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Deborah Frett: Last Year’s Slacker Is This Year’s Slow Starter

by on April 21, 2011

Huffington Post…

The tide is changing. Rhetoric on the 80 million strong Generation Y is softening. Last year, Gen Y was labeled lazy slackers with unrealistic work expectations . This year, they are simply slow starters who have been humbled by the current economic environment. I’m encouraged that Gen Y is getting a better shake, but I keep wondering if Gen Y is changing or if our perceptions of Gen Y are changing? It could be both; I’m just throwing it out there. Take the discussion of Gen Y living at home longer with their parents. While it’s easy to pass judgment and write them off as not having their act together, new studies indicate that parental assistance in early adulthood isn’t such a bad thing. In fact, it can be a good thing — leading to autonomy and resiliency. The more we explore the beliefs and attitudes of this generation, the more we can understand and can appreciate their decisions and priorities. This year, BPW Foundation critically engaged Gen Y stereotypes through a series of employer-based focus groups which resulted in a newly released report — Gen Y Women in the Workplace: Focus Group Summary Report . Based on our observations, I’d like to suggest a few other areas for changing how we talk about Gen Y in the workplace. Pursuing Life not Work/Life. Practically everyone who writes about Gen Y also covers work/life balance. Keeping in step with the literature our participants also talked about the importance of the two dimensions of their life. However, we found that participants were tired of the “live to work/work to live” debate. They have one life and work is an integral part of that life. They want to have a successful and meaningful career without forfeiting other areas of life (e.g. family, friends, hobbies, spirituality, etc.). Is it any wonder then that they are dissatisfied with current work-life balance programs? They aren’t looking for a stellar concierge program or a “fun” work environment; they are looking for an overhaul of the workplace structure. As one Gen Yer stated, “We [Gen Y] are much more productive when we have the freedom and flexibility to get work done when and how we want to get it done. Society isn’t 9am-5pm. Why should work be?” Unaccustomed not Disrespectful. Throughout the focus groups, we often heard comments from managers of Gen Y like, “Gen Y doesn’t acknowledge or respect the experiences of older colleagues.” At the same time, we heard Gen Y say, “I appreciate the wealth of knowledge and experience older colleagues bring to the workplace.” Gen Y women said that they often feel doubly judged by older colleagues. They already feel that their actions and decisions are scrutinized because of their age and then gender adds a compounding effect. Our participants were not familiar with how to draw out information from older colleagues in a way that capitalized on the benefits of a multi-generational workforce and communicated appreciation for their older colleagues. I truly sensed that these women were simply unaccustomed to adapting to different generational cultures and not deliberately disrespectful. Cautiously Optimistic. Gen Y women are often portrayed as optimistic about their workplace prospects and more likely than any other generational cohort to believe that deliberate discrimination is declining. Yet, there is a disconnect between workplace expectations and workplace experiences. While participants in our study did not believe that gender hinders their access to positions, they did acknowledge that their experiences within positions differ from that of their male counterparts. From pressure to be a “rockstar” to anticipation of the maternal wall, Gen Y women recognize that the workplace is still not gender neutral. As one Gen Yer stated, “We’ve been welcomed into the workplace, but the structure hasn’t changed. The rules haven’t changed.” BPW Foundation’s effort to understand Gen Y women’s workplace continues. We are launching a national survey of Gen Y women to corroborate and build upon our findings. To learn more, please e-mail youngcareerist@bpwfoundation.org.

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Deborah Frett: Last Year’s Slacker Is This Year’s Slow Starter

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Ted Kaufman: Greenspan Is Back to Lead the Charge Against Responsible Regulation

by on April 21, 2011

Huffington Post…

Wall Street bankers, with help from key Republicans in the House and Senate, have begun a major campaign across the country to kill the regulations currently being developed to enforce Dodd-Frank Wall Street Reform. A recent speech by the leader of Wall Street bankers, JP Morgan’s CEO Jamie Dimon, took direct aim at financial regulation and new, more rigorous capital standards. The same week, Alan Greenspan — just a year removed from his mea culpa on “self-regulation” — said the Dodd-Frank legislation would create the “largest regulatory-induced market distortion” in the US since wage and price controls. Very shortly afterwards Senator DeMint introduced a bill to repeal Dodd-Frank. And House Financial Services Committee Chairman Spencer Bachus led 34 of the committee’s Republicans in sening a letter to the six agency heads charged with implementing the Dodd-Frank Act stating that the members are “troubled by the volume and pace of rulemakings.” It is very hard to believe that anyone would propose going back to the policy of “self-regulation” on Wall Street and elsewhere. We tried that during the last 20 years, and it catastrophically resulted in the worst financial meltdown in 80 years, almost destroying the US and world financial systems. It caused more than 3 million homes to be repossessed, drove the unemployment rate over 10 percent, and left millions in economic, and emotional, shock. Where was the regulatory backstop that should have been the last line of defense? Completely dismantled by Washington policymakers who bought the view that self-regulation would work and markets could police themselves — the same ideology that they are boldly pressing now, so soon after its complete failure. The question of whether regulation is necessary has been asked and answered, painfully so for many Americans. We are not living in the abstract, debating hypotheticals about what would happen without regulations. Before the meltdown, market fundamentalists and Wall Street bankers argued that our financial actors could police themselves, that their self-interest in remaining financially viable would create sufficient incentive to avoid failure — far exceeding the ability of regulators to limit excessive risk by rulemaking. Systematically, these fundamentalists worked to dismantle many of the prudential New Deal era banking reforms. Their crowning achievement: the repeal of Glass-Steagall (which, passed in the aftermath of the Great Depression, kept our financial system stable and growing for 60 years) in 1999. Wall Street and Washington were possessed by this laissez faire ethos over the past 20 years. It was this philosophy, and the decisions that sprang from it, that led us blindly down the path to the financial crisis. Before his recent (re-)conversion, Alan Greenspan admitted that this dominant concept of self-regulation was ill-conceived. In a speech on February 17, 2009 before the Economic Club of New York, the former Fed Chairman conceded that the “enlightened self-interest” he had once assumed would ensure that Wall Street firms maintain a “buffer against insolvency” had failed. Mr. Greenspan, perhaps more than anyone else, should have known better. But instead of playing the role of the markets’ fire chief, he played that of head cheerleader. For example, Mr. Greenspan applauded the trend of financial disintermediation, proclaiming that new innovations would allow risks to be dispersed throughout the system. Of course, this was just the tip of the iceberg. Despite having the power to write and enforce consumer protection standards, the Federal Reserve did nothing to combat deteriorating origination standards in mortgage and consumer loans. He could have implemented common-sense rules like minimal capital requirements for systemically important financial institutions. That would have been a critical emergency-brake when the Bear Stearns/AIG tailspin began. Instead, Mr. Greenspan signed off on regulations that gave banks the ability to set their own capital standards. He allowed banking institutions to leverage excessively by gorging on short-term liabilities and, in some cases, creating off-balance-sheet entities to warehouse their risky assets. This makes it hard to believe that Greenspan would return to his old talking points, joining the offensive coordinated by Wall Street banks and others saying that the Wall Street Reform Act will never work, and its implementing regulations should be delayed or watered down. Trust alone will not work in business, just like it does not work in sports. Many of us, as fans, are frustrated at the referees and umpires for constantly interfering with the free flow of the game. But they enforce the rules and regulations developed to keep the game orderly and protect the participants. Perhaps a football game would go smoothly for a bit without referees, but I would not want to be at the bottom of the second or third pileup. Rebuilding effective regulatory policies and agencies will take time, but that work is absolutely essential. Not every business will follow the call to build trustworthy practices. Only the hammer of fair and consistent regulatory penalties and fraud laws will deter wrongdoers.

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Ted Kaufman: Greenspan Is Back to Lead the Charge Against Responsible Regulation

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Joan K. Smith: Startup Fever: Why it Matters

April 6, 2011

Last month, in the midst of the South by Southwest Interactive Festival when I was reporting on the Startup Bus here on Huffington Post, Michael Taylor of the New York Observer wrote a piece called “Abolish South by Southwest!” in which he cast smart-aleck barbs at the culture surrounding the Interactive portion of SXSW, calling it a “sham of technological confabulation” that uses ideas of techno-utopian progress as a pretense for a self-congratulatory, evangelical frat party. Easy enough to dismiss as attention-getting snarkiness, right? But a few days after that piece ran, Taylor and I appeared as guests on a Minnesota Public Radio segment about Startup Bus and SXSWi. He elaborated on his serious point behind the admittedly tongue-in-cheek article, namely a concern that the rash of entrepreneurial ventures spurred on by movements like the Startup Bus were creating a misallocation of capital toward sure-to-fail “whimsical” projects, and away from “serious” existing businesses. The venerable Mr. Taylor bemoaned the fact that there were Startup Bus projects that dared deal with such fluff as bar trivia, and bemoaned further “cheerleader” media hype surrounding a field where less than 50 percent were destined to successfully find a market. Oh, and the irony of a real-life conference “like our parents went to” being held in an age when we have apps and social media available to “erase [physical] distance.” Unfortunately, Mr. Taylor got the last word before the segment ended. My first instinct in terms of a counterpoint — after dismissing as not worthy of response the notion that without a startup to fund, “misallocated capital” would magically be directed toward established businesses, a notion that ignores the pesky little reality of a free market — would have been to point out the many Startup Bus projects that were not even remotely frivolous. “Help Near Me” from the Cleveland bus dealt with finding geo-located human services to aid individuals in crisis situations, and” Mom and Pop Co-ops,” also from the Cleveland Bus, was a system to enable small businesses to amass aggregate buying power in order to compete with mega-retailers like Walmart; or the finalist from the New York bus, “TripMedi,” which offered a service for making intelligent decisions about finding affordable healthcare procedures overseas, aimed mainly at those who are uninsured and priced out of the American market; or maybe “Isitgood4me” from the Miami bus, an app to scan food barcodes to compare with personal dietary restrictions…the list goes on. But in retrospect that counter-argument would miss the broader point at hand. The fact is, whether the startups are frivolous or not, the crazy energy and direct, interactive spirit of real-life collaboration behind projects like Startup Bus is exactly why they matter, and the very reason they can have a broader impact on innovation culture at large. For me, the value of startup culture crystallized even more completely a few weeks ago when I was a judge for a mobile app development competition sponsored by NJ Mobile Meetup in the Converge Coworking Space at Kean University. After judging, we had the opportunity to chat with a number of the participants and got an impressive view of the collaborative process that prevailed over their 24 hours of work. Just as in the case of Startup Bus, where participants reported a virtual love-fest of cooperation and skill-sharing across competing teams, those who had come into this mobile app competition with more creative ideas than tech chops were readily assisted by those with more advanced skills. Even the teams who didn’t have a project ready for judging came out of the experience with new knowledge, and everyone came away with new connections forged by a shared, high-pressure, and focused work session. The experience provided lessons valuable across the board, whether the fledgling entrepreneurs succeed in getting investment dollars for their own venture or end up joining the traditional workforce as an employee. Getting a massive amount of creative people not just thinking about their own startup, but going through the tangible steps in an intensified and collaborative way, can only be positive for overall business culture. At the very least, this flock of creative and enterprising souls coming up with new ideas — even if they ultimately fail — can goose existing businesses out of staid complacency and into generating their own innovation. Particularly in the exponentially flourishing area of technology, a culture that doesn’t encourage the support of new, young – and yes, even crazy — ideas is a moribund culture that will not keep up with rapid fire changes in the global marketplace. So rather than considering the startup trend to be a hype-driven bubble leading to little more than broken dreams and wasted investments, we should be appreciating the culture of networked innovators that it engenders — a culture of dynamic energy and readiness for challenge. After all, exuberance doesn’t have to be irrational.

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Michael Spence: Observations on the Evolution of Economic Policies

March 25, 2011

It was a privilege to participate in the IMF conference devoted to rethinking policy frameworks in the wake of the crisis. Highly encouraging was the openness of the discussion, the range of views, the willingness to question orthodoxy, and the posture of humility. One gets the impression that the crisis has triggered a response that it should trigger, and we have embarked on a path of rethinking conceptual frameworks and policy choices in a way that will contribute to the stability of the system. That said, the good news is that we recognize that in finance and parts of macroeconomics the models or frameworks are incomplete. That represents a challenge to the academic community. But it also means that, in the short run, participants and regulators will be operating with incomplete models. This will require judgments (which will be uncomfortable in contrast to the earlier sense of certainty). There will be mistakes. And, as Olivier Blanchard said in his excellent summary , we will proceed step-by-step, evaluating the impacts of policy choices and sometimes reversing course. This is relatively familiar territory in developing countries, where changes in the institutional depth of the economy mean that models (especially advanced country models) are not very precise in predicting market responses to policy choices. Nevertheless theory is still useful when used judiciously. In that context, you can think of this as analogous to navigating with charts that are incomplete. Having said that, we do in principle have the option of returning to old patterns while waiting for different or more complete models to be developed and tested, I think there is a widespread recognition that this would be a risky mistake. I offer some thoughts stimulated by the spirit of the conference; not as a summary, or even an ordered set of priorities, but as a contribution to a general discussion that we all hope might stimulate further research and policy analysis, and ultimately progress. 1. The Dynamics of Risk in the Financial System The dynamics of the risk characteristics of the financial system are not well understood by the participants or the regulators. Fixing this represents a central challenge and opportunity for economists. I think it is one of the hardest challenges in the area of economic and financial theory. With most investors paying more attention to risk factors, and the costs and benefits of liquidity, they are constantly adjusting their investments and the structure of the assets they hold. So, relationships between assets, prices and risk may only remain stable for a few months at a time. The old model with stable relationships, implemented through a largely fixed asset allocation framework is broken. That doesn’t mean that diversification is a silly idea. But the challenge is to implement it effectively. Most of the discussion concerns adjustments to the regulatory approach. This is too narrow. Although self-regulation failed in the run up to the crisis, and cannot be relied as the principal element of stability, it remains important. A financial system in which the participants and regulators accurately perceive risk will behave differently, and defensive action by participants when is accurately perceived will be a contributing factor. 2. Multiple Targets and Instruments It may not be unanimous, but it is close, that the single target – single instrument approach to policy is not sufficient for achieving financial and macroeconomic stability. Nor are policies that focus on the flow of funds or resources, and prices likely to be sufficient. And given the state of our knowledge, at this point, we are going to have to pay attention to balance sheet variables and linkages at the micro and macro levels. There will be warning signs or puzzles, and we are going to have to be willing to act on them without being able to give air tight arguments that there are problems. That is at variance with our earlier mindset in which the preferred course was inaction unless there was a clear case for intervention. This asymmetric attitude needs to be abandoned in favor of a more balanced assessment of the benefits and risks of inaction versus action. 3. Understanding Structural Changes in Advanced Economies The structure of all economies evolves in ways that affect the income distribution and employment opportunities. This evolution is driven by powerful market forces operating in the global economy. And, after these changes, economies don’t return to their previous average behavior. The vast majority (by population) of the emerging economies only become big once. Major technological innovations can also produce shifts in structure. Paying attention to structural evolution and incorporating it into longer term policy frameworks seem to me important and worth institutionalizing, with supporting research. It is of course easier to think about efficiency and market failures and even stability, than it is to address distributional issues and consider interventions that may adversely affect dynamic efficiency at the global level. But the alternative, ignoring the distributional and structural issues, doesn’t seem right and has risks. There are more and less harmful ways to nudge structural evolution. Ignoring the issue raises the risks of choices that run toward the more harmful end of the spectrum. 4. Ban High Speed Trading I would ban high speed trading–the automated, computer-driven trading of large volumes of financial assets in a short timeframe–by introducing lags in the trading process or increasing capital requirements or both. As far as I can see, it is entertaining, but it’s largely a zero-sum game, using resources, contributing potential volatility in markets. The economic benefits in terms of enhancing the pricing, capital allocation and risk spreading functions of the financial system, seem negligible. 5. Financial Regulation Financial regulation is a huge subject, rightly receiving lots of attention. These are just a few thoughts. At the macro level, it seems clear that we need to restrict excessive leverage. Ditto for banks. Regulating the shadow banking system is crucial. The crisis experience surely tells us that. I would have liked to hear much more about what is needed to properly regulate this part of the financial system in order to ensure stability. This involves ratings, capital requirements, incentives, and structures that, unlike the present ones, allow the unwinding of securitized assets in an efficient way after a shock or crisis. As far as I can tell, the procedures for dealing with underwater mortgages held in trusts supporting securitized assets are essentially broken. This makes recovery from crisis, shocks, and asset bubbles less efficient and much too lengthy. Finally, it seems to be that the current structure of the financial system–as it has evolved with a pattern of reduced regulation with respect to the separation of functions–is shot through with actual and potential conflicts of interest. These adversely affect incentives and performance and perhaps more importantly trust. This needs to be addressed by regulators, but also by the industry itself. There remains much more to be done, particularly on the industry side. Crossposted from iMFdirect .

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Matt Cohen: Four Market Research Mistakes to Avoid

March 21, 2011

Somebody in my family was recently sent a direct-mail survey from the National Republican Senatorial Committee (NRSC). The survey’s purpose, according to the accompanying letter from NRSC Chairman Senator John Cornyn (R-TX), is to help Republicans in the Senate “fight for the interests and issues that matter to our grassroots base…” That’s a legitimate reason to put a survey in the field, but the questionnaire — like so many others — has a variety of flaws that prevent it from accurately collecting and reflecting the views of the respondents. Whether it’s for political, business, or academic purposes, proper survey design should help market researchers to reveal truths that will enable better decision-making. With that in mind, I’d like to look at some of the flaws in this particular survey with the goal of demonstrating how surveys should actually be constructed. To begin, look at the format of the following questions: Note that the Very important/Somewhat important/Not important answer format doesn’t allow for negative responses. You have to either agree that the prompts represent issues that are important to you (“Very important” and “Somewhat important”) or state that you are indifferent (“Not important”). There is no way for anybody to express that they disagree with a party platform. Suppose you’re a Republican voter who thinks we need amnesty for illegal immigrants. Saying the issue is “Not important” will not accurately reflect your opposition to one of the party platforms. This entire section could have more accurately captured the opinions of the respondents if a five-point Likert scale had been used. For example, the immigration question could have been written as: The Senate should stop passage of amnesty for illegal immigrants. __ Strongly Agree __ Somewhat Agree __ Neither Agree Nor Disagree __ Somewhat Disagree __ Strongly Disagree Of course, this suggestion assumes that the purpose of the survey is to accurately reflect the opinions of Republican voters. There are, however, some questions on the survey that suggest that may not be the case. For example, look at this item from the same section: The prompt is worded to intentionally bias the reader. “ObamaCare” is a weighted term that was coined to make the listener feel negative feelings against health care reform. Here’s the most blatant example of bias being built into the questions: That’s not a question — it’s a lecture. Are the creators of the survey anticipating that anybody will check the “No” box? Here’s an important rule to remember about survey design: never ask a question if the response will not influence your decision-making process. Otherwise, the data you collect will be useless. This survey has many questions where the responses are unlikely to have any impact on how the NRSC behaves either in terms of the legislative agenda or their campaign marketing strategy. So why did they ask that last question? Just as some earlier questions were meant to remind readers about how they should feel about key issues, this final question is meant to act as a pledge . The survey is asking you to confirm your party loyalty. It should come as no surprise that this pledge (disguised as a survey question) is used to segue to the final section of the document: It may look like a survey — but this mailing is really a fundraising effort. Combining market research and fundraising into a single mailing is an ethically questionable practice that violates the trust of the participants. When people choose to complete a survey, they believe that they are helping the researcher and having their voice heard. If the survey turns out to be nothing more than a fundraising campaign, then the participants waste their time and their good intentions. Hypothetically, if this poll really did have the dual purpose of collecting data and raising funds, what effect would the donation or fee requirement have on the results of the survey? The survey’s stated purpose is to take the pulse of all Republicans. The fundraising effort would have the effect of making sure that the sample represents only Republican donors . (There is no check box for completing the survey but not sending money.) This would introduce a selection bias and corrupt the results. If you’re a Democrat, I hope this case study doesn’t make you feel superior: I’m sure there are progressive and liberal organizations that use similar fundraising tactics. If you’re a Republican, I hope you’re able to look past politics to see that the purpose of market research is to collect accurate data that represents your target population, not to persuade people. It doesn’t matter whether a survey is being conducted by political fundraisers or by businesses — the basic standards of responsible market research must remain absolute.

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Danny Wong: No School, No Jobs — Take the Leap With 20 Under 20!

December 22, 2010

Co-founder of PayPal , Peter Thiel, is encouraging going cold turkey. Instead of fighting the war against drug addiction, the vice here is conservatism, being ordinary and taking the safe route in life. The Thiel Foundation is now sponsoring the Thiel Fellowship , also known as 20 Under 20. It seems it’s never too early to be done with school or to forget about the cushy corporate life and take the incredibly brave plunge to become an entrepreneur. There are many notable entrepreneurs that realized their ideas couldn’t wait and that “standard” career paths weren’t moving fast enough. The Thiel Foundations’ press release launching 20 Under 20 cites success stories like Elon Musk: Musk himself stopped out of his graduate program before classes began to co-found his first company Zip2, which he sold to Compaq for $307 million. And Scott Bannister: Banister left the University of Illinois before taking a degree and founded ListBot, the largest ASP for business email, and IronPort, the anti-spam company that Cisco acquired for $830 million. And William Adregg: “Because education seeks to impart past knowledge, when you are trying to create a technological breakthrough, you have to create new knowledge, and there is no way to teach that. There was no course at University of Arizona on ‘how to cure aging.’ Hopefully, this program will allow others to work on ambitious projects themselves, before they’ve taken on a crippling amount of student debt,” said William Andregg, CEO and co-founder of Halcyon Molecular. Here is a real opportunity for young bloods to justify their life-changing decisions to hesitant parents who would absolutely be robbing their child of an unparalleled experience such as this. With an exciting idea in mind, or one that is already in the works, the distraction of studies and part-time jobs to pay off student loans eliminated, a new life in sunny California where startups thrive, support from seasoned mentors, and a life-altering two year commitment, the selected 20 teen entrepreneurs are luckily not taking a gamble on life, but are instead taking massive advantage of life’s beautiful opportunities. Eligibility is for anyone between the ages of 14 and 20 (admittedly, I think 14 is a bit on the low-end, but I am sure there are exceptional 14 year old entrepreneurs — I just haven’t met them yet) who will be awarded up to $100,000 in grants over the two year period with a commitment to cease studies and other employment (unless by special permission of the fund) to do something amazing, whether that be the creation of new scientific developments and technologies, an improvement on existing scientific theories or technologies, or the completion of a defined goal. Simply put, this is a chance for fresh entrepreneurs to Innovate. When you’re ready to take the leap, you’re ready. While you may think it’s important to fulfill filial duties, stay within the confides of societal standards, and beg off your entrepreneurial and innovative itch until you’ve become a ‘tried and true adult,’ you are doing a disservice to yourself and the world by holding yourself back. While I am not exactly taking my year off with the aim to do the world a good service, I am doing it for personal reasons, which might allow and encourage me to do more exciting things with my life later on (perhaps some things that might be less self-serving). I’d be interested to see the full lineup of young entrepreneurs that will be selectively picked to begin a wild two-year journey. I’m more excited to see how the two years make out for the participants who will most certainly be just beginning to introduce their innovative ideas to the world. Danny Wong is the co-founder of Blank Label Group , hosting Blank Label , Thread Tradition and RE:custom .

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Roger Hickey: In Deficit "Town Meetings," People Reject America Speaks’ Stacked Deck

June 27, 2010

On Saturday, the group known as America Speaks ( funded by Wall Street mogul Peter G. Peterson and two other foundations) brought together several thousand people in meetings in 60 cities. They gave participants misleading background information about the federal deficit and economic options to achieve fiscal “balance” and future prosperity. Peterson cannot be pleased with the participants’ mainly progressive policy choices, which will be presented on June 30 to the Deficit Commission that Peterson encouraged President Obama to create. According to America Speaks’ own press release , when a scientifically selected group of participants picked up their electronic voting devices, they overwhelmingly supported proposals to Raise tax rates on corporate income and those earning more than $1 million. Reduce military spending by 10 to 15 percent, Create a carbon tax and a securities-transaction tax. This pretty progressive set of solutions emerged from the process many feared would be skewed to the solutions of conservative deficit hawks. America Speaks was certainly not pushing the discussion in a progressive direction. The background materials — and policy options — provided to participants were anything but fair and balanced, as analysis by economist Dean Baker demonstrated. Most egregious were the following: Social Security. America Speaks gave participants no explanation of the fact that Social Security has its own source of funding, and thus does not contribute a dime to the deficit. Americans actually have been paying extra payroll taxes to create a trust fund that will make sure full benefits can be paid for decades into the future — and thus there is no rational reason to cut Social Security benefits (or raise the retirement age) in order to reduce the Federal deficit. But you wouldn’t know that from the America Speaks materials or explanations. The Social Security program is simply presented as another big spending program and participants were presented with various ways to cut benefits. Given all this, a majority endorsed raising the retirement age for full benefits to 69 — a benefit cut for future retirees. But they also chose the progressive plan to raise the cap on taxable earnings subject to Social Security taxes, thus producing income for the system from greater portion of higher income peoples’ wages. Medicare and Medicaid. The America Speaks background materials actually did acknowledge that the rising budgetary costs of Medicare and Medicaid are driven by the fact that our whole health care system is broken — and costing both the private sector and government programs much more per person than in countries that have much better health outcomes. They even acknowledged that thoroughgoing reform — like single-payer health care system — is the only way to control those rising costs. However, when it came to options the participants were allowed to vote on, they were all variations on how much people wanted to cut Medicare and Medicaid benefits. At this point in the proceedings, the America Speaks founder and President, Carolyn Lukensmeyer had to acknowledge a rebellion in the ranks. People were demanding to have the option of voting for “single-payer” reform instead of cutting Medicare and Medicaid, and when she announced a complicated process of writing in that alternative, a roar of approval went up from the crowd in several locations. Their press release doesn’t report how many people chose this difficult to select option, but the organization clearly had had to scramble to quell a revolt by participants. (Note: their press release states that people chose to “cut health care spending by at least five percent,” but the choice was really to cut government health programs five percent — and my reading of the charts online was that only 21 percent of participants chose that option, with 71 percent choosing “no change.”) Austerity vs Growth. Finally, the organizers had heard enough protests from the Economic Policy Institute and the AFL-CIO that they felt they had to assure the audience that they were not prioritizing deficit reduction over the need for economic stimulus to get the economy to start producing jobs. But after that ritual disclaimer, they went on to devote the vast majority of the day to deficits as our defining economic program. But David Dyen, an LA participant, wrote in a post on firedoglake , “While the cumulative effect of all this tends towards social safety net cuts rather than tax fairness, the crowd in Los Angeles, at least, wasn’t biting at first. In surveying the discussion groups, most people seemed more concerned about the desperate need for more stimulus spending to move the economic recovery forward… In the nationwide instant survey, taken by participants through electronic devices at all 19 America Speaks sites, 61% said the government needed to do more to strengthen the recovery, with only 25% opposed. Even with a push poll question asking if participants supported government programs to increase growth “if it increases the deficit,” got a majority, 51%, of the nation-wide group of participants. My next-day posting here — claiming participants mostly rejected conservative nostrums — is based on watching the process online, from reports from people who attended events around the country — and on a fairly sketchy press release put out by America Speaks on Thursday, just after the town meetings. But America Speaks billed these events as a nation-wide scientific experiment in finding out what the “American people” think about the economic way forward. They are thus duty bound to publish a full report on the details of every single question — and voting results — that participants were asked to make decisions about. It is especially important that they put out this comprehensive report because they are also scheduled to summarize their findings before a special public meeting of the White House Deficit Commission on June 30. Only then can the people who participated in the process judge whether their surprisingly progressive decisions are being accurately presented to the Commission.

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Dodd’s Revised Financial Rules Ease Exclusion of Swaps From Clearinghouses

March 15, 2010

By Matthew Leising March 15 (Bloomberg) — Senator Christopher Dodd ’s draft legislation to regulate the $605 trillion private swaps market makes it easier to exclude trades from being processed by clearinghouses, compared with his plan released in November. Dodd’s bill no longer requires federal regulators to agree that excluding a swap from being cleared “is necessary and appropriate for the reduction of systemic risk.” That stricter requirement was in the draft bill Dodd, a Democrat from Connecticut and chairman of the Senate Banking Committee, released in November . The section released today may be updated by Senators Jack Reed , Democrat of Rhode Island, and Judd Gregg , Republican of New Hampshire, according to the Senate Banking Committee. The new section on derivatives regulation “may be offered at full committee,” according to a summary of the Dodd bill released today. Congress is seeking to regulate the private market for the first time in its 30-year history after derivatives contributed to the financial crisis of 2008. The unregulated market made it difficult for government agencies to know how interconnected banks had become after Lehman Brothers Holdings Inc.’s bankruptcy that September. Credit-default swaps also were used to mimic returns from subprime mortgages that were responsible for the majority of the crisis. Goal of Clearinghouse Clearinghouses , capitalized by their members, help organize markets and are intended to lessen the effects of a bank default by guaranteeing counterparty payment. They collect daily margin to keep accounts current and allow regulators to monitor trading positions. An e-mail to a spokeswoman for the Senate Banking Committee wasn’t immediately returned. The draft bill also defines how swaps could be traded before they are sent to clearinghouses on what is known as an “alternative swap execution facility.” Such a system would create “pre-trade and post-trade transparency” for prices “in which multiple participants have the ability to execute or trade swaps by accepting bids and offers made by other participants.” The other option for trading clearable swaps is on an exchange such as CME Group Inc. Swaps that can’t be cleared because they are too customized must be reported to regulators and face higher capital requirements than cleared swaps, according to the bill. To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net .

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Dodd’s Revised Financial Rules Ease Exclusion of Swaps From Clearinghouses

March 15, 2010

By Matthew Leising March 15 (Bloomberg) — Senator Christopher Dodd ’s draft legislation to regulate the $605 trillion private swaps market makes it easier to exclude trades from being processed by clearinghouses, compared with his plan released in November. Dodd’s bill no longer requires federal regulators to agree that excluding a swap from being cleared “is necessary and appropriate for the reduction of systemic risk.” That stricter requirement was in the draft bill Dodd, a Democrat from Connecticut and chairman of the Senate Banking Committee, released in November . The section released today may be updated by Senators Jack Reed , Democrat of Rhode Island, and Judd Gregg , Republican of New Hampshire, according to the Senate Banking Committee. The new section on derivatives regulation “may be offered at full committee,” according to a summary of the Dodd bill released today. Congress is seeking to regulate the private market for the first time in its 30-year history after derivatives contributed to the financial crisis of 2008. The unregulated market made it difficult for government agencies to know how interconnected banks had become after Lehman Brothers Holdings Inc.’s bankruptcy that September. Credit-default swaps also were used to mimic returns from subprime mortgages that were responsible for the majority of the crisis. Goal of Clearinghouse Clearinghouses , capitalized by their members, help organize markets and are intended to lessen the effects of a bank default by guaranteeing counterparty payment. They collect daily margin to keep accounts current and allow regulators to monitor trading positions. An e-mail to a spokeswoman for the Senate Banking Committee wasn’t immediately returned. The draft bill also defines how swaps could be traded before they are sent to clearinghouses on what is known as an “alternative swap execution facility.” Such a system would create “pre-trade and post-trade transparency” for prices “in which multiple participants have the ability to execute or trade swaps by accepting bids and offers made by other participants.” The other option for trading clearable swaps is on an exchange such as CME Group Inc. Swaps that can’t be cleared because they are too customized must be reported to regulators and face higher capital requirements than cleared swaps, according to the bill. To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net .

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Shankar Tells Galleon Judge Two People Gave Him Tips for Insider Trades

November 17, 2009

By David Glovin and Linda Sandler Nov. 17 (Bloomberg) — Gautham Shankar , a former trader at New York-based Schottenfeld Group LLC who pleaded guilty to insider trading in the Galleon Group case, told a judge he got secret tips from two people, according to a transcript of his guilty plea. Shankar, 35, was part of a chain of inside information in the case centering on Galleon Group founder Raj Rajaratnam that yielded $53 million in illicit profits, the government has said. Shankar’s tips on three occasions came from an individual identified in government documents only as “Tipper X,” a friend of Roomy Khan , now the government’s star witness in the case. Shankar in turn passed on the tips to others at the Schottenfeld trading firm, including Zvi Goffer , a former Galleon employee who sought tips and paid for them, according to government documents. A transcript of Shankar’s comments, made during an Oct. 20 guilty plea, became publicly available today. Prosecutors say Shankar in 2007 learned from Tipper X proprietary details about pending takeover bids for Hilton Hotels Corp. and Kronos Inc., plus a tip that Google Inc.’s earnings would be lower than expected. Shankar in turn passed on the tips to Schottenfeld colleagues including Goffer, according to court documents. Illegal Gains This insider trading ring that overlapped with Rajaratnam’s circle generated $33 million in illegal gains, according to the U.S. Securities & Exchange Commission, which has a civil case against the participants. Shankar, who lives in New Canaan, Connecticut, is currently unemployed, it said. Shankar is one of five people who pleaded guilty in the case involving Rajaratnam in which the government so far has charged 20 individuals. Also cooperating in the investigation are Ali Far and Richard Choo-Beng Lee , co-founders of San Jose, California-based hedge fund Spherix, as well as Steven Fortuna and Roomy Khan . Their guilty pleas were made public on Nov. 5. According to the criminal case, Goffer, who founded Incremental Capital LLC, is the leader of an insider trading ring of 14 that was charged Nov. 6. He passed along tips about takeovers that he got from Arthur Cutillo , an attorney at Ropes & Gray LLP, to Shankar and others, prosecutors said. The criminal case is U.S. v. Shankar, CHECK U.S. District Court, Southern District of New York (Manhattan). To contact the reporters on this story: David Glovin in New York federal court at dglovin@bloomberg.net ; Linda Sandler in New York at lsandler@bloomberg.net .

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Saudis get training in real estate

November 7, 2009

JEDDAH: The ongoing real estate boom in the Kingdom has opened up avenues for young Saudis to qualify and specialize as agents and brokers. Even some real estate owners were among the participants of

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