in 2009, when he ruled that Bank of America and Merrill Lynch had “effectively lied to their shareholders” when the two firms paid out $3.6 billion in executive bonuses shortly before the bank acquired Merrill and after the bank had accepted billions of dollars in federal bailout funds. “The way the SEC has always proceeded is a slap on the wrist and a cost of doing business, and all these big banks know it,” the securities lawyer said. “If they get in trouble with the SEC, they know they can buy their way out of it without admitting anything. Ninety-nine out of 100 judges go along with it because it is the machine that greases the wheels.” The stakes are high for Citi. If they admit wrongdoing, that would likely be used against them in many more suits. The bank’s potential exposure is enormous. Both the SEC and Citigroup said Monday that they disagree with the ruling. Robert Khuzami, the director of the SEC’s Division of Enforcement, said in a settlement “reasonably reflects the scope of relief that would be obtained after a successful trial,” according to the Wall Street Journal . Rakoff has in the past upheld SEC settlements that avoided an admission of guilt, including the well-publicized 2010 settlement between the SEC and Goldman Sachs in which the investment bank was accused of failing to disclose another hedge fund’s involvement in its operations, a “similar but arguably less egregious” situation, in Rakoff’s words, than the one Citigroup is accused of by the SEC. Rakoff has ordered both parties to prepare to go to court in July 2012. Though an appeal is possible, it appears unlikely, the securities lawyer said.

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Super Fail Complicates Election Year Battle Lines

November 24, 2011

WASHINGTON — The failure of Congress’ deficit-reduction supercommittee adds a new dimension to the 2012 political contests, drawing political battle lines around broad tax increases and massive spending cuts that now are scheduled to begin automatically in 2013. President Barack Obama and his Republican challenger will be forced to debate alternatives for reducing deficits, made all the more urgent by the looming consequences of congressional inaction. The dividing lines already are sharply drawn, with Obama supporting deficit reduction that includes a mix of spending cuts and tax increases on the wealthy, while Republicans have declared themselves averse to tax hikes. An election that has been shaping up as a referendum on Obama’s stewardship of the economy now will require the candidates to offer competing forward-looking deficit-reduction plans to avoid cuts and tax hikes that neither side wants to see materialize. For Obama, that is a more favorable place to be, drawing contrasts with his opponent and arguing for higher taxes on the rich rather than defending his oversight of an economy that could still be suffering from high unemployment and slow growth next November. Beginning in 2013, the federal government faces two oncoming trains. When the supercommittee was unable to find agreement by Wednesday, it triggered spending cuts of $1.2 trillion starting in January 2013 and extending over 10 years. Half of the cuts would come from defense spending, the other from education, agriculture and environmental programs, and, to a lesser extent, Medicare. At the same time, tax cuts adopted during the presidency of George W. Bush will expire at the end of 2012, meaning an increase for every taxpayer. Defense Secretary Leon Panetta has said the cuts would “tear a seam in the nation’s defense.” Meanwhile, the tax increases would hit a still-fragile economy, endangering a recovery and raising prospects of another recession. But while neither side wants those outcomes, Washington’s recent history of tackling fiscal problems shows Congress does not act unless faced with a dire deadline. It extended Bush-era tax cuts in 2010 just days before they expired, it avoided a government shutdown by hours and it put off a debt crisis this summer in the face of a government default. “The next big event, barring some movement from Congress, may just well be the 2012 election,” said Kevin Madden, a former senior House leadership aide and an outside adviser to Republican Mitt Romney’s presidential campaign. “Then we look to either a new president and a new Congress, or the same president and the same Congress to restart it all.” Election years do not lend themselves to big legislative initiatives. Lawmakers are too busy seeking re-election to take potentially controversial stances that could cost them votes. Moreover, congressional leaders may well want to see how the elections affect Washington’s balance of power before undertaking changes that require compromises. An angry public could demand swift action. But even if Congress were to attempt to find common ground next year, the legislative maneuvering would unfold in the midst of the presidential contest, and White House aides acknowledge that it can’t avoid becoming a part of the political debate. They repeatedly point out that each of the eight Republican candidates have refused to endorse any deficit-reduction plan that contains any tax increases and that they reiterated that position en masse during a recent presidential debate. “The very men and woman who would occupy the Oval Office stood up on a stage and all raised their hand and said they would not accept a deal that had as its foundation $10 in spending cuts for every $1 in revenue,” White House spokesman Jay Carney said this week. While Republicans have criticized Obama for not engaging directly in the supercommittee negotiations, his hands-off approach was calculated, coming in the aftermath of his own failed attempts to strike a deficit deal with House Speaker John Boehner, R-Ohio. In a gridlocked Congress, Obama is more likely to lose if he gets deeply involved. The detachment allows him to set a clear dividing line for voters, one in which he can cast Republicans as protecting the rich. It’s a stance that for now has political appeal. A number of recent public opinion polls show that up to two-thirds of Americans support raising taxes on individuals earning more than $1 million, and about half favor raising taxes on families earning at least $250,000 a year. Even if some Republicans were disposed to negotiate a new deficit-reduction plan, Obama’s sharpening of the lines between the parties could drive them away. “If the president has decided that he is now in full campaign mode, that’s going to make things very difficult in terms of finding common ground,” said David Winston, a GOP strategist who advises House Republican leaders. Eager to maintain pressure on Congress, Obama this week issued a veto threat against any efforts to change the automatic spending cuts triggered by the supercommittee’s inaction. Aides said Obama did not prefer those cuts, but he made it clear that the threat of such cuts was essential to get Congress to act. “There will be no easy off-ramps on this one,” Obama said Monday. “We need to keep the pressure up to compromise, not turn off the pressure. The only way these spending cuts will not take place is if Congress gets back to work and agrees on a balanced plan to reduce the deficit by at least $1.2 trillion.” Republicans pounced on the veto threat, portraying Obama as indifferent to deep Pentagon reductions. Republican presidential candidate Rick Perry, the governor of Texas, said he found the veto threat “reprehensible.” He added: “If Leon Panetta is an honorable man, he should resign in protest.” But Democrats, and Obama in particular, don’t feel as vulnerable on defense as the party once was. Aides point to foreign policy advances, the killing of Osama bin Laden and other al-Qaida leaders, and the drawdown of forces from Iraq and Afghanistan as evidence that Obama has credibility on military issues. But Carney this week also said that if critics worry about maintaining defense spending levels, “There is an easy way out here, which is be willing to ask the wealthiest Americans to pay a little bit more in order to achieve this comprehensive and balanced deficit-reduction plan.”

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FIRST LISTEN: San Francisco’s Most Famous Rockers Pen Occupy Wall Street Anthem

November 17, 2011

Never one to step back from the ledge separating music and politics, Third Eye Blind frontman Stephan Jenkins has penned an ode to the Occupy Wall Street movement. Entitled “If There Ever Was A Time,” the San Francisco alt-rock mainstay’s newly released protest song kicks off with a bang–an audio clip taken from the gristly aftermath of a police-lobbed tear gas canister fracturing the skull of Iraq War veteran Scott Olsen at an infamous Occupy Oakland protest. (SCROLL DOWN FOR VIDEO) From there, the U.C. Berkeley valedictorian ( really ) says Zuccotti Park is everywhere and calls on the youth of America to take to the streets–all done in Third Eye Blind’s trademark glossy post-grunge style. The track can be streamed or downloaded on the band’s Facebook page . “I think college students are going to come to terms with the unfairness of student loans, the hallowing out of jobs from finance based capitalism, and the depletion of public wealth,” said Jenkins in a post on Third Eye Blind’s website . “When you take money out of politics, which is what Occupy Wall Street is about for me, you reverse these trends. This song is meant to encourage their participation. I hope we flood this movement with music.” Jenkins has long been outspoken politically and often embedded political messages in his songs. In a tongue-in-cheek blog post on Huffington Post San Francisco earlier this year, he advocated for Oracle billionaire Larry Ellsion to become the next Republican nominee for president. Here are the lyrics: if there ever was a time, it would be now is all I’m saying if there ever was a time to get on your feet and take it to the street cause you’re the one who’s getting played right now by the game they’re playing come on meet me down at Zuccotti park oh where are the youth, we need you now come speak the truth, come break it down where are the youth, we need you now if there ever was a time, it would be now to make the masters hear this if there ever was a time to get downtown and get non violent and fearless things only get brighter when you light a spark everywhere you go right now is Zuccotti park and news corps says you don’t have a plan well sit down man, i’ll tell you again the plan’s to stand together up to greed and a tear gas can in a veteran’s face won’t change the case (chorus) if there ever was a time, it would be now for the rest of us if there ever was a time it would be now cause money and power are incestuous a moment makes a movement or it fades out in the dark come on meet me down at Zuccotti park and i saw a sign in the oakland spring it said “occupy everything!” or by and for and off won’t mean a thing Listen to the track: Check out this video of Jenkins discussing the politics behind Third Eye Blind:

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Ted Kaufman: The Emperor Has No Clothes

November 3, 2011

Much of the recent media coverage and Internet chatter about financial industry reform has focused on the Occupy Wall Street movement. If we ever end up with the kind of reforms needed, that movement would certainly deserve some of the credit. If we look back on the Fall of 2011 a few years from now, however, I suspect we may trace the beginnings of real reform from two events that occurred last week with little fanfare. The first of the two events was when Federal District Court Judge Jed S. Rakoff refused to approve a settlement with Citigroup that the S.E.C. had proposed. The second was the lawsuit filed by Delaware Attorney General Beau Biden in the Delaware Court of Chancery accusing the Mortgage Electronic Registration System (MERS) of deceptive trade practices. (Full disclosure: I have been a friend of Beau’s his entire life.) Together, these two initiatives do the equivalent of exposing that the emperor has no clothes. Judge Rakoff had earlier refused to approve an S.E.C.-endorsed settlement of $33 million with Bank of America. When he finally did approve a $150 million settlement, he described even that as ” inadequate .” Last week, he dropped a second shoe on the major banks. Refusing to approve the S.E.C.’s $285 million settlement with Citigroup, which was accused of fraud in the sale to investors of $1 billion of Collateralized Debt Obligations, Judge Rakoff demanded that, before any settlement was approved, the S.E.C. first answer a number of questions. They are great, commonsense questions — exactly the ones that should have been asked in a whole strong of prior big bank settlements. Among them : • Why should the Court impose a judgment in a case in which the S.E.C. alleges serious securities fraud, but the defendant neither admits nor denies wrongdoing? • Why is the penalty in this case to be paid in large part by Citigroup and its shareholders rather than by the ‘culpable individual offenders acting for the corporation? … If the SEC was for the most part unable to identify such alleged offenders, why was this? • What specific ‘control weaknesses’ led to the acts alleged in the Complaint?… How will the proposed ‘remedial undertakings’ ensure that those acts do not occur again? • How can a securities fraud of this nature and magnitude be the result simply of negligence? Do you think for a moment that the average target of an investigation would get a deal that did not include answers to these questions? Stay tuned. Merscorp was founded in 1995 and is owned by the major financial institutions involved in the mortgage market, including Citigroup, Chase, Bank of America, Wells Fargo, FNMA, FMAC and others. MERS tracks mortgages and was established to reduce the charges of recording home ownership in local communities, thus making the widespread securitization of residential mortgages possible. AG Biden’s suit is the result of concerns he and New York AG Eric Schneiderman have expressed for some time about the potential settlement between the banks and the 50 State AGs. Those settlement talks began after the exposure of widespread problems with MERS and the banks’ foreclosure procedures, including the practice of filing affidavits in court in which the lenders’ employees claimed they had personal knowledge when they did not. Many documents had been “robo signed” or signed without being read. Essential documents were lost or destroyed. Files simply disappeared. Evidence of falsified documents is widespread. A lot of the AGs seem to be willing to impose some monetary penalties on the banks and reach a settlement without any more investigation. That settlement would allow the banks to move on without any admission of guilt or wrongdoing. Biden, Schneiderman and a few other AGs see it differently. They have been insisting on further investigations before any settlement is reached. The charges in Biden’s suit against MERS include a series of allegations based on his investigations to date. Among them : • Hiding the true mortgage owner and removing that information from the public land records. • Creating a systemically important, yet inherently unreliable, database that created
 confusion and inappropriate assignments and foreclosures of mortgages. • Failing to ensure the proper transfer of mortgage loan documentation to the securitization
 trusts, which may have resulted in the failure of securitizations to own the loans upon which
 they claimed to foreclose. (This is called “securities fail” and is the theory that allows put backs that crush the bank/originators.) • Initiating foreclosures in the name of MERS without authority to do so or without appropriate
controls to ensure the actions were being carried out by the actual owner of the mortgage. • Allowing the entry and management of data by those MERS members who are identified as 
owners or servicers in the MERS System, instead of controlling entry and management itself. • Initiating foreclosure actions in which the real party in interest was hidden, thus preventing
homeowners from ascertaining who owned their mortgage in order to challenge whether or not 
they had a right to foreclose and limiting their legal defenses. Again, stay tuned. Together, Judge Rakoff and Attorney General Biden are finally demanding much of the information we need to truly reform Wall Street.

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White House Moves Plan To Ax Hundreds Of Regulations

August 23, 2011

VINEYARD HAVEN, Mass. — The White House is revealing plans to save businesses $10 billion by scrapping hundreds of government regulations found to be outdated, unfair or unnecessary. Administration officials say the savings will be realized over a five-year period. The plan was described Tuesday by Cass Sunstein, administrator of the White House Office of Information and Regulatory Affairs, in a column in the Wall Street Journal in advance of a formal announcement as President Barack Obama vacations at Martha’s Vineyard, Mass. After last year’s election setback, Obama launched a concerted outreach to the business community, vowing to scrutinize federal regulations that companies consider to be an excessive burden. He at the time his goal was to scrap “dumb” rules without weakening ones that are needed to protect consumers and the environment.

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Worst Stock Market Crashes Since The Great Depression

August 14, 2011

When 24/7 Wall St. compared each period of market downturn with national unemployment, gross domestic product and the consumer price index, we indeed found that seven of the eight largest bear markets matched the start of recessions, periods of high unemployment, or sharp inflation.

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JPMorgan CEO: S&P Downgrade ‘Just An Opinion’

August 10, 2011

Amidst downgrades, debt crises and declining stocks, one of Wall Street’s biggest names is keeping it cool. On Wednesday, Jamie Dimon, CEO of JPMorgan Chase, told CNBC Tuesday that despite the current state of the economy, it’s been “business as usual” at JPMorgan. And while Standard and Poor’s credit downgrade of the U.S. cause an onslaught of emotional reactions , and preceded the sixth-worst point loss in Dow Jones history, Dimon isn’t so concerned. He says S&P ratings don’t carry quite the weight that many assume. “I think people have their right to their opinions and S&P is just an opinion,” Dimon said, referring to the downgrade. “Most people I speak to in the marketplace, the big participants, they don’t rely on S&P ratings.” As for the European debt crisis, Dimon gave no indication JPMorgan would be running for the hills. “We have manageable exposure to all of the [European] banks,” he said. “We won’t cut and run.” To Dimon, the show must go on, despite the recently winding ways of the market. “Markets are volatile, probably for pretty good reasons,” Dimon explained. “[There's] a lot of uncertainty in the world out there, but we will still open branchs tomorrow and hire bankers tomorrow and create clients tomorrow.” Watch Jamie Dimon’s appearance on CNBC here:

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This Year’s Kings Of Corporate Layoffs

August 10, 2011

From 24/7 Wall St. : Financial markets have been reeling as investors grow more concerned about the economy: An S&P downgrade of the full faith and credit of the United States, dismal GDP data, and ongoing weak employment data trends are just some of the issues contributing to the recent turmoil. What has so far received very little attention in 2011 are the incidents of corporate layoff announcements, especially this summer. The announcements are almost always tied to restructuring of companies, but you can’t have that many big companies simultaneously hiding behind this excuse. What is obvious as a sore thumb is that the weak economy is continuing to hurt business fundamentals, forcing companies to pare down their head counts. Economists also know that there is a difference between furloughs and layoffs. Layoffs generally imply that businesses are anticipating a longer period of slowness. When you see this many layoffs at this many companies at once, the obvious answer is that a system wide weakness is not just present — it is building. This trend comes at a time when corporate balance sheets are stronger than ever, with many buying back stock and increasing dividends. Interest rates are close to record lows again. The gridlock over the debt ceiling and budget deficits further motivated companies to sit back and not hire. The growing sense is that the new round of layoffs at the major companies may be followed by more layoffs at rival companies. How long can that last if the economy keeps sliding? From Borders to Research In Motion, to Cisco, pharmaceutical companies, banks, and Wall Street firms — all are getting pushed out the door. Meanwhile, economic indicators are getting worse rather than better. If the numbers get any softer, don’t be surprised by more layoff announcements. At a minimum, this will keep the larger corporate employers from having to make new hires. Read more at 24/7 Wall St. Here are the layoff kings of 2011 by number of layoffs according to 24/7 Wall St :

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David Isenberg: Trust But, Incompetently, Verify

July 28, 2011

In August 2009, the Pentagon awarded five Theater-wide Internal Security Services (TWISS) contracts for site security in Iraq. These contracts, awarded to EOD Technology, Inc.; Torres Advanced Enterprise Solutions, LLC; Special Operations Consulting-Security Management Group; Triple Canopy, Inc.; and Protection Strategies Inc., have a combined value of $485 million. U.S base commanders nominate contracting officer’s representatives (CORs), who are responsible for verifying the U.S. government receives what it pays for. The Defense Contract Management Agency (DCMA) appoints and trains CORs and manages their activities. DCMA uses Quality Assurance Representatives (QARs) to monitor the CORs’ and contractors’ performance. Yet although COR duties are critical to the U.S. government’s oversight of the TWISS contracts, almost 40% of the CORs it surveyed said the training they received did not prepare them for their duties and 25% said they lack sufficient time to conduct effective oversight, according to an audit report ” Control Weaknesses Remain in Oversight of Theater-wide Internal Security Services Contracts ,” released today by the Office of the Special Inspector General For Iraq Reconstruction (SIGIR). Why is this important? Without adequate training, CORs may not be conducting sufficient oversight of the TWISS contractors’ services and invoice payments. This training is particularly important since 24 of 28 CORs we surveyed stated they had no previous COR experience. Considering that as of June 9, 2011, more than half the total value of these TWISS contacts, about $258 million had been disbursed under the contracts this is, to put it mildly, not good news. This is similar to what SIGIR found the last time it looked at the TWISS contracts in 2009. After that report, DCMA increased training requirements but recognized in an April 2011 internal review that not all training was being conducted and documented. To get a sense of how nothing has changed note that in April 2009, SIGIR reported that 11 of 27 CORs surveyed stated their COR training did not fully prepare them to oversee the TWISS contractors. In the new audit 11 of 28 CORs SIGIR surveyed stated their training did not prepare them to perform COR duties on the TWISS contracts. SIGIR also found that CORs are not completing, or DCMA is not maintaining, all monthly review checklists, which DCMA developed to help CORs review contractor compliance with task order requirements. Even when completed, SIGIR noted most reviews appeared to be of questionable value or provided little assurance that CORs’ oversight was adequate, a fact DCMA officials acknowledge. As irony goes, this is hard to beat. In plain English it means DCMA, the agency which is charged with providing proper oversight on military contracts, is itself guilty of not providing proper guidance to its own employees, thus impeding them from doing an effective job. Furthermore, even if DCMA did provide proper guidance some of the CORs are not particularly good at their jobs. According to DCMA officials, some TWISS CORs provide excellent oversight and others provide weak oversight. To verify this statement, SIGIR examined the 81 COR Performance Work Statement reviews available from February through April 2011. SIGIR’s examination noted that five appeared comprehensive in nature, 21 appeared adequate, and the remaining 55 appeared of questionable value.12 In the auditors’ judgment, reviews of “questionable value” provided no reasonable assurance the COR’s oversight was sufficient to guarantee the U.S. government received all services for which it paid.

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Debt Talks Break Up After 50 Minutes

July 23, 2011

WASHINGTON — A tense White House meeting on the expiring debt limit broke up after less than an hour today, with the president and leaders of Congress agreeing only that it was urgent to find a path forward this weekend, a source familiar with the meeting said. Staffers were set to work through the weekend, in hopes of crafting a compromise that could avert the United States beginning to default on its debt starting Aug. 2. Senate Minority Leader Mitch McConnell (R-Ky.) said in a statement soon after the session that Obama wanted assurances that Congress would not let the nation become delinquent. “The president wanted to know that there was a plan for preventing national default,” McConnell said. “The bipartisan leadership in Congress is committed to working on new legislation that will prevent default while substantially reducing Washington spending.” The remarks hinted that leaders may be narrowing in on the plan McConnell and Senate Majority Leader Harry Reid (D-Nev.) had been working on, which would hand authority to the president to raise the debt ceiling in three stages, paired with spending cuts totaling about $1.5 trillion. One obstacle to following that path is the president’s desire for a larger package — a so-called grand bargain — that would at least last through the election season. Another is that many House Republicans do not like the McConnell plan. Obama might have to back down, and enough Tea Party Republicans would have to conclude that default is worse than a smaller, though still large, cut. The print pool report from the start of Saturday’s meeting suggested it began extremely tense, but TV reporters who lingered just a little longer said President Obama broke the ice with a joke about golf . “I think everybody agrees it’s too hot to play golf today,” Obama told House Speaker John Boehner (R-Ohio), referring to their recent golf summit, which also did not lead to a breakthrough on debt negotiations.

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

July 15, 2011

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

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Douglas LaBier: Deal with Abusive Bosses and Unhealthy Management Through ‘Engaged Indifference’

July 11, 2011

In my previous post I described how abusive bosses and psychologically unhealthy management harm both employees and business success, and I explained that such behavior in the workplace is increasingly dysfunctional in today’s highly interconnected, interdependent economic and social environment . This follow-up piece offers some suggestions for dealing with such situations when you find yourself within them. Many people struggle to find ways to better cope when subjected to unhealthy, abusive management. Often that means learning stress management techniques . They can be helpful, especially when you don’t think any alternatives exist. But ultimately, they aren’t enough. However, reframing how you envision your situation to begin with can open the door to proactive, positive actions in the situation you feel trapped in. Cathy’s example contains some ways you can do that. She was at mid-level in her company and had a record of steady promotion. At one point, senior leadership in her area changed abruptly, and she was now reporting to a newly appointed boss. “I’m here to shake things up,” he told everyone when he took over. “Everyone’s job is on the line.” Cathy’s assessment of her new boss was that he didn’t really know her area of expertise, nor was he very interested in learning about it. Nevertheless, he freely criticized her work. Moreover, he kept sitting on a promotion that she had been in line for. It wasn’t just her: Her boss stirred up much resentment among others because of his arrogant, controlling, dismissive style. When Cathy researched something he had requested and presented it to him, he exploded, saying that she had wasted her time doing something that had “no relevance.” When she pointed out that he had requested the analysis to begin with, he denied it. But Cathy didn’t just hunker down, become stressed and depressed, or feel disempowered. First, she used a meditative technique to focus her attention on just observing the negative emotions her boss’ behavior aroused in her. That is, she practiced “watching” her emotions as they passed through her. This helped her refrain from being pulled by angry emotions into greater, more debilitating depths, or into unproductive behavior. Doing that enabled her, in turn, to step “outside” herself (that is, outside the narrow vantage point of her own ego). She looked at herself as if she were a character in a movie. She imagined rewriting the dialogue and actions of the character that was herself, and she envisioned how this “character” might create a different scenario. This is a form of what I called learning to “forget yourself” in a previous post (that is, moving beyond and through your immediate self-interest to see yourself in a larger context). Cathy’s enlarged perspective enabled her to accept that her boss was simply acting in accordance with the person he was, regardless of the reasons or how she judged them. Doing that helped prevent her from being drawn into taking his behavior personally, even though it impacted her personally. She rose “above” her situations with, in effect, “engaged indifference.” That is, she remained “indifferent” to her own emotional reactions, yet she stayed very engaged in looking for solutions from within her broadened perspective. She considered the possible viewpoints and agenda of her boss, from within his possible mindset. That added to her capacity to figure out what might be going on — and what might help. For example, she thought about what might be some drivers of her boss’ behavior. Was he simply a jerk? An unskilled manager? Did he have an agenda that she didn’t understand? Was he dealing with some insecurities of his own? Personal issues at home? She did a little sleuthing and learned that her new boss had been brought in under a lot of pressure to create some major changes in that part of the organization. Moreover, she learned that he had a troubled teenager at home. Knowing these things didn’t change her opinion about his behavior, but it helped her realize that it would be useful to both of them if he didn’t think of her as a thorn in his side. And it was up to her to try to make that happen. In essence, she saw the whole picture as a set of circumstances that created a “perfect storm” for her, and that called for an effective solution, from her. So, when her boss criticized a report she had prepared — on the grounds that it didn’t include something that he had previously told her to ignore, but which he now claimed he needed and had told her so — she anticipated that. Rather than reacting with anger, defensiveness or frustration, she simply said she would provide it immediately and asked how she could best help him with anything else that he needed at this point. Now this may sound counterintuitive, or that it’s “giving in” to a tyrant. But from an enlarged perspective of indifference and engagement, it’s not. That’s because you’re taking into account the emotional drivers and needs of the difficult person you’re dealing with. And you can’t do that if you’re driven solely by your own. By stepping “outside” herself, Cathy saw some ways to provide her boss the support he need to feel, which, in turn, could help calm his anxieties. She asked him for ways that she could aid his objectives. At the same time, she decided to cede control of some areas that didn’t matter to her, but which her boss seemed to enjoy micromanaging. Cathy felt secure in the knowledge that her expertise wasn’t diminished by her boss’ agenda or his actions. But there was one more important step that she took: looking down the road, Cathy concluded that her future under him was probably a dead end for the foreseeable future. So she immediately updated her resume and began looking for a new position. She kept her eyes on her own career development objectives, while at the same time navigating through her situation with as little friction as possible. Learn To ‘Enlarge The Problem’ President Eisenhower once said , when speaking about his experience as Allied commander during World War II, that if you have difficulty understanding a problem or figuring out how to solve it, “enlarge the problem.” That’s what Cathy did. Her example provides some general guidelines that can help, at least in some situations. They include: Create an emotional buffer zone. Observe your internal emotional responses to your situation, but recognize that you’re not obligated to act on them. Visualize a “space” between your emotions and how you choose to deal with them in your behavior. If you don’t, you’re likely to say or do something unhelpful or damaging to yourself. That is, stay fully aware of your buttons that your boss is pushing, but separate that from simply reacting to what he’s triggered, or from taking his behavior personally. Don’t get drawn into reacting to your boss’ emotional issues. Recognize that you always have a choice about what you do with your emotions in your conduct. Expand your perspective. By not reacting externally to your internal reactions, you are, in effect, learning to be “indifferent” to them. This allows you to enlarge your perspective about the whole situation: what’s feeding into it, and what’s driving your boss’ conduct. When you expand your vision beyond your personal, narrow vantage point, you can see the problem in a much larger context. That includes the multiple factors that feed into it, such as the role of other players or other organizational issues and politics, regardless of what your opinion is about them. This includes getting inside your boss’ mental perspective to understand what he or she may be sensitive to or reacting to. For example, some of your boss’ controlling or abusive behavior may reflect fear about her or his own security in the position. Create productive actions with “engaged indifference.” That means staying proactively engaged with solving the problem, yet “indifferent” to your own emotional reactions. Then, you avoid getting sucked into unproductive behavior fueled by anger, resentment or self-pity, or staying fixed within too narrow an understanding of the problem, which leads to a dead end. Ask yourself what you can do proactively, even if it means “feeding the dog what it wants to eat,” regardless of your opinion of your boss’ choice of “food.” Visualize alternative takes of the “movie” about your situation, as Cathy did. Use them to identify some new actions that reflect “turns of the plot.” You might decide to go along with some parts of your situation, because your enlarged perspective enables you to see down the road, as you might from the rooftop of a building. You may decide that that’s the best strategy for achieving your longer-range objectives. That might sound like “giving in,” but it’s not when you know what you’re doing and why. For example, you might look for ways to help your boss feel more secure or supported, despite what you think of him or her, because that diminishes your boss’ anxiety and will therefore make your life a bit easier, as long as you remain there. Of course, it’s important to self-examine at the outset, when you find yourself in a bad situation. Look honestly, with outside help, if necessary, at what you might be contributing to the problem. Ask yourself, “How much is it me or the situation?” Without doing that, you might take actions that you later regret or that prove to be unhelpful. Finally, it’s crucial to leave any situation that becomes outright abusive, or if you’re subjected to humiliation and extreme denigration. And then, do the research when considering a new job: look for signs of a potentially negative situation, tune in to what you hear during interviews, ask people within the organization what it’s like to work for that company or that boss, heed any red flags raised by what you hear, and don’t enable history to repeat itself. Douglas LaBier, Ph.D., a business psychologist and psychotherapist, is Director of the Center for Progressive Development in Washington, D.C. You may contact him at dlabier@CenterProgressive.org .

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Commercial real estate notes

June 17, 2011

Cassidy Turley represented parties in these transactions:

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David Kirkpatrick: Why Loyal3 May Point the Way to a Successful Facebook IPO, And More

June 3, 2011

One of the most interesting companies I’ve seen in a long time launched on Thursday. Loyal3′s business is to enable companies to sell their own shares to customers, through something called a Customer Stock Ownership Plan (CSOP). This is an emblematic company for the new era of individual empowerment. And it could also help answer the question, which many are asking, of how Facebook — the social phenomenon most reinforcing that empowerment of people — might both go public and retain its independence and innovativeness, without being crushed by Wall Street’s shortsighted pursuit of quarterly profit. There’s a fundamental injustice at the heart of modern consumerism — the individual does not share in the value created by his or her buying behavior. Remember that quaint early 20th-century notion about the workers (read:consumers) owning the means of production? Maybe it wasn’t so irrelevant after all. So now we have a company that subtly undermines the conventional notion of what a “company” is. For details about how Loyal3 will operate and actually sell the stock read these articles at the New York Times , the Wall Street Journal , and Forbes . Customers will be able to buy fractions of shares with investments of as little as $10, paying no fees to buy or to sell (the company in which they are investing will pay Loyal3). Key to Loyal3′s approach is sophisticated technology and newly-redefined SEC regulations to make the process of purchasing simple. Much of the buying will occur on Facebook itself. “As easy as buying a book on Amazon,” as Loyal3′s CEO Barry Schneider likes to say. (I spoke with him and other executives before the company’s launch.) Loyal3′s pitch to companies is in my opinion insufficiently imaginative: owners, even those who own a tiny amount, feel proprietary about their investments and serve as advocates and loyal repeat customers. Therefore if you turn your customers into shareholders they will become even better customers. That owners are loyalists has been buttressed by many studies of consumer behavior. “Customers care more about things they own than things they don’t,” says Schneider. However I see a more profound harmony emerging here. In the world of Facebook-mediated Internet behavior, companies already seek to increase the bandwidth of their communication with customers for more effective marketing. But the transformative power of the two-way pipeline that social media and Facebook create between companies and customers demands more than merely more effective “marketing.” The real business opportunity presented by social media is to use that pipeline to make improved products. If you have better communication with customers why not let them help refine and iterate what you actually sell? (This, by the way, is implicit in the way Facebook or Google themselves already operate — by constantly studying data they obsessively collect about users, they refine their products in real-time and correct mistakes quickly.) Says Chris Kelly, a Loyal3 investor and board member: “This allows incentives for customers and companies to become better aligned. Customers should get better products and companies should get better information.” So we are entering the age of co-creation. The companies that succeed will be those that recognize the power of customers. Rather than fight it, they will utilize it. And if customers are helping you design and build what you sell them, then why shouldn’t they be owners themselves? It nicely completes the circle. Loyal3′s own first customer is the NASDAQ stock market. The exchange, itself a company, will shortly begin selling its own shares using Loyal3′s system. But more importantly, it will also promote Loyal3 to its 3,500 member companies. Today only 18.5% of Americans own stock at all. This could help broaden participation in the stock market, increase individual savings, and maybe even increase popular understanding of the importance of business in society. After all, one of the most toxic facts in the modern economy is the fundamental suspicion ordinary people have of business and companies, even as business is how most value is created in society. But if so many people dislike companies why would they want to buy stock in the first place, you might ask. Perhaps they wouldn’t have to. Frontier Communications of Stamford, Connecticut, a regional phone company, plans this year to work with Loyal3 to start simply giving away stock to good customers. CEO Maggie Wilderotter says in an email that customers will ” ‘earn’ shares based on dollars spent with Frontier and years of service… We want to see if that ownership changes customer longevity and loyalty.” Frontier’s focus groups so far indicate customers like the idea. Loyal3′s Schneider says many consumer-products companies are similarly considering small-scale share giveaways where they might have in the past offered discounts. In addition, some companies are thinking of encouraging customers to purchase stock by offering special incentives and upgrades if they become shareholders. Another reason I like this approach for our obsessively consumerist society — it turns investing into consumerism. But what about that point about Facebook retaining independence after an IPO? As a student of the company, I am convinced a 2012 IPO is now inevitable, but that nonetheless Zuckerberg is resolute not to be swayed by Wall Street’s short-term financial thinking. How better to insure Facebook remain focused on the best interests of its users — which Zuckerberg incessantly says is how he wants the company to function — than for Facebook itself to be substantially owned by them? A system like Loyal3′s could be a way to literally capitalize on the extraordinary passion many have for Facebook. Loyal3′s research on the behavior of customer-shareholders shows they tend to hold the stock rather than trade it frequently. So Facebook could get stability and a group of investors who share the long-term view — or who would at least only revolt if it was the product that was faulty, not short-term financial results. Isn’t it provocative that Chris Kelly, the Loyal3 investor and board member, was for years Facebook’s head of policy and chief privacy officer? This post was originally published here .

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Sramana Mitra: Twitter, LinkedIn: Why Not Affiliates?

May 27, 2011

During today’s roundtable, I opened with a question that was going to be a key topic of discussion at the end of the show: Why do large sites like Twitter, LinkedIn, Facebook, etc. make so little use of the affiliate business model for monetization purposes? This is a question I would like to address to you guys as well. Please use the comments below to give your thoughts and analyses on why you think Twitter is not using the affiliate business model to monetize its immense traffic. The same question applies to many large sites that prefer CPM-based display ads to affiliate deals, and my hypothesis is if they used affiliate-based monetization more aggressively, they would be making a lot more money. For related material, please read my recent post Making Money With Blogs . It would give you some concrete details to tackle this somewhat hairy strategy question that I believe the CEOs of Twitter, LinkedIn, TechCrunch and others need to consider. Got Produce? As for the presenters, first up, Deborah Walliser from Redding, California, presented Got Produce? . This is a greenhouse technology to grow fresh agricultural produce. Deborah has interest from Whole Foods and some other grocery stores to build such greenhouses near their distribution centers. She, however, has framed the business model as a franchise, whereas in my opinion, this is a technology licensing and services business. I have advised her to course-correct and validate with the potential customers how much they are willing to pay and in what framework. Priyanka Bhatnagar Jewellery & Accessories Next, Priyanka Bhatnagar from Pune, India, pitched Priyanka Bhatnagar Jewellery & Accessories , an e-commerce jewelry line. Priyanka needs to learn a lot about how to position an e-commerce business in a hyper-crowded jewelry market. The only way I can really help her is by putting her through 1M/1M premium, because it is impossible for me to give her a crash course on e-commerce in three minutes. Snowboard Wax Mobile Apps Then Adam Lee from Incline, Nevada, presented a mobile app for snowboarders who want to wax their own snowboards. The market sizing of the business is full of assumptions that made me very uncomfortable, the chief of those being that over 40% of free members would convert to premium. Freemium conversion rates are usually 4% at the very best, more like 1% to 2% average. I advised Adam to also build this as a B-to-B business selling apps to snowboard wax makers and even board vendors. Of course, this needs to be validated. Finally, we had a discussion on Adam’s proposal to sell 20% of his equity for $50K, which I thought was preposterous. That’s like selling your prized assets for nothing in a flea market. No way! Adam needs a crash course on financing and should go digest the 1M/1M curriculum module on that topic ASAP. You can select the business you like best of those discussed today through a poll on the 1M/1M Facebook page . The recording of today’s roundtable can be found here . Recordings of previous roundtables are all available here . You can register for upcoming roundtables here . And you can sign up for the 1M/1M premium program here . Also, folks, remember, the Microsoft India Startup Grant application deadline is June 2nd. Don’t miss it!

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Luxury vacation resort Seeking equity position partner or turnkey …

May 20, 2011

“As long as you have certain desires about how it ought to be you can’t see how it is.” — Ram Dass: Spiritual Teacher. Commercial Real Estate Professionals & Investors Group. Network, Find Funding, Promote Events, …

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State Lawmakers Revisit Expired Unemployment Benefits

May 9, 2011

State lawmakers in Tennessee and North Carolina want a legislative do-over after their states became ineligible for 20 weeks of federally-funded unemployment insurance last month. Democrats in the Tennessee, where the unemployment rate is 9.5 percent, are trying to revive the Extended Benefits program. They didn’t learn of the program’s untimely death until constituents reported that their checks had stopped after April 16. The U.S. Congress had previously reauthorized the EB program through the end of the year for states with persistent high unemployment. “We were pretty surprised to learn it had happened and there weren’t other efforts to get it remedied,” said Sen. Lowe Finney (D), who introduced legislation last Thursday to restore the federal EB program. “I’ve been hearing from constituents for a few weeks.” Rep. Craig Fitzhugh (D), who introduced the same bill in the state House of Representatives, also said constituents brought the lapsed benefits to his attention. “It’s certainly something, in my opinion, we should move forward on,” Fitzhugh said. In North Carolina, Democratic Gov. Bev Perdue vetoed a bill saving the benefits because Republican lawmakers attached big budget cuts to the legislation. But now Democrats and Republicans in the North Carolina General Assembly have said they want to cut a new deal to reinstate the benefits, according to the Charlotte Observer . The federal Extended Benefits program provides the final 20 weeks of checks for the long-term jobless who have exhausted up to 73 weeks of state and federal benefits without finding work. (That full complement of 99 weeks of benefits is available in only 25 states .) States are eligible for the EB program if they’ve got unemployment above 8 percent and if the rate is 110 percent of what it was two years ago. Since unemployment rates have been flat since then, Congress told states in December that they could amend their EB laws to look back three years instead of two. But several states haven’t bothered , and others have done so only after coupling the benefits with cuts . Some 28,000 Tennesseans missed out on checks last month as EB expired with little or no public debate , even though the federal government put states on notice about how the program might lapse and what lawmakers could do about it. Sen. Finney said that the bill, if passed, would pay benefits retroactively for anyone who has missed checks since April. Republican leaders in the Tennessee General Assembly did not immediately respond to requests for comment. A potential obstacle to the bill’s passage is its cost: While the federal government would pay $57.7 million, the state would be on the hook for $396,000, according to the legislature’s fiscal review committee. That’s because states cover the cost of layoff claims from state, local and tribal governments, which the National Employment Law Project estimates amount to 2 percent of all claims. Finney said he didn’t know if the legislation will be taken up by the assembly before it adjourns for the year this month. “When we’re this late in the legislative session it’s difficult to get bills heard, and some committees have already shut down for the year,” Finney said.

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Steve Mariotti: Remembering Ayn Rand

April 21, 2011

I am the founder of the Network for Teaching Entrepreneurship (NFTE) and I would like to share my personal memories of Ayn Rand and the effect she and her work had on my life, which provide interesting sidelights on the legendary founder of Objectivism. It took me two months to read all 1069 pages of Atlas Shrugged in 1967, as a 14-year-old. Rand’s famous novel was sent to me by my grandfather, Lowell B. Mason, who was Ayn’s friend and advisor. Reading it was what made me want to be an entrepreneur. Featuring an inspirational hero who was independent and could get things done, Atlas Shrugged was the first work of fiction I had ever read that talked positively about entrepreneurs and the wealth they created. It eventually motivated me — as a 9th grader in Flint, Michigan — to move to New York and start a business. So here is my story. I met with Ayn Rand three times, beginning on Memorial Day of 1980, and our correspondence continued through mid-January of 1982, two months before she passed away, on March 6th. Our last meeting was right before her trip to New Orleans, in the fall of 1981, where she spoke at my friend Jim Blanchard’s convention on investments. Jim was the top expert in the world on gold investment, and he got Ayn to be the featured speaker by arranging for a private train car for her trip. My appointment on Memorial Day in 1980 was at 11 in the morning. I was overdressed for the weather, and sweat streamed down my face as I walked around the block at 34th Street and Lexington Avenue, putting off the meeting with my role model. Despite her well-known inaccessibility, Ayn Rand had agreed to meet me, a 26-year-old entrepreneur, through a connection with my grandfather, a famous libertarian lawyer who had worked with Clarence Darrow in the Depression. Now, procrastinating, I could barely breathe. I was exhilarated and terribly nervous. She was a great hero of mine; I had memorized large parts of Atlas Shrugged . However, I would find out that the Ayn Rand I had fantasized about was not the Ayn Rand I was about to meet. I finally went into the lobby of the Tudor-style building at 128 East 34th Street, and rang the bell for apartment 6D. (The name on the directory was O’Connor — Frank O’Connor, her husband, had recently passed away.) “I never agree to meet with anyone,” were her first words. And then: “You’re right on time. That tells me something about you. Your grandfather Lowell has been my close friend since I started writing The Fountainhead. He gave me good advice on some legal issues. His Language of Dissent was brilliant,” she continued, pointing to the copy on a bookshelf. “Otherwise I would never have agreed to see you. I am old and do not have the energy.” She wore a black dress that came to just below her knees, and her hair was pulled back and up. She made a point of standing beneath a topless portrait of herself painted 40 years before, when she was in her thirties. She examined me intently, wearing the same sly smile she had in the portrait. She was beautiful and, standing directly below the picture, she seemed to be saying: “And I am still this sexy?” She was. With her high cheekbones, full bosom and bright green eyes, she looked like an earthly goddess who had stepped out of one of her novels. I called her “Dominique,” and then “Dagney,” and she smiled and touched my arm. She knew I meant it when I told her how beautiful I thought she was, and laughed a loud, Russian laugh.” I was in love. She showed me around the apartment — everything but the bedroom; she said it was too untidy for me to see. She showed me the massive drafting table on which she’d written every page of Atlas Shrugged by hand. She mentioned how she’d outlined various thoughts and ideas from Part Three of Atlas Shrugged : “A is A” — on the table in ink. When I asked where she had outlined parts One and Two, she laughed and said she would tell me later. (She never did.) It was amazing to think that she had laid out the handwritten pages of her masterwork on this very table every night. She showed me some handwritten pages of an unpublished article about the impact of Atlas Shrugged , as well as ten or so pages from a draft of the manuscript of Part One of Atlas Shrugged , “Non-Contradiction.” We talked for about an hour in her apartment — over the noise of a maid, who was cleaning. Then we headed out for lunch. The maid, a soft-spoken African-American woman, said: “Ms. Rand, please do not be long, and absolutely no smoking.” (I didn’t know at the time that she had been diagnosed with lung cancer.) As we walked down Lexington Avenue, I quoted my favorite passages from both her novels, and also from the Objectivist Newsletter. At the corner of 33rd and Lex, I happened to mention King Vidor being the director of King of Kings . It was Cecil B. DeMille. Ayn said: “Now that you’ve gotten one wrong, can you be quiet and let me talk?” Of course I had been rattling on, as we walked from her apartment to the restaurant. I wanted to impress upon her just how significant she had been to me growing up, and that I knew she had met her husband on the set of King of Kings, in 1927. But, because of that one slip, I had to pretty much suppress my urge to talk further and, over the next four hours, let her have the lion’s share of the conversation. The restaurant was closed because of the holiday. As we walked on, looping back around towards her apartment, I remember thinking, “This is going to be a short meeting; we are going to end up back at her front door and that will be it. She won’t invite me up because the maid is cleaning.” Luckily we found a diner a block further on, back on 34th Street, and settled in. Ayn ordered cereal and I got a hamburger. She lit a cigarette and didn’t stop smoking and blowing smoke in my face for the next four hours. She did not eat at all. When it was apparent that I was uncomfortable with her smoking, Ayn shrugged and said, “I can’t do this in front of my housekeeper because it’s bad for my health. Do not be such a complainer.” The time went by in an instant. We talked about philosophy and economics and her work and career, and the love of her life, Frank O’Connor. In our time together I understood how she could have created a worldwide movement against totalitarianism just through force of will. But, sadly, she was also an adherent of atheism, a point of view I so strongly disagreed with that I could not keep silent about it, and the debate was on. In her words, I was a “mystic fool,” but I pushed back with Pascal’s argument that this world is so complex that some higher power must have created it. She was fearless and said exactly what she thought, in short, perfectly formed sentences. She was extremely judgmental, and every remark was dissected and commented upon. But earlier in my life I had faced off with Madelyn Murray O’Hare, the famous American atheist, and I too was fearless, at least on this subject. But she also spoke about her childhood, her father the pharmacist, growing up in and then leaving Russia, and about her sister, who came to live with her in the 1960′s. Throughout the conversation she would laugh often — loudly and joyously. I listened intensely to her every word, sensing that being with this beautiful woman would impact my life forever. As our visit was coming to an end, she said, “You listen and talk well but too much sometimes. You would make a good teacher. I’ve been taking math lessons in arithmetic; can you show me how to do this problem?” It was a simple procedure of dividing fractions and I showed her how to do it, feeling the pleasure of knowing something she did not. (Years later, in one of life’s great coincidences, I was in the same class with her math teacher.) I paid the check, we walked back to her apartment building, and said goodbye. I told her: “You are a great teacher, Ms. Rand.” She walked into her building and that was the end of our first meeting. A few days later, I sent her a book about Hollywood that she was mentioned in, along with a hand-written thank-you note. She didn’t reply, so a few weeks later I sent another gift — Russian candy — meant humorously, with another note. She sent them back. The returned gifts were accompanied by a letter from Ayn’s secretary, saying that Ms Rand had only seen me out of courtesy to my grandfather. I was devastated. This incident cut me deeply. I was so scarred by the rejection that I couldn’t even tell anyone about it for 15 years. Ayn had been so nice to me during those smoke-filled hours, which made the letter from her secretary all the more distressing. (I promised myself never to treat anyone like that, and I never have.) I felt then what others had told me: my idol was nothing more than an egotistical, self-absorbed recluse, and just as flawed as anyone else. Fifteen months later, in September of 1981, we both got another chance. Again my grandfather had intervened, calling Ayn and apologizing on my behalf. To me, he said: “You were too intellectually aggressive.” I was shocked, and didn’t say anything about my virtual silence for those four hours in the restaurant. My grandfather continued: “Because she hurt your feelings last year, she will see you one last time — for fifteen minutes. Don’t mess it up this time. She is a genius and you can learn a great deal from her. Do not talk or take issue with anything at all.” I met her in the lobby of her building in the early fall of 1981. I had been so shaken by her letter and the return of my gifts that I must have looked like a stunned little kid — beyond chagrined. She said, “Don’t be so weak. Weakness sickens me. Do not make me feel pity.” I knew she was quoting from The Fountainhead ; I then quoted the preceding and following sentences. She laughed, and said, “OK, you’re forgiven.” She looked even more beautiful to me this year. Her intelligence shone from a face that was now over 76-years-old. We went back to the restaurant on 33rd and Lexington that had been closed the previous Memorial Day. I gave her a bracelet my mother had given me when I left Flint. She put it on over a green shirt that was covered by an old blue sweater, with an elegant gold brooch pinned to the sweater. Her outfit was completed by a pair of baggy black pants. We sat at her favorite table by the door, exactly on the corner. She knew all the waiters, who were very respectful to her. I excused myself and went to the bathroom. On the way, I asked one of the waiters: “Do you know who that is?” “Of course,” he replied, “she’s a writer, right?” This time Ayn and I talked for at least five hours. She was still grieving over her husband Frank’s death. She smoked continuously, and said: “No one knows how sad I am. And this pain from Frank is killing me.” She blew a cloud of smoke in my face and said, “You should come to my funeral.” I laughed when she added: “And I mean it” — the four words that had guided her life. She told me in detail how she met Frank O’Connor on the set of King of Kings on a bus for the extras. She then did not see him for several months, until running across him by chance at the studio library, where he was reading about art history. She told me with a breaking voice what he was wearing on his tall frame. She had kidded him about his baggy pants and he had laughed at her accent. They both liked the poem “IF,” and she recited it to him from memory. For her, it was love at first sight. She told me many anecdotes about Frank and related how he had had a stroke before he died, which interfered with his ability to talk but not his ability to hear. Then she started to cry. I was shocked — everyone had told me she never cried, except once at the Foundation for Economic Education (FEE), a think tank for the ideas of Henry David Thoreau, when Ludwig von Mises — the legendary free market economist — had yelled at her. Von Mises told her that she was a stupid ignorant Russian peasant woman, and she broke down. When I mentioned this story, she got upset. She said Von Mises, always a gentleman, would never have said such a thing, that he had a deep respect for her. As she tells it, William F. Buckley had made up the story to hurt her. To change the subject, I brought up God and spirituality. We had spent a good deal of time at our first meeting arguing about spirituality — my belief in God and her hatred of the concept. “You will see Frank again in a spiritual sense,” I said, “there is just too much energy for it all to disappear. There are over two billion calculations a second for the body to function. That is so incredible, someone had to create that. And if that is so, then anything is possible.” She nodded, half-sobbing, her face heavy with tears. “I hope so” she said. “I would do anything to see him one more time.” She showed me notes he had written to her after the stroke. They were in large letters in what looked like a third-grader’s printing. “I hope you are right, maybe you are. I think about it all the time. I do not know. I just do not know,” she said. After a long pause, she added: “I will find out soon enough.” “Let me know,” I said, and we both laughed. I pointed out her use of “God” on Phil Donohue (whom she adored). “You did say God bless America,” I teased. She laughed that wonderful laugh again — she was so charismatic. I said: “You should let the public know that, that you have doubts. So many people follow you.” She waved her hand dismissively: “So what. Let them find their own way, I cannot help them.” I told her about my interest in politics and my desire to help maximize people’s personal and professional freedom — particularly for poor children. (I had recently been mugged and was thinking about making a career change to work with the type of children that had humiliated me.) She agreed that that was laudable, “Provided they have a good philosophy of reason and that they are objective and face reality,” she added — in what sounded like a harbinger of the didacticism that would come soon after her death, and scar Objectivism for decades. “You should be a teacher. You have a knack for it,” she said, repeating her comment of fifteen months before. “If you could teach people that are born poor to create value and be capitalists, that would be good. Look at what I was able to do with nothing — I had no money or skills, just a vision of what I could become. I wanted to be a writer and philosopher.” Little did I know how those words would guide me in the very near future. I gave her copies of three papers I had written on economics. One of them has since become famous as the first statistical test of the Austrian Trade Cycle Theory; another was my attempt to bring a unity to the different methodologies of economics, a paper F.A Hayek — a Nobel Prize winner — had loved when I had studied with him in 1977. She promised to read them. In passing, I told her of my activism for gay rights, thinking she would be pleased. She was not pleased, and also made it clear that she hated Murray Rothbard who, along with Charles Koch and I, had just co-wrote the Libertarian Party Platform. “We made him leave our study group,” she said, referring to Rothbard’s excommunication from the Collective, a discussion group of intellectuals that met weekly in her apartment. When we left the restaurant, having let her do almost all the talking, I said nothing — but gave her a hug. We walked back to her building, just as the housekeeper was coming out: “Ms. Rand, I was just coming to find you.” A colleague of hers had come out too, and began yelling at me that I had kept Ayn out too long and that I was boring her. I think perhaps he felt threatened by her being with me. Ayn turned and said, “You made me feel better.” I laughed and replied, “I thought people were not supposed to feel.” She gave me a quick one-finger handshake and said: “One more meeting and that is it — I am tired.” She added: “Do not count on me for any more visits.” I answered: “OK, but you did say we could have coffee; I love being with a beautiful woman. Can I get a picture with you, please?” I handed my camera to the housekeeper, at the same time calming her colleague down. “No, absolutely not, I am too old! If I am alive next year, perhaps,” she said laughing. “If not, come to my funeral.” Over her objections, the housekeeper took a picture (which unfortunately I lost 20 years later). Ayn and I both laughed, and she went inside the building with her companions. This time I waited a month to call her and sent no notes or gifts. When I got her on the phone, she said, “I am too tired now,” and then: “I can see you for a cup of coffee, perhaps, but only for twenty minutes. You wear me out.” I was pleased and promised not to talk at all. I met her at the same restaurant, but she was grumpy, irritable, and tired. We left after twenty minutes. I had absentmindedly left my jacket at the restaurant and her housekeeper called to say that I could come over to the apartment and get it from the doorman, that I could say hello to Ms. Rand for a minute, then leave. My visit got postponed several times. The last time I called, Ayn got on the phone and we spoke for a minute, but she sounded tired. I never picked up the jacket. After her return from the trip to New Orleans, where she had spoken on the topic of Morality and Capitalism, I received a letter from out of the blue: “I had seen you out of respect for your grandfather. You turned out to be a terrible disappointment. The fact that you support the immoral acts of homosexuals shows me you are a second-hander who likes his heroes with clay feet. Do not call me again or contact me in any way. Here is the bracelet — I do not want it. I am burning your papers.” It was like someone had taken a hot knife to my stomach. But the letter so contradicted how our last encounter had played out, that I was unsure if it was even written by Ayn herself. She had made a point to “cc” this letter to several individuals, including Leonard Peikoff. And that was that. This final communication hurt so much that I have never talked about it until now. In my opinion, based on our last conversation, Ayn Rand died a deist or an agnostic, not an atheist. Sadly, her intense dislike of gays and the gay liberation movement led to our falling out, during that last meeting in January of 1982. I felt that she had replicated the world she had grown up in, where the Tsar — then Lenin — would ostracize (or worse) anyone who disagreed with official attitudes. I will forever reject Rand’s philosophy of Objectivism, because it denigrates the importance of spirituality. It also overlooks the limits of a market economy in solving a variety of serious problems caused by the economics of externalities and public goods. I fully appreciate Ayn Rand’s influence in stopping the worldwide rise of totalitarianism, in encouraging the feminist movement, stimulating discussion of the legalization of victimless crimes, and the jump-starting of libertarian politics . And she was uncannily prescient. Inspired by her, I subsequently spent 30 years teaching at-risk youth and, in 1987, I founded NFTE, where I still teach. Sadly, many of the events she wrote about in Atlas Shrugged are coming to pass.

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Wendell Potter: Ryan’s Medicare Plan Would Be a Windfall for Insurance Companies

April 21, 2011

Rep. Paul Ryan’s plan to privatize Medicare would accelerate a trend started several years ago by corporate CEOs and their political allies to shift ever-increasing amounts of risk from Big Business and the government to workers and retirees. If enacted, the Ryan plan would represent a windfall of unprecedented proportions for insurance corporations and other businesses. For millions of average Americans, many of whom already are finding it impossible to save for retirement, it would represent financial calamity. The nation’s middle class would pay dearly for Ryan’s proposed shredding of the social safety net that Medicare currently provides. Ryan, chairman of the House Budget Committee, wants to dismantle the Medicare program and replace it with a system of vouchers. Starting in 2022, the government would give the average 65-year-old Medicare beneficiary $8,000 a year to buy coverage from a private insurer. That’s the amount health care analysts estimate will be what the Medicare program will spend on every 65-year-old in 2022 if the government doesn’t turn it over to private insurance companies. While that might sound fair on the surface, it would actually be a very bad deal for people who turn 65 that year, compared to those who turn 65 in 2021. That’s because commercial insurance plans are much more expensive, and operate far less efficiently, than the current Medicare program. The amount of money commercial plans actually spend to pay medical claims has been declining rapidly over the past several years while the amount they spend on administrative activities such as marketing and underwriting — and to pay executives and reward shareholders — has been increasing. That’s why Congress included a provision in last year’s health care reform law to require insurance firms to spend no more than 20 percent of their policyholders’ premiums on overhead. By contrast, the current Medicare program spends just 3 percent of its budget on administration. The nonpartisan Congressional Budget Office says the $8,000 voucher won’t be nearly enough for seniors to buy comparable coverage from private insurers and pay the additional out-of-pocket costs that those insurers would require them to pay. The amount the average 65-year-old would have to shell out to buy private insurance in 2022, according to the CBO, will actually be $20,510. Seniors would have to pay the difference — $12,510. If Medicare is not privatized, the difference would be $6,150. Here’s why this would be a dream-come-true for the insurance industry: The more health plan enrollees have to pay out of their own pockets, the less insurers have to pay for medical care. The money that insurers avoid paying out in claims goes straight to their bottom line — and into shareholders’ pockets. Insurers have been shifting more and more of the cost of care to their policyholders over the past several years by enticing — or pushing — them into plans with ever increasing deductibles. This trend is part of what Yale professor Jacob S. Hacker called “the personal responsibility crusade” — making people more responsible for the management and financing of the major economic risks they face — in his 2006 book, The Great Risk Shift . This crusade has been led by Republicans and insurance company executives who have been saying for years that the best way to control medical costs is for Americans to have more “skin in the game.” That’s an expression that former Aetna CEO Jack Rowe used often before he retired in 2005, the year he made $22.2 million. It was also a sound bite favored by the CEO I used to work for, CIGNA’s Ed Hanway, before he retired in 2009. Hanway’s total compensation that year was almost $111 million. The problem is, most Americans have far less skin to put in the game than CEOs like Rowe and Hanway or even Rep. Ryan, who makes $174,000 as a member of Congress. The median household income in the United States was just $49,777 in 2009, which was down $335 from 2008. That decline, by the way, was the continuation of another trend that began as the Clinton era was ending and the George W. Bush era was beginning. Median household income in the United States peaked in 1999 at $52,388 (adjusted for inflation). It fell more than $2,000 during the eight years of the Bush administration. During that time, health costs rose dramatically. According to the Kaiser Family Foundation, the average annual health insurance premium for family coverage increased from $5,791 in 1999 to $13,770 in 2010. The average amount that workers contributed out of their own pockets for family coverage increased from $1,543 to $3,997. With household incomes declining, Americans have had far less money to put into retirement. According to a recent survey conducted by Opinion Research Corp. for America Saves and the American Savings Education Council, less than half of current workers are saving enough to have a “desirable standard of living in retirement.” If workers are having this much difficulty saving for retirement, where in the world will they find the money to pay what Rep. Ryan would make them pay for Medicare coverage when they turn 65? Ryan’s “blueprint” is one that will take America back to the pre-1965 days when senior citizens were losing their homes and their farms to pay for medical care. They were becoming destitute — and dying much earlier than they are today — because insurers would not sell them coverage because they were too much of a risk to insure, and there was no safety net for them. That’s exactly the same place future senior citizens would find themselves if Ryan’s plan to privatize Medicare ever becomes public policy.

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Dow Jones Drops On News Of U.S. Credit Downgrade

April 18, 2011

On Monday, stocks took a big hit after credit-rating agency Standard & Poor’s downgraded the longterm outlook the U.S.’s previously-stable AAA credit rating to negative, citing a lack of faith in the country to address widening budget deficits. The Dow Jones is currently down by 1.76 percent (217.66 points) to 12,124.17. “Because the U.S. has, relative to its ‘AAA’ peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating,” S&P said in a press release. This is the first time S&P has downgraded the U.S. debt rating, according to CNBC , who also noted that America was briefly on Moody’s “negative watch” in January 1996, when Republicans fought against raising the debt ceiling. Gary Jenkins of Evolution securities says this should be a wake-up call for the U.S. government. “It is not really a shock that one of the agencies have decided to slightly weaken the overall rating category of the US,” said Jenkins, according to the Guardian . “[B]ut what is a surprise is that the agency makes no comment regarding the upcoming requirement to raise the debt ceiling, which if delayed could well lead to a watchlisting in our opinion[.]” Regardless of the debt limit not being directly addressed in S&P’s release, Austan Goolsbee, chairman of the White House Council of Economic Advisers, went on on Bloomberg television to defend the federal government’s ability to raise the quickly-approaching debt ceiling, saying it was already “quite clear” the issue would be resolved. Apart from the political implications, though, this credit downgrade could spell bad news for business around the globe. “A downgrade by S&P is the first step in a series of steps that could have catastrophic effects of the cost of doing business domestically and globally,” Peter Kenny, managing director at Knight Capital Group, told Fox Business . Not everyone, however, believes the S&P’s downgrade deserves the attention it has received. The news led The Big Picture’s Barry Ritholtz , for one, to ask, “Who Cares?” “Its not that I disagree with their assessment — I do not — but I pay it little heed,” Ritholtz said. “If ever there was an organization more corrupt, incompetent, and less capable of issuing an intelligent analysis on debt than S&P, I am unaware of them.” Below is a graph of the Dow Jones drop, according to Google Finance:

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Bruce E. Levine: The Myth of U.S. Democracy and the Reality of U.S. Corporatocracy

March 16, 2011

Polls show that on the major issues of our time — the Afghanistan and Iraq wars, Wall Street bailouts and health insurance — the opinion of We the People has been ignored on a national level for quite some time. While the corporate media repeats the myth that the United States of America is a democracy, Americans, especially Wisonsiners and Ohioans, know that this is a joke. On March 3, 2011, a Rasmussen Reports poll declared that “Most Wisconsin voters oppose efforts to weaken collective bargaining rights for union workers.” This of course didn’t stop Wisconsin Governor Walker and the Wisconsin legislature from passing a bill that — to the delight of America’s ruling class — trashed most collective bargaining rights of public employee unions. Similarly in Ohio, legislation to limit collective bargaining rights for public workers is on the verge of being signed into law by Governor Kasich, despite the fact that Public Policy Polling on March 15, 2011 reported that 54 percent of Ohio voters would repeal the law, while 31 percent would keep it. It is a myth that the United States of America was ever a democracy (most of the famous founder elite such as John Adams equated democracy with mob rule and wanted no part of it). The United States of America was actually created as a republic, in which Americans were supposed to have power through representatives who were supposed to actually represent the American people. The truth today, however, is that the United States is neither a democracy nor a republic. Americans are ruled by a corporatocracy: a partnership of “too-big-to-fail” corporations, the extremely wealthy elite, and corporate-collaborator government officials. The reality is that Americans, for quite some time, have opposed the U.S. government’s wars in Afghanistan and Iraq, but We the People have zero impact on policy. On March 10-13, 2011, an ABC News/Washington Post poll asked, “All in all, considering the costs to the United States versus the benefits to the United States, do you think the war in Afghanistan has been worth fighting, or not?”; 64 percent said “not worth fighting” and 31 percent said “worth fighting.” A February 11, 2011, CBS poll reported Americans’ response to the question, “Do you think the U.S. is doing the right thing by fighting the war in Afghanistan now, or should the U.S. not be involved in Afghanistan now?”; only 37 percent of Americans said the U.S. “is doing the right thing” and 54 percent said we “should not be involved.” When a CNN/Opinion Research Corporation poll on December 17-19, 2010, posed the question, “Do you favor or oppose the U.S. war in Afghanistan?” only 35 percent of Americans favored the war while 63 percent opposed it. For several years, the majority of Americans have also opposed the Iraq war, typified by a 2010 CBS poll which reported that 6 out of 10 Americans view the Iraq war as “a mistake.” The opposition by the majority of Americans to current U.S. wars has remained steady for several years. However, if you watched only the corporate media’s coverage of the 2010 election between Democratic and Republican corporate-picked candidates, you might not even know that America was involved in two wars — two wars that are not only opposed by the majority of Americans but which are also bankrupting America. How about the 2008 Wall Street bailout? Even when Americans believed the lie that it was only a $700 billion bailout, they opposed it; but their opinion was irrelevant. In September 2008, despite the corporate media’s attempts to terrify Americans into believing that an economic doomsday would occur without the bailout, Americans still opposed it. A Los Angeles Times/Bloomberg poll in September 2008, asked, “Do you think the government should use taxpayers’ dollars to rescue ailing private financial firms whose collapse could have adverse effects on the economy and market, or is it not the government’s responsibility to bail out private companies with taxpayers’ dollars?”; only 31 percent of Americans said we should “use taxpayers” dollars while 55 percent said it is “not government’s responsibility.” Also in September 2008, both a CBSNews/New York Times poll and a USA Today/Gallup poll showed Americans opposed the bailout. This disapproval of the bailout was before most Americans discovered that the Federal Reserve had loaned far more money to “too-big-to-fail” corporations than Americans had been originally led to believe ( The Wall Street Journal reported on December 1, 2010, “The US central bank on Wednesday disclosed details of some $3.3 trillion in loans made to financial firms, companies and foreign central banks during the crisis.”) What about health insurance? Despite the fact that several 2009 polls showed that Americans actually favored a “single-payer” or “Medicare-for-all” health insurance plan, it was not even on the table in the Democrat-Republican 2009-2010 debate over health insurance reform legislation. And polls during this debate showed that an even larger majority of Americans favored the government providing a “public option” to compete with private health insurance plans, but the public option was quickly pushed off the table in the Democratic-Republican debate. A July 2009 Kaiser Health Tracking poll asked, “Do you favor or oppose having a national health plan in which all Americans would get their insurance through an expanded, universal form of Medicare-for-all?” In this Kaiser poll, 58 percent of Americans favored a Medicare-for-all universal plan, and only 38 percent opposed it — and a whopping 77 percent favored “expanding Medicare to cover people between the ages of 55 and 64 who do not have health insurance.” A February 2009 CBS News/New York Times poll reported that 59 percent of Americans say the government should provide national health insurance. And a December 2009 Reuters poll reported that, “Just under 60 percent of those surveyed said they would like a public option as part of any final healthcare reform legislation.” In the U.S. corporatocracy, as in most modern tyrannies, there are elections, but the reality is that giant corporations and the wealthy elite rule in a way to satisfy their own self-interest. In elections in a corporatocracy, as is the case in elections in all tyrannies, it’s in the interest of the ruling class to maintain the appearance that the people have a say, so more than one candidate is offered up. In the U.S. corporatocracy, it’s in the interest of corporations and the wealthy elite that the winning candidate is beholden to them, so they financially support both Democrats and Republicans. It’s in the interest of corporations and the wealthy elite that there are only two viable parties–this cuts down on bribery costs. And it’s in the interest of these two parties that they are the only parties with a chance of winning. In the U.S. corporatocracy, corporations and the wealthy elite directly and indirectly finance candidates, who are then indebted to them. It’s common for these indebted government officials to appoint to key decision-making roles those friendly to corporations, including executives from these corporations. And it’s routine for high-level government officials to be rewarded with high-paying industry positions when they exit government. It’s common and routine for former government officials to be given high-paying lobbying jobs so as to use their relationships with current government officials to ensure that corporate interests will be taken care of. The integration between giant corporations and the U.S. government has gone beyond revolving doors of employment (exemplified by George W. Bush’s last Treasury secretary, Henry Paulson, who had previously been CEO of Goldman Sachs; and Barack Obama’s first chief economic adviser, Lawrence Summers who in 2008 received $5.2 million from hedge fund D. E. Shaw). Nowadays, the door need not even revolve in the U.S. corporatocracy; for example, when President Obama earlier in 2011 appointed General Electric CEO Jeffrey Immelt as a key economic advisor, Immelt kept his job as CEO of General Electric. The United States is not ruled by a single deranged dictator but by an impersonal corporatocracy. Thus, there is no one tyrant that Americans can first hate and then finally overthrow so as to end senseless wars and economic injustices. Revolutions against Qaddafi-type tyrants require enormous physical courage. In the U.S. corporatocracy, the first step in recovering democracy is the psychological courage to face the humiliation that we Americans have neither a democracy nor a republic but are in fact ruled by a partnership of “too-big-to-fail” corporations, the extremely wealthy elite, and corporate-collaborator government officials. Bruce E. Levine is a clinical psychologist and author of Get Up, Stand Up: Uniting Populists, Energizing the Defeated, and Battling the Corporate Elite (Chelsea Green Publishing, April 2011).

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Mary Bottari: WI Firefighters Spark "Move Your Money" Moment

March 12, 2011

On the day that the bill passed the Wisconsin Assembly effectively ending 50 years of collective bargaining in Wisconsin and eviscerating the ability of public unions to raise money through dues, a new front opened in the battle for the future of Wisconsin families. Bagpipes blaring, hundreds of firefighters walked across the street from the Wisconsin Capitol building, stood outside the Marshall and Ilsley Bank (M&I Bank) and played a few tunes — loudly. Later, a group of firefighter and consumers stopped back in at the bank to make a few transactions. One by one they closed their accounts and withdrew their life savings, totaling approximately $190,000. After the last customer left, the bank quickly closed its doors, just in case the spontaneous “Move Your Money” moment caught fire. The sedate, old fashioned M&I Bank on the Capitol Square has gained some notoriety in recent weeks. Oddly, a tunnel in the M&I parking garage links to the capitol basement. Dubbed the “rat hole to the Walker palace” , the tunnel was used by Governor Scott Walker to ferry lobbyists into the capitol building to hear his budget address during a time when the capitol was in a virtual lock down in defiance of a court order and after Sheriffs has quit the building refusing to be a “palace guard.” Now the bank is getting caught up in the controversy again. Word is beginning to spread that M&I is one of Walker’s biggest backers. Top executives at M&I Bank have long been boosters of Walker. M&I Chief Executive Dennis Kuester and his wife gave $20,000 to Walker in recent years. When you package individual and PAC contributions by employers, M&I is number one — at $57,000 dollars. The firm apparently uses a conduit to bundle much of its money to Walker. Flyers, webpages, and Facebook sites have popped up encouraging WI consumers to boycott Walker campaign contributors and “Pull the Plug on M&I Bank.” Other banks whose employees have donated large sums to Walker, such as Associated Bank and North Shore Bank may also be seeing their customers soon. Economic Transparency Joe Conway, President Madison Fire Fighters Local 311, explained to CMD that the action was totally spontaneous, but that “economic transparency” was going to be a big theme in the fight ahead. “Groups will be sending letters to Walker’s major donors giving them the opportunity to support the teachers, firefighters and police in their community.” Conway is well aware that new polling shows that 74% of Wisconsin families support collective bargaining rights for public workers. Two of these letters are already in the mail to M&I Bank and Kwik Trip. “The undersigned groups would like your company to publicly oppose Governor Walker’s efforts to virtually eliminate collective bargaining for public employees in Wisconsin. In the event that you cannot support this effort to save collective bargaining, please be advised that the undersigned will publicly and formally boycott the goods and services provided by your company,” the letter says. “However, if you join us, we will do everything in our power to publicly celebrate your partnership in the fight to preserve the right of public employees to be heard at the bargaining table.” The letters are signed by the heads of the Wisconsin Professional Police Association, the Professional Fire Fighters of Wisconsin, the International Association of Fire Fighters Local 311, Madison Teachers Inc., Dane County Deputy Sheriffs Association and the Madison Professional Police Officers Association. Just the Beginning Walker’s list of campaign contributors is already in wide circulation on websites like “Scott Walker Watch” and fast-growing Facebook pages like “Boycott Scott Walkers Contributors” . These grassroots efforts are backed up by solid names and numbers extracted from the Wisconsin Democracy Campaign (WDC) database, a nonpartisan, nonprofit organization that tracks money in politics. The WDC data shows that Walker’s major contributors include a diversity of national and state-based firms including Koch Brother Industries, AT&T, Walmart, John Deere Tractor, Johnsonville Brats, Miller/Coors, Kwik Trip, Sargento Cheese, and SC Johnson & Sons (producers of Windex, Glade, Pledge etc). The letter writing effort is being undertaken not to put people out of work, but to encourage workers to let their bosses know it is time to reconsider their support for Walker’s newly revealed radical agenda. Sam Hokin, a Wisconsinite and small businessman who started the Facebook page in the early days of the protest, put the strategy bluntly: “The only thing the Republicans care about is money. The only way you can touch them is through their revenue. They don’t care about signs and protesters. They don’t care about the opinion of the majority of the people in the state, their bottom line is money.” Unions, pension funds, cities and counties and average consumers bank at these banks and support these firms by buying their products and services. They have tremendous clout in Wisconsin’s small economy. Greatest Heist in History Wisconsin workers are keenly aware that they are part of a historic push back that is spreading from state to state. After $14 trillion dollars of housing wealth, wages and retirement savings were taken from the middle class during the 2008 financial collapse, workers are being asked to take it on the chin again. Michael Moore put it best: “We aren’t broke. Wisconsin is not broke. The country is awash in wealth and cash. It’s just that it’s not in your hands. It has been transferred, in the greatest heist in history, from the workers and consumers to the banks and the portfolios of the über-rich.” M&I Bank is in the process of being bought by a Canadian bank. It took $2 billion in TARP bailout money from the taxpayers and have yet to pay it back. “They [state Republicans] came in like the Grim Reaper to drive a knife into the heart of labor,” yelled Jim Garity at a recent rally. Garity is a unionized Jefferson County Highway Department worker and leader. “But we are going to stand and we are not going to bleed. Governor Walker’s plan is to give more money to Wall Street, but we are going to take back our money from Wall Street and put Main Street to work!” Walker’s recent moves include over $200 billion in tax cuts for corporations while stripping $1 trillion from Wisconsin schools and local governments. The “take it back” movement is gaining steam. At the federal level, AFL-CIO, SEIU are joined by consumer groups in a fight to apply a small financial transaction tax to damaging Wall Street speculation in order to recoup over $100 billion dollars a year for job creation and other essential needs. It’s About Power Walker’s collective bargaining bill not only seeks to gut a 50 year tradition in the state where public unions started, but by doing away with automatic check off for union dues he seeks to cripple the the ability of public sector unions to hire employees to organize, grow and be a force in Wisconsin politics. State Senate Majority Leader Scott Fitzgerald, one of Walker’s closest allies in the legislature, admitted as much to FOX News. “If we win this battle, and the money is not there under the auspices of the unions, certainly what you’re going to find is President Obama is going to have a much difficult, much more difficult time getting elected and winning the state of Wisconsin,” said Fitzgerald. While some hold out hope for a general strike and vigorous recall efforts are underway, others remain focused on leveraging the power of the “sleeping giant” to force Walker to back down and to prevent devastating cuts to schools and municipalities. Stay tuned. This fire might be hard to contain. The Madison-based Center for Media and Democracy has been reporting live from the Wisconsin Capitol for four weeks. Learn more at our website PRWatch.org .

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Fred Whelan and Gladys Stone: Didn’t Get the Promotion? Get Over It Or Keep Losing

January 21, 2011

Getting passed over for a promotion can be painful. It certainly was in Cindy’s case. She had been working on a project for several years and every indication was that she was doing a great job. As the project scaled the company decided they needed another layer of management. Cindy believed she would be the logical choice for this promotion. She was stunned when the job went to someone from the outside. Cindy met with her boss to find out why she wasn’t given a shot at the position. Her boss simply said it wasn’t up to him and the decision had already been made. She was extremely disappointed and this was heightened by the fact that she never got a clear answer as to what she was lacking. As months went by, she continued to seethe and her resentment played out in many ways. One example was when her original boss approached her with questions on the project, she replied, “Why don’t you ask the person you hired instead of me?” This probably confirmed in her boss’s mind that he had made the right decision. Months later, after a restructuring, Cindy was part of a company-wide layoff. This company, and many others like it, frequently offers laid-off employees the opportunity to interview for another position within the organization. Cindy was actively pursuing a job and things were going well. She made it all the way to the final round and was getting feedback along the way that she was a good fit. However, things changed in the final round when the hiring manager went to Cindy’s old boss for a reference. Her old boss said she didn’t handle frustration well. This was a concern to the hiring manager, who brought it up to Cindy. Cindy explained her plight and the hiring manager nodded in what appeared to be understanding. In addition, the hiring manager acknowledged that Cindy’s former boss was a difficult person to work for. Whew. Cindy thought she had dodged a bullet. Unfortunately, she didn’t get the job and was surprised to learn that they were continuing to interview new candidates. Since she was well qualified for this job and hadn’t lost it to someone else already in the mix, it was obvious to her that the negative feedback from her old boss ruined her chances. Frustration in the workplace is a natural part of business. How you handle it separates leaders from the rest of the pack. We can all sympathize with Cindy’s situation. Anyone would have felt slighted. What she could have done at the time to make the situation better was acknowledge to her boss that she hadn’t handled things well and that she was now ready to accept the decision and support the new person. This would have shown the level of maturity companies seek in people they are considering for promotion. In addition, she had another opportunity to diffuse the situation with the hiring manager during the interview. Instead of complaining about what had happened, she could have explained what she learned and how going forward she would better handle similar situations. Even if your boss has a reputation of being difficult to work for, their opinion of you carries weight. Stewing in frustration won’t improve your situation and can make it worse. Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

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WATCH: Suze Orman Gives HuffPost Reader Lending Advice

January 16, 2011

In the premiere episode of ” Ask Oprah’s All Stars ,” an OWN: Oprah Winfrey Network original program featuring Suze Orman, Dr. Phil, and Dr. Mehmet Oz on a panel answering viewers’ questions, Orman took an inquiry from one of HuffPost’s very own readers. The reader wrote in asking if she had a right to be angry at her twin sister, who borrowed $4,000 and has yet to pay it back. Despite losing her job and falling upon hard economic times, the reader explained, her sister still managed to get a manicure and take her children on vacation. “You have a right to be angry at her,” Orman responded. “But i have to tell you, you should actually in be, in my opinion, more angry at yourself. Just don’t go telling me this is the first time you’ve seen your sister be irresponsible with money.” Orman continued, “When you give someone money, you’re giving it to them…don’t think you’re lending it to them.” Catch ” Ask Oprah’s All Stars ” Sundays at 8 PM Sundays on OWN. WATCH:

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Richard (RJ) Eskow: Which Is More "Gangsta" – 50 Cent’s Twitter Stock Pitch or Goldman’s Facebook Deal?

January 12, 2011

Music was Clarence “50 Cent” Jackson’s second career. News reports say he began dealing crack at the age of twelve, after the murder of his coke-dealer mother. Early tracks like “Ghetto Quran” and “How to Rob” reflect a brutal, street-hustling life, and Jackson has the bullet wounds to match. He’s talented, wildly successful, and I sure wouldn’t mess with him. But when he starts mixing social media with pumped-up investment pitches, 50 Cent is moving into Goldman Sachs territory. “Fitty” reportedly earned millions for touting a stock on Twitter, without disclosing that he owned shares in the company. How does that stack up against Goldman’s own social media deal with Facebook? When you move into the stock market, you’re going where the real gangstas roll. The Message We’re in the middle of a much-needed national dialog about harsh and violent rhetoric, and rappers like 50 Cent have been singled out again for criticism. I’m opposed to music censorship, but I get the concern. Even some of the best rappers glamorize things I despise. Yet even as some politicians wag their fingers at hip-hop criminals, their other hand’s stretched our for campaign cash from corporate lawbreakers. Sometimes the difference between crime on the Mean Streets and crime on Wall Street is just a matter of degree. And don’t think the language and lifestyle can’t get rough on Wall Street. Morgan Stanley’s brokers had a now-famous phrase, used whenever they sold their own clients bad investments: “I ripped his face off.” It was a Goldman Sachs executive who praised another employee for selling Goldman clients on a program he described as a “shitty deal.” (That guy’s now a senior exec at Bank of America.) And the depositions in Goldman’s sex discrimination suit read like the script to a rap video: female employees pressured to join a party in a topless bar, a woman pinned against a wall and forcibly kissed, a Christmas party with female escorts wearing “short black skirts, strapless tops and Santa hats.” Throw in some beats and a few “uh-huh’s” and “yeahs” and you’ve got yourself a video. Fitty Twitters “Ok ok ok my friends just told me stop tweeting about HNHI so that we can get all the money. Hahaha check it out its the real deal.” 50 Cent tweeted about a marginal stock all weekend and into early Monday , calling it “BIG MONEY” and saying “you can double your money right now.” The effect was mindblowing: Jackson’s credited with moving the stock of a company called HNHI by $50 million dollars in one day , even though its own auditor reportedly ” expressed concerns about its financial future .” Fitty didn’t mention that he held 30 million shares of the stock, which he picked up for $750,000 last fall. Yesterday’s surge reportedly netted him somewhere between $8.7 million and $10 million. No wonder so many news accounts repeated the name of his hit album, Get Rich or Die Tryin’. HNHI increased in value by about 200%. Even after it dropped more than 23% today, Jackson was way ahead of the game. Fitty’s attorneys presumably got a little worried, because the disclaimers started appearing late Monday: “HNHI is the right investment for me it might not be for u! Do ur homework,” “I own HNHI stocks thoughts on it are my opinion. Talk to your financial advisor …” Old School How does Fitty’s Twitter run compare with Goldman Sach’s Facebook deal? Goldman consolidated a number of its clients into a single artificial “investor” to get around a legal requirement that any company with more than 500 investors be publicly traded and subject to the regulations that protect investors. Felix Salmon observes that this deal is bigger than many IPOs, but doesn’t have to follow any of the same rules. Goldman sure knows how to create a feeding frenzy. They wouldn’t let anybody into the deal for less than $2 million – a surefire way to make the marks salivate – and touted the deal shamelessly to its clients: “When you have a chance I wanted to find a time to discuss a highly confidential and time sensitive investment opportunity … If you agree not to use information that we reveal to you … I will be able to disclose the name of the company and provide you with more information…” Former Goldmanite Nomi Prins captures the essence of the deal: create an artificial bubble and then “pawn off the overpriced goods on the clients.” As Prins notes, Goldman’s giving itself the option to unload this investment if it goes bad, but is locking its clients in until 2013. Knowing Goldman, they’ll also be shorting Facebook somewhere along the way. The country learned their M.O. afer the last crisis by reviewing their internal emails , and by the cynical and lawless way they played clients in the ABACUS deal. To avoid legal trouble this time around, Goldman’s even disclosed in advance that it may short Facebook. Goldman skims a lot off the top, then lets you buy into a deal so skewed that one of its own funds turned it down. In return, you get to say you own a piece of Facebook. Maybe they’ll even give you a nice certificate you can hang on the wall of your Las Vegas investment property. Blowing Bubbles Is Facebook this year’s version of Vegas real estate? It looks that way. Even the most successful business has a real and an inflated value, after all, and I tend to agree with all the people who say Facebook’s going to fade away like MySpace did. Think about it: Facebook has a badly designed interface, it’s difficult to use, and it continues to irritate and infuriate its customers. Badly-managed companies can thrive for a while, but not forever. And the Goldman deal sidesteps the very public accountability that might encourage Facebook to make the changes it needs. But whatever happens to Facebook, the Goldman deal is a bubble machine designed to inflate its price. And Goldman’s tapped the mother lode: the US government. As Simon Johnson points out, their Facebook investment is backed by the Fed – and therefore by the public’s dollars. 50 Cent may have made a few mil, but the big banks have knocked off Fort Knox. Goldman invested $75 million in Facebook early on through a hedge fund. Now they’re saying they’ve put $450 million of their own money into this deal, but they get that money at the ultra-low Fed rate the government gives them. So they don’t need to earn the same returns their clients do. What’s more, they can unload their investment whenever the bubble deflates and walk away with their “client’s” money one more time. Throw in the $60 million plus they’re charging for the deal, and they’re sitting pretty. Those “lucky” Facebook investors: Goldman will get rich. They’ll die tryin’. Fitty vs. Blankey So how does 50 Cent stack up against Goldman – morally, ethically, and legally? For one thing, Mr. Jackson is not a bank or investment manager and doesn’t claim any special financial expertise. Fitty doesn’t receive low-rate loans through the Fed’s discount window. Neither he nor his company, G-Unit Records, received a Federal bailout. 50 Cent did not receive $13 billion in taxpayer money as a “backdoor bailout” through AIG. (Disclaimer: I used to work at AIG.) And 50 Cent has never paid himself a nickel, much less a huge bonus, after being rescued with Federal funds. Goldman wouldn’t admit that it misled clients about its ABACUS product until it was time to plea bargain its way out of SEC fines and potential criminal charges. Until then Goldman execs congratulated themselves for dumping bad investments on their clients. Now that’s cold . Fitty, on the other hand, copped to his actions right away. On the rhetoric front, 50 Cent’s pretty rough: “I’ll hit your vertebrae, rip through your tissues/your wife on the futon huggin’ the shih tzu.” Goldman’s more genteel – but some of its political allies aren’t. Most of its campaign contributions are placed through intermediaries – in this case, the GOP Senate and Congressional Committees. Some of the candidates funded by these groups have used a lot of violent rhetoric, like threatening “Second Amendment” reactions (i.e., gun violence) to decisions they don’t like,firing guns at targets with their political opponent’s face on it, and suggesting they would issue “hunting permits” for “liberals.” If there’s a difference between this rhetoric and 50 Cent’s, I can’t see it. (And despite all their populist Tea Party rhetoric, these candidates have come through for their Wall Street patrons . ) The chorus to the “shih tzu” song is “I’m laughing all the way to the bank.” But 50 Cent has an actual product – music – so he’s a part of the productive economy, not the financial sector. Curtis Jackson’s a self-made success who came up the hard way, with talent. If Kanye is rap’s F. Scott Fitzgerald, its chronicler of the high life’s pain and pleasure, 50 Cent is its Jim Thompson. He’s the poet of blood and bullets. His raps remind me of what a great jazz bass player once told me about that instrument: that it stands on the bordeline between melody and percussion. 50 Cent raps on the border between prose and percussion. There’s no evidence of criminal behavior in either Curtis Jackson’s Twitter move or Goldman’s Facebook deal. But 50 Cent has proved that the so-called “rational” “free market” is neither. And Goldman has proved that Wall Street is still up to its old tricks, getting rich creating bubbles and then getting even richer as they pop. No, I don’t like the violent language. Or the sexism. Or the glorification of bad behavior. But enough about Wall Street: I don’t like those things in music, either. One of the things worth remembering about language is that it reflects deeper values. If we despise what these words reflect, we shouldn’t tolerate the behavior. Don’t censor music. Regulate banks. _______________________________ (Two videos for your enjoyment: 50 Cent and Lloyd Blankfein. Play them at the same time for the proper effect.)

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Dan Solin: Fools Rush in…

January 12, 2011

Many market trends are “obvious” to readers of my books and blogs. Here are some of them: The U.S. will become a third world country; The dollar is doomed; Inflation is inevitable; Interest rates will rise dramatically; Municipal bond defaults will rise at an alarming rate. Now is the time to dump municipal bonds. The stock market will continue its recovery well into 2011, and probably longer. I don’t understand why anyone is interested in my opinion on any of these issues. They could be right or wrong on any or all of them. I don’t have a clue. I believe the markets have taken all of the facts that underlie these beliefs into consideration and have priced the dollar, stocks and bonds accordingly. I also know that most investors make terrible investing decisions based on whatever their beliefs may be. Here’s my take on a prudent course of action. If you believe the U.S. is doomed (and even if you don’t), your portfolio should have exposure to international stocks. Most experts recommend a range of 30%-50%. If you believe the dollar is doomed (or not doomed), consider a globally diversified bond portfolio for that portion of your assets allocated to bonds. The SPDR Barclays Capital International Treasury Bond ETF (BWX) is a good place to start. As for inflation and interest rates, whether or not you believe these are risks, your bond portfolio should consist of short or intermediate term bonds (with maturities five years or less) in an index fund or an ETF. As those bonds mature, they will be replaced by new ones that will reflect current interest rates. It’s your personal hedge against inflation. What about the municipal bond issue? If the market perceives municipal bonds as risky, issuers will have to offer more interest to compensate for the higher risk of default. Historically, riskier assets have higher returns over time than less risky assets. If you can afford the increased risk, and are prepared to hold on for the long-term, maybe this is the right time to buy a low cost municipal bond ETF, like the iShares National Municipal Bond ETF (MUB). Many investors are fleeing bonds and going back to stocks, now that the pundits are predicting a continuation of the stock market recovery. The fact that they failed to call the recovery when the markets bottomed out in March, 2009 does not stop them from making more predictions. It also doesn’t deter investors from believing they have the ability to predict random events. Net inflows to bond funds (and out of stocks) peaked in October, 2009 at $231 billion. Think of all those hapless souls, relying on the financial media and their brokers and advisers, who “fled to safety” and missed out on the dramatic market recovery which continues to this day. Your asset allocation shouldn’t change with the latest survey of self-styled experts, economists or others. Endless talk and conflicting opinions fuel fear and uncertainty. Fear compels investors to make trading decisions. Trading decisions benefit brokers and their firms. It’s a crazy cycle, which repeats endlessly. Only advice based on long-term data qualifies as investment advice. If you’re paying for any other kind of advice, understand the price may far exceed the fees you are paying. 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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Susan G. Komen Foundation Elbows Out Charities Over Use Of The Word ‘Cure’

December 7, 2010

In addition to raising millions of dollars a year for breast cancer research, fundraising giant Susan G. Komen for the Cure has a lesser-known mission that eats up donor funds: patrolling the waters for other charities and events around the country that use any variation of “for the cure” in their names. So far, Komen has identified and filed legal trademark oppositions against more than a hundred of these Mom and Pop charities, including Kites for a Cure, Par for The Cure, Surfing for a Cure and Cupcakes for a Cure–and many of the organizations are too small and underfunded to hold their ground. “It happened to my family,” said Roxanne Donovan, whose sister runs Kites for a Cure, a family kite-flying event that raises money for lung cancer research. “They came after us ferociously with a big law firm. They said they own ‘cure’ in a name and we had to stop using it, even though we were raising money for an entirely different cause.” Donovan’s sister, Mary Ann Tighe, said the Komen foundation sent her a letter asking her to stop using the phrase “for a cure” in their title and to never use the color pink in conjunction with their fundraising. What bothered her most about the whole ordeal, she said, was that Komen forced her to spend money and time on legal fees and proceedings instead of raising funds for cancer. “We were certainly taken aback by it,” she told HuffPost. “We have partners running these kite events around the country. What if one of them uses, say, magenta? Is that pink? I mean, where are we going with this? We just want to raise money for cancer. What we don’t want is to have our energy misplaced by having our charity partners trying to police the good work that we’re doing.” Sue Prom, who started a small dog sledding fundraiser for breast cancer called “Mush for the Cure” in Grand Marais, Minn., said she was shocked to hear from Komen’s lawyers this summer asking that she change the name of her event or face legal proceedings. “I had to call the trademark helpline, because I had no idea what I was doing,” said Prom, who runs the annual sled race with her husband and friend. “We pay for the expenses out of our pockets, and we’ve never personally made a dime from it. We have t-shirts, sweatshirts, domain names, posters, stationery, all with ‘Mush for the Cure’ on it. What do we do with all the materials now? How are we gonna defend ourselves? We’re not like Komen.” Prom said she’s been running the event for six years, and the most she has raised for the National Breast Cancer Foundation is $25,000. Before the NBCF could accept the money, they warned her to file for a trademark to protect her event legally against the Komen Foundation. But now that Komen has opposed Mush’s trademark application with the U.S. Patent and Trademark Office, Prom is looking for a pro bono lawyer to help her figure out what to do next. “I think it’s a shame,” she said. “It’s not okay. People don’t give their money to the Komen Foundation and they don’t do their races and events so that Komen can squash any other fundraising efforts by individuals. That’s not what it’s about.” Komen’s general counsel, Jonathan Blum, told HuffPost that the fundraising powerhouse tries to be reasonable when dealing with small charities and nonprofits, but that it has a legal duty to protect its more than 200 registered trademarks. “It’s never our goal to shut down a nonprofit,” he said, “and we try very hard to be reasonable, but it’s still our obligation to make sure that our trademarks are used appropriately so there’s no confusion in the marketplace over where people’s money is going.” Blum told HuffPost that legal fees comprise a “very small part” of Komen’s budget, but according to Komen’s financial statements, such costs add up to almost a million dollars a year in donor funds. “I think it’s important that charities protect their brand, but on the other hand, I don’t think the donors’ intent in giving their money was to fund a turf war,” said Sandra Minuitti, a spokesperson for Charity Navigator. “It’s very important that Komen treads carefully and is very transparent about how they’re spending money on these legal battles.” Michael Mercanti, an intellectual property lawyer, said he is surprised by the large number of oppositions Komen has filed against other charities–a number he would expect from a company like Toys”R”Us or McDonalds, but not a charitable fundraising organization. “They seem to be very aggressive in policing their mark, or what they’re claiming to be their mark,” he told HuffPost. “I guess there are a lot of ways to captain a ship, but it seems like there are ways they could protect and police their trademarks and also allow other charities to coexist.” Mercanti said filing hundreds of oppositions is not only damaging to other charities, but could also be counterproductive for Komen’s brand. “They could actually be seen as being a bully,” he said. “They’re going to alienate some donors who don’t appreciate them stepping on smaller, worthwhile charities.” With the help of a team of pro bono layers, Kites for a Cure was able to reach a settlement with Komen: They agreed to only use the phrase “for a Cure” in conjunction with the words “lung cancer” to make the distinction clear. But Tighe said they reached a settlement only after many, many months of a free legal team working long hours each day. “We were very fortunate because we had strong support from knowledgeable pro bono counsel, but it did seem like a misdirection of a lot of people’s energy,” she told HuffPost. “I don’t know what smaller organizations do without free representation.” Sue Prom said Tighe has already put her in touch with her pro bono legal team, and she is prepared to fight for the name of her sledding event in court. The ordeal has changed her opinion of Komen. “I used to give money to Komen all the time, but now I’m just kind of wary of them,” she said. “I’m not buying Yoplait yogurt or anything that has the word ‘Komen’ on it. They seem to have forgotten what charity is about.”

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Bernanke Calls On Congress To Help The Economy — For At Least The Fourth Time In Five Months

November 20, 2010

NEW YORK — For at least the fourth time since June, Federal Reserve Chairman Ben Bernanke publicly urged Congress to combat the lackluster recovery by increasing government spending, a recommendation that has gone unheeded by lawmakers. In a speech at a conference of central bankers in Frankfurt, Bernanke once again said the Fed cannot save the economy on its own. The Fed’s recent move to add to its ballooning balance sheet by committing to buy up to $600 billion of government debt faces “limits” to its effectiveness, Bernanke said. The rest of the government, the chairman added, could aid the Fed’s efforts by hammering out a plan for stimulative spending. The right kind of spending, he noted, could help reduce the budget deficit over the long-term by first boosting economic growth. “[I]n general terms, a fiscal program that combines near-term measures to enhance growth with strong, confidence-inducing steps to reduce longer-term structural deficits would be an important complement to the policies of the Federal Reserve,” Bernanke said Friday, according to his written remarks. The fiscal policy recommendation came directly after Bernanke acknowledged it isn’t his job to make such policy proposals. “The Federal Reserve is nonpartisan and does not make recommendations regarding specific tax and spending programs,” the chairman noted. The official parameters of his job, though, have not stopped Bernanke from engaging in backseat driving. At least four times since June — on June 9, July 21, July 22 and now Friday — he has urged lawmakers to increase spending to jumpstart the lagging economy. But policy makers have proved to be unable to agree upon such a plan — or even propose one that’s viable. The rest of the nation has suffered as a result, as near-10 percent unemployment continues to hobble the economy. Democrats recently lost control of the House of Representatives, and a substantial part of their majority in the Senate. Voters said the dismal economy was their top concern. To combat an ineffectual Washington establishment, the Fed has taken matters into its own hands. By buying up to $600 billion of government debt, the central bank hopes to increase the flow of money through the economy. Critics of the program, which is intended to lower interest rates and encourage corporate spending, have said the cheap money will not convince businesses to create jobs. Companies are already sitting on about $1.8 trillion in cash and other liquid assets, according to the most recent quarterly data from the Fed. Only an increase in consumer demand and business confidence, critics say, will spur a robust recovery. Bernanke, too, has said the Fed’s actions won’t be enough. While its actions determine interest rates and the money supply, in order to be effective, Bernanke has said, it must be combined with expansionary fiscal policy. In other words, the government has to ramp up spending. By law, the Federal Reserve’s function is to “maintain long run growth of the monetary and credit aggregates” in order to promote “maximum employment, stable prices, and moderate long-term interest rates.” As Rep. Scott Garrett (R-N.J.) reminded Bernanke during a July hearing, “it would be an unconstitutional role for the Fed to engage in fiscal policy.” The central banker has not publicly supported actual bills pending in Congress. But over the past year, he hasn’t been shy about giving his opinion, and nudging Congress along: June 9, before the House Committee on the Budget : “Achieving long-term fiscal sustainability will be difficult. But unless we as a nation make a strong commitment to fiscal responsibility, in the longer run, we will have neither financial stability nor healthy economic growth. And he went on : “Right now I don’t think is the time — this very moment is not the time — to radically reduce our spending or raise our taxes because the economy is still in recovery mode and needs that support.” Fiscal stimulus, he said, is necessary. “I think, you know, right now we have a broadly stimulative fiscal policy which, at the moment, is helping, is needed, that includes lower taxes and probably higher spending as well.” July 21, before the Senate Banking Committee : “At the current moment the large deficits, as unattractive as they are, are important for supporting economic activity.” July 22, before the House Financial Services Committee : “More generally, certainly both the Fed, the Treasury, the Congress and everyone should try to focus on growth-oriented policies. It’s important to take steps, including control the fiscal deficit, that will support longer-term growth, which will increase confidence in the present, and to do what we can to reduce uncertainty, about policies and about the economy. … [I]n general, as I said, I think that maintaining the current level of fiscal support is important because the economy is still quite weak.” Bernanke, though, also wants Congress to get a handle on the federal government’s ballooning yearly deficits and overall debt. A growing chorus of experts believe that the government’s bulging debt endangers long-term growth. Among Bernanke’s statements: April 7, Dallas, Tex. : “Indeed, a credible plan that demonstrated a commitment to achieving long-run fiscal sustainability could lead to lower interest rates and more rapid growth in the near term.” April 14, before the Joint Economic Committee : “In other words, addressing the country’s fiscal problems will require difficult choices, but postponing them will only make them more difficult.” April 27, at the National Commission on Fiscal Responsibility and Reform : “Thus, the reality is that the Congress, the Administration, and the American people will have to choose among making modifications to entitlement programs such as Medicare and Social Security, restraining federal spending on everything else, accepting higher taxes, or some combination thereof. ” August 2, Charleston, S.C. : “Thus, state governments may wish to revisit their criteria for accumulating fiscal reserves. Building a rainy-day fund during good times may not be politically popular, but it can pay off during the bad times.” He continued, “The states have the opportunity to serve as role models for effective long-term fiscal planning.” October 4, Providence, R.I. : “What we do know, however, is that the threat to our economy is real and growing, which should be sufficient reason for fiscal policy makers to put in place a credible plan for bringing deficits down to sustainable levels over the medium term.” The Republican economist appears to believe that the best way to encourage economic growth and reduce the near-record unemployment rate is to increase government spending in the short-term; create a credible plan to tackle record deficits in the medium-term; and deploy that plan (and stick to it) over the long-term. Whether the White House and Congress can formulate such a plan — and agree to it — is a matter beyond Bernanke’s control. ************************* William Alden is the business writer for The Huffington Post. He can be reached at alden@huffingtonpost.com. Shahien Nasiripour is the business reporter for The Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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David Isenberg: Exposing Troops to a Carcinogen Is Not Part of Supporting the Troops

November 13, 2010

I truly did not intend to write about KBR for two consecutive days in a row. But as the saying goes, when it rains, it pours. We have a new development in the Qarmat Ali lawsuit which I last wrote about on October 22. This is the case where U.S. National Guard troops from Indiana, Oregon, South Carolina, and West Virginia were exposed to sodium dichromate, a known and highly potent carcinogen at the Qarmat Ali water treatment facility in Iraq. The ever laudable Ms. Sparky already has an excellent post about this and I’ll get back to that later. But as The Oregonian first reported: Documents exchanged in an Oregon lawsuit suggest that Kellogg, Brown and Root managers had medical tests proving workers at an Iraqi water treatment plant had “significant exposure” to a cancer-causing chemical, and managers worried about KBR’s liability as a result. The minutes of an Oct. 2, 2003 meeting about blood and urine tests from workers at the Qarmat Ali plant contradicts KBR’s long-standing claims that there was no medical evidence of harm. The documents also indicate KBR’s top health, safety and environmental manager knew plant workers continued to use the toxic chemical long after health alarms were raised. While piles of the corrosion fighter containing hexavalent chromium blew in the desert wind, the workers inside mixing the material wore gas masks. You can find the minutes here . Now bear in mind that ever since the law suit was filed against KBR it has steadfastly denied any wrongdoing and stated there is no proof of health problems from exposure to hexavalent chromium at Qarmat Ali. This, despite the fact that hexavalent chromium is recognized as a human carcinogen via inhalation [Note: Hexavalent chromium refers to chemical compounds that contain the element chromium in the +6 oxidation state. Virtually all chromium ore is processed via hexavalent chromium, specifically the salt sodium dichromate.]. Now I ask you to go and read the entire minutes in their entirety just so people don’t say I am cherry picking selected excerpts to prove a point. That said, consider the remarks at the very beginning. These are said by Chuck Adams, who was KBR’s HSE Manager for Team RIO [Restore Iraqi Oil] South. We are here to talk about the problem and share information so that we are all on the same page Around May-June we identified what chemicals were present Around July realized that Sodium Dichromate was in more places than supposed to be, basically open to atmosphere, scattered all over the water treatment plant Sodium Dichromate has been banned in the USA, no longer used for Water injection Sodium Dichromate has been identified as a high carcinogen Started doing testing to assess potential problem. Results showed high levels of Chrome III and Chrome VI Air samples results did not show threat Urine and blood sample showed elevated of chromium, meaning that there was a significant exposure Started doing some sealing in the area but people were breaking the seals. Wet back to do re-sealing Cannot allow personnel to be exposed, the company will be liable if let this happen. Now think about that last point for a moment. How, in good conscience can anyone at KBR now claim that there is no proof of health problems from exposure to hexavalent chromium when six years ago its own Health, Safety Environmental Manager was warning of the liability to the company if it continued to allow people to be exposed to it? I mean you don’t have to be Mr. Spock to see the illogic in that. Unless, of course, you are KBR, in which case it whines, oops, I mean argues, that the culprit is clear: it is the fault of the plaintiff’s lawyers who “improperly are attempting to influence public opinion, and the opinion of potential jury pools, by selectively disclosing only a few documents out of the many thousands of documents produced in this case.” I am reminded of the old classic truth, “When the law is against you, argue the facts. When the facts are against you, argue the law. When both are against you, call the other lawyer names.” I’m guessing that it is only a matter of time until KBR starts arguing that the lawyers for the National Guardsman are engaging in lawfare , which is defined as a form of asymmetric warfare waged via the use of domestic or international law with the intention of damaging an opponent. But you can read KBR’s full response here. Now as I’ve noted in the past part of KBR’s defense is to channel the Nuremberg Defense, i.e., it was just following orders. Putting aside the fact that this is germane to regular soldiers and the law is hazy on its applicability to contractors and that it is an ethically deplorable rationale, there is at least a grain of truth in it, which it brings us back to Ms. Sparky’s post. Many of her readers are particularly well informed, as they have often worked as contractors themselves. They point out that: KBR had a Contracts Administrator to communicate to DCMA [Defense Contracting Management Agency] Contracting Officers to ask what they should have done about the situation – clarify. Where is that communication KBR ? What did DCMA tell the company to do ? There are pieces missing, but this memo should lead to a few depositions being taken from those in attendance – some of whom have probably already claimed they knew nothing. and A Contracting Officer would still need to make a determination about this chemical. Who was the contracting officer in charge of that contract ? We want to know their name (s) Where is his or her deposition? Indeed, increasingly it seems a case of what did KBR know and when did it know it. Perhaps we should start calling this case Qarmat Aligate It is a good thing that KBR isn’t a member of the trade group that used to be called IPOA ). Otherwise IPOA might have to rethink its traditional talking point that thanks to contractors “Iraq and Afghanistan are the best supported, best supplied military operations in history.”

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Chris Guillebeau: How to Get Paid for What You Love

November 12, 2010

I’m no consultant, but from time to time (as in, several times a day) people ask for my opinion about building some kind of online business. I’m happy to give $0.02 for whatever it’s worth, and I’m sure there are times when it’s not worth more than that. How can you do something you love and make a good living from it? Much of my Unconventional Guides business is devoted to answering this question in one way or another. And as discussed before, often when we ask for advice, we don’t really want advice — we want someone to say “That’s great! Go for it!” But when people really want advice about building a business out of something they love, there are a few principles that are fairly universal. Starting with… Not everything you love makes a good business. In fact, most things you love don’t really make a good business. This is probably the most common misconception of the entire “follow your passion” concept: you love watersports, or crafting, or traveling, for example. So why not build a business around it and do what you love all the time? There are actually several reasons why this isn’t always a good idea, one of which is that you might not like everything that goes along with running a business as much as you like the actual activity. Sure, you like traveling… but how much do you want to work while you’re traveling? Do you like the business of crafting or just the crafting itself? Second, not everything you do is commercially viable. Chances are, no one will pay money to watch you go surfing, and this brings us to the next point… What you love must be relevant to other people. Whoever your prospects, customers, or clients are, they have to identify with what you do and believe it can be possible for them as well. That’s why you work to find the magic convergence between your passions and what customers will pay for. (I go on and on about this in my business work — if you have the Empire Building Kit , I’m sorry for repeating myself. But, I repeat myself: you have to meet a clear need or solve a real problem for the people who pay you. This is critical!) In fact, the more you can focus on other people’s needs and understand how they overlap with a skill you enjoy sharing, that’s where the real follow-your-passion model gains potential. Often you won’t get paid for the obvious thing, but something related. To get paid for what you love, you must inspire, educate, or entertain — preferably at least two of the three. But one way or another, you’ll get paid for helping people, not just being awesome. As much fun as it is, I don’t get paid to travel. I get paid because of a business I’ve built that helps other people; it has very little to do with my actual travel. Sometimes it helps to separate the business model from your passions, even if the two are ultimately correlated. The main question you have to answer for the business model is: “What will customers actually pay me for?” It probably isn’t surfing or travel, unless you’re teaching people to go surfing or travel. Instead of “breaking in” somewhere, create your own market. Freelance writing is a good example. As far as I can tell, supporting yourself as a freelance writer under the traditional system is effectively dead. Business Week, CNN, Psychology Today , and the Huffington Post all pay me a grand total of $0 for the articles they post with my byline. It’s worth it to me because I’ve built my own platform at AONC and UnconventionalGuides.com . Without that platform, I’d literally be working for free. So don’t worry about breaking in — figure out what you can do that no one else is doing, or at least how you can do it in a different way than everyone else is doing. You can waste a lot of time trying to get into an existing system, or you can put the time to good use and build your own system. (Ironically, when you do the latter, it becomes easier to break in to the original system as you go along.) Keep startup costs very low. Someone asked me the other day, “If you had $1,000 to start over with my business, how would you spend it?” I said I would get a $10 domain name, a free Wordpress installation, and a PayPal account. Then I would set up a one-page site and see what I could do with it. If it looked promising, there are plenty of things I could spend the remaining $990 on (I’d probably start with design). But the point is, I would first make sure I had some kind of viable idea. If you can start something without spending a lot of money, that’s best. If you have to invest some amount of money, that’s OK too. But the worst thing you can do is spend a lot of money and do nothing. Don’t do that! Find a way to make it work just a little . In Louisville, Kentucky I talked with Nick, who told me about a small photography business he wanted to start. A few weeks later, I saw him again in Charleston, West Virginia, and this time he had an update: “I sold a print for $50!” he said with great enthusiasm. And I knew exactly why Nick was so excited–he wasn’t going to cash it in and retire on one $50 sale, but it was very empowering to get paid for something he loved to do. When it comes to a lifestyle business, a little momentum goes a long way. The sooner you can get paid, even a small amount or a one-time sale, the better. *** The greatest benefit of a lifestyle business is freedom. But usually we find that freedom does not just appear out of nowhere; it requires a shift in mindset and the corresponding action. It also sometimes requires a surprising amount of work to maintain. ( If you love something, you have to protect it .) These disclaimers are not meant to dissuade anyone. Overall, I think this is a fantastic time to start a business and find a way to get paid for what you love to do. Don’t hold back! Just make sure you head off in the right direction. As I see it, the right direction begins with taking action, like Nick did with his $50 print sale. ### Image: The Wolf

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Les Leopold: When will we face up to the enormity of the jobs crisis?

November 12, 2010

“If future job creation reaches about 208,000 jobs per month, the average monthly job creation for the best year for job creation in the 2000s, it will take almost 140 months (about 11.5 years) to reach pre-recession employment levels. In a more optimistic scenario with 321,000 jobs created per month, the average monthly job creation for the best year in the 1990s, it will take 59 months (almost 5 years).” Michael Greenstone, Adam Looney “The Long Road Back to Full Employment: How the Great Recession Compares to Previous U.S. Recessions,” The Brookings Institution This may be the first time in American history that the super-rich are experiencing an economic boom while the rest of us are coping with serious economic difficulties. Even during the depths of the Great Depression there was some equality of suffering. Of course, the wealthy weren’t exactly standing in bread lines wondering if they’d ever work again. But the rich and the poor both felt the crisis. This time around, it’s a Tale of Two Cities: the super-rich are doing just fine, thanks to taxpayer largess, even as the rest of us are staggering through the highest sustained unemployment level since 1937. Our Wall Street billionaires easily weathered the financial storm that they themselves created. It’s as if nothing had happened. The financial reforms Congress passed are weak. The biggest banks actually are bigger. And Wall Street profits and bonuses are approaching record highs. That’s in stark contrast with the fact that more than 29 million Americans are without work or have been forced into part-time jobs. With the Republican landslide, the super-rich have nothing to fear from Congress. No need to worry about tax increases or tighter regulations now. The hedge funds will be able to hang on to their 15 percent tax rate (by claiming their earnings as capital gains) while raking in $900,000 an hour (not a typo). Meanwhile the pressure mounts to cut social spending–because, of course, we’ve got to combat the large deficits we racked up by giving tax breaks to the rich, bailing out Wall Street, and dealing with the financial crash that Wall Street created. (We get a deficit commission instead of a jobs commission?) But the real mystery is how quiet progressives are. We seem constitutionally incapable of facing the enormity of the employment crisis. As far as I can tell, most liberal advocacy groups are carrying on as if the economy hadn’t crashed at all. It’s like we’re all stuck in our remote silos – each working on our own separate issues. We have no shared vision, shared programs or shared will to tackle the broader unemployment crisis. We hope the economy will somehow resurrect itself so that we can go on fighting for our favorite cause without any further interruptions. Meanwhile, the right, especially the Tea Party, definitely is in crisis mode, and they have a plan. In my opinion they have misidentified the crisis – big government and debt – and have the wrong plan — cut taxes and government spending. But they have a vision, they have passion, and they’re not afraid to challenge not only the Democrats, but the Republicans. They’ve hit on a clever theory to explain the jobs crisis, one that can’t be disproved by facts: It’s caused by big government’s interference in the economy. The solution: slice government spending and regulations so that free enterprise can prosper. And if unemployment still remains high after budget cuts–well, then we just didn’t cut enough. It’s a perfect Catch 22. And the rest of us are saying …what? What do environmentalists propose to do about the jobs crisis? What is the women’s movement’s economic program? What do progressives involved in healthcare or education think we should do to create the 22 million new jobs we need to get back to full employment? Yes, there’s a lot of positive discussion about rebuilding our economy through green jobs and renewable energy. But the scale of these proposals is far too small to put much of a dent in the unemployment numbers. Are we all too afraid to say what’s really needed? We need hundreds of billions of dollars of public investment, right now, paid by taxes on the super-rich. Why are progressives so timid? Part of the answer lies in our permanent attachment to the Democratic Party. It seems that we can’t ever imagine a time when it would be appropriate to abandon or at least openly fight with the Dems–even those who abandoned us long ago. What will we do as the remaining Blue Dogs move even further to the right, joining with the Republicans on deficit reduction, gutting health care reform, outlawing abortions and stonewalling on climate change? One thing is certain — the Democratic Party is in no mood to lay out a bold national proposal to create the millions of new jobs we need. Most are tacking to the “center” to avoid the fate of Russ Feingold, the very best of the bunch. What would a massive job creation program look like ? Let’s start with a no-brainer: We hire an army of at least one million installers to weatherize every home and business in the country. Hiring all these workers –at decent wages –through tens of thousands of local contractors will probably add another 400,000 jobs (in addition to the original million) as these re-employed workers spend their earnings. Households and businesses will save on their energy bills, and we’ll reduce global warming emissions. The budget crisis facing state governments will ease as tax dollars start pouring in and unemployment insurance claims plummet. We’ll trigger an economic upswing that’s also good for the environment. Next, we should fund free higher education at all public colleges and universities, a social good that will also open up the job market by drawing people from the workforce into the educational system. A hiring and construction boom on campuses all over the country will generate a flood of jobs for our millions of unemployed construction workers. This is precisely how the GI Bill of Rights averted what could have been a staggering unemployment crisis after WWII–a time when millions of returning veterans were coming back home in search of work. Through the GI bill, three million instead went to school. Congressional studies show that the GI Bill returned almost $7 dollars of economic growth for every dollar invested–probably the best investment the federal government ever made. We should also invest massively in alternative energy research, in rebuilding and enhancing our infrastructure, and in meeting a myriad of other needs in our communities. Ask every town in the country to come up with ten projects that need doing right now, and then have the federal government fund them. The ripple effect would wake up our slumbering economy. Oh, but won’t all this cost a fortune? Aren’t we already tapped out from Wall Street bailouts and the half-assed stimulus program (not to mention two wars)? Good question — it gets us to the best part of our in-your-face program. We need to make those who crushed our economy, and whom we so generously bailed out, foot the bill. The American people, I believe, would support a windfall tax on financial profits and bonuses and eliminating tax loopholes on hedge funds to fund the jobs we so desperately need. Time for a Jobs Party ? Will any of this pass in the near future? Of course not. But it’ll never happen if we don’t propose what is really needed. We have no prayer of tackling the jobs crisis until we articulate a clear-cut agenda and start pressing for it. And we can’t do it alone. We need a sustained, organized voice independent of the Democratic Party that focuses clearly on the jobs crisis. In fact, we should take a cold hard look at creating a Jobs Party. Maybe, one day, it would become a third party that would truly vie for power. But at the very least it could create the same kind of chaos among the Democrats as the Tea Party is creating among the Republicans. Wouldn’t it be nice to see Democratic officials, fearing primary fights, tripping all over themselves to proclaim their allegiance to the Jobs Party agenda? Right now, the only conversation we’re hearing on jobs is a boring rerun of failed neo-liberalism – cut taxes on the super-rich, deregulate big business and pray for rain. Instead, we need to force politicians to engage in a much more aggressive national conversation about jobs. How are we are going to create the 22 million new jobs to get us back near full-employment? Will it really take eleven years or more, as the Brookings Institution study (cited above) suggests, for us to get these jobs back? That’s up to us. A Jobs Party with moxie could speed up the timetable during this new era of joblessness. Maybe all this sound fanciful and unrealistic. But let’s remind ourselves of how fast the world is changing. Did anyone believe that President Obama could go from being America’s darling to chopped liver in less than two years? Did anyone believe that a Tea Party would become a “credible” force among more than 40 percent of the electorate by pushing an agenda that died with Barry Goldwater a generation ago? Actually, the most fanciful path of all might be hoping we can muddle through indefinitely with the Democrats while ignoring the employment crisis as we plug away, day after day, inside our issue silos. Come on — let’s say what we really believe in before we forget how. Les Leopold is the author of The Looting of America: How Wall Street’s Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009. He is currently working on a new book, How to Earn $900,000 an Hour: The Rise of Wall Street Billionaires and the New Class War, (hopefully to be published in 2011).

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Valerie Orsoni: How to Succeed in a Macho World

November 5, 2010

Did you know that there was a time when women ruled the world? When the most revered figures were females: goddesses, empresses, and mothers? But three thousand years ago, the vast majority of humanity abandoned goddesses for gods as our ancestors settled and developed agriculture, marking the end of direct female domination. Or perhaps not? Thanks to their formidable inner-strength and unflinching determination, women soon began to develop their own talents in order to get what they desired, be it a husband, a child, wealth, a house, and more. Women intrinsically knew that achieving a goal was far more important than the path one takes to reach it. Women understood that they should never let men feel they have lost face or have been manipulated. Women inherently recognized that men need to believe they are responsible for their success in order to fully enjoy it. And women have always been aware that confrontation is not the way to victory (ultimately). So how do these realizations translate in our world today? How does the modern woman thrive in today’s macho business environment? There are several ways to succeed. They might all be combined, or they can exist individually, making it fairly easy in the end to succeed in a macho world! MyPrivateCoach / LeBootCamp conducted a survey where we asked 256 people (50/50 men to women ratio) if they agreed or disagreed to 6 specific statements, and the results are exciting! Indeed, the vast majority of women think they need to behave like men in order to be successful, whereas most men believe that what makes a woman successful is, in fact, her femininity! Before sharing the results with you, I’d like to share how one of our participants, Rebecca, summed up the fine line that women tread when doing business in a macho world: “If women are strong, they are ball busters, and if they show any weakness or softness, they are little girls trying to play in a man’s world.” (1) Use feminine attributes (Men: 90% – Women: 25%) Interestingly enough (and should I say, as expected), men and women are absolutely not in agreement on this statement. Little girls’ education gives us some undeniable advantages to compete in a dominantly male group or company: better communication skills, better empathy with colleagues and clients, and most importantly, better cooperation and better understanding of the modus operandi of our workmates. We also have a physical way of expressing our femininity, which men believe we try to hide more often than we should. This is even truer since the start of lawsuits against sexual harassment. However, businessmen are begging us: be yourself! You can dress professionally and in all your femininity without being provocative. Be a woman and be proud of it (keep in mind though, that a little pinch of perceived vulnerability won’t hurt either). However, I do notice that many female executives and CEOs (still too rare) in the software, legal, banking and high-tech industries, wear rather conservative suits (usually pants) and short haircuts… something to think about! Is this the reason for their success? Or are they trying to avoid despising comments like: “I know how she climbed the ladder — short skirt and sexy attitude.” (2) Talk about facts, not feelings (Men: 95% – Women: 30%) Again, it all goes back to our childhood games, and women tend to give more weight to non-tangible elements than facts in a business relationship. While this attitude can be a great sales closing tool, more often than not, it will hamper our efforts in the day-to-day corporate world. Strive at not letting your emotions take over facts. Do not take things personally. When you foresee your feelings may prevent you from considering facts in a clear manner, or negotiating successfully, sit back, relax and reformulate your thoughts and ideas in a logical and rational way. Rather than saying: “I like this idea,” try to (think, and) say: “This idea will work because of XYZ logical or marketing reason that we know about this audience.” This works wonders in a male/female business relationship. If we look at what men and women think about this statement, we see an enormous gap! Almost all men agree that facts matter! Women don’t seem to realize how much of a showstopper the “facts vs. emotions paradigm” is. (3) Don’t imitate male machismo (Men: 76% – Women: 20%) Thriving in a high-profile executive job requires a “genetic” mutation: the development of thick skin (Men: 54% – Women: 89%) typical to men, to prevent direct attacks from hurting while still remaining soft so as not to hurt the male ego. The most effective female business leaders I have met don’t try to imitate male machismo. They use some “feminine” attributes such as greater attention to interpersonal interaction, and a degree of approachability in order to lower people’s defensiveness. But underlying this soft approach they remain focused on the bottom-line goals, express self-confidence, and succeed in achieving those goals without having the men around them feel that they have been manipulated or lost face. What’s more, imitating is irritating. And, though men are not people readers in general, they can see through a bad imitation almost instantaneously. (4) Be a warrior (Men: 25% – Women: 75%) Let’s not deny it: not giving in to male machismo does not mean we should be subdued to everything! Being a warrior, or developing a survivor’s spirit helps a woman be more successful — NO question about it. The only problem is that we are not wired to accurately identify rivals. We are not wired to be warriors; we have to work on becoming one. If you develop into a warrior yourself, think like a man and play his game. Since women have this great ability to adapt to nearly any situation, this should not be too tough. Paradoxically, this attitude will help you mingle better in situations where you are the only woman. But once you’ve found your place, remember to shift to a more feminine (and more efficient) attitude. (5) Treat men as equal (Men: 60% – Women: 76%) Stop thinking he is man, I am woman, there must be some difference. By brainwashing ourselves into thinking about differences, we focus on the wrong element and hinder our ability to succeed. Let’s stop thinking about differences; when conducting business, let’s believe in one species: Homo sapiens. (6) Recognize when the game is over (Men: 82% – Women: 13%) Harking on the past and broaching former incidents when in the heat of an argument, is a typically female habit. This attitude is particularly detrimental to our business success in a dominant male world. What happened five years ago, is over; no need to bring it to the (business) table anymore. I know it is a hard one; we are wired to react this way… but aren’t we also wired to be extremely adaptive? ;-) Keep in mind that this wiring happens when we are very young. Little boys are taught to play war-oriented games and sports, which have a clear end. In contrast, little girls play with dolls and kitchen sets — activities that have no real clear-cut ending; play that is more of a process rather than a timed game. The poll result for this one was very interesting, indicating that women do not consider this attitude as a showstopper when it comes to their success in the corporate world. I bet that you have found yourself using (whether consciously or not) one or more of these key factors to success in a macho world, and likely discovered that it was not THAT easy or THAT straightforward. Recapturing the former woman’s glory, not to mention its social, religious and political power, is considered difficult, if not unattainable. But is it necessary? I don’t subscribe to this point of view. In fact, I don’t support allegation about gender struggle in general, as I have never believed that businessmen and businesswomen were doomed to be at odds. The old dichotomy of black/white, man/woman, power/submission is long gone. In 2010, the “businesswoman homo sapien” species has evolved and is now a patent pending complex mix of 10% man, 2% warrior, 88% woman. I will leave the last words to one of the male participants in the survey, who is definitely not macho: “The best way to succeed in a macho world is to make up your own rules, rather than compete with the macho element. The bottom line is that the macho thing may look formidable, but it’s really not an effective business strategy; (in my opinion) it lacks subtlety…”

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Lynn Parramore: Green Tide: The More Money You Make, the More Likely You Voted Republican

November 5, 2010

Memo to David Brooks, whose sentimental, fact-free musings on working class Americans and how they rejected the Democrats graced the Opinion page of the New York Times today: Think that ordinary, hard-working folks have gone Republican? Think again. The Wall Street Journal has posted some very illuminating charts on 2010 voter preferences that help us blow through the blather and by-pass the baloney. Despite what you are hearing about Tea Party Populism and hopping mad Main Streeters, one thing is indisputable. The more money you make, the more likely you were to cast a ballot for Republicans in the 2010 elections. The GOP was swept into office by a green tide of affluence. The numbers do not lie, friends. And here they are. Voters who said their income is… Less than 30K per year voted 58% for Dems, 40% for Repubs 30K – 49,999: 52% for Dems, 45% for Repubs 50K-74,999: 46% for Dems, 52% for Repubs 75K – 99,999: 43% for Dems, 56% for Repubs 100K-199,999: 43% for Dems, 56 for Repubs Over $200,000: 36% for Dems, 62% for Repubs Notice that as soon as you past the average household income level in the United States, which is currently around 50K per year , you see voters trending Republican. What to make of this? Well, poor and working class people are not stupid. They know darn well that Republicans are out to put the squeeze on them. Make no mistake: they’re plenty mad at Democrats for all the bank-centric bullshit and backroom deals. They are outraged that the same crooks that got bailed out are now kicking them out of their houses. But they aren’t fooled by the phony populism that the Right is spewing. They know that between the two parties, the Democrats at least have a vestigial memory of standing against the brutal income inequality, exploitation, wage depression and ripping of social safety nets that the Right has come to think of as the norm. More affluent folks, on the other hand, are feeling greedier as their uncertainty about the future heightens. Apparently many of them aren’t in the mood to share. The Journal observes that the 2010 trend represents a distinct shift from 2006. “Democrats saw support in their long-term stronghold of low earners, while Republicans – many of whom have espoused tax overhauls that would limit income taxes – saw more support at higher income levels. A two-point edge in 2006 among voters with income between $50,000 and $75,000 a year turned into a deficit for Democrats, the preliminary data showed. And a five-point advantage among those with income of $75,000 to $100,000 has turned into a more substantial deficit for Democrats. These income groups made up a third of the 2010 electorate, early data showed.” Somehow, we have got to convince more of the affluent voters that the ever-widening gap between the rich and poor is not in their interest, no matter how uncertain the future looks. It rips communities apart. It leads to every kind of social ill and unrest, from increased crime to depression to teen pregnancy. It’s ruinous to democracy and it’s even destructive to capitalism. Society will absorb only so much unfairness, only so much disparity between haves and have-nots. Ideas like cutting Social Security, extending tax breaks to millionaires and billionaires, cutting unemployment benefits so that Americans will take any job they can get, no matter how shitty, are the kinds of things these Republicans who have just been elected are going to be talking about. The trick is to get the Democrats to stop getting cowed and call them out. To get them to ask themselves tough questions about how they drifted from their roots, and how they can come back to being the party that they historically have been: the one that protects average, hard-working Joe and Jane. Cross-posted from New Deal 2.0 .

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Twitter Mood Predicts Stock Market Changes, Study Says

October 18, 2010

In the latest effort to determine how exactly Twitter will help the world , a new study argues that the micro-blogging platform can predict movements in the stock market. The report (pdf) , authored by Johan Bollen, Huina Mao and Xiao-Jun Zeng, says that the degree of “calmness” of the Twitterverse can predict — with 87.6 percent accuracy — how the Dow Jones Industrial Average will move, two to six days before the movements occur (hat tip to the Awl ). To reach this conclusion, the researchers examined two already-existing Twitter “mood tracking tools”: OpinionFinder, which measures positive versus negative mood, and Google-Profile of Mood States, which measures “six dimensions” of mood: alert, sure, vital, kind, happy and calm. After double-checking the accuracy of these tools, they looked at 9.7 million tweets between March and December 2008 and determined that Twitter calmness predicts the behavior of the DJIA. They find it “surprising,” they say in the report, that OpinionFinder’s positive/negative indicators didn’t have more influence, and that it was “calmness” that appeared to anticipate moves in the market. The study’s authors are quick to note that they have no idea why this should be the case. The researchers say their findings “offer no information on the causative mechanisms that may connect public mood states with DJIA values in this manner.” While “calmness” might predict market movements, it doesn’t necessarily cause them. Also perplexing is the fact that the tweets came from around the world, and the researchers don’t know how many of them were conceived in the U.S., where the DJIA is based. And of course, other influences, such as news, can trump the “calmness” factor. As the researchers put it, “The deviation between Calm values and the DJIA … illustrates that unexpected news is not anticipated by the public mood yet remains a significant factor in modeling the stock market.” Still, as Technology Review notes, these potential flaws don’t detract from the fact that the findings could be “hugely influential.” If nothing else, the results suggest the influences on the DJIA extend far beyond the financial community. “One could speculate that the general public is presently as strongly invested in the DJIA as financial experts, and that therefore their mood states will directly affect their investment decisions and thus stock market values, but this too remains an area of future research,” the report says.

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Ron Ashkenas: Why We Secretly Love Meetings

October 7, 2010

Cross-posted from Harvard Business Online Is too much of your time spent in unnecessary or ineffective meetings ? If so, you’re not alone. Most managers consider meeting fatigue and meeting failures as two of the most significant drains on their productivity . As a result, an entire industry has sprung up over the past twenty years focusing on “meeting management.” Every company has courses on how to run good meetings , and in case you miss the training there are posters , laminated cards, and checklists for preparation, conduct, and follow-up. As a result of this saturation of meeting education, almost every manager knows the basic rules: Be clear about what you want to accomplish; invite the right people; send out pre-reading in advance; have an agenda and follow it with discipline ; send out notes with key decisions and action steps. You know the drill. Unfortunately these basic and widely understood guidelines for effective meetings are probably the least followed procedures in corporate history. If the government conducted “meeting audits” almost every company would fail. Most managers still complain about ineffective meetings, and then proceed to schedule multiple meetings and run them poorly. It’s an amazing phenomenon. This leads to one of the dirty little secrets of organizational life: Despite their protestations, at an unconscious (or conscious) level most managers actually like meetings, and for several reasons. They encourage social interaction. Most people don’t enjoy working alone; they want contact and relationships with other people. Meetings make them feel part of a community, and give them an outlet for sharing their personal feelings and opinions, not only on work issues but also on personal or political topics. So, some of the seemingly off-target chatter in meetings (even the complaining) is actually the realization of an important social outlet. They keep everyone in the loop. As firms have become more matrixed and interdependent, meetings serve as the informal loom that weaves together the organizational threads. People need to know what’s going on in other parts of the organization. They need informal sources to supplement the formal communication mechanisms — and to guide them through political and personal minefields. These information networks are created, reinforced and expanded through meetings. They often represent status. Membership on multiple committees means that you are important, your opinion is valued, and you have a seat at a decision-making table. Attendance at staff meetings means that you are part of the leadership team. Even being asked to present or answer questions at a meeting on a one-time basis gives you visibility with senior people and is status-enhancing. These psychological drivers of meetings are very powerful — and usually trump all of the logical and rational “meeting management” advice that is doled out in courses and articles. In other words, what seems like wasted or unproductive time for many managers is actually fulfilling important personal and organizational needs. This does not pardon meetings run wild and the time we lose to them. Managers at all levels need to be continuously on guard against unnecessary meeting proliferation and poor meeting disciplines. For example, several years ago in GlaxoSmithKline’s research organization there was a realization that — as a result of multiple project meetings and the inclusion of all functions on drug development teams — many people were spending as much time in meetings as they were on actual drug development work. As a result the company developed a “fit for purpose” meeting process in which only the people directly involved in a particular phase or issue of the project attended the meetings, while others just received information. All organizations should periodically look at their meeting patterns and make adjustments like this in addition to encouraging the use of agendas, virtual meeting approaches, and all the rest. However just complaining about too many meetings or poorly run meetings won’t do much good. Like moths to a flame, we’ll keep coming back, no matter what we say. What are your feelings about meetings?

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Heartbeat Experts signs 6 APAC Key Opinion Leader MGMT clients

October 6, 2010

Heartbeat Experts signs 6 APAC Key Opinion Leader MGMT clients

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Lloyd Chapman: Jobs Bill Could Harm Legitimate Small Businesses

September 23, 2010

This afternoon, the U.S. House of Representatives passed “jobs legislation” that will do little to create jobs or stimulate the nation’s economy. The American Small Business League (ASBL) maintains H.R. 5297, the Small Business Jobs Act, contains a loophole that may hurt small businesses by allowing large businesses to hijack small business programs without fear of prosecution. Section 1341 states that the Administrator of the Small Business Administration (SBA), “shall promulgate regulations to provide adequate protections to individuals and business concerns from liability under this subsection in cases of unintentional errors, technical malfunctions, and other similar situations.” ( http://finance.senate.gov/legislation/details/?id=da799068-5056-a032-5229-92cebbd2b7a0 ) The ASBL believes that this language may create a loophole under which large prime contractors could be protected from prosecution for felony contracting fraud under the guise of, “unintentional errors, technical malfunctions, and other similar situations.” Since 2003, more than a dozen federal investigations have uncovered billions of dollars in federal small business contracts actually flowing into the hands of corporate giants. Firms included in the Obama Administration’s small business data include Lockheed Martin, Boeing, Raytheon, General Dynamics, Ssangyong Corporation headquartered in South Korea, and Italian firm Finmeccanica SpA. ( http://www.asbl.com/documents/20090825TopSmallBusinessContractors2008.pdf ) In February of 2008, President Obama promised to end the diversion of federal small business contracts to corporate giants. This bill creates a colossal loophole that will make it easier for large firms to avoid prosecution for contracting fraud. In my opinion, the net effect of this bill will be harmful to job growth. The potential for harm greatly outweighs any potential for benefit. In addition to concerns about Section 1341, the ASBL does not believe H.R. 5297′s lending provisions or tax cuts are likely to create new jobs. Research by the Economic Policy Institute and Princeton University’s Center for Economic Policy Studies indicates that tax cuts do not create jobs. Additionally, the National Federation of Independent Businesses (NFIB) and the Congressional Oversight Panel have separately concluded that small businesses are in desperate need of demand as opposed to loans. The ASBL maintains that the most effective way to create jobs and stimulate the economy is to direct federal infrastructure spending to small businesses. This could be done by adopting H.R. 2568, the Fairness and Transparency in Contracting Act, which would stop the diversion of federal small business contracts to corporate giants.

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Bob Barr: Extending Ethanol Tax Credit Makes Sense

September 23, 2010

The ethanol tax credit, known commonly by its congressionally-bestowed acronym, “VEETC” (the “Volumetric Ethanol Excise Tax Credit” for those who delight in impressing cocktail-party acquaintances with their knowledge of trivia), is the tax credit many conservatives and liberals alike love to hate. Both sides, however, would be well-advised to push aside ideologically-based peeves for the time being, and support extension of the credit beyond its scheduled December 31st expiration. Outside those states boasting heavy corn production, which is the most common product source for the biofuel ethanol, few Americans — including the millions of motorists who daily benefit from inclusion of ethanol in the gasoline that fuels their vehicles — VEETC is essentially unknown. This understandable lack of public awareness accounts for much of the trouble proponents of the tax credit are encountering in their efforts to convince Congress to include an extension in some piece of legislation that will make its way to President Obama’s desk in the final weeks of this 111

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Charles H. Green: Kolchinsky vs Moody’s: the Perils of Whistle Blowing

September 14, 2010

Many of you remember Sherron Watkins , who shall forever be known as the Whistle Blower of Enron. She was named Person of the Week by Time Magazine back in early 2002. But Sherron was no fly-by-night. I saw her speak, and she’s smart, thoughtful, and clearly of strong character. A not-uncommon set of characteristics for whistle-blowers, as it turns out. Read her empathetic comments about another whistle blower, Harry Markopolos , of Madoff fame. But there’s another whistle blower in town, and he deserves a look-see as well. In this case, his name is Ilya Eric Kolchinsky, and the company he’s blowing the whistle on is his former employer, Moody’s Investors Service. When Kolchinsky used to work for Moody’s, he criticized some of their practices. Moody’s resisted to some extent, and to some extent changed practices based on his criticism. Or so it seems. You can read the NYTimes article Kolchinsky and Moody’s . What’s unusual here is that Kolchinsky is filing suit against Moody’s not to ‘out’ Moody’s original actions, but to say that Moody’s effectively blacklisted him after the fact. You can look up his LinkedIn page and see that he had quite a good track record before his stint at Moody’s, but has been doing consulting work well off Wall Street since then. You can read the text of Kolchinksy’s lawsuit yourself. Make up your own mind; don’t take my opinion of its validity, judge for yourself. Here’s why you should care. The Perils of Whistle Blowing In my humble and non-legal opinion, he’s got a case. And if he does, here’s what follows: First, it sucks to be a whistle-blower. And if you don’t believe Kolchinsky, go back and read Watkins and Markopolis. The Enrons, Madoffs and Moodys of the world don’t take kindly to criticism. Second, if they do this to whistle blowers who tell the truth (proven in Watkins’ and Markopolis’ cases, yet to be proven in Kolchinksy’s), then how can you trust what they have to say? Can you say “opaque”? Third, if it’s true at Moody’s that you get punished for telling the truth, then what does that tell you about the internal culture at Moody’s right now? How likely is it that others are going to be telling the truth–particularly about whatever it is they’re telling you is the truth? And how fixed are things that need fixing? Kolchinsky and Moody’s will get their day in court, and of course it’s premature to speculate. But I will say this. The sounds of whistles being blown often, albeit not always, signify fire. And if you get to the point where a multi-year Managing Director is suing you–well, I wouldn’t lay big money that he’s cuckoo. It’s more likely that Wall Street is very effective at chilling dissent. Here’s what the Times article went on to say: Experts on whistle-blower suits expressed surprise that more such suits had not been filed. “We didn’t see people coming from Wall Street, from the brokerages — it was stunning,” said David K. Colapinto, the legal director for the National Whistleblowers Center, a nonprofit organization in Washington that tracks whistle-blower cases. “What it signals is there just are not incentives for people to come forward, and there may have been big disincentives.” My guess is it took nerves and a lot of provocation for Mr. Kolchinsky to take the steps he did.

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Irena Medavoy: Botox Bullet

September 14, 2010

Five years after the end of my lawsuit against Allergan — which I believe was the first lawsuit of its kind seeking damages for off-label use and misbranding of Botox — it is interesting to see that company finally agree to pay the federal government hundreds of millions of dollars to settle criminal accusations. Like many plaintiffs who have attempted to obtain justice in the courts against pharmaceutical companies, I did not succeed at trial — including in my claims that close financial and professional ties between my doctor and Allergan should have been disclosed to me. I famously (or perhaps infamously) lost at trial when a divided jury ruled against me on my claims regarding the physical harms I alleged and the trial court judge refused to hear my claims regarding alleged illegal marketing of Botox. But I now take comfort in the hope that my lawsuit may have played a role in raising public awareness about, and ultimately federal government attention to, Allergan’s practices in marketing Botox. According to the Department of Justice’s full press release about the settlement, if the settlement is approved, then Allergan must post on its website information about payments to doctors, such as honoraria, travel or lodging, in order to increase the transparency of Allergan’s interactions with physicians. This basic issue of disclosure is a matter of great importance to me, and should be for all members of the public. The federal government’s settlement with Allergan is an important step in the right direction, but it is not a complete solution. Wholly apart from whether Allergan in particular must now disclose such information about the doctors that it compensates is the far greater issue of why all doctors and pharmaceutical companies do not disclose such information regarding any drug or treatment being prescribed. In my opinion, it is important for patients to know such information, and there should be a legal right for patients to know such information, if such a right does not already exist under laws governing fair business practices. When I brought my lawsuit against Allergan alleging that I had been seriously and life-alteringly harmed by the spread of Botox throughout my body, my claims were met in some circles with disbelief and ridicule — and in other circles with full belief in their validity. Just a few years later, on July 31, 2009, according to information still available on the website of the Federal Drug Administration , the FDA “approved the following revisions to the prescribing information of Botox/Botox Cosmetic . . .: A Boxed Warning highlighting the possibility of experiencing potentially life-threatening distant spread of toxin effect from the injection site after local injection.” In my lawsuit, I also argued that Allergan’s promotion of off-label uses of Botox was against the law. Now, according to the Department of Justice press release, Allergan has been the subject of a criminal FBI investigation for its marketing practices. That investigation surely was an ugly experience for Allergan that must have caused its executives to experience headaches that could not be cured by Botox. Even though Allergan has had some success in beating back litigation by private plaintiffs like myself, finally, in the face of criminal charges by the federal government, Allergan has agreed to pay hundreds of millions of dollars based on charges similar to those that I alleged and that others like me alleged. Other plaintiffs now have their own lawsuits pending against Allergan regarding Botox. My hope is that those other plaintiffs, with the recent history of federal regulatory action against Allergan, will find success in the courts and that in the future potential patients will be adequately informed and protected from harm.

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Donald Trump’s Mosque Offer REJECTED: ‘Cheap Attempt To Get Publicity’

September 9, 2010

NEW YORK — Donald Trump offered Thursday to buy out a major investor in the real estate partnership that controls the site near ground zero where a Muslim group wants to build a 13-story Islamic center and mosque. The offer, though, fell flat nearly instantly. “This is just a cheap attempt to get publicity and get in the limelight,” said Wolodymyr Starosolsky, a lawyer for the investor, Hisham Elzanaty. In a letter released Thursday by Trump’s publicist, the real estate investor told Elzanaty that he would buy his stake in the lower Manhattan building for 25 percent more than whatever he paid. “I am making this offer as a resident of New York and citizen of the United States, not because I think the location is a spectacular one (because it is not), but because it will end a very serious, inflammatory, and highly divisive situation that is destined, in my opinion, to only get worse,” the letter said. Trump also attached a condition to his offer: He said that as part of the deal, the backers of the project would need to promise that any new mosque they constructed would be at least five blocks farther away from the World Trade Center site. In Gainesville, Fla., a minister said he had canceled plans to burn copies of the Quran because the imam leading the mosque agreed to move its location. Imam Feisal Abdul Rauf said that he was surprised by the announcement and that he would not barter. The current planned location is just two blocks north of the site. Opponents argue it’s insensitive to families and memories of Sept. 11 victims to build a mosque so close to where Islamic extremists flew planes into the World Trade Center and killed nearly 2,800 people, while proponents support the project as a reflection of religious freedom and diversity. It’s unclear how much control Elzanaty has over the property, which is owned by an eight-member investment group led by Soho Properties, but his response was unequivocal. “He knows what the value of the building is. If he were really interested in buying the buiding, he would have come forward with at least $20 million,” Starosolsky said. Elzanaty said he remains committed to the idea of having a mosque built on at least part of the property. A spokesman for Soho Properties general manager Sharif El-Gamal and his nonprofit group, Park51, did not immediately respond to a request for comment Thursday. Earlier in the day, the organization sent a statement to The Associated Press affirming that Soho Properties controlled the real estate and that Elzanaty was one of several investors. El-Gamal and other people associated with the Islamic center have refused to detail the ownership structure of the real estate partnership that holds the site. Elzanaty’s lawyer did not immediately return a phone message Thursday. But in a pair of interviews with the AP this week, Elzanaty said he had invested in the site with an intention of making a profit and was willing to half the land for private development, and maybe all of it if a Muslim group doesn’t come forward with enough money to build the mosque.

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David Isenberg: Strike Two on "Just Following Orders" Defense

September 9, 2010

To paraphrase Yogi Berra it’s déjà vu all over again for KBR. In my Aug. 31 post I wrote about a significant pro-veteran ruling in the Oregon KBR Qarmat Ali litigation. This is the case where Oregon National Guard troops allege KBR’s liability for negligence and for fraud arising out of plaintiffs’ exposure to sodium dichromate and resultanthexavalent chromium poisoning while assigned to duty at the Qarmat Ali water plant in 2003. Paul Papak, the federal district judge rejected the motion by KBR and co-defendants to dismiss the suit for lack of subject-matter jurisdiction and rejected it. I noted that the end result was that the “we were just following orders” defense is looking even lamer than ever. Now it turns out another judge, ruling on another KBR issue, its running of burn pits in Iraq and Afghanistan, has ruled the same way. Sick soldiers deployed in Iraq and Afghanistan filed claims against the corporations because of “alleged failures of the military contractors to treat water and dispose of waste in a manner required” by their contract with the US military. Today federal court judge Roger W. Titus ordered that claims against military contractors, KBR (Kellogg Brown and Root) and Halliburton, may proceed. In his 41-page opinion Judge Titus dismissed the jurisdictions of the defendants and is allowing limited discovery to go forward. In its ruling the Court stated, “In tension with the exercise of caution supported by these legal defenses is the legitimate concern that the judiciary may prematurely close courtroom doors to soldiers and civilians injured from wartime logistical activities performed by hired hands allegedly acting contrary to military-defined strictures. Courts must be prepared to adjudicate cases that ultimately expose defense contractors to appropriate liability where it is demonstrated that they acted outside the parameters established by the military and, as a result, failed to exercise proper care in minimizing risk to service members and civilians.” The judge notes the defendant’s objections to proceeding with the case based on 1) that Plaintiffs’ claims are nonjusticiable under the political question; 2) they are entitled to “derivative sovereign immunity” based on the “discretionary function” exception to the federal government’s waiver of immunity in the Federal Torts Claims Act and 3) are preempted by the “combatant activities” exception in the FTCA. But he then writes: In tension with the exercise of caution supported by these legal defenses is the legitimate concern that the judiciary may prematurely close courtroom doors to soldiers and civilians injured from wartime logistical activities performed by hired hands allegedly acting contrary to military-defined strictures. Courts must be prepared to adjudicate cases that ultimately expose defense contractors to appropriate liability where it is demonstrated that they acted outside the parameters established by the military and, as a result, failed to exercise proper care in minimizing risk to service members and civilians. These rival considerations drive Plaintiffs’ opposition to Defendants’ motion. Plaintiffs emphasize the preliminary nature of this lawsuit and the narrow tailoring of their tort claims to wartime logistical activities negligently performed by Defendants in breach of their duties under LOGCAP III. They argue that discovery relating to their claims is necessary and can be limited so as to avoid separation of powers and competency concerns and to minimize any potential interference with, and detraction from, the war efforts. For the reasons provided below, the Court agrees with Plaintiffs that their claims, based on their as yet unproven factual allegations, may be justiciable at this time. An initial phase of carefully limited discovery is therefore appropriate in order to frame the issue with sufficient facts so that the Court may make an informed decision. Now, this should not be taken that the Oregon National Guardsman will ultimately win in court. It is far too soon to be making such a prediction. For example, in explaining his decision the judge refers to various “Baker” factors. The Baker factor refers to a 1962 case in which the Supreme Court set forth six independent guidelines to aid a court in identifying a political question. 1. A textually demonstrable constitutional commitment of the issue to a coordinate political department; or 2. A lack of judicially discoverable and manageable standards for resolving it; or 3. The impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; or 4. The impossibility of a court’s undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or 5. An unusual need for unquestioning adherence to a political decision already made; or 6. The potentiality of embarrassment from multifarious pronouncements by various departments on one question For example, in regard to the first factor the judge is not ruling on whether the plaintiffs can meet their burden of proof motion. Rather he is asking whether the key inquiry posed by the first Baker factor of the political question doctrine is whether the Court can adjudicate this case without second-guessing the reasonableness of the military’s operations and decisions. Judge Titus says that “Based on Plaintiffs’ narrowly tailored claims, the Court believes it can, albeit with significant restrictions on the scope of the inquiry.” In regard to second Baker factor the judge wrote: The negligence standard is very flexible and depends heavily on the circumstances in each case. As of now, the Court does not know the precise nature of Defendants’ allegedly negligent actions nor their attendant circumstances. Only after discovery develops the facts surrounding any unauthorized acts by Defendants can the Court evaluate whether workable standards exist. Accordingly, the second Baker factor does not exclude this lawsuit from judicial review at this time. In looking at the fourth and sixth factors the judge wrote: Again, because Plaintiffs’ allegations pertain only to Defendants’ allegedly unauthorized performance of waste disposal and water treatment services, it is doubtful that the exercise of jurisdiction by this Court will somehow disrespect or embarrass the executive or legislative branches. In fact, subjecting defense contractors to potential tort liability for actions not approved by the military arguably expresses respect for the executive branch. [My emphasis] In a rulemaking to implement policy regarding contractor personnel authorized to accompany U.S. Armed Forces deployed outside the United States, the Department of Defense (“DoD”) explicitly advised military contractors that they could be subjected “to prosecution or civil liability under the laws of the United States and the host nation” for the “inappropriate use of force.” Defense Federal Acquisition Regulation Supplement; Contractor Personnel Authorized to Accompany U.S. Armed Forces, 73 Fed. Reg. 16,764, 16,767 (Mar. 31, 2008). When contractors expressed concern about their defenses in tort litigation, DoD made clear that it thought the rule “adequately allocates risks, allows for equitable adjustments, and permits contractors to defend against potential third-party claims.” Id. at 16,768. The DoD explained: [T]he clause retains the current rule of law, holding contractors accountable for the negligent or willful actions of their employees, officers, and subcontractors. . . . Contractors will still be able to defend themselves when injuries to third parties are caused by the actions or decisions of the Government. However, to the extent contractors are currently seeking to avoid accountability to third parties for their own actions by raising defenses based on the sovereignty of the United States, this rule should not send a signal that would invite courts to shift the risk of loss to innocent third parties. Consistent with the DoD’s position, the Court will not, at this early stage, allow contractors “to avoid accountability to third parties for their own actions” based on the political question doctrine, or as discussed below, based on the sovereignty of the United States. Id. (emphasis added). But perhaps the most intriguing part of the opinion comes when the judge discusses the Derivative Sovereign Immunity defense. As a general matter, the United States as a sovereign is immune from suit except under those limited circumstances in which it has waived that immunity. Judge Titus writes: The costs, however, of blanketing government contractors with the sovereign’s cloak of immunity at this early stage of the litigation are significant. In this case, Plaintiffs seek compensation for injuries resulting from exposure to burn pit emissions and contaminated water, which they allegedly would not have suffered absent what they claim were the Defendants’ decisions to breach LOGCAP III without the necessary military permission and to otherwise disobey military directives. Assuming the truth of these allegations, refusing such victims compensation and allowing Defendants’ allegedly unauthorized conduct to go unredressed would be contrary to the most fundamental tenets of our legal system. See Westfall, 484 U.S. at 295. In addition to shifting the risk of loss onto innocent plaintiffs, inappropriately extending official immunity to defendants would discourage them from properly assessing the risks involved in their actions and taking proper precautions. See 73 Fed. Reg. at 16,768 (“However, to the extent contractors are currently seeking to avoid accountability to third parties for their own actions by raising defenses based on the sovereignty of the United States, this rule should not send a signal that would invite courts to shift the risk of loss to innocent third parties. The language in the clause is intended to encourage contractors to properly assess the risks involved and take proper precautions.”). Thus, the costs of immunity to the hundreds of named Plaintiffs and to future government-defense contractor relationships are obviously considerable. Based on this preliminary balancing of interests, it cannot be said at this juncture that the public interest demands that the Westfall absolute immunity protect Defendants to the same extent it protects federal officials. Plaintiffs contend, and the Court agrees, that this case can proceed while “insulat[ing] the decisionmaking process from the harassment of prospective litigation.” See Westfall, 484 U.S. at 295. So long as the military’s decisionmaking process remains insulated and the government is freed from the “costs of vexatious and often frivolous damages suits,” id., the benefits to government efficiency are outweighed by the interests of the Plaintiffs in securing compensation for injuries resulting from Defendants’ allegedly unauthorized acts and of the public in holding Defendants accountable for any such wrongful conduct that may be proven.

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Samuel H. Williamson: It Is About the Dependency Ratio

September 2, 2010

Perhaps I should have said non-working instead of dependent population. The common definition of the dependency ratio is “an age-population ratio of those typically not in the labor force (the dependent part) and those typically in the labor force (the productive part)” and this is why I used that term. The point is, no matter how rich they are, everyone who is not working depends on workers to produce goods and services for consumption. For over a century developed nations have decided the dependency ratio in the private sector with things such as mandatory retirement and industrial pensions, and in the public sector with programs such as Social Security. In my opinion it is a legitimate question for public debate as to what the most desirable dependency ratio should be. Social Security is (only) one mechanism to achieve the desired ratio, but an important one. Let us decide what ratio we want, then debate how to get there. I gather there are some who would rather let the market decide all — if you have enough funds set aside you can stop working, otherwise…

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April Rudin: Word of Mouth Marketing — Powerful Messaging Via an Affordable Medium

August 18, 2010

Word of mouth marketing has been getting a lot of buzz recently. Word of mouth marketing in its simplest form is a new name for an ancient hobby: talking about which things we like or dislike with friends, family, business associates, etc. Through these conversations, we are making recommendations and helping to shape public opinion albeit on an incremental basis. Marketers today are measuring and categorizing these messages utilizing new tools under the auspices of the much bantered around term social media. In my opinion, word of mouth (WOM) marketing is a medium which allows for powerful yet affordable messages to be spread through the consumer world. First, what is word of mouth marketing and how does it work? The most basic definition of WOM marketing is that consumers do your marketing for you i.e. talk about your product or service. These customers are typically your most loyal customers who are enthusiasts. They tend to be almost evangelical. This group of people may be selected by you or they are so satisfied with your services that they speak and, in turn, market for you. You may have a link on your website for “ambassadors” or devotees to sign-up for free or discounted products/services, factory tours, coupons, promotional products (e.g. hats, t-shirts, etc) all designed to “fuel” your ambassadors with important and relevant things to say about your product. Driving consumers to your website, and giving compelling reasons for registering and surrendering their email address is the initial objective of such a campaign. Harvesting email addresses from your customers and website visitors is your “gold.” For example, one of the ways which I market my marketing firm is to send out a link to my own Huffington Post business blogs so that both potential and existing customers have my name in a regular fashion with some valuable/useful business information. Sending this blog (regarding WOM marketing) to my list of customers and prospects is a way to “touch” this targeted group so that they will notice me and then tell others. Here is the viral part: there is an instant trigger reminding the recipient of me and my services. Hopefully, this will translate into action prompting them to contact me or forward my information to others in their business sphere. You can see how this can spread thus the term viral marketing. Here are some of the essentials for those who want to get experiment with this type of marketing program. First, try to identify user groups, communities or any groups of people who may be more familiar or delighted with your product or service. If the groups don’t exist virally, facilitate their creation. Second, devise a way to communicate regularly with these groups either via email newsletters, corporate blog, events, outreach or any combination of these methods. And, third, give these groups of like-minded people a uniform positive message by providing consistently excellent customer service or improving the quality of your products. And last, recognize these people for their evangelistic efforts whether they are purposeful or not. HuffPost has a system of “badges” whereby they recognize bloggers with followers and those who regularly comment. Remember: word of mouth marketing is only as good as your last customer says you are!

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April Rudin: Word of Mouth Marketing — Powerful Messaging Via an Affordable Medium

August 18, 2010

Word of mouth marketing has been getting a lot of buzz recently. Word of mouth marketing in its simplest form is a new name for an ancient hobby: talking about which things we like or dislike with friends, family, business associates, etc. Through these conversations, we are making recommendations and helping to shape public opinion albeit on an incremental basis. Marketers today are measuring and categorizing these messages utilizing new tools under the auspices of the much bantered around term social media. In my opinion, word of mouth (WOM) marketing is a medium which allows for powerful yet affordable messages to be spread through the consumer world. First, what is word of mouth marketing and how does it work? The most basic definition of WOM marketing is that consumers do your marketing for you i.e. talk about your product or service. These customers are typically your most loyal customers who are enthusiasts. They tend to be almost evangelical. This group of people may be selected by you or they are so satisfied with your services that they speak and, in turn, market for you. You may have a link on your website for “ambassadors” or devotees to sign-up for free or discounted products/services, factory tours, coupons, promotional products (e.g. hats, t-shirts, etc) all designed to “fuel” your ambassadors with important and relevant things to say about your product. Driving consumers to your website, and giving compelling reasons for registering and surrendering their email address is the initial objective of such a campaign. Harvesting email addresses from your customers and website visitors is your “gold.” For example, one of the ways which I market my marketing firm is to send out a link to my own Huffington Post business blogs so that both potential and existing customers have my name in a regular fashion with some valuable/useful business information. Sending this blog (regarding WOM marketing) to my list of customers and prospects is a way to “touch” this targeted group so that they will notice me and then tell others. Here is the viral part: there is an instant trigger reminding the recipient of me and my services. Hopefully, this will translate into action prompting them to contact me or forward my information to others in their business sphere. You can see how this can spread thus the term viral marketing. Here are some of the essentials for those who want to get experiment with this type of marketing program. First, try to identify user groups, communities or any groups of people who may be more familiar or delighted with your product or service. If the groups don’t exist virally, facilitate their creation. Second, devise a way to communicate regularly with these groups either via email newsletters, corporate blog, events, outreach or any combination of these methods. And, third, give these groups of like-minded people a uniform positive message by providing consistently excellent customer service or improving the quality of your products. And last, recognize these people for their evangelistic efforts whether they are purposeful or not. HuffPost has a system of “badges” whereby they recognize bloggers with followers and those who regularly comment. Remember: word of mouth marketing is only as good as your last customer says you are!

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Michael Pento: How Dr. Keynes Killed the Patient

August 18, 2010

A morbidly obese gentleman labored into Dr. Hayek’s office suffering from severe chest pain. The patient also complained that he was unable to consume his usual 10,000 calorie-per-day diet; in fact, he was feeling so sick that he could barely scarf down 9,000 calories. He plead that his love for food remained as strong as ever, but his body just wasn’t keeping up with his demands. After having a thorough look at the patient, the good doctor could not find anything wrong outside of the patient’s extreme portliness. After a moment of reflection, he delivered to his patient a troubling diagnosis. He explained that the chest pain stemmed from the strain the patient’s 500lb body was putting on his heart, and that the lack of appetite was his body’s attempt to protect itself from this imbalance. Dr. Hayek’s prescription was simple: the patient had to dramatically reduce his consumption while undertaking a moderate exercise program, with the goal of losing 250lbs as quickly and safely as possible. Dr. Hayek was aware that it would be a physically painful and emotionally difficult process for the man, but it was the only way to avert a life of suffering – or even a heart attack. Unfortunately, our patient rebelled against such an austere program. He had grown very fond of his high-calorie and high-fat diet and didn’t think that now, when he was already depressed from dealing with all these ailments, was a good time to deny himself the few pleasures he had left. In his opinion, the doc’s prescription was just too simplistic. He thought there just had to be a way to have his cake and eat it – frequently. So, he waddled out of Dr. Hayek’s office as fast as he could, shouting over his shoulder: “I’m getting a second opinion!” The overweight gentleman sauntered across the street, where he found the office of Dr. Keynes. He told the new doctor about his acute chest pain and lack of appetite, and complained about the previous doctor’s “heartless” prescription. After a cursory examination, Dr. Keynes rendered his diagnosis: the patient’s condition did not stem from the fact that his gigantic frame was causing undo strain on his heart; instead, the doctor concluded, the patient’s chest pain was merely causing a temporary lack of hunger. Furthermore, Dr. Keynes argued, the stress of cutting weight at the present time would certainly prove detrimental to the man’s already weak heart. Therefore, his prescription was for the 500lb man to each as much as possible, as quickly as possible. Anything less might cause the man to suffer a heart attack, he noted. Now the doctor did concede that, at some point in the distant future, it might be a good idea for the man to shed a few pounds. But for the present, the most import thing to do would be to consume as much as he could stomach. The patient left Dr. Keynes’ office with a broad smile. After gorging at an all-you-can-eat buffet, he momentarily forgot about his chest pain. It looked like he had found his solution; except, a week later, he died. The Hubris of Government The allegory above discusses the dangers of quackery, whether medical or economic. Right now, economic quackery – in the form of Keynesianism – has overtaken Washington. American consumers are trying their best to deleverage. In terms of the story, the patient is actually trying to lose weight. But the government is blocking deleveraging and trying to boost consumption. They are forcing food down the patient’s throat. According to the Flow of Funds Report, households reduced debt at a 2.4% annualized rate ($330 billion) during Q1 of 2010. Meanwhile, the federal government was piling on debt at an 18.5% annual rate ($1.44 trillion). Since every dollar of government debt is a promise to tax the private sector in the future with interest, this public spending spree effectively negated the Herculean efforts of the private sector to return to a sustainable path. That’s where the arrogance of Washington is really apparent. Scores of millions of American consumers have made the decision that reducing their debt burden is in their best interests right now. But a few hundred individuals in government believe they know better than the collective wisdom of the entire free market. By leveraging up the public sector, they have used their power to confiscate our savings. In short, they are forbidding us from following the common sense path to fiscal health. Unlike their forbears, modern-day Keynesians do not argue just for mollification in the rate of deleveraging. They seek to significantly increase debt levels in an effort to boost the aggregate demand in the economy. Apparently, only once the mythical recovery takes hold due to government spending, printing, and borrowing does a discussion of deficits become appropriate. The US has persisted under this theory for close to a century. Curiously, the world has yet to fully recognize our precarious condition, even as they provide us with life support. Washington is now entirely dependent on the reserve currency status of the dollar and the continued hibernation of bond vigilantes. Without these supports, the United States would face complete economic arrest. Rather than allowing the American people to get back on our feet, Washington is stuffing us with even more debt. It’s almost as if the feds are daring our foreign creditors to pull the plug. As a consequence, I predict that just as Dr. Keynes killed his patient, Keynesian economics will kill our economy. Michael Pento is the Senior Economist for Euro Pacific Capital

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