past

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(MENAFN) The US NPD Group said that during the past holiday season, sales of consumer electronics dropped 5.9 percent to 9.5 billion, including TVs and PCs, reported AP. The group added that the …

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US holiday sales of electronics down 5.9%

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A weaker growth for the U.S

by on August 27, 2011

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(MENAFN – ecPulse) The world’s leading economy remains deeply swollen by the recession as its recovery lost momentum and pace this past period to watch accordingly a slower growth; expanding at a 1 …

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A weaker growth for the U.S

Find our Weekly Commercial Real Estate, Private Equity and Fund Newsletters at www.WeeklyBrief.net

Commercial Real Estate Slowly Turning Around « Washington Bank …

June 4, 2011

Sales and leasing volumes in commercial real estate have turned a corner and are heading up, but because the past few years have been so difficult, the upturn barely feels like one. … That's a bit surprising, because the big-four national banks — Wells Fargo, Citibank, Chase, and Bank of America — are in a far better position to make loans. Not only are they sitting on piles of money, but because they've grown to the point where they're too big to fail, …

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Phoenix high-rise deal averts foreclosure

June 4, 2011

The challenges of managing commercial real estate had been so daunting that many commercial – real-estate lenders had tried to prevent or delay having to foreclose whenever possible. However, in the past six months, …

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Jodi Summers = Office Real Estate » THE SOCAL OFFICE REAL ESTATE …

June 4, 2011

Several recent indicators suggest an easing of investment capital for real estate transaction. CoStar notes that life insurers have become more active lenders ; new CMBS offerings are hitting the street; syndicators are starting to assemble new … Commercial real estate lending is down 75% from peak levels, but it rebounded in the past 12 months. It was up 88% in the first quarter of 2011 from the first quarter of 2010, according to CoStar Group. …

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Job Seekers React To Dismal Jobs Report

June 4, 2011

This story was reported in collaboration with our partners at Patch.com. For the past three months, the millions of Americans who’ve been getting by on savings and unemployment checks could at least take some comfort in the job reports that the Bureau of Labor Statistics releases on the first Friday of every month. Almost 200,000 new jobs in February, about as many as that in March, and 232,000 in April. Even people who hadn’t worked since the recession began had reason to believe that things were looking up. Yet there were signs all along that things could get worse, and then last month they did. According to Friday’s bombshell jobs report, the U.S. economy added only 54,000 jobs in May, far fewer than expected or needed. Meanwhile, the unemployment rate actually worsened by a tenth of a percentage point. For some job-seekers, this news was just too bleak to contemplate. “The numbers are just so discouraging that after a while there’s no reason for me to look at them,” said a battle-weary Stephen Brown, a 31-year-old business school graduate from Morristown, N.J. Brown is among the millions of people for whom today’s news landed with an especially heavy thud -– the unemployed, the temps, the part-time contractors. A couple days ago, some of those job-seekers gathered at a workshop in the suburbs of Chicago . Sherri Gould, a resident of the town of Wilmette, was there. Gould said she worked for a decade in client services at Quest Diagnostics, the company that sends out those metal boxes labeled “Blood and urine specimens only.” When the economy crashed, the metal-box traffic slowed, she said. “Someone who is unemployed and has just lost their health insurance is not going to go to the doctor,” Gould explained. Soon she was among the unemployed herself. Sixty miles away, in Yorkville, Ill., a man named Robert Castro took his job search to the side of the road . He could be seen standing alongside Route 47 Friday, a cardboard sign in metal frame propped up beside him: “Any Work Wanted.” Castro, 47, said he spent more than a decade at a food distribution company, working his way up from a general worker to a supervisor. The upward trajectory ended when he was laid off a little over a year ago. His unemployment benefits ended about a year after that. Castro says he’s tried the traditional route to employment, the route that doesn’t involve standing alongside an actual road. “It’s a dead end,” he said. “I’ve had job offers, and they say overqualified. I’ll take a pay cut, whatever.” He said this is the first time he’s been unemployed since he started washing pans in a bakery when he was 14. In the past, when people in Danvers, Mass., lost their jobs, they could go to Gia Page for help. Page is a manager at CoWorx Staffing Services, a company that places people in clerical and manufacturing jobs. But her own job’s gotten tougher recently, thanks to the lack of opportunities awaiting the people who walk into her office. “I thought we would have more at this point,” she said, ” so that’s disappointing .” Nearby, in North Andover, Mass., someone else in the job-hunt business actually sounded a note of optimism today. Jori Blumsack, an accountant at a company that provides job-seekers with video resumes (it’s called The Vesume Group), said she’s seen a “very strong demand” for the people who come to her firm for work. Her reaction to the job report: “Wage levels have come down. People that are out of work are not going to go back to making what they made when they lost their job.” While it might be true that people are simply holding out for better pay, it isn’t true for everyone. Certainly not Stephen Brown, the business-school grad from New Jersey. For the past few months, Brown’s been holding down a temporary job in consumer-goods marketing that pays almost as much as his old job, which he lost in January 2010. What he wants is a permanent, full-time position, and he’s applied for about 500 of them. He says he’s had 75 to 80 interviews. “I started to count,” he said, “until I got a little too depressed.” Just yesterday, Brown was rejected from a job that he’d applied for back in October. The company had called him for the first time in January, interviewed him in April and again in May. Recounting the story, he was surprisingly even-toned. Brown said he’s trying not to dwell on his frustrations. “What can I do?” he said. “There’s not much I can do, I just gotta keep moving.”

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The Elusiveness Of Presidential Pardons

June 3, 2011

A 1975 felony conviction and three-year prison stint ended Randy Eugene Dyer’s career as a bad guy who imported drugs from Mexico and started his career as a God-fearing family man who ministers to prisoners. In 2004, after nearly 30 years jailhouse preaching, Dyer applied for a presidential pardon via the Office of the Pardon Attorney with much help from his wife, Karla Dyer. The application took them most of the year, she said, as they gathered more than 100 affidavits from business associates and friends who could speak to Dyer’s good character. Collecting the affidavits, plus gathering info on every place they’d lived since the 1970s and every job he’d had, amounted to hundreds of hours of work. On May 20, it paid off off: President Barack Obama pardoned Dyer, forgiving him for his bad deeds. “I think it’s a great honor,” Dyer told HuffPost. “We know Jesus Christ forgave us, but sometimes society has a lot of difficulty forgiving people for the things they’ve done.” American presidents have found it increasingly difficult to forgive felons. Over the past century, acts of executive clemency have dwindled, with President Obama on track to be among the stingiest presidents in history. So far, Obama’s granted just 17 pardons. In May, the president denied 791 pardon requests and 1,947 sentence commutation requests, giving no explanation for his decisions. Obama has rejected at total of 3,976 requests for forgiveness. George W. Bush wasn’t any more generous after two years in office, but he also hadn’t denied as many petitions as Obama. Over eight years in office, Bush handed out 189 pardons and 11 commutations. P.S. Ruckman, a professor of political science and pardon expert at Rock Valley College in Rockford, Ill., said the lack of pardons is a shame. “In an era of booming federal prison populations, mandatory minimum sentences, three-strikes laws, the growth of the ‘nanny state’ and over-criminalization, the need for regular use of the pardon power is greater than ever,” Ruckman said. “Amazingly, the most popular explanation for scarce use of the power — that controversial pardons expend tremendous political capital — is altogether flimsy. The typical pardon simply restores the civil rights of an unknown, average person who has committed an offense and served their time a long, long time ago.” Obama pardoned seven others besides Dyer in May. Among them was Mike Neal of Palm Coast, Fla., who said he spent six months in a federal prison camp in the early 1990s for the “manufacture, assembly, modification and distribution of equipment for unauthorized decryption of satellite cable programming.” Neal ran a company called T&M Communications in Virginia that de-scrambled satellite signals, he said, even though he knew it might be against the law. A 1991 story in Communications Daily reported that Neal and his business partner realized more than $900,000 in illegal proceeds from their business. The FBI had to figure out what to do with the 3,000 people who’d purchased illegal decoders after Neal and his partner were arrested, the article said. Neal told HuffPost he pursued the pardon in 2007 because he’d changed since the early ’90s — he was only 26 years old when he was arrested. Neil is proud of the way the pardon reflects that change. “When I was young I could care less about voting, about holding public office,” he said. “But later on in life when you grow up, you get married, you have kids, you want to be able to make a change in society. But you can’t do it? Man, that really affects you. You run for office of any sort -– you can’t do it? Back when you’re a kid that didn’t matter.” Neal, now 46, said he recruited three people to sign affidavits on his behalf, which is all that the pardon application requires. Each person provides a few lines to describe his or her relationship with the petitioner, whom the signer affirms “has behaved since the conviction in a moral and law-abiding manner.” Neal said he handled the application himself. Marveling at the number of applications rejected, Neal asked, “What made me stand out? Was it the luck of the draw? The Justice Department looked at these and said, ‘This one looks good,’” he said. “My lucky day, I guess.” Dan Levitz of Angola, Ind., and Edwin Alan North of Wolcottville, Ind., both received pardons after being sentenced in 1980 to probation for felonies relating to the sale of a machine gun. North had sent it home from the Vietnam War as a souvenir, according to the pair’s lawyers, Jackie Bennett and Jayna Cacioppo of Taft Stettinius & Hollister LLP, who represented them pro bono. North traded the gun to Levitz, and Levitz told HuffPost that he sold it almost immediately. “I was told it was illegal to have it so I got rid of it,” he said. The gun apparently wound up in the wrong hands: Years later, Levitz said, federal authorities traced it back to Levitz, North, and a third friend, all of whom were arrested and charged with felonies. Attorney Bennett said a strength of Levitz’s and North’s 2006 pardon applications was a transcript from their sentencing hearing that strongly suggested the judge didn’t think the government should have pursued the case so aggressively. “The judge thought this was not the case that should have been brought,” he said. “I think that fact was one of the most compelling aspects of their pardon application.” Another boost came from former Rep. Mark Souder (R-Ind.), who sent a letter supporting the applications after the lawyers brought it to his attention, Bennett said. “I feel like I was very lucky that [President Obama] looked at it,” said the 59-year-old Levitz. As for his felony record, he said, “Other than I couldn’t hunt with my sons with cartridge guns, it really didn’t have no effect.” Yet Levitz said that he’s still “really relieved” to have been pardoned and that he’s looking forward to now going hunting with his sons and grandkids. “I’m sure that those who were pardoned are all deserving, but it isn’t clear to me what distinguishes them from many hundreds of others who applied and were turned down,” said Margaret Love, a U.S. pardon attorney from 1990 to 1997 who now represents clients seeking clemency. Though it may be difficult to distinguish pardon winners and losers, there is a pattern to who gets pardons these days, P.S. Ruckman said. Drug offenders have been regulars among the pardoned for the past 30 years. And for the past 50 years, it’s been unlikely for presidents to commute prison sentences, he said. “And the people who are pardoned are typically people who were sentenced a really long time ago,” Ruckman said. “People who are suffering right now are not getting pardons. People whose previous convictions are causing them the most inconvenience — the ones who could benefit the most — are the ones least likely to get it.” Another trend, Ruckman said, is pardons for minor offenses. He cited the December pardons for “mutilation of coins” in 1963 and the guy who’d been busted for stealing plywood and nails from a construction site. The president’s pattern of pardons, Ruckman said, has been identical to that of George W. Bush. “I don’t think you could point to a single thing about Obama that suggests he’s doing different in any way.” One man who had his pardon request denied by Obama in 2009 said it was “devastating” when he found out. “There’s a whole way of life I cannot participate in, and there’s no mechanism for me to get my rights back,” said the New York resident, who spoke on condition of anonymity because he wants to re-file his pardon request eventually. In 2000, he was sentenced to four years of probation and slapped with a $5,000 fine for mail fraud and conspiracy after being accused of inflating the cost of a building renovation contract with a local government agency. Since serving the probation and paying the fine, the man said his life has changed for the worse. Some real estate investors won’t deal with him, he says, and he can’t go hunting like he used to. “I’m affected in business, I’m affected socially, and mostly, I love my country as I love my family, and it is so insulting for me,” he said. “As it stands now, I’m going to die as a convicted felon.” HuffPost readers: Denied clemency by a president? Tell us about it — email arthur@huffingtonpost.com . Please include your phone number if you’re willing to do an interview.

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Bill Lichtenstein: Obama’s Wall Street Turnaround Good for Nonprofits

June 2, 2011

After getting off to a rocky start at the beginning of President Obama’s term, the stock market has grown steadily. Consider the Dow Jones, which went up 128 points on Wednesday alone. Even if you don’t have a stock portfolio overflowing with GOOG and AAPL, and especially if you’re involved with a nonprofit or charity, here’s another reason to be thankful for the Obama administration’s success in turning the stock markets around: Commonfund, the 40-year-old Connecticut-based financial advisor to educational and nonprofit endowments, has just released two companion studies of 175 foundations, including 135 private/public foundations and 40 community foundations and operating charities, with a combined total of $108.2 billion in assets. The Commonfund studies found that investment returns of the foundations were in the range of 12 percent in FY2010. This is critical, as it’s the interest or returns on investments that is disbursed by most foundations and charities. Commonfund notes that while the 12 percent returns in FY 2010 were well below the 21 percent range posted in the Obama recovery year of FY2009, these two consecutive years of double-digit returns served as a welcome offset to the 26 percent portfolio decline experienced by these organizations in FY2008, during the final year of the Bush administration. In fact, the average investment returns in 2010 were the fourth highest in the nine years that the foundation study has been conducted and the third highest in the seven years of the operating charities study. According to Commonfund’s executive director John Griswold, foundation funds are still tight, but the situation appears to be less than the crisis that has been feared in the non-profit sector: “Two consecutive years of good performance is a great relief for foundations and operating charities participating in the two Studies after the serious erosion in asset values experienced in FY2008. While three-year returns are just about flat, five- and 10-year returns are edging back into the range of 5 percent, which is an encouraging sign although it still falls short of covering these nonprofit organizations’ spending, inflation and costs.” The same is true with regard to the levels of giving: Among operating charities, giving was stronger in FY2010, but far from robust. Among responding institutions, 17 percent reported decreased giving in FY2010, a marked improvement over the 38 percent that reported decreased giving in FY2009. Finally, the study found that levels of giving by foundations are inching up, with the largest foundations, not surprisingly, leading the way, with community foundations, perhaps hedging their bets about the recovery, giving away the least to nonprofits and charities. Given the “pipeline” effect, resulting from the time delay for foundations and charities to pass along the available funds resulting from their investment returns, nonprofits over the past year or two may have been feeling the lingering results of the poor stock market under the final year of the Bush administration, whereas the revenue from the past year or two may just, in many cases, be starting to flow. If so, that is certainly welcome news to nonprofits. At the same time, this all represents another example of the inextricable ties between “too big to fail” Wall Street and the rest of the nation.

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Public Pools Closing Across Country As Budget Crises Loom

May 30, 2011

ANDERSON, S.C. — On those summer days when the temperature soars into the 90s and the haze blurs the horizon, city pools across the U.S. have beckoned people from all over to take a cool dip. But as the Great Recession has drained city budgets across the country, it also has drained public pools for good. From New York City to Sacramento, Calif., pools now considered costly extravagances are being shuttered, taking away a rite of summer for millions. It’s especially hard for families that can’t afford a membership to private pool or fitness club and don’t live in a neighborhood where they can befriend with someone with a backyard pool. Hard times haven’t always meant cutbacks. An author who studied the role swimming pools played in 20th century America found more than 1,000 municipal pools were built as public works projects during the Great Depression. But this time, most governments only see decades-old pools burning holes in already tight budgets. In the past two years, Anderson has closed two pools to the public, one shuttered for good and one hanging on by a thread, run by a swim club only for swim team practices and lessons. In all, four public pools within 20 miles of the city have closed since the economy went sour. “You think about American culture – swimming and summer just go together. A lot of these kids not having the opportunity to swim – it’s just hard to swallow. Not only is it important for safety, but what you should do as a kid is swim and have fun and be active,” said Tommy Starkweather, the swim team coach at the Sheppard Swim Center, which was closed to the public in January. But running a pool is an expensive proposition. The Anderson Swim Club spends $10,000 a month on insurance, operations and maintenance even for the pool’s current limited use. In Grand Traverse County, Mich., the only public pool for the county’s 87,000 residents lost $244,000 last year. “That’s three sheriff’s deputies on the road,” County Commissioner Christine Maxbauer said. Grand Traverse County is also facing a looming deficit of more than $1 million, and commissioners are debating whether it is fair to keep to pool open when other services get cut. “We have to focus on vital services … . Clearly a swimming pool is not a vital service,” said Maxbauer, whose husband is a competitive swimmer. In Sacramento, Calif., the city’s more than 465,000 residents had 13 pools to choose from a decade ago. By the start of the summer of 2012, only three public pools will be open. The city has tried for years to keep from closing any pools completely by shortening hours and closing them only on certain days. But the lingering economic downturn has cut $1 million from Sacramento’s aquatics budget, leaving officials with just $700,000 for pools, said Dave Mitchell, operations manager for the city’s Department of Parks and Recreation. The pool closings and shuttering of other recreation opportunities leaves children with far fewer good choices to occupy their free time during the long summer months, Mitchell said. Pools “are just a safe place to be and be kids, to enjoy summer, to enjoy some times. These opportunities just aren’t going to be there for the youth and it is crushing,” Mitchell said. In Oak Park, one of Sacramento’s poorest neighborhoods, the local pool is scheduled to close next year along with a neighborhood community center. The Rev. Tony Sadler of the neighborhood’s Shiloh Baptist Church said both facilities are a resource for families “just to survive in these economic times.” “In an area such as Oak Park, closing these places would be the equivalent of putting them back in a drug-infested war zone that has trapped our children generation after generation,” Sadler recently told the city council. In an odd twist, the Great Recession may be killing off a city amenity born during the Great Depression, when more than a thousand municipal pools were built across the country as public works projects, said Jeff Wiltse, author of a book called “Contested Waters: A Social History of Swimming Pools in America.” “It democratized pleasurable recreation and leisure. A municipal swimming pool offered to poor and working-class and middle-class American, sort of the trappings of the good life – cooling off in a pool on a hot day. Laying out in the sun,” Wiltse said. The first hiccup for municipal swimming pools came during the civil rights era, when they had to integrate. Pools were an especially sensitive place, considering how little most swimmers wore in the water. Many whites, particularly in the South, refused to share public pools, contributing to a sharp rise in private swim clubs and home pools, Wiltse said. In 1950, there were 2,500 private in-ground pools in the U.S. In 2009, there were 5.2 million backyard pools, according to the National Swimming Pool Foundation. The first major round of pool closings happened during the bad economic times in the 1970s and 1980s. Those that survived now face an uncertain future brought on by the latest economic upheaval, which could end up shuttering one of the few places outside public schools where people from a wide range of economic classes meet, Wiltse said. “We’re a much wealthier country than we were back during the 1930s, yet our reaction now to economic downturns is we need to cut public recreation,” Wiltse said. “I think we in contemporary times we don’t value public recreation as past generations of Americans have.” In South Carolina, an informal poll of swimming pools inspectors found 17 municipal pools have closed in the past five years, said Jim Ridge, recreational water compliance coordinator for the state Department of Health and Environmental Control. “The traditional municipal pool … those are in decline,” Ridge said. “I think the primary reason is economics. They don’t age well.” In their place, more affluent communities are building water parks, where splash pads, water slides and other attractions can bring in entire families and allow parks and recreation departments to charge $7 or $8 a person instead of the $2 or $3 admission more common to a regular pool. And the splash pads are often built in suburbs that boomed over the past decade instead of the city centers where decades-old municipal pools are found, Ridge said. In Anderson, Sheppard Swim Center and another pool, Hudgens Swim Center, opened in the mid-1970s, replacing a series of smaller pools, some carved out of ponds, dotted around the county. The school district owned the pools and split costs with the city, and it sent thousands of fourth-graders to the centers for swimming lessons. But the school system withdrew its money several years ago, leaving the city to pay all the bills. Hudgens Swim Center closed before summer 2009, when city council members decided it would be too costly to fix holes in the roof and clean up a mold problem. Sheppard Swim Center, named for a city police officer who died on duty as the pool was being built, managed to stay open to the public for two more years. But at the end of last year, the city decided it didn’t have the money to keep a 35-year-old pool open. The Anderson Swim Club rallied, persuading the school district to let them keep the pool open for practice and meets as well as swim lessons, holding yard sales and pancake breakfasts to raise the $10,000 a month needed to keep a lease on the center. But the bare-bones insurance policy won’t allow the pool to open to the public. Stagnant water fills a splash zone for kids just outside the indoor pool’s doors. And the school district could take its land back anytime to expand the neighboring middle school. During the public outcry after the closing, the city considered building a new pool, but couldn’t get the county or a private company to help with the costs. “It was a very hard decision. Our community needs public pools. But we just can’t afford them right now. I’m not sure who can,” said Anderson Mayor Terence Roberts, who learned to swim at the Sheppard Swim Center in eighth grade. Kerstin Mensch brings her 7-year-old son to the pool for swimming lessons. As he held on to a boogie board and glided in one lane of the 25-meter pool, she recalled how just about every hot day growing up would be spent at the pool with her friends. “My son really loves to swim and this is the only place to go,” she said. As one of Anderson County’s 187,000 residents, she can’t believe the only public pool in the whole county is a small one in Honea Path, a rural town of 3,700 at least 15 miles away. She would be willing to shift priorities or even pay just a little extra in taxes to have a pool she could take her son to so he could spend a carefree summer day in the water, just like she did growing up. “What are kids going to do over the summer?” Mensch said. “Play video games or just get in trouble, I guess.” ___ Jeffrey Collins can be reached at _ http://twitter.com/JSCollinsAP

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Apartment And Multifamily Unit Financing | financebis

May 30, 2011

Over the past numerous years real estate has proved to be a common avenue for folks looking to produce income. You'll find authorities who see real.

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Apartment And Multifamily Unit Financing | financebis

May 30, 2011

Over the past numerous years real estate has proved to be a common avenue for folks looking to produce income. You'll find authorities who see real.

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India- Sighting of wild beasts now a thing of the past

May 29, 2011

India- Sighting of wild beasts now a thing of the past

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Donna Flagg: Put an End to Dealing With Difficult People

May 26, 2011

There are many reasons why people dread having difficult conversations, with one of the standouts being fear of handling difficult people and their erratic, unpredictable ways. That fear is legitimate but misplaced. It’s true that difficult people are expert at sucking the life out of a room and turning normal, everyday situations into profoundly unpleasant, jarring events. But it doesn’t have to be that way. See, what happens is that difficult people draw others into an alternate reality that has nothing to do with real life in real time. They’re reacting to something else within themselves, but in doing so they’re also revealing remnants of their past. It’s their world though, their problem, not yours. Even if you were the trigger, it still has nothing to do with you. All you have to remember is that wherever and whenever you see drama, a child is in the room. That person is either regressing to an earlier time where the appropriate coping skills did not have an opportunity to form, and/or he or she is stuck in a less developed point in life. So, framed this way, handling it actually becomes quite easy. You have two choices. You can either deal with it, or not deal with it. Oh, and make sure you go into zero-emotion mode first. If you decide to deal with it you can: 1. Engage , which is to say, “Please help me understand this, because your behavior is not making any sense. 2. Confront , which is to say, “You’ve gotta stop. This is utter ridiculousness.” 3. Comfort , which is to say, “Is there anything I can do to put you at ease so that we can get back on track?” Or, if you prefer not to deal with it, you can: 1. Walk away , which is to ignore it and make pretend it’s not happening. Since “the child” is seeking attention, this one works wonders. 2. Reconvene , which is to simply propose that you revisit the conversation at a better time when his or her behavior has returned to “normal.” Either way, whichever you choose, you’ll be amazed at how effective you become at managing, controlling and relieving the discomfort surrounding difficult conversations that involve difficult people. The point is that what you are essentially saying is, “We’re not getting anywhere and if you insist on … (insert irrational, dramatic behavior here) you will prevent us from moving forward and having a productive conversation,” which translates into, “I am not willing to participate in your drama or your past.” Find Donna on: Krysalis Amazon Facebook Twitter YouTube

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Money for CRE Deals Starting To Flow

May 26, 2011

Numerous indications over the past few weeks point to an easing of investment capital for real estate deals. Life insurers have become more active lenders; new CMBS offerings are hitting the street; syndicators are starting to assemble new CDO offerings; and bank loan officers are reporting the first easing of lending standards in years. The ongoing recovery of the capital markets is being aided by an improving U.S. economic recovery. Employment…

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Angel Gurría: Déjà Vu All Over Again?

May 25, 2011

We’d like to think we’re through the worst of the biggest crisis in 70 years. And yet derivatives, a chief culprit of the financial meltdown, continue to account for 10 times world GDP and counting. A major $8.5 billion takeover has analysts speculating about a new internet bubble. Some emerging economies are showing classic signs of overheating with property prices, consumer credit and bank profits hitting all time highs. We could be forgiven for wondering if we have learned anything over the past few years. We would deserve less forgiveness if we were unwittingly preparing the ground for the next slump and no one sounded the alarm. If international institutions do their job and fulfill their purpose, we stand a good chance of avoiding the mistakes of the past. The crisis has brought the roles of organizations like the OECD into sharp focus. Like never before, we are coordinating our efforts with the International Monetary Fund, the World Bank, the World Trade Organization and the International Labor Organization. But much more needs to be done. The G20, governments, civil society actors and citizens around the world now have higher expectations of us. Since the OECD was founded 50 years ago, it has provided a unique forum where leaders and decision makers meet to discuss which policies work and which don’t. We have had a solid track-record freeing people from economic and social wreckage, beginning with the Marshall Plan in the aftermath of WWII. Helping governments and countries understand the interdependence of their economies and societies paved the way for an era of cooperation. In addressing the latest crisis we have delivered some concrete results: closing down tax havens worldwide so taxpayers and collectors are sure we’re all making a contribution to clear up the mess. OECD standards to fight international bribery have global reach with Russia on the brink of becoming the 40th country to sign up to them. Bribery takes money out of people’s hands, food out of people’s mouths and undermines development. In an effort to bring renewed focus on the need for robust corporate governance we have fundamentally overhauled our international Guidelines for Multinational Enterprises. We continue to push for the separation of risky business investments such as derivatives from high-street banking. And we are making real efforts to address the deficit in citizens’ financial education and protection that the crisis so flagrantly revealed. We are leading G20 efforts to enforce proper consumer protection so that people are never placed in the position where they sign a mortgage document that they don’t understand. In regions like the Middle East, we can bring our experience to bear to help rebuild societies and economies, as we have done throughout Western and Eastern Europe. And we are pushing boundaries of knowledge and understanding by questioning conventional wisdom. After seven years working to better measure societal progress, the launch of Your Better Life Index is designed to respond to a pent-up demand from citizens the world over to move beyond GDP as the means of measuring well-being and gauging progress. By giving ordinary people the instrument to measure their well-being we are changing the face of public policy making, helping them help us deliver the best public policies to improve their lives. The pre-crisis system let us down. We need to restore trust and make good on what people want most — growth and jobs. The best way to do this is to start from the facts, the evidence, the numbers, to share best practices, to make an honest assessment of what works and what doesn’t. And to develop standards that can ensure the global community can benefit from the accrued wisdom of experience. Good public policy is about good ideas. There is no political monopoly on them. They should be formulated not in competing corners of the policy landscape, but rather at the nexus of where economics, government, the private sector and everyday people meet. We’re clearly not out of the woods as far as the crisis is concerned. It is all too human to indulge in wishful thinking and end up back where we started with business as usual. But it would be a temptation we could never forgive ourselves for falling into. Angel Gurria is Secretary-General of the Organization for Economic Cooperation and Development.

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Ailing Housing Market Creating New Generation Of Renters

May 24, 2011

WASHINGTON — A growing number of Americans can’t afford a home or don’t want to own one, a trend that’s spawning a generation of renters and a rise in apartment construction. Many of the new renters are former owners who lost homes to foreclosure or bankruptcy. For others who could afford one, a home now feels too costly, too risky or unlikely to appreciate enough to make it a worthwhile investment. The proportion of U.S. households that own homes is at its lowest point since 1998. When the housing bubble burst four years ago, 31.6 percent of households were renters. Now, it’s at 33.6 percent and rising. Since the housing meltdown, nearly 3 million households have become renters. At least 3 million more are expected by 2015, according to census data analyzed by Harvard’s Joint Center for Housing Studies and The Associated Press. All told, nearly 38 million households are renters. Among the signs of a rising rental market: _ The pace of apartment construction has surged 115 percent from its October 2009 low. It’s still well below a healthy level. But permits for apartments, a gauge of future construction, hit a two-year peak in March. By contrast, permits for single-family home are on pace for their lowest annual level on records dating to 1960. _ The number of completed apartments averaged about 250,000 a year before the boom. They fell to 54,000 last year and will probably number around the same this year. But then the number will likely double to about 100,000 in 2012 and hit 250,000 by 2013 or 2014, according to the CoStar Group, a research firm. The lag is due to the time it takes for an apartment building to be completed: an average of 14 months. _ Demand is driving up rents. The median price of advertised rents rose 4.1 percent between the end of 2009 and the end of 2010, census data shows. Few expect the higher prices to stem the flood of renters, though. One reason: Younger adults don’t value homeownership as earlier generations did and many prefer to rent, studies show. _ Rental housing is giving builders more work just as construction of single-family homes has dried up. Still, that economic lift won’t make up for all the single-family houses not being built. Apartments account for only about one-fourth of homes. And renters are outspent roughly 2-to-1 by homeowners, who pay for items from lawn care to remodeling and help drive the economy. Before the housing bust, mortgage rates were so low it was often cheaper to buy than rent. That was true a decade ago in more than half the 54 biggest metro areas, according to Moody’s Analytics. Today, by contrast, it’s cheaper to rent in about 72 percent of metro areas. Consider Mason Hamilton, 26, an energy consultant who rents an apartment with his wife for $1,100 a month in Alexandria, Va., outside Washington. He’d like something bigger. But he says he doesn’t plan to buy even though he could afford to. “My parents always told me, `You need to buy a place; you need to buy property,’” he says. “But the housing market is insane.” Many younger Americans see owning as risky. It hardly seems the best way to build wealth, especially when prices are falling. “There’s been this idea for years, a part of the American dream, that owning a home improves and strengthens communities,” said John McIlwain, a senior fellow at the nonprofit Urban Land Institute. “But what we’ve learned over the past few years is that many people simply are not ready to own a home.” From the 1940s until 2007, homes appreciated an average of nearly 5 percent a year, adjusted for inflation. In the past four years, the median price of a single-family home has sunk 37 percent, by $57,500, to its lowest since 2002. Yet in some areas, owning is still too expensive for many. “It’s becoming so difficult for most Americans to afford a home, with larger down payments and tighter credit, that it is creating a renter’s nation,” says Robert Shiller, a Yale economist and co-creator of the Case-Shiller home price index. “The home is no longer an investment; it’s a burden.” Homeownership bestows its own financial advantages, of course. Each loan payment builds equity. Loan interest and property taxes provide tax deductions. And in normal housing markets, home values rise over time. But for now, renting is more attractive. Hamilton, the energy consultant, says his father, a 58-year-old teacher in Richmond, Va., still owes nearly as much on his mortgage as his house is worth. “He’s stuck in that house,” Hamilton says. “After telling me to buy for all of those years, he’d love to rent like me.”

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David Isenberg: Showing the Private Military Contracting Sector the Money

May 23, 2011

Imagine a real life version of the Jerry Maguire movie. In this reality, the private military contracting community is played by Cuba Gooding and the Pentagon is played by Tom Cruise. As Cuba dances around the kitchen he shouts, increasingly loudly, “Show me the MONEY.” What does Tom do? Why, he delivers the money, of course. Okay, a little over the top perhaps; after all, we know the Pentagon can’t dance. Still this scenario nicely encapsulates the finding of a recent report by the Center for Strategic and International Studies. The report, Defense Contract Trends: U.S. Department of Defense Contract Spending and the Supporting Industrial Base , released May 6, confirms why so many private military and security contracting companies (PMSC) are out lusting after, oops, I mean competing for, federal contracts. Because that, as bank robber Willy Sutton famously said, is where the money is. Remember that PMSC firms, unlike the military-industrial complex of the past, are generally providing services, not hardware. Yes, there are exceptions, of course but they are small scale; they are not building fighter jets or aircraft carriers. And providing services will definitely make a CEO smile. The report notes at the outset, “In DoD contracting overall, services grew at a much faster pace in the past 20 years than did products and R&D, and were it not for combat operations in Iraq and Afghanistan would possibly have continued to receive the lion’s share of DoD contract awards.” How fast did spending on contracting grow? The report found that between 2001 and 2010, dollars obligated by the DOD to contract awards more than doubled, and contract spending far outpaced growth in other DOD outlays. Yes, but how much is that in actual dollars? The report says that in FY 1990 it was $49 billion. In FY 2010 it was $161 billion, or just over 40 percent of all contract spending — the other two categories being products and R&D. While people still debate whether military outsourcing is more efficient and effective than keeping it in-house, the report makes it clear that if the goal is to allow private sector companies to make huge profits it is unquestionably a success: Drawing down military and civilian personnel after the Cold War necessitated an increase in outsourcing to continue providing many services, while spending on products decreased with the numbers of active-duty military. The relative shares of product and services spending converged in 1998 and 1999, with the former decreasing and the latter increasing. After this point, products edged up over services, and the gap widened with the initiation of Operation Iraqi Freedom (OIF) in 2003. The relative shares of services and products appeared to begin converging again after 2008, as absolute spending levels declined sharply for products while spending on services remained relatively stable. The period covered in the report was from 1990 to 2010. As one might expect, given the wars in Afghanistan and Iraq, the Army and “other DoD” (primarily DLA) shares of total contracting grew while the Navy and Air Force shares declined. More recently, with U.S. forces set to withdraw from Iraq, the Army’s contract spending started to decrease in 2008 while the Navy’s spending also shrunk and continued its long decline after a short period of stagnation. The share of Air Force contract spending in the last few years declined to the lowest of all DOD components. Things were particularly sweet for Army contractors; think KBR LOGCAP awards for example. According to the report: Army contract spending has skyrocketed over the past decade. During the 1990s, the Army accounted for only 23 to 25 percent of total DOD contract spending. Beginning in FY 2002, this share started to grow rapidly, reaching 40 percent of total DOD contract spending by 2008. Growth in Army contract spending averaged over 11.5 percent per year since 1999. This rapid growth is almost entirely attributable to Army operations in Afghanistan and Iraq. From the viewpoint of getting the best bang for the buck the report actually had something positive to say about the state of competition in the Pentagon. Overall, the majority of DOD contract dollars were awarded on an increasingly competitive basis towards the end of the period analyzed, and dollars awarded competitively rose faster than those awarded without competition. The share of contract dollars awarded using fixed price contracts also grew, at a faster rate than cost-based contract awards. Up through 2009, there was a disturbing and sudden rise in “combination” contracts, which obfuscated the total distribution of cost and price-based contracts, but contract spending allocated to this category seems to have all but disappeared in 2010. The report noted important trends regarding contract competition: The first is a decrease since 2008 in the number of unlabeled contracts, which indicates that more care is taken in entering data on competitiveness. The second is an increase in fixed-price contracting that is faster than cost-based contracting, including time and materials, which is in line with the 2009 Presidential Memo calling for more use of fixed-price contracting across government. Of course, it is the Pentagon so it can’t all be sweetness and light. Thus, “In another trend viewed with concern in light of recent efficiency-promoting directives within DOD, the spending on indefinite delivery vehicles rose sharply in the past several years while definitive contracts and purchase orders stagnated and even declined in 2010.” If they do, then they are underestimating the total value of service contracts due to categorization issues. The Top 20 DOD Contractors for Services in 2009 were: (Contract value in 2010 in millions of dollars) Lockheed Martin 7,040 Northrop Grumman 6,050 KBR 4,660 L3 Communications 3,710 Humana 3,460 General Dynamics 3,370 Raytheon 3,130 Health Net 2,860 SAIC 2,840 Computer Sciences Corp. 2,800 TriWest Healthcare 2,700 Boeing 2,650 BAE Systems 2,120 URS 1,810 ITT 1,670 Booz Allen Hamilton 1,540 Hensel Phelps 1,420 Hewlett-Packard 1,410 CACI 1,390 Bechtel 1,270 Total for Top 57,890 Total for Services 162,460

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Simon Johnson: 7 Strong Emerging-Market Candidates For IMF Chief

May 17, 2011

Even before the shocking events of the past few days, the international policy community had been contemplating a successor to Dominique Strauss-Kahn at the International Monetary Fund.

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Officials Agree On Huge Portugal Bailout Package

May 16, 2011

BRUSSELS (AP, By Gabriele Steinhauser) — European finance ministers on Monday signed off on euro 78 billion ($110 billion) in rescue loans to Portugal to give the debt-ridden country time to overhaul its economy. One-third of the package will be financed by other eurozone states, another third will come from a fund backed by the EU budget, and the International Monetary Fund will contribute the final euro26 billion, the ministers said in a statement from Brussels, where they were meeting. The statement also said that the Portuguese authorities agreed to “encourage” private investors to maintain their exposure to the country “on a voluntary basis” and not pull out funds. That was a key demand from Finland, which had a hard time getting approval for the rescue package from its parliament. European officials could not immediately explain how private investors could maintain their exposure in practice, since the bailout program was supposed to keep Portugal out of international debt markets for about two years. It could mean that investors make a commitment to continue buying short-term treasury bills during the bailout period. Greece, for instance, has continued to issue short-term debt over the past year, after being granted euro110 billion in rescue loans. For the Greek bailout, large multinational banks were also asked to support their Greek subsidiaries. Approval from finance ministers was expected, after the Finnish parliament dropped its resistance, and many of the broad details of the program had already been revealed over the past weeks. A European official previously said the average maturity of the rescue loans will be 7 1/2 years — like the bailouts for Ireland and Greece — and come at an interest rate of around 5.7 percent. That’s lower than the rate Ireland has to pay for its bailout.

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Fraud Within Finance Departments On The Rise, Survey Finds

May 15, 2011

ORLANDO, Florida (Barbara Liston) – “Back office” fraud is draining corporate treasuries of billions of dollars a year, and the risk is growing as companies and employees struggle in the wake of the recession, finance managers and experts say. Fraud schemes in company finance departments include the creation of fake vendors, billings for nonexistent goods, checks written to dummy companies and kickbacks from vendors. “Most companies are weak in the area of back office and vendor fraud and that poses a significant threat to them,” Michele Edwards, a fraud expert, told Reuters this week on the sidelines of a corporate finance professionals’ conference. Typically, it takes 18 months to detect a fraud, Edwards said. In an informal poll of 622 finance managers during the May 8-12 Orlando conference, 72 percent reported seeing an increase in cases of back office fraud, Tom Bohn, president of the Institute of Financial Operations, said on Friday. The institute, which groups several associations of corporate finance professionals from across the world, was launched this week during the Orlando conference. Bohn and Edwards said some of the rise in reported losses might be a result of companies’ increased focus on, and detection of, back office fraud over the past two years. That focus came in response to U.S. federal regulators taking a harder line against companies that were not doing enough to prevent fraud that caused shareholder losses. SQUEEZE ON PERSONAL FINANCES But Edwards and Bohn said the recent recession had increased the risk of fraud. Company budget cutbacks had resulted in some employees becoming solely responsible for what previously had been two or more separate duties, and there had been a reduction in internal checks and balances and office controls. The squeeze from the recession on employees’ personal finances and family life also was a factor, Edwards said. “They didn’t get a raise. They didn’t get a 401k (retirement plan) match. Those are all additional pressures that have been on a lot of people over the past couple of years that may have caused them — where they might not have in a normal environment — to do something unfortunate like fraud,” Edwards said. She said the end of the recession won’t solve the problem. “You’ve got those expectations from the shareholders and the CEO that, hey, we’re coming out of the recession. It’s back to business. It’s back to growth mode. That pressure isn’t really going away,” Edwards said. Companies are beginning to employ safeguards such as software, analytical tools and fraud prevention specialists to detect problems early. They are also starting to search out and shut down opportunities for fraud, and to build a corporate culture that discouraged it. “If you focus on the culture, you can reduce the risk from day one,” said Bohn. “The more dollars you can save leaving the corporation, the better your bottom line is going to be.” (Editing by Pascal Fletcher and Xavier Briand) Copyright 2011 Thomson Reuters. Click for Restrictions .

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William S. Becker: Big Oil’s Political Ploy

May 13, 2011

Whatever else we might say about Big Oil in the United States, we have to give the industry credit for one thing: it has mastered the art of scamming us with a perfectly straight face. The scam has been underway for decades. This year’s example is the debate about repealing $21 billion in federal subsidies for big oil companies over the next decade.To their credit, President Obama and several Democrats in Congress are pushing the idea. Oil executives have launched a counteroffensive reminiscent of Gordon Gekko’s argument that “greed is good.” Requiring taxpayers to subsidize America’s biggest oil companies is in the best interest of the country, they say, and anyone who disagrees is playing politics. ExxonMobil, for example, said that President Obama and congressional Democrats are engaging in “political theater” on this issue. Perhaps. But the real plot line is that big oil companies are fighting once again to keep largesse they don’t need and the nation can’t afford. Here are some examples of the time-tested arguments we’re hearing from Big Oil: Eliminating their subsidies will force oil companies to increase the cost of gasoline. Even some oil executives acknowledge this is not true. Unless the industry uses subsidy reform as an excuse to gouge consumers, reducing its tax breaks will not affect energy prices. The handful of subsidies under scrutiny here are the proverbial drop in the oil barrel. They are a fraction of the special favors oil companies receive from the federal government, usually at taxpayer expense. And oil company revenues are so high, even counting the cyclic nature of the market, that subsidy reform will not make a difference in energy prices. The bigger misdirection is the industry’s stubborn assertion that encouraging more domestic production with taxpayer subsidies and permission to drill everywhere will have a meaningful impact on consumer prices. Legions of experts have pointed out in the past that petroleum prices are set by a world oil market so large that more domestic drilling and subsidies won’t much matter. Two fresh examples illustrate how little we control the factors that influence the global petroleum market. Last December, a vegetable vendor in Tunisia set himself on fire to protest harassment by police. His self-immolation and subsequent death triggered the “Arab Spring” — a chain reaction of protests across the Arab world fueled by frustrations ranging from high food prices to chronic unemployment, and suppression of freedoms to government corruption. Oil prices rose just because of the fear that Arab unrest would threaten world supplies. The second example is the historic flooding along the Mississippi River. Hopes have been high that high oil prices will flatten demand and lower the cost of gasoline. But gasoline prices may rise anyway because the river is threatening to disrupt oil barges, pipelines and refineries. It’s unfair to cut subsidies for big oil companies when other companies and industries get taxpayer support. Sen. Orrin Hatch, R-UT, made this statement when oil company executives testified before Congress on May 12. The corollary is that if oil companies get tax breaks, so should all other companies and industries. The last time I checked, we can’t afford that. More seriously, Hatch’s point is valid within the oil industry. Current proposals would cut some subsidies for big oil companies, but not smaller oil producers. The equitable solution is to phase out all federal subsidies for oil, regardless of the size of the company producing it. Applied to the energy sector in general, however, Hatch’s point is bogus. The oil industry has been getting federal subsidies for nearly a century, far longer and in far greater amounts than alternative energy industries. Rational public policy would recognize there’s a big and legitimate difference between subsidizing mature and wealthy industries such as coal and oil, and subsidizing emerging industries that are critical to national security, such as solar and wind energy. Fossil energy subsidies are classic corporate welfare; renewable energy subsidies help these vital young industries get across the “valley of death” and into the marketplace. The American people don’t want shared sacrifice. They want shared prosperity. This interesting statement came from Chevron CEO John Watson at the same congressional hearing. If Watson really supported the idea of “shared prosperity,” he’d volunteer to give his company’s tax breaks back to the American people. Rather than reducing federal budget deficits, cutting oil subsidies will have the opposite effect. Jobs and investors will disappear and government tax revenues will fall. This argument has been raised by Jim Mulva, chief executive of ConocoPhillips, among others. It’s ludicrous to believe that cutting these few subsidies will drive investors away from oil. So long as there are profits to be made, oil companies will drill and investors will invest. In a world in which populations are growing, consumerism is surging and emerging economies are injecting oil like steroids, there are ample profits to be made. Eliminating a few subsidies won’t change that. Cutting these subsidies is a tax increase for Big Oil. The “tax increase” argument is an all-purpose fear phrase routinely rolled out by fiscal conservatives and corporations. It’s not clear to me that eliminating a tax break qualifies as a tax increase, strictly speaking. Yes, removing subsidies would result in big oil companies paying higher taxes, assuming their accountants don’t find other ways to escape the obligation. But taking away subsidies merely results in oil companies paying what they should pay without favored treatment. Look at it this way: Big Oil is subsidized not only by access to public lands, low royalty fees and special breaks in the federal tax code. It also is subsidized every day by every one of us who pays taxes, buys gasoline or purchases a petroleum-based product. Our tax dollars pay the enormous costs of protecting overseas oil supplies and shipping lanes. The gas taxes we pay at the pump help build and maintain the highways that promote the use and sale of oil. More than 154 million Americans live in places where coal plants and petroleum-powered vehicles contribute to pollution that makes the air too dangerous to breathe . Families bear the medical costs and lost wages associated with that pollution. It’s difficult to feel bad about the taxes paid by Big Oil. Oil subsidy reform is election-year silliness and political posturing by Obama and reform advocates on the Hill. Ken Cohen, the vice-president of public and government affairs at Exxon, told the Financial Times the subsidy debate is merely “the kickoff for the 2012 presidential campaign and congressional elections.” So what? The 2012 election cycle is an excellent time for presidential and congressional candidates to differentiate themselves on national energy policy. Our oil addiction is one of the biggest national, environmental and economic security issues of our time. We need an electoral intervention. Cutting subsidies by $21 billion over 10 years will make little difference in reducing the federal deficit. That’s true. As of May 12, the national debt was more than $14 trillion — the largest in the world, about $46,000 for every citizen. But we have to start somewhere. To paraphrase the late Republican Sen. Everett Dirksen, “Twenty billion here, twenty billion there, and pretty soon you’re talking real money.” The oil subsidy debate has greater significance than $21 billion, however. It is a litmus test of conservative sincerity about reducing the federal deficit — a test the Tea Party should watch closely. So far, the spending cuts proposed in the Republican-controlled House have been driven by naked ideology, using deficit reduction as an opportunity to attack environmental regulations, climate science and government services for the poor and middle class. In the words of ExxonMobil, the votes have been pure political theater. Last February, shortly after he became Speaker of the House, John Boehner said this : “It is immoral to bind our children to as leeching and destructive a force as debt. It is immoral to rob our children’s future and make them beholden to China. No society is worthy that treats its children so shabbily.” With that level of moral conviction, it should be a no-brainer for Republicans to vote in favor of eliminating oil subsidies. If conservatives are not willing to harvest this low-hanging fruit, it’s doubtful they’ll make the far tougher choices that meaningful deficit reduction will require. Congress should take up oil subsidy reform another time, as part of overhauling the nation’s tax system. There’s no reason to wait on reforming such an obvious and equitable target for deficit reduction. And there’s no reason to believe that a Congress so deadlocked by partisanship and its own rules will succeed at reforming the tax code anytime soon. This isn’t the first time we’ve had this debate. In the past decade alone, oil executives were called before Congress to justify excessive profits in November 2005 when oil cost $60 a barrel; again six months later when a barrel of oil cost $75; again in April 2008 when oil hit $100 a barrel; and again this week, with crude back in the $100 range. For the past 40 years of oil crises, oil wars and oil-induced recessions, it has been Groundhog Day on Capitol Hill. The questions reform-minded members of Congress asked oil executives over the years remain relevant and unresolved today: Why should oil companies get tax breaks when their profits are so high and consumers are so broke? Why isn’t Big Oil investing more of its profits to develop the alternative energy resources that would keep the industry and the nation secure in the long-term? If it were up to me, all fossil energy subsidies would be shifted to a rapid buildup of energy efficiency and renewable energy technologies in the United States. But if deficit reduction provides the only sufficient leverage for subsidy reform, so be it. However we use the revenues, we should resolve the indefensible perversities of national energy policy once and for all, starting with the elimination of federal subsidies for Big Oil.

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GOP Cries Of ‘MediScare’ Prompt Democratic Shout of ‘Hypocrisy’

May 11, 2011

WASHINGTON — In a bold political about-face, a group of freshman Republicans who won office campaigning against cuts to Medicare last year called on Democrats Wednesday not to do the same in 2012. Complaining that Democrats were using “Mediscare” tactics, they touted a letter signed by 42 members of the 2010 GOP class to President Obama, asking him and his party to stop using Medicare to score political points. “We ask that you stand above partisanship, condemn these disingenuous attacks and work with Congress to reform spending on entitlement programs,” reads the letter, orchestrated by Rep. Adam Kinzinger (R-Ill.) Democrats pounced on the Medicare issue after the House passed a budget proposal authored by Rep. Paul Ryan (R-Wis.) in April. His plan would shift Medicare from a public program to a voucher-like private system, with the already expected rise in costs to seniors under the current system jumping by an extra $6,000 in 10 years. The plan could cut some $1 trillion from the program, by some estimates . Yet in the run-up to the 2010 elections, many Republicans campaigned aggressively against the Democratic health insurance reform law, in part because it cuts $500 billion from the privately run portion of Medicare, the more expensive Medicare Advantage. The Huffington Post identified at least a dozen signers of the letter to President Obama who made a political issue out of the Medicare Advantage cuts last year. Among those running against the $500 billion cut was Scott Tipton, who upended Democratic Rep. John Salazar in Colorado. “Unlike John Salazar, I’ll never put our seniors’ future at risk, he charged in one ad . “Our seniors deserve better.” Current Rep. Cory Gardner (R-Colo.), who defeated Democratic Rep. Betsy Markey, slammed her for the $500 billion cut and a “government takeover” of health care. The charges were typical and widespread. Others who campaigned against Medicare cuts during the 2010 campaign are Reps. Martha Roby (R-Ala.), Todd Young (R-Ind.), Andy Harris (R-Md.), Bob Gibbs (R-Ohio), Todd Young (R-Ind.), Renee Ellmers (R-N.C.), Kristi Noem (R-S.D.), Randy Hultgren (R-Ill.), Sean Duffy (R-Wis.), and Paul Gosar (R-Ariz.). But this year, they are on the defensive, and point to remarks made by Democrats like Health and Human Services Secretary Kathleen Sebelius, who charged recently that under Ryan’s plan, seniors would be reluctant to use medical services that were more expensive and would “die sooner.” The freshman legislators said such remarks were out of bounds, although phrases such as medical “rationing” and “death panels” were watchwords of the 2010 contests. Asked if the freshmen may have committed the sin they were accusing Democrats of — and why it was not hypocritical of them to now gripe about the Democrats’ stance — Kinzinger admitted that mistakes were made during Republicans’ campaigns. “To say that one side is blameless in trying to use issues to win votes is just dishonest,” he told reporters. But he didn’t blush at trying to “reset” the tone now that his party controls the House, and Democrats have the Medicare argument at their disposal. “I’m not going to defend anything done in the past,” he added. “Let’s get past the past. Let’s move forward to the future, and say OK, today is today. We have a real problem. Let’s get past the entrenched politics and move forward together.” Rep. James Lankford (R-Okla.) suggested Democrats were knocking the GOP Medicare plan because they know Republicans are serious about carrying it through. “Typically when you don’t think a proposal is serious, you ignore it. When you think it’s serious and a threat, you yell at it and attack it as hard as you can,” Lankford said. “We feel the attack, we understand what’s going on. But we’re saying let’s get past all the attacks, let’s get on to the serious business that we’ve got to get onto.” Democrats showed no sign of letting up on their strategy of highlighting the GOP’s Medicare proposals, and accused their rivals of taking something of a Hypocritic Oath. “House Republican freshmen used false and misleading scare tactics against seniors last year but are now afraid of the truth: their constituents are outraged that they voted to end Medicare while protecting Big Oil,” said Democratic Congressional Campaign Committee spokesman Jesse Ferguson, referring to Republican objections to ending federal subsidies for the top five petroleum producers. “Voters are smarter than the freshmen give them credit for. They can see through House Republicans’ hypocritical stunt to try silence their constituents’ outrage,” Ferguson said, pointing to recent town halls sessions in members’ districts where voters raised concerns about the Ryan budget.

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Bryce Covert: Gas Prices up, Wages Down, Americans Caught in the Middle

May 11, 2011

Cross-posted from New Deal 2.0 . When picturing people who are so far into debt they can’t get on top of their bills, many likely see images of flat screen TVs, Escalades, and giant, unnecessary houses. But the sad truth is that one of the biggest reasons Americans carry $796.5 billion in revolving debt is that wages have stagnated while the cost of necessities rose. That’s particularly true now, at the end of a decade where wages actually dropped, 13.7 million people are unemployed, and prices are through the roof. Gas prices are soaring . The average price is up 80 cents per gallon since January, up to $3.96 . With Americans consuming about 140 gallons per year, that’s an extra $112 billion over the course of 2011 that consumers will have to shell out at the pump. So is rent. It is too damn high . A new study came out recently that showed the level of renters spending more than half of their income on rent is the highest in half a century. That’s not just low-income people, either. “About 26 percent of renters — or 10.1 million people — spent more than half their pre-tax household income on rent and utilities in 2009,” the Washington Post reported. Under ideal circumstances, renters aren’t supposed to spend more than 30% of their income on housing. Not to mention buying food. Restaurants are now considering raising prices due to rising commodity costs. Prices for purchased meals and beverages rose almost 2% between March 2010 and March 2011, the biggest increase since November 2009. And health care is still unaffordable for too many of us. Last year, four in 10 Americans struggled to pay their medical bills and 40% had to forgo needed care due to high costs. What do Americans do when we can’t afford the necessities? What we’ve learned to do over the past 30 years as our wages stagnated: use credit cards to plug the gaping holes. Only this time it’s worse, because wages have actually shrunk over the past decade, with the median family’s earnings falling from $52,388 a year in 2000 to $47,127 in 2010. We still have 9% unemployment. And 27% of Americans had no personal savings as of February this year, up from 22% 18 months before that. Meanwhile, access to credit is flowing less quickly than it was before the recession — and when it does flow, it comes with overpriced fees and interest. While banks are getting back into lending to riskier, lower-income consumers, it’s a slow trickle. Most card mailings are targeting the wealthy, with only 17% going to borrowers with dinged credit scores — compared to 39% in 2007. And the cards those consumers are offered come with higher fees and interest rates . The NYTimes reports, for example, “Capital One… is offering low-end cards that carry interest rates of 18 percent or higher and annual fees of up to $50.” The ability to cover up our income inequality and wage stagnation with easy credit is coming to end. So now what are workers supposed to do when they can’t afford life’s basics?

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Ian Fletcher: Appeasers or Cold Warriors: Must America Confront China?

May 11, 2011

My last article , a review of Eamonn Fingleton’s provocative (but hard to dismiss) book In the Jaws of the Dragon: America’s Fate Under Chinese Hegemony , has drawn enough comment that I feel I should respond. There have been basically two schools of response: 1) Yes, China is eating our lunch, but it’s our own fault and when will we stop being such fools that we let them do it? By the way, can at least a few token traitors from corporate America go in front of a firing squad at Ft. Leavenworth? It’s 1930s-style appeasement all over again. 2) Lay off the warmongering. China isn’t a threat now, won’t be in future, and you’re either a yellow-peril racist or a neocon pining for a new Cold War. And did I mention Bush lied last time, and right-wingers are trying to lie us into another war? Oh and yes, the economic interests of all nations are in harmony. To be sure, I can’t be certain of the sincerity of all of the latter responses, as Beijing is known to employ an army of amateur Internet propagandists, known as the “50 cent party” after the per-post fee they receive, whose job it is to spread commentary favorable to the regime’s interests on the web. But at least some of the above responses appear to be genuine, and even if they are not, they still represent a possible interpretation of the facts and some corresponding policy choices for the U.S. So we’d better take them seriously. Let’s begin by remembering that America’s past political mistakes don’t, on their own, prove anything about the present. For example, there is no doubt that the U.S. was at one time seriously prejudiced against Asian peoples. But dismissing American fears of China today as mere racial prejudice is silly: we’re not imagining China’s nuclear warheads, its dictatorial government, or its predatory mercantilism. Even if racism is a part of the motivation of some of China’s critics–it may be; I can’t read people’s minds–this doesn’t make their criticisms false, just dishonorably motivated. Similarly, have a care with the Cold War analogy and the ghost of McCarthy. Granted, there are people in the U.S. who are spoiling for an enemy. I recall attending a conference in Washington–it was in 1997 or 1998–in which there was literally a panel discussion entitled “Should We Make China the New Soviet Union?” Hmm… I recall thinking at the time that China either is or isn’t whatever it is, and Americans don’t have much option to “make” it anything otherwise. I still think so. Even if vested interests in the U.S. want to ramp up defense spending and some people just can’t face the day without an enemy to crusade against, again this doesn’t make them wrong, just dishonorably motivated. I also can’t resist noting at this juncture that, perverse though it sounds, having an enemy is not always entirely a bad thing. It’s painfully obvious, in retrospect, that the vast surge of broadly-shared middle class prosperity, not just here in the U.S. but in Western Europe, at mid-century was in large part a riposte to Communism engineered by America’s ruling elite. Minus the competition with Stalin, I’m not entirely sure they would have built Levittown. You think it’s an accident that inequality surged as the credibility of the Soviet threat receded? And that’s not to mention the fact that the Pentagon created most of the effective industrial policy the U.S. had during this era. Might a drawn-out competition with China similarly force America to get its act together and deliver decent economic performance for its own citizens and the foreign peoples in its sphere of influence? It just possibly might, especially as the success of the East Asian model of planned-economy capitalism is intellectually killing the mythology of laissez faire that is strangling this country right now. Sometimes it takes rivalry to bring out the best in people–even the USA. Another theme that often came up about China was that “authoritarianism, no matter how strong it looks at the moment, can’t last. Freedom is on the march, and there is a mile-long list of dead tyrants to testify to that.” Sounds inspiring, and it’s an easy idea to drape in red, white, and blue. But this analysis is misleading in the case of China, barring some extremely unexpected events. The authoritarian societies of the past have tended to fail for specific reasons–problems which the regime in Beijing is very carefully avoiding: 1) They were personalist dictatorships that depended upon the vigor of a single despot whose luck eventually ran out. 2) They were stuck in the past, and did not adapt to modern technology. In this category go traditional societies from Spain to Zululand. 3) They went broke because they didn’t understand economics and thought they could create wealth by political fiat. In this category goes the USSR and all its imitators. 4) They got arrogant and blundered into wars they couldn’t win. In this category go Hitler, Mussolini, and Saddam Hussein. In China’s case, we can rule out #1 and #2 above with ease. Problem #4, of course, refers, from our present vantage point, to the future, as we cannot be absolutely sure they won’t do something stupid militarily. But the evidence appears to weigh against it. Beijing for now appears to be a disciplined player of the game which, while certainly willing to use force (ask Tibet!), isn’t going to romp into strategic catastrophe from sheer excess testosterone. War? Personally, my suspicion is that a corrupt deal will be struck by the rulers (I mean the real rulers, not necessarily the elected government in our case) of China and the U.S., and there will no violent clash between the two nations. Too unprofitable. I can certainly gin up scenarios for the opposite, but these get tendentious. Much easier for two elites to unite on their true common ground: aggrandize their own money and power, and the populations they rule take the hindmost. Behind closed doors, I think they already realize how much they have in common.

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Top Business Writer Jumps To NYT

May 10, 2011

Business journalist and author James Stewart is leaving Dow Jones to become a New York Times business columnist. Stewart will succeed Joe Nocera, who left the business desk to become an op-ed writer for the Times. Stewart’s column will appear on Saturdays. In order to take the job, Stewart is walking away from the company that has been his home for the past 27 years in Dow Jones. “I just think the Times is a great institution,” he said.

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Average Jobless Spell Now Lasts A Year For Older Workers

May 6, 2011

WASHINGTON — For workers age 55 and up, the economy is adding jobs and the unemployment rate is low. But older workers who do lose their jobs face a tough situation: an average jobless spell that now lasts longer than a year. According to Friday’s jobs data from the U.S. Department of Labor, older workers gained 203,000 jobs in April, while the 25-34 cohort lost 184,000 jobs and workers aged 35-34 lost 164,000. The unemployment rate for older workers held steady at 6.5 percent from March to April, even as the overall jobless rate rose slightly to 9 percent. Yet according to an analysis of the Friday numbers by the AARP Public Policy Institute, the average jobless spell for the 55-plus crowd lasted 53.6 weeks in April, compared with 51.5 weeks in March and just 20.2 weeks at the beginning of the recession in December 2007. The average bout of unemployment for workers younger than 55 is 39.5 weeks, AARP said. “If you’re out of work and over 55 you are having a really tough time finding employment,” Sara Rix, a policy adviser with the AARP Public Policy Institute, told HuffPost. Older workers face extra barriers to new employment, Rix said, including age discrimination and concerns among potential employers that older applicants have been out of school and away from training for too long. Dozens of jobless workers in their 50s have told HuffPost their age makes it impossible to find new work. Long-term unemployment has been a distinctive feature of the current jobs crisis, with people out of work six months or longer comprising nearly half the total jobless for the past year. But the overall picture improved a bit with Friday’s data, as the number of long-term jobless declined by 283,000 to 5.8 million. The extension of unemployment benefits to 99 weeks in some states may be another explanation for the long jobless spells — more workers have been classified as “unemployed” instead of “discouraged” or “marginally-attached” to the labor force. “The extension of benefits almost certainly has increased duration,” said Dean Baker, co-director of the Center for Economic and Policy Priorities, a progressive Washington think tank. “Not because people are taking longer to find jobs — the bigger reason is they stay unemployed as opposed to dropping out of the labor force.” As for the job gains among older workers, Baker and Rix said that the Baby Boom generation is well educated and healthy and thus able to take a larger share of available jobs than older workers may have in the past. Rix also noted that many older workers feel financially unprepared for retirement, and so will continue working as long as they can.

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Daniel Dicker: Big Silver and Oil Moves End All Speculation About Speculators

May 5, 2011

If anyone ever needed a proof of the power of speculative bets in commodity markets, the last three days of silver’s price action should settle all doubts. Silver’s almost $12 dollar drop, a massive 25% correction in less than 72 hours (!) is a direct result of chasing the weakest retail customers and traders of this “poor man’s gold.” The avalanche of unwinding positions was initiated by the increased margins assigned to silver futures by the Chicago Mercantile Exchange in the last week. But now we’ve got to ask the question: What could measures to chase that kind of speculative money out of oil futures do for all of us regular Joes paying through the nose at the gas pumps? The answer is — probably as much as a dollar a gallon, although it won’t be quite as easy as raising margins in futures — speculative oil money isn’t as easily attacked as the bets being placed on silver. Let’s imagine that the price of silver, or oil for that matter, is represented in layers of money. There is hedging money from producers and commercial end-users, representing the “real” fundamental participants who have set prices for commodities since futures markets were created. On top of that, we have a layer of speculative interest from bigger institutional investors and traders, from pension plans and university endowments and dedicated commodity hedge funds. Add to that a layer from smaller trade groups and funds that only dabble in commodities — a smaller amount of interest individually, but collectively their force can be as great. Finally, let’s add that last layer of purely speculative interest, from day traders and other retail investors working through commodity ETF’s. What you have, if I can push this analogy, is a seven layer cake of capital, all voting on the price of the underlying commodity. Sometimes, it may be tough to see just how thick each layer in the cake is, but there is no question that increased money in any layer will lead to a thicker cake and a higher price. When the Chicago Merc raised silver margins four times in the last week, raising them almost 85% in total, they took aim at the most capital sensitive layer of our cake — the day traders and small retail investors. In addition, silver ETF’s which use futures like the Powershares DB Silver (DBS) were forced into liquidating as well. A market that has moved parabolically as silver had in the past several months was particularly vulnerable to a sell-off, and all that was required was a tipping point — which these margin increases provided. Going back to our cake, much of the top layer in silver has been sliced away — and that 25% selloff indicates just how thick that layer of money was. And what about oil? If margin increases could be a tipping lever for a big sell-off in silver, could we do the same to crude oil and slice the costs that people are paying at the pumps? Increasing margins would be an excellent start, and one of the arguments that the CFTC is waging among itself as part of their rule writing mandate from the Dodd-Frank bill. But that big top layer of retail speculation fueling silver is a relatively much, much smaller layer in oil’s “cake” and slicing the thicker layers of investment interest in crude will require a much, much bigger knife. An enormous amount of capital, perhaps as much as $300 billion, is engaged in energy through index investment, the speculative proxy of institutional and private wealth investors. Getting at that layer of speculation will require restricted access to the commodity markets from these instruments, owned and run by powerhouse funds like Pimco, Oppenheimer, Blackrock and Goldman Sachs. Being able to remove that capital from the oil market might drop the price that consumers pay for gas as much as a dollar a gallon as quickly as money has fled from silver. It would, however, require a more concerted effort from Congress and the SEC, as well as from the overseeing exchanges. Still the silver move provides the lesson of just how much speculative money has been fueling the price rises we’ve seen in all commodities in the past year — and just how quickly prices can come down if some available tools are used to chase some of that money out.

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Diane Kramer-Pavelich Joins Alliant Specialty Insurance Services as Claims Advocate for Tribal First Program

May 5, 2011

Based in Alliant’s Centennial, CO, Office, She Has Worked Exclusively With Indian Governments for the Past 16 Years

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Freddie Mac Posts First Quarterly Gain In Two Years

May 4, 2011

WASHINGTON — Freddie Mac reported earning $676 million in the January-March quarter, the first time the bailed-out mortgage giant has posted a quarterly gain in nearly two years. The government-controlled company requested no additional federal aid after receiving $13 billion over the past four quarters. CEO Charles Haldeman attributed the net income to cost savings but did not elaborate. The government rescued McLean, Va.-based Freddie Mac and sibling company Fannie Mae from the brink of failure in September 2008. The government estimates the bailouts will cost taxpayers as much as $259 billion. But even with the net income gained, Freddie Mac posted a 29-cent per share loss attributable to common stockholders. That’s because the loss takes into account $1.6 million in dividend payments to the government. That compares with a loss of $1.7 billion, or 53 cents a share, in the October-December quarter. Analysts were quick to caution that the company’s one-time gain was scant when compared with years of losses. The last time Freddie Mac posted a quarterly gain was the April-June quarter of 2009. They said they don’t expect Freddie to report sustained earnings this year. “This is not necessarily a climb to ongoing profit,” said Jim Vogel, a debt strategist with FTN Financial Capital Markets. “They still have a long way to go.” Fannie and Freddie own or guarantee about half of all mortgages in the U.S., or nearly 31 million home loans worth more than $5 trillion. Along with other federal agencies, they backed almost 90 percent of new mortgages over the past year. Fannie and Freddie buy home loans from banks and other lenders, package them into bonds with a guarantee against default and sell them to investors around the world.

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Miles Jaffe: The Dollar Collapse

May 2, 2011

What explains the dramatic dollar decline over the past several months? Very simple: The Republican pledge of no new taxes. Outside of the United States — those selling the dollar — know full well that no modern national state can be run on revenues of less than 20 percent of GDP. No other large advanced country in the world is even attempting to do run its economy on tax revenues of less than 30 percent of its GDP. Yet in the past year, the Federal Government took in a stunning 15 percent of GDP while spending nearly 25 percent. This extraordinary gap was virtually required by the financial collapse of 2008. The gap was created by ever lower tax rates and resulting lower revenues, and by moneys poured out as economic stimulus to avoid economic collapse. Such Keynesian spending is justified, even mandated, because at a time of zero interest rates, only strong fiscal policy can offset deflationary dangers and avoid catastrophic consequences. But now as we all know, we have to face the deficit. Yes, we have to cut spending. But as a country supporting two wars, having a military presence in more than 100 countries, paying social security to our elderly, and supporting health care for the poor and the elderly, Federal revenues must rise to at least 20 percent. The Republicans have made clear that this is not going to happen. Yet even under Representative Ryan’s budget plan focusing only on spending cuts, Federal expenditures would exceed 20 percent of GDP. Unless you believe that somehow this Republican limit will be overcome, you have to conclude that the dollar is in trouble. The international financial world has reached that conclusion. Until the conclusion is reverse, holding the dollar does not make sense. It must decline.

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When Is Tracking Too Much?

April 24, 2011

SAN FRANCISCO — If you’re worried about privacy, you can turn off the function on your smartphone that tracks where you go. But that means giving up the services that probably made you want a smartphone in the first place. After all, how smart is an iPhone or an Android if you can’t use it to map your car trip or scan reviews of nearby restaurants? The debate over digital privacy flamed higher this week with news that Apple Inc.’s popular iPhones and iPads store users’ GPS coordinates for a year or more. Phones that run Google Inc.’s Android software also store users’ location data. And not only is the data stored – allowing anyone who can get their hands on the device to piece together a chillingly accurate profile of where you’ve been – but it’s also transmitted back to the companies to use for their own research. Now, cellphone service providers have had customers’ location data for almost as long as there have been cellphones. That’s how they make sure to route calls and Internet traffic to the right place. Law enforcement analyzes location data on iPhones for criminal evidence – a practice that Alex Levinson, technical lead for firm Katana Forensics, said has helped lead to convictions. And both Apple and Google have said that the location data that they collect from the phones is anonymous and not able to be tied back to specific users. But lawmakers and many users say storing the data creates an opportunity for one’s private information to be misused. Levinson, who raised the iPhone tracking issue last year, agrees that people should start thinking about location data as just as valuable and worth protecting as a wallet or bank account number. “We don’t know what they’re going to do with that information,” said Dawn Anderson, a creative director and Web developer in Glen Mills, Pa., who turned off the GPS feature on her Android-based phone even before the latest debate about location data. She said she doesn’t miss any of the location-based services in the phone. She uses the GPS unit in her car instead. “With any technology, there are security risks and breaches,” she added. “How do we know that it can’t be compromised in some way and used for criminal things?” Privacy watchdogs note that location data opens a big window into very private details of a person’s life, including the doctors they see, the friends they have and the places where they like to spend their time. Besides hackers, databases filled with such information could become inviting targets for stalkers, even divorce lawyers. Do you sync your iPhone to your computer? Well, all it would take to find out where you’ve been is simple, free software that pulls information from the computer. Voila! Your comings and goings, clandestine or otherwise, helpfully pinpointed on a map. One could make the case that privacy isn’t all that prized these days. People knowingly trade it away each day, checking in to restaurants and stores via social media sites like Foursquare, uploading party photos to Facebook to be seen by friends of friends of friends, and freely tweeting the minutiae of their lives on Twitter. More than 500 million people have shared their personal information with Facebook to connect with friends on the social networking service. Billions of people search Google and Yahoo each month, accepting their tracking “cookies” in exchange for access to the world’s digital information. And with about 5 billion people now using cellphones, a person’s location has become just another data point to be used for marketing, the same way that advertisers now use records of Web searches to show you online ads tailored to your interest in the Red Sox, or dancing, or certain stores. Autumn Bradfish, a sophomore at the University of Iowa, said she doesn’t see a problem with phone companies using her location to produce targeted ads, as long as they deliver relevant offers to her. She said she would not disable the tracking feature on her iPhone because she enjoys using a mapping app that helps her find new restaurants. “I’m terrible with maps,” she said. The very fact that your location is a moving target makes it that much more alluring for advertisers. Every new place you go represents a new selling opportunity. In that sense, smartphone technology is the ultimate matchmaker for marketers looking to assemble profiles on prospective customers. That profiling is what makes some users uneasy. At a technology conference in San Francisco this past week, security researchers disclosed that iPhones and iPads keep a small file of location data on their users. That file – which is not encrypted and thus vulnerable to hacking – is transferred when you sync your phone to your computer to back up information. Security firm F-Secure Corp. said the iPhone sends users’ location data to Apple twice a day to improve its database of known Wi-Fi networks. The data that is available goes back to last year’s launch of Apple’s new iOS 4 operating software. Researchers say the tracking was going on before that, though the file was in a different format and wasn’t easy to find until the new system came out. In June, Apple added a section to its privacy policy to note that it would collect some real-time location data from iPhone users in order to improve its features. While Apple has been silent about the latest findings, it has noted that its practice is clearly spelled out in user agreements. Other phone makers say the same. Google acknowledged this past week that it does store some location data directly on phones for a short time from users who have chosen to use GPS services, “in order to provide a better mobile experience on Android devices.” It too stressed that any location sharing on Android is done with the user’s permission. But consumer advocates warn that too many people click right through privacy notifications and breeze over or ignore such legalese. Case in point _some iPhone users who found about this past week about the data storage say they didn’t know anything about Apple’s tracking. “It’s like being stalked by a secret organization. Outrageous!” said Jill Kuraitis, 54, a freelance journalist in Boise, Idaho. “To be actively tracking millions of people without notification? It’s beyond unacceptable.” It’s easy to tell smartphone users that turning off tracking is as easy as finding their way to the settings menu. But to opt out of GPS service means preventing the software on your phone from using any information about where you are. That means cutting yourself off from the vast array of mobile apps that offer discounts and ads, allow you to connect more easily with friends who use social media, and simplify your life with map directions. Not a great trade-off. And if you thought there were laws that curbed tracking, think again. The government prohibits telephone companies from sharing customer data, including location information, with outside parties without first getting the customer’s consent. But those rules don’t apply to Apple and other phone makers. Nor do they apply to the new ecosystem of mobile services offered through those apps made by third-party developers. What’s more, because those rules were written for old-fashioned telephone service, it’s unclear whether they apply to mobile broadband service at all – even for wireless carriers that are also traditional phone companies, like AT&T Inc. and Verizon. Both the Federal Communications Commission and the Federal Trade Commission have said they are looking into the issue. But for now, it’s up to smartphone users to decide: Is it privacy they are most concerned about, or convenience? ___ AP writers Ryan J. Foley in Iowa City, Iowa, Kathy Matheson in Philadelphia and AP Technology Writers Joelle Tessler in Washington and Peter Svensson in New York contributed to this report.

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Parties Spoil For 2012 Fight Over Size Of Government

April 22, 2011

It’s always hazardous to predict the issues that will define the next presidential selection. But leading thinkers in both parties say that events of the past two weeks have locked in place a major part of the 2012 general-election contest.

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Jeffrey Rubin: When Will We See Demand Destruction for Oil?

April 21, 2011

How high must oil prices go before they start killing the very demand that feeds them? Everybody from the International Monetary Fund to the International Energy Agency (IEA) are warning of dire economic consequences if today’s triple digit oil prices persist. Curiously though, the IEA , which is warning of a potential global recession due to today’s oil prices, is also predicting an almost 1.5 million barrel a day increase in world demand this year. And judging by their recent track record, this forecast, like the one it made early last year for 2010, will once again be on the light side. Somber warnings from leading world institutions aside, there is no evidence yet of demand destruction in the places that have been pushing world consumption for over the better part of the past decade. Preliminary data on apparent fuel consumption show Chinese oil demand, already closing in on 10 million barrels a day, continued to grow at a double digit rate in March for the sixth consecutive month. That doesn’t sound like demand destruction to me. Of course, that is not to say there won’t be demand destruction in the future as oil prices continue to rise. All past oil shocks have resulted in recessions and falling crude prices, and there is no reason to expect the coming one will be any different. Given how high oil prices will likely rise ($200/barrel?) and the likely lack of fiscal counter measures from deficit ridden governments when the economy does finally keel over, there is potentially even more room for demand destruction than during the last recession. Keep in mind, the last recession was severe enough to register the first annual drop in world oil consumption since 1983. But what is still lacking for demand destruction to happen is the huge round of monetary tightening that always attenuates oil shocks. It’s no doubt coming. Just look how interest rates are already chasing runaway energy and food inflation in the world economy’s new growth areas, China and India. Facing 5.5 percent inflation, the People’s Bank of China has already increased interest rates four times over the past six months, and inflation will soon force other central banks around the world to follow their lead. Just as they did last time, those rate hikes, along with the burden of skyrocketing fuel bills, will eventually knock the economy back into recession. But until then, it is a little too early to focus on demand destruction. In the meantime, a fuel-hungry world economy will push oil prices to new record highs.

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Google’s Eric Schmidt Took Home A Paltry Paycheck In 2010

April 21, 2011

SAN FRANCISCO — Billionaire Eric Schmidt feels more comfortable taking a million dollar paycheck as Google Inc.’s former CEO than he did when he was running the Internet’s most powerful company. After voluntarily limiting his annual salary to $1 during most of his 10-year reign as Google’s CEO, Schmidt is getting a $1.25 million raise in his new job as executive chairman. The bigger paycheck kicked in April 4 when Schmidt was replaced as CEO by Google co-founder Larry Page. The revised compensation package, filed with federal regulators Tuesday, will pay Schmidt an annual bonus of up to $6 million. The raise and bonus plan supplement a stock package valued at $100 million that the board awarded Schmidt shortly after the late January announcement about Google’s planned change in command. The stock will vest during the next four years, a sign that Google wants Schmidt to stick around. In in his final year as CEO, Schmidt’s 2010 compensation package totaled $313,219. All but $1,786 of that amount covered Schmidt’s personal security bill and the cost flying his friends and family in jets chartered by the company, according to additional documents filed Wednesday. Schmidt, 55, ranks among the world’s wealthiest people with an estimated net worth of $7 billion that he accumulated mostly from the stock he bought and received after becoming Google’s CEO in 2001. When Schmidt joined Google, the company had less than $90 million in annual revenue. In Schmidt’s last year as CEO, Google’s annual revenue surpassed $29 billion. Google’s board has offered to pay Schmidt more money each year since 2005 only to be rebuffed. Schmidt accepted this time when a Google board committee consisting of Intel Corp. CEO Paul Otellini and venture capitalist John Doerr decided he deserved a raise in his new role focusing on acquisitions and government relations. The board also wanted to reward Schmidt for his past accomplishments as CEO, according to a Google spokesman. Page and Google co-founder Sergey Brin, who each have fortunes of $20 billion, also have insisted on maintaining the salaries at $1 and have refused other compensation besides a $1,000 holiday bonus that Google has handed out to all employees most years. Schmidt’s holiday bonus last year included an extra $785 to cover the taxes. Now that he is CEO, Page is still being paid $1. So is Brin while he works on long-term projects for the company, which is based in Mountain View, Calif. By accepting paltry paychecks, Schmidt, Page and Brin signaled to shareholders that they believed the company’s strategy and hard work would produce a higher stock price. Because they are among the largest shareholders, their wealth increases as the stock price rises. Google shares closed Wednesday at $525.73, up $4.20. Although Google’s stock is about 30 percent below its peak price reached in late 2007, the shares still have increased by more than sixfold since the company went public in 2004. The stock had been during the past week on investor concerns about Google’s expenses rising more rapidly than its revenue growth. The higher costs, in part, reflect a hiring binge that has added 5,700 employees to Google’s payroll in the past year and a 10 percent raise given to all workers in January. In calculating an executive’s total compensation, the Associated Press counts salary, bonuses, perks and stock and options awarded to the executive during the year. The value used for an executive’s stock and option awards is the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company’s stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.

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GE’s Profit Smashes Wall Street Expectations

April 21, 2011

BOSTON (Scott Malone) – General Electric Co posted quarterly results that blew past Wall Street expectations, joining a wave of better-than-expected earnings in the U.S. manufacturing sector. The largest U.S. conglomerate also raised its quarterly dividend by 1 cent to 15 cents per share, its third increase in the payout in the past year. Its shares rose nearly 4 percent in premarket trading. The first-quarter results reflected revenue growth across all of its industrial and financial businesses, with profit at GE Capital more than tripling and demand for railroad locomotives also bouncing back. “You have got growth coming out of every segment of GE, which is quite encouraging. Infrastructure orders are up 13 percent, which I also think is a very strong indication of a company executing on a strategy of getting back to the core energy and technology infrastructure businesses,” said Daniel Holland, equity analyst at Morningstar in Chicago. “It’s also quite encouraging to see the dividend bump up one more time.” The world’s biggest maker of jet engines and electric turbines said earnings attributable to common shareholders came to $3.36 billion, or 31 cents per share, up from $1.87 billion, or 17 cents per share, a year earlier. Revenue rose 6 percent to $38.45 billion. Factoring out one-time items, earnings came to 33 cents per share, easily exceeding analysts’ average estimate of 28 cents compiled by Thomson Reuters I/B/E/S. Revenue also topped Wall Street’s $34.64 billion forecast — which would have represented a decline, rather than a rise. “This is a superb turnaround,” said Howard Wheeldon, senior strategist at BGC Partners in London. “GE is reflecting an improvement in the U.S. economy and indeed more importantly it reflects the improvement of the global economy.” The Fairfield, Connecticut-based company has been cutting back its GE Capital unit, which Chief Executive Jeff Immelt wants to represent 30 percent to 40 percent of earnings, rather than the more than half it generated before the 2008 financial crisis. Refocusing GE on its industrial businesses has meant lowering revenue. The company also sold a 51 percent stake in the NBC Universal media business to Comcast Corp. Expectations are high for manufacturers this earnings season. On Wednesday, United Technologies Corp, Honeywell International Inc and Eaton Corp reported results that topped analysts’ expectations and raised their profit forecasts for the year. Shares of GE were up 3.8 percent at $21.17 in trading before the market opened. The stock has been particularly strong of late. At Wednesday’s close, it had gained 10.8 percent since the start of the year, well ahead of the 4.4 percent gain in the broad Standard & Poor’s 500 index. GE has come under fire over the past month for its low 2010 U.S. tax bill, although it has denied reports that it paid no income taxes at all last year. GE has also returned to the takeover trail in the past six months, spending some $14 billion on acquisitions, primarily to boost its presence in the energy sector. (Reporting by Scott Malone; Additional reporting by Nick Zieminski in New York, Christoph Steitz in Frankfurt, Harpreet Bhal and Dominic Lau in London; Editing by Bernard Orr, Lisa Von Ahn and John Wallace) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Bank Watch: Regulators Close Six Banks with $635M in Distressed CRE on Their Books

April 20, 2011

Six more banks were declared insolvent this past week and were sold, primarily to private equity-backed banks. This represents a sharp uptick from the pace of the previous several weeks. Until these closures, the year-to-date failure pace was an average of two banks per week, according to Trepp LLC. The six banks had total assets at year-end of $4.54 billion with more than $1.84 billion in nonresidential loans on their books — more than 40% of…

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Jack Myers: Content Producers and Owners Turn the Table on Aggregators

April 19, 2011

It’s no longer about using technology to aggregate content. It’s about using content to aggregate technology. If there was one common theme at both this year’s CES and at last week’s National Association of Broadcasters Convention in Las Vegas, it is the shift in emphasis away from advances in TV technology and distribution to how content producers are being recognized as the monetization engines for technology companies. For the past five to six decades, the TV industry has handled content as a commoditized product (with occasional hits) to be aggregated, packaged and sold to distributors, advertisers and audiences. The digital media business has followed the same pattern, with investors, advertisers, agencies, media companies and developers all reducing the role of content to a tertiary player in the ecosystem. Invite the top 100 venture capital investors to invest in a content start-up, and more than 90 will advise they “don’t invest in content.” What they should admit is that they are ignorant about the fundamentals of the media and advertising business, locked into an outdated paradigm, and blind to the hottest growth sector of media and advertising for the next decade. Google’s acquisition of YouTube and NextNewNetworks acknowledges that reality. Ask 100 media buyers to identify their clients’ #1 priority, the answer has almost always been “reaching key audiences as efficiently as possible.” The biggest issue in the industry for the past half-decade: procurement ! But for the next five decades, the central-point of investment opportunity in both digital and legacy media will be content and context — not technology, and not content aggregation. Content creators and developers now have the ability to shop in a warehouse over-stocked with software tools and resources that enable them to build out their digital distribution models across all platforms. Free, cheap and ubiquitous tools are available for mobile apps, interactivity, group deals and commerce, social connections, ad management, advanced TV, performance measurement and pretty much any capability content producers may require to scale their businesses. Venture capital investors with deep pockets continue to fund one tech start-up after the other, all chasing advertiser dollars and consumer eyeballs. They, along with huge global CE manufacturers LG, Intel, Samsung, Panasonic, Sony and others are now all focusing on chasing content partners. It was inevitable that content would find its way to the center of this discussion. It’s no longer about technology tools aggregating and monetizing content. It’s about branded content producers aggregating and monetizing technology. Jack Myers can be reached at Jack@mediadvisorygroup.com . JackMyersThinkTank is free and underwritten, as part of MediaBizBloggers.com , by subscriptions to Jack Myers Media Business Report ( www.jackmyers.com ). Subscribe free to all MediaBizBloggers reports at www.MediaBizBloggers . For Jack Myers Media Business Report subscription information visit www.myersreport.com or contact Jack Myers at Jack@mediadvisorygroup.com . Jack Myers and Media Advisory Group provide details on all underwriters and companies in which we have an investment at www.jackmyers.com . This commentary was originally posted at www.jackmyers.com.

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BP Greases Palms: Spill’s One-Year Anniversary Marked With Campaign Contributions

April 19, 2011

WASHINGTON — A year after BP’s catastrophic Gulf oil spill, the petroleum giant is easing its way back into the political money race — and the stain of shame candidates originally felt about accepting the company’s contributions appears to have evaporated. The gas and oil giant’s North America Political Action Committee filed its latest report with the Federal Election Commission Tuesday, which revealed $29,000 doled out to federal campaigns on its behalf. These figures mark the first contributions BP made that were not returned by federal office candidates since its drilling platform exploded on April 20, 2010, killing 11 people. “BP’s political action committee had gone completely off the radar for the past year,” noted Dave Levinthal of the Center for Responsive Politics. “It appears they’re back in the political game.” For many years before the spill, BP had been a “heavy hitter” by CRP’s standards, Levinthal said. The company regularly gave more than $200,000 to candidates each year, spreading the wealth to both Democrats and Republicans. But BP seems to be showing more of a partisan tilt upon its re-entry into the money game. “Although they were donors to both Democrats and Republicans before, their initial foray back into the political fray is targeted towards Republicans,” Levinthal said. House Speaker John Boehner (R-Ohio), House Majority Whip Kevin McCarthy (R-Calif.), Energy and Commerce Committee Chairman Fred Upton (R-Mich.), the National Republican Senatorial Committee and the National Republican Congressional Committee each received $5,000 from BP last month. Indiana Democratic Rep. Pete Visclosky got $3,000, and Ways and Means Committee Chairman Dave Camp (R-Mich.) bagged $1,000. Campaigns that accepted the money did so without blushing. “Our employee PAC contributions are a matter of public record and speak for themselves,” the company said in a statement. “From day one, Speaker Boehner has been clear in his position that BP should be accountable for every dime of the Gulf cleanup,” said Boehner campaign spokesman Cory Fritz. “We appreciate the support of all of our donors,” said the NRSC’s Brian Walsh. “Of course when it comes to BP, every Republican is still playing catch-up to President Obama, who is the largest recipient of BP PAC and individual money over the past 20 years,” said Walsh. Obama netted $77,000 in BP-related contributions for his senatorial and presidential campaigns combined, mostly from individual employees. The BP PAC gave him $1,000 during his senate run in 2004, and his White House campaign took no PAC money. The NRSC’s equivalent, the Democratic Senatorial Campaign Committee, received money from BP in the past, but none since the spill. While campaigns starting to accept donations from the oil giant again, it’s too soon to tell how voters feel about it. “The public and the candidates themselves will ultimately be the ones to determine whether enough time has passed for BP to emerge from political purgatory,” Levinthal said.

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The New Yorker: Has Obama Given Up On Inequality?

April 18, 2011

All this suggests, not for the first time, that the President might be a better tactician than his critics. But outmaneuvering his political opponents is not the same thing as achieving a country that, as he said last week, “values fairness.” The most persistent and corrosive feature of American life over the past three decades is income inequality: it rose steeply during Clinton’s first term, and, despite his budget victory, it continued to go up in his second.

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Unemployment Is Dropping — Except For Discouraged Workers

April 11, 2011

Some 6.3 million people have been out of work and looking for a job for more than six months. The employment-to-population ratio is lower than it was when the recession ended as companies have been slow to add to payrolls. And big sources of hiring in the past — government, health care and retailing — may not be able to reprise that role in the future as lawmakers limit outlays and consumers curb spending.

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Jeffrey Rubin: Only A Recession Can Deliver Obama’s Energy Targets

April 6, 2011

Like many in the White House before him, President Barack Obama charted out a plan last week to reduce America’s dependence on foreign oil. And like his predecessors, his road map to cut U.S. oil imports by one-third over the next decade comes against the backdrop of sharply rising oil prices and supply disruptions from an increasingly volatile Middle East. Unfortunately, we have heard this song many times before. In 1973, President Richard Nixon unveiled “Project Independence” in response to the OPEC oil embargo that was triggered by the Arab-Israeli war. President Jimmy Carter called the need to lessen U.S. dependence on Middle Eastern oil the moral equivalent of war in response to the supply disruptions that followed the Iranian Revolution. President George Bush Jr. referred to America’s dependence on foreign oil as nothing short of an addiction. Over the past four decades, U.S. presidents have waxed eloquent about the need to reduce the country’s dependence on imported oil. Yet the U.S. economy still relies on imports for more than 50% of the 19 million barrels of oil burned every day. As a result, the U.S. remains as vulnerable to soaring oil prices as it was during the OPEC shocks in the 1970s. In many ways, Obama’s plan is reminiscent of his predecessors by supporting more government subsidies for energy alternatives such as nuclear and bio fuels. Higher fuel efficiency standards will be mandated for cars and trucks. And, of course, there will be increased reliance on offshore drilling for deep water oil and on hydraulic fracturing in pursuit of America’s new wonder fuel: shale gas. Unfortunately, these initiatives have in one way or another been tried before by previous administrations. And many look less credible than they have in the past. As the Fukushima nuclear disaster threatens Japan with a Chernobyl-like legacy, President Obama is unlikely to find much support for more nuclear power in a country that already has more nuclear plants (and more radioactive spent fuel lying around) than any other in the world. And so far the diversion of food production to energy generation, like the 12 billion gallons of corn-based ethanol that America pumps out every year, has had a far greater impact on raising food and fertilizer prices than on lowering energy prices. While greater fuel efficiency is a laudable goal, past improvements in fuel efficiency have only encouraged Americans to drive more each year — about 30% more than at the time of the OPEC oil shocks. And they haven’t been filling up their tanks with shale gas either, which has only a quarter of the energy density of either gasoline or diesel. So far, recessions have been the only surefire way America has cut back on its fuel consumption and the need for oil imports. But, of course, that is not an option any U.S. president can pursue.

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Unemployment Drops In Vast Majority Of U.S. Cities

April 6, 2011

WASHINGTON — Unemployment rates are falling in most metro areas across the country, suggesting that hiring is widespread and not limited to a few healthy regions. The Labor Department says more than three-quarters of the nation’s 372 largest metro areas reported lower unemployment rates in February than the previous month. That’s the most to report a decline since September. More than 300 cities have seen their unemployment rates decline in the past year, the best showing since the recession ended in June 2009. And more than 280 metro areas reported job gains in the past year, also the most since the recession ended. Nationwide, private employers added more than 200,000 jobs in both February and March, the best two-month pace since 2006. The local data is one month behind the national figures.

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Largest Village In New York Closes Chase Account To Protest Foreclosures

April 5, 2011

The Village of Hempstead, a relatively low-income, minority-heavy municipality on Long Island, pulled its money out of JP Morgan Chase bank on Tuesday as part of a statewide campaign protesting the bank’s dismal mortgage modification record. “It’s important that Chase and all the big corporate banks start to heed the minority communities,” Hempstead Mayor Wayne Hall said in an interview. “There’s a lot of power in the minority communities. If we all stick together and start withdrawing our money out of these big banks and start putting it into more favorable banks, Chase will review its procedures for modifications.” Nearly one in every four U.S. homeowners with mortgages — or 10.8 million people — currently owe more on their home than it’s worth. In Hempstead, almost 4 percent of homes are in the foreclosure process, according to Dealbook , a rate four times Nassau County average. While data on Chase loans in Hempstead are hard to come by, in nearby New York City, only six percent of the 1,027 borrowers with Chase mortgages who asked for help in the past year were granted a permanent modification, according to a report released recently by the Center for New York City Neighborhoods. Moreover, a full 80 percent of these homeowners have not even received an offer for a loan modification. Chase’s national modification record is not much better. Of 233,653 trial modifications started by Chase under the Obama administration’s Home Affordable Modification Program (HAMP) launched in 2009, the bank now has just 71,657 active permanent modifications, according to the latest data from the Treasury Department. One Hempstead homeowner, Maribel Toure, said she has been trying and failing to modify her mortgage loan with Chase bank for two and a half years. “It has been an unhealthy experience, with bad communication and no response,” she told NY Communities for Change, a coalition of working families in low- and moderate-income communities. “I have to work 16-hour shifts in the hospital to make extra money, and I’ve asked for a modification three times, but have gotten no straight answer — I’m stuck in limbo.” A Chase spokesperson said the bank has “served the financial needs of the Village of Hempstead well” for more than 30 years. “In New York, Chase has offered 50,000 modifications to struggling borrowers and has prevented seven foreclosures for every one foreclosure here,” he said. “This past weekend, we met face-to-face with 2,200 borrowers in Brooklyn to help them stay in their homes.” The Village of Hempstead is the first municipality in the country to close a bank account due to foreclosure policies. But a spokesperson for NY Communities for Change said many local governments throughout the state are planning to close their Chase accounts in the coming months. New York City Councilman Jumaane Williams marched into a Park Avenue Chase bank in February to close his account, and major unions have also announced their intention to pull their pension-fund money out of JP Morgan Chase. “Banks like Chase should be ashamed of themselves,” Hempstead Deputy Mayor Henry Conyers said in a press release. “They were bailed out with taxpayer money – now look what they are doing to the taxpayer: foreclosing instead of modifying.”

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U.S.’s Ten Most Endangered Industries

April 2, 2011

The recession has caused the failure of some formidable companies, Lehman Brothers and Circuit City among them. Not only individual businesses have suffered, however. The economic woes of the last decade have preyed upon entire industries. In a new report entitled “Dying Industries,” by Toon Von Beeck, research firm IBISWorld identifies 10 U.S. industries that have experienced severe, possibly irreversible drop-offs over the past decade, today remaining stuck in the decline phase of their business cycle. All mentioned industries — having already experienced significant decreases in revenue over the last decade — can be expected to experience further declines through 2016. The reasons for the suffering vary by industry, but IBISWorld attributes a significant amount of industry strife to three primary factors: new technology, foreign competition and industry stagnation. With the country still reeling from a housing crisis , manufactured home dealers may be in the most trouble, the report finds. Over 50 percent of manufactured home dealers closed their doors over the past decade, and revenue numbers for those still open are terrible: down 73.7 percent with a further 62 percent decline expected by 2016. And while the decline of some high-profile industries, like the newspaper and record businesses, have been well-documented for years, who knew that rental formal wear could soon be passé ? The apparel industry has suffered tremendously from foreign competition, with revenues down 77.1 percent since 2000. Photofinishers have largely been supplanted by digital camera as well. But maybe some can take solace in the fact that there likely won’t be a sequel forthcoming to 2002′s One Hour Photo . The slidshow below uses data compiled in the report “10 Dying Industries” by IBISWorld . Ranking is based on percentage decrease in revenue from 2000 to 2010:

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Dominique Strauss-Kahn: Nanjing and the New International Monetary System

March 31, 2011

I am delighted to be back in China this week for a high-level seminar in Nanjing on the international monetary system . Every time I come to this part of the world, I am impressed by the dynamism of the economies and the optimism of the people. The future is here. The region’s economic performance over the past few decades has been nothing short of remarkable. Asia now accounts for about a third of the global economy, up from under just a fifth in 1980. This trend has been reinforced by the crisis, with the emerging market powerhouses leading the global recovery. Asia has also made tremendous progress with poverty reduction. China alone has pulled hundreds of millions of people out of poverty over the past few decades. Such a feat has never before been accomplished in the history of human civilization. But to sustain this progress, Asia needs to grapple with numerous challenges today, among them the need to deal with overheating pressures and volatile capital inflows. And this relates directly to our discussion at Nanjing . The current international monetary system has certainly delivered a lot. But it also has flaws that need to be fixed, especially if the next phase of globalization is to succeed in bringing a strong and broad-based rise in living standards. I see four pressing issues: Imbalances across and within countries. We need stronger cooperation to promote effective global adjustment and discourage countries from running policies that lead to global imbalances. The G20 Mutual Assessment Process and the IMF’s “spillover reports” for the five most important systemic economies–which look at the effects of country policies across their borders–are steps in the right direction. More ambitious ideas, including a strengthening of countries’ multilateral obligations and of accountability mechanisms for these, are also worth discussing. No framework to oversee capital flows. Everybody knows that capital flows can sometimes be destabilizing. This is something many countries worry about. But we do not have globally agreed “rules of the road” on what they should do. Sometimes we need to look at old ideas with a fresh perspective, and we are developing more of a consensus view. In the past, capital controls were not in our toolkit. Today, we see them more as part of the toolkit, although only in specific circumstances and not, of course, as a substitute for good macroeconomic policies. Inadequate global liquidity. We need to strengthen the global financial safety net, to reduce the need to “self-insure” by building up costly reserves buffers. There are a number of options here. One possibility is to strengthen partnerships with regional financing arrangements. Another is to improve the predictability of the provision of systemic liquidity more generally. Too few options for safe global assets to meet the demand. The question here is how to diversify reserve assets. One option is to encourage greater international use of currencies other than the four currently in the SDR basket, including those of large dynamic emerging markets. Over the longer term, the SDR itself could play a greater role. These issues go right to the heart of the IMF’s mandate, and their resolution will require further engagement and discussion among our global membership. Certainly, they are challenges in which all global citizens have a stake–to support an ongoing recovery and avoid future crises, ensuring better outcomes for all. The Nanjing meeting was a useful step toward the international monetary system of the future. And speaking as the head of the IMF, it was also a useful step in advancing the partnership between Asia and the Fund. A partnership that I firmly believe will continue to strengthen in the future. From iMFdirect blog

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Number Of People Seeking Jobless Aid Drops

March 31, 2011

WASHINGTON — Fewer people applied for unemployment benefits last week, a sign that layoffs are dropping and companies may be stepping up hiring. The Labor Department said Thursday that the number of people seeking benefits dipped by 6,000 to a seasonally adjusted 388,000 for the week that ended March 26. That’s the second decline in three weeks. Applications near 375,000 or below are consistent with a sustained increase in hiring. Applications peaked during the recession at 659,000. The four-week average of applications, a less volatile measure, rose to 394,250. Still, that figure has dropped by 35,500, or 8 percent, in the past eight weeks. “The downtrend … is undeniable,” Joshua Shapiro, chief economist at MFR Financial Inc., said. “We believe that this improvement will continue in the weeks and months ahead.” The department also revised the previous five years of data. The changes showed that applications in recent weeks were moderately higher than previously reported. As applications have fallen, hiring has started to pick up. Economists forecast that employers added a net total of 185,000 jobs in March. That would be just below February’s gain of 192,000 – the most jobs added in nearly a year. The unemployment rate is expected to remain unchanged at 8.9 percent. The March data will be released Friday. Still, hiring must rise by about 300,000 per month to rapidly bring down the unemployment rate, economists say. The economy has gained more than a million jobs in the past year but still has 7.5 million fewer jobs than before the recession. The number of people collecting benefits also dropped. It fell by 51,000 to 3.7 million in the week ending March 19, the latest data available. That’s the lowest figure since October 2008. But that doesn’t include millions of people receiving aid under the emergency unemployment benefit programs put in place during the recession. All told, 8.8 million people received unemployment benefits in the week ending March 12, the latest data available. That’s slightly higher than the previous week. There have been other positive reports about jobs and hiring this week. More than half of the largest U.S. companies plan to step up hiring in the next six months, according to a survey by the Business Roundtable, released Wednesday. That’s the highest proportion of the group’s members that plan to add workers since the quarterly survey began in 2002. The Roundtable represents the CEOs of roughly 200 of the largest U.S. companies. And the Conference Board said more job openings were posted online in March. The number of postings rose by 208,800, or nearly 5 percent, to 4.45 million. Job openings have increased by 600,000 in the first three months of this year. The Conference Board is a nonprofit business research group.

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Bryce Covert: The Return of the Debtor’s Prison

March 30, 2011

Judges have signed off on more than 5,000 warrants allowing borrowers who don’t pay to be jailed since the start of 2010. Portfolio Recovery Associates, a debt buyer, made $44 million last year on $281 million in revenue, a 16% net margin. You wouldn’t be crazy to think that debtor’s prisons are a thing of the past. Debtors have historically been treated pretty poorly: under Roman law, a debtor’s body could be chopped up and the pieces given to his creditors (although they were more likely to be turned into slaves). So debtor’s prisons, in comparison, might seem less harsh. But they were squalid and debtors weren’t given any provisions. No sentences were set; you were there until you paid up. Borrowers owing as little as 60 cents could be jailed indefinitely. They were officially abolished in the United States in 1883. But they’re now making a comeback in a modern form. As the debt-collection industry buys up bad debt and then seeks payment, it’s started relying on arrest warrants to get its way, throwing those who miss court appearances or don’t pay in jail. The Minneapolis StarTribune was one of the first to report on the resurgence : after analyzing court data it found “the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009.” The practice is inconsistent, varying state-by-state, and the actual punishment varies. But there have been some cases that stand out: In Illinois and southwest Indiana, some judges jail debtors for missing court-ordered debt payments. In extreme cases, people stay in jail until they raise a minimum payment. In January, a judge sentenced a Kenney, Ill., man “to indefinite incarceration” until he came up with $300 toward a lumber yard debt. It’s impossible to say how widespread this is across the country as no national statistics are kept. But the Wall Street Journal recently reported on the same phenomenon: More than a third of all U.S. states allow borrowers who can’t or won’t pay to be jailed. Judges have signed off on more than 5,000 such warrants since the start of 2010 in nine counties with a total population of 13.6 million people, according to a tally by The Wall Street Journal of filings in those counties. In Minnesota, arrest warrants have been issued for debts totaling as little as $85. It’s not free to put people in jail, either, and taxpayer dollars cover the cost. Not to mention the distraction from pursuing violent offenders. Law enforcement “can’t quickly access arrest orders for dangerous criminals because their computer system is clogged with debt cases,” reports the WSJ . And there’s something else we’re being distracted from. In Joe Nocera’s weekend NYTimes column , he told the story of Charlie Engle, a marathoner who has been serving a 21-month sentence for mortgage fraud. Was he a lender who suckered borrowers into loans they couldn’t afford? A banker who sliced and diced mortgages into securities with AAA ratings? No. He’s a borrower who supposedly lied on two liar’s loans (although as Nocera reports, the evidence for that is pretty fuzzy). So while Angelo Mozilo walks free, making a nice profit for his company and himself, Engle goes to jail. Banks and debt collectors are making a tidy profit, while the customers they prey upon are being thrown in the slammer. “We have now imprisoned one generation of debtors after another,” Samuel Johnson observed in 1758, “but we do not find that their numbers lessen.” His words ring true today. Cross-posted from New Deal 2.0 .

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