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Hot Seat for SEC Chief Schapiro Won’t Cool Off: Susan Antilla

December 21, 2009

Commentary by Susan Antilla Dec. 21 (Bloomberg) — The chairman of the Securities and Exchange Commission has a past that is fast coming back to haunt her. Mary Schapiro’s story has none of the lurid details of philandering celebrity golfers or hedge fund titans who get sued by ex-wives for concealing marital money. Her history and two pending lawsuits, though, raise an important question for investors: Is the woman who oversees the U.S. financial markets someone willing to fudge the facts to get things done? If what I heard in federal Judge Jed Rakoff’s New York courtroom last week is even close to accurate, I’d say that it’s time for some serious conversations as to whether Schapiro is the person we should entrust to the top SEC job. Schapiro was chief executive officer of the self-regulatory organization National Association of Securities Dealers in 2006 when it and the New York Stock Exchange decided to combine their regulatory operations, which ultimately became known as Finra. NASD pulled out all the stops to pitch the deal, putting on a 26-city promotional tour to persuade its 5,100 members to vote to change the bylaws so the merger could get done. To hear NASD’s take on the transaction, outlined in a Dec. 14, 2006, proxy statement, in notes from the roadshow, in a telephone pitch script and in a video promo by Schapiro, it was an early holiday gift to members, offering the chance to reduce duplicative regulation once the two regulators joined as one. Additionally enticing was that, in anticipation of cost savings, NASD would pay $35,000 to each of them. Sounding Ungrateful Ungrateful though it might sound, two Finra member firms sued Finra, Schapiro, and other Finra officers. Standard Investment Chartered Inc. and Benchmark Financial Services Inc. said in lawsuits filed in 2007 and 2008 that the defendants breached their fiduciary duty, misled brokers about the merger terms, shortchanged the brokers in the payment, and unjustly enriched themselves with soaring compensation. Schapiro’s compensation rose to $3 million from $2.1 million once the combination was completed in July 2007. Chief among their claims is that Schapiro and NASD lied when they told members the organization couldn’t pay more than $35,000. “Based on our consultation with the Internal Revenue Service, a larger payment is not possible,” Schapiro said in a Webcast to members. How she knew that before members voted in January 2007 remains a mystery: the IRS letter to NASD on the matter was dated March 13, 2007. Chump Change Thirty-five thousand bucks is chump change to a big brokerage firm. But for smaller NASD members — 672 of them had revenue of less than $75,000 in 2006, according to a voting analysis produced by NASD in the litigation — it sounded like real money. The proxy assured them “a larger payment is not possible” because of laws governing tax-exempt organizations. The NASD cited IRS rules in a similar line in a telephone script dated Dec. 20, 2006, and produced by NASD in the litigation. What the IRS really said remains under seal at the insistence of Finra. In court on Dec. 16, though, it began to look like that $35,000 number was low-balled by a significant amount. Rakoff asked a lawyer for Standard Investment and Benchmark, Jonathan Cuneo of Cuneo Gilbert & LaDuca LLP, what damages he was claiming on behalf of his clients. To reveal the numbers, the lawyer would have to base his answer on the IRS information that lawyers for Schapiro and Finra have fought to keep under wraps. So Cuneo asked the judge if he wanted him to refer to those numbers in open court. Rakoff said yes. With that, Cuneo said the IRS letter would have allowed “something like $35,000 to $76,000” on top of the $35,000 that each NASD firm got. Double or More In other words, while Mary Schapiro and others at NASD were saying that members couldn’t get more than $35,000 because the IRS had said so, the real number turned out to be at least double that, based on what Cuneo said. John Heine , an SEC spokesman, declined requests to comment on Schapiro’s behalf. Brendan Intindola , a Finra spokesman, told Bloomberg in an e-mail that “There is no way to know how those numbers were created,” and that they are “inaccurate.” But neither Intindola nor the defense lawyers questioned by Rakoff on Dec. 16 would offer any evidence to back up the claim of inaccuracy. Finra has asked the court to dismiss the case, saying the organization and its officers operate as regulators and have immunity from damage suits. Finra has said in court filings that the SEC reviewed the IRS payment issue and concluded “that NASD has made a prima facie showing that these representations were not misleading.” But it barred the plaintiffs from sharing the unsealed documents with the SEC in July 2007. Who’s in charge here, anyway? Finra continues to fight to keep the information under seal. Bloomberg News and two other news organizations have asked Rakoff to open the files. He will hear arguments on Jan. 14. Schapiro was one of NASD’s biggest cheerleaders for the NYSE merger. She may come to regret ever saying that the IRS wouldn’t let her member firms get a penny more than they received. ( Susan Antilla is a Bloomberg News columnist. The opinions expressed are her own.) Click on “Send Comment” in the sidebar display to send a letter to the editor. To contact the writer of this column: Susan Antilla in New York at santilla@bloomberg.net

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Unemployment By State In November (MAP)

December 18, 2009

Unemployment rates are up from this time last year in all 50 states, but in recent months the situation has improved somewhat, with rates declining in 36 states since October, according to new government data. Seven states, led by Kentucky and Connecticut, saw statistically significant decreases of less than one percent. Michigan still boasts the highest rate in the country, but saw its second consecutive monthly decrease in unemployment as the rate fell to 14.7 percent from 15.1 percent. The only state with a higher unemployment rate from the previous month is Florida, where the rate climbed from 11.3 percent to a record 11.5 percent. Texas, Ohio, and Georgia saw the biggest payroll gains. HuffPost readers: Got a story about unemployment? Tell us about it! Email arthur@huffingtonpost.com . Interestingly, a new study finds that people living in sunshine states — places shown by the below map to be suffering some of the highest unemployment rates — are the happiest people in the country. Click here for a larger pop-out version, and here for a PDF of the report from the Department of Labor’s Bureau of Labor Statistics.

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Cate Long: Derivatives Regulation: The Devil in the Details

December 11, 2009

The House of Representatives has begun the debate on the Wall Street Reform and Consumer Protection Act … (HR 4173) The real devil lurking in the details is the regulation of derivatives … The weeds of the competing legislative proposals are a little thick but the high level concept relates to where the derivatives trade gets done… Will the trade get done in the light or in the dark? Will the trade get done on a public exchange or alternative swap facility? Or will it be done during a phone call between two big banks and then buried deep in an opaque trading book? Where it will lurk as a weapon of mass destruction as Warren Buffett would say Derivatives trading must happen in the light… These trades must be done publicly to provide stability in our financial system… Remember the AIG darkness? Which almost melted down the global economy… it was really dark around all those AIG trades… dark as a graveyard. * * * Here are the particular details where the devil is lurking… from Baseline Scenario : Colin Peterson (D-MN), Chairman of the House Committee on Agriculture, along with Barney Frank, has added an amendment to the OTC Bill (opens large pdf). There are two relevant sentences for reformers from the long document. The first is on page 32: (49) SWAP EXECUTION FACILITY.–The term ‘swap execution facility’ means a person or entity that facilitates the execution or trading of swaps between two persons through any means of interstate commerce, but which is not a designated contract market, including any electronic trade execution or voice brokerage facility. This replaces other language in the original bill (opens even larger pdf), on page 546: SEC. 5h. SWAP EXECUTION FACILITIES. (a) REGISTRATION.– (1) INGENERAL.– (A) No person may operate a swap execution facility unless the facility is registered under this section. (B) The term ‘swap execution facility’ means an entity that facilitates the execution of swaps between two persons through any means of interstate commerce but which is not a designated contract market. So notice any differences? First the definition of a swap execution facility has been expanded to include “a person” (different from the “or entity”). It’s also expanded to an “or trading” definition, and includes voice brokerage firms. So now we are moving from the definition of something that is a platform for swaps to be traded on to instead something that simply helps swaps get traded. This could, quite simply, be a telephone over which two people trade a derivative (with one person declaring himself to be the exchange?). Instead of changing the way business is done for reform it looks like it redefines reform as the way things are currently done, and just calls it a victory. Now on page 89 of the amendment: 2) RULES FOR TRADING THROUGH THE FACILITY.–Not later than 1 year after the date of the enactment of the Derivative Markets transparency and Accountability Act of 2009, the Commission shall adopt rules to allow a swap to be traded through the facilities of a designated contract market or a swap execution facility. Such rules shall permit an intermediary, acting as principal or agent, to enter into or execute a swap, notwithstanding section 2(k), if the swap is executed, reported, recorded, or confirmed in accordance with the rules of the designated contract market or swap execution facility. * * * To see the legislation and amendments here … Here are all the amendments that are being debated on the floor: The ‘ manager’s amendment ‘ is a kitchen-sink amendment that pulls in all the last minute deals (so you can actually see handwriting on the PDF). It is 242 pages long and that is where you are going to find a lot of important policy changes.

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Treasury Touts Long-Available Derivatives Report As A Part Of Its ‘New’ Open Government Plan

December 9, 2009

This morning, the folks at the U.S. Treasury Department put out a press release announcing their “Open Government Plan,” which they are touting as a “New Information Sharing Effort” that “Promotes [a] Culture of Transparency, Collaboration, Participation.” The release reads, in part: As part of a commitment to increase transparency in government and maintain accountability of taxpayer dollars, the U.S. Department of the Treasury today announced an open government effort that will increase public access to data and information. Under this initiative, Treasury has compiled and will now make available new data on tax returns, more user friendly information on transactions under the Troubled Asset Relief Program (TARP), and a new report on bank trading and derivatives. It’s new! And it’s now! Except, of course, for the component of this “Open Government Plan” that’s actually been available for over a decade that the Treasury is now attempting to pass off as something they’ve just introduced. Quarterly Report on Bank Trading and Derivatives . This new report, made available by the Office of the Comptroller of Currency, provides information on the federal government’s supervision of banks as well as the investment activities of financial institutions. Yeah, see, that “new report” has actually been available since 1995. You can look it up ! The Huffington Post’s own business reporter Shahien Nasiripour tells me, “I’ve written many , many articles on derivatives, and I’ve been using this report for a long time.” The release cites two additional “new” innovations: new data from the Internal Revenue Service on taxpayer ” migration patterns ” and a new “format” for transactions being made under the Troubled Asset Relief Program . One used to be available for a fee; the other in a slightly less useful PDF format, so that’s all well and good — but as examples of “new” frontiers in government transparency, it’s pretty weak tea. So it’s really no wonder that the Treasury would pad these scant offerings out with a report that financial reporters have been using very effectively, for years. [Would you like to follow me on Twitter ? Because why not? Also, please send tips to tv@huffingtonpost.com -- learn more about our media monitoring project here .]

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Yen, Dollar Fall as Economic Recovery, Stock Gains Spur Demand for Yields

December 2, 2009

By Yasuhiko Seki and Ron Harui Dec. 3 (Bloomberg) — The yen weakened for a third day against the euro and the dollar also fell as signs the global economy is recovering boosted demand for riskier assets. The yen slid against all of its 16 major counterparts before reports today that economists said will show European retail sales fell at a slower pace and U.S. service industries expanded. Australia’s dollar approached a one-week high versus the dollar after a government report showed retail sales rose in October after unexpectedly declining the previous month. “With the global economy recovering, risk trades will weigh on the funding currencies” such as the yen and the dollar, said Soichiro Mori , manager of foreign-exchange promotion at FXOnline Japan Co., a margin-trading company. “Higher-yielding currencies will benefit from the liquidity-driven play.” The yen declined to 132.45 per euro as of 11:06 a.m. in Tokyo from 131.46 yesterday in New York, after earlier dropping to 132.53, the lowest level since Nov. 25. Japan’s currency fell to 87.82 per dollar from 87.38, after sliding to 87.88, the weakest since Nov. 25. The currency had risen to 84.83 on Nov. 27, the highest since July 1995. The dollar dropped to $1.5080 versus the euro from $1.5044. Store revenue in the 16-nation euro region fell 2.4 percent in October following a 3.6 percent drop the previous month, according to a Bloomberg News survey of economists before the European Union’s statistics office releases the data today. The Institute for Supply Management’s index of non- manufacturing businesses, which make up the largest part of the U.S. economy, rose to 51.5 in November from 50.6 in October, according to a separate Bloomberg survey before today’s report. U.S. Beige Book The world’s biggest economy expanded or improved “modestly” across the nation from October to mid-November as consumer spending rose in a majority of Federal Reserve districts, the central bank said yesterday in its Beige Book. “The risk trade continues,” analysts led by Hans-Guenter Redeker , London-based global head of foreign-exchange strategy at BNP Paribas SA, wrote in an e-mail to Bloomberg today. “Till year end euro-dollar continues to be a main trade.” U.S. stocks erased losses yesterday following the release of the Beige Book. The Standard & Poor’s 500 Index has jumped more than 60 percent from its 2009 low on March 9 on prospects for a recovery from recession. The Nikkei 225 Stock Average advanced 2.3 percent today, a fourth day of gains, and the MSCI Asia Pacific Index of regional shares advanced 1 percent. Tamaki Visit Japanese Vice Finance Minister Rintaro Tamaki , who is head of international affairs including currency policy, met with U.S. Treasury officials this week in Washington, spurring speculation that the two nations are discussing the yen’s strength. “Japan is shifting away from laissez-faire policy on the rising yen,” said Takeshi Minami , chief economist in Tokyo at Norinchukin Research Institute Ltd. “The possibility of actual intervention may strengthen if the yen reaches 83 per dollar.” Japan should ask the U.S. and Europe to take coordinated action to weaken the yen, Financial Services Minister Shizuka Kamei said in an interview in Tokyo yesterday. “We need international coordination,” said Kamei, whose People’s New Party is a coalition partner to the Democratic Party of Japan . He has urged Finance Minister Hirohisa Fujii to seek international cooperation to halt the yen’s rally. The currencies of New Zealand and Australia were the biggest gainers against the dollar and the yen as signs of an economic recovery spurred demand for higher-yielding securities. Retail Sales Australia’s retail sales climbed 0.3 percent from September, when they fell 0.2 percent, the Bureau of Statistics said in Sydney. The result matched the median forecast of economists surveyed by Bloomberg News. There is a 46 percent chance that Reserve Bank of Australia Governor Glenn Stevens will boost the benchmark rate by a quarter point to 4 percent at the central bank’s next meeting on Feb. 2, according to interbank contracts traded on the Sydney Futures Exchange. Australia’s currency rose to 92.84 U.S. cents from 92.48 cents in New York yesterday, and gained 0.9 percent to 81.51 yen. New Zealand’s dollar climbed to 72.56 U.S. cents from 72.21 cents, and advanced 1 percent to 63.70 yen. Benchmark interest rates are 3.75 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net ; Ron Harui in Singapore at rharui@bloomberg.net .

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Spanish Bullrings, Fake Eiffel Towers Can’t Prevent 20% Unemployment Rate

November 27, 2009

By Emma Ross-Thomas Nov. 27 (Bloomberg) — Bullrings and fake Eiffel Towers may not be enough to hold back the tide of surging unemployment in Spain, Europe’s one-time engine of job growth. As an 8 billion-euro ($12 billion) stimulus program runs out, that will help destroy 250,000 jobs at the start of next year, according to the AGETT association of employment agencies, and push the jobless rate above 20 percent. Prime Minister Jose Luis Rodriguez Zapatero’s package, designed to fight Spain’s worst recession in 60 years, has kept people in work by funding a wave of building projects from a theme park of European monuments to sports complexes and bullrings. The risk is that a further jump in joblessness will delay the return to growth, boosting the budget deficit and borrowing costs. “What they’ve done is just put the unemployed on ice,” said Fernando Fernandez, a professor at IE business school in Madrid and former International Monetary Fund economist. “There’s been a series of transitory measures based on the idea the crisis would be short, and now we have to deal with the consequences.” Under the Plan E program, which created 422,298 jobs, builders in Torrejon de Ardoz , near Madrid, are erecting the collection of monuments among 5,000 trees. On the Mediterranean island of Ibiza, 3 million euros is being spent to build a swimming pool, while a bullring near the capital has a new roof. Christopher Columbus Across the euro area, unemployment has risen by 3.2 million people in the last year . As a larger share of temporary contracts than anywhere else in the region made it easier to cut payrolls, Spain accounted for half of the increase. Spain has the highest unemployment rate in the euro area, at 19.3 percent in September, as companies including Banco Bilbao Vizcaya Argentaria SA and Iberia Lineas Aereas de Espana SA cut jobs. The 16-nation region’s average was 9.7 percent. Victor Castellanos, 22, may be among those who join Spain’s 3.8 million unemployed in January. He’s been working for seven months on a 3.6 million-euro project to move a statue of Christopher Columbus in central Madrid. It ends next month and he has no plans. Only 11.5 percent of all projects have been completed, according to government data, signaling most of those hired will lose their jobs between now and year-end. “It’s bread today and hunger tomorrow,” Castellanos said in an interview on Paseo de la Castellana, one of the city’s main avenues, where the road works hold up traffic. Workers traditionally receive unemployment benefits for a maximum of two years. The government this year extended that with a 420 euro-a-month payment it pledged to maintain as long as unemployment remains above 17 percent. It may be paying that until at least 2011, according to Fernandez, putting further pressure on the budget. Debt Costs Spain lost its top AAA credit rating at Standard & Poor’s in January on concerns about public finances that pushed the extra interest investors charge to hold Spanish debt instead of German equivalents to 128 basis points, the most in the euro’s lifetime. While that spread has narrowed to 61 basis points, that’s still five times what it was at the start of 2008. “The Spanish deficit outlook is not very rosy,” said Michiel de Bruin , head of European government bonds in Amsterdam at F&C Asset Management Plc, which manages assets worth $145 billion and holds Spanish debt. “We are maybe a bit concerned on the Spanish spread, it might widen a bit from here.” Spain’s debt may rise to 74 percent of gross domestic product in 2011 from 36 percent before the crisis, European Commission forecasts show. ‘Problem’ “Rising unemployment is a significant factor and does suggest that Spain has a long-term competitiveness problem,” said Harvinder Sian , senior bond strategist at Royal Bank of Scotland Plc in London. He sees Spanish bond yields rising closer to levels on Italian debt. While the economy will continue to shrink next year, the government is raising taxes as well as trimming stimulus spending. It aims to reduce the budget deficit to the EU limit of 3 percent of GDP by 2013 from 11 percent this year. AGETT, which represents companies including Adecco SA , and Madrid-based Analistas Financieros Internacionales see payrolls falling by 1 million to 18.3 million in the year to January 2010. The unemployment rate will reach 20.5 percent next year, according to a Bloomberg survey. “At one point it seemed the world was coming to an end, jobs were being lost a frightening rate. Plan E stopped the bleeding a bit,” said Juan Rubio, a professor at Duke University. “But from the point of view of economics, it was crazy. It was almost throwing money away.” Even as the job crisis escalates, the mounting fiscal problems mean a new stimulus fund for 2010 is half the size of this year’s. The Ministry for Territorial Policy , which manages the plan, estimates it will still create 200,000 jobs. “Some people who were employed to dig holes in the morning and cover them up in the afternoon will be out of a job,” said Javier Diaz-Gimenez , a professor at business school IESE and former government adviser. “Is this a good thing or a bad thing? I think it’s a good thing in the long-run.” To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

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William Drayton: Want to Fight Climate Change? Hire Somebody

November 17, 2009

With official U. S. unemployment at 10.2% and with Congressional debate on a climate bill sputtering, last week the Senate Finance Committee held a hearing on how climate legislation might help fix the economy and create jobs. At the same time, President Obama announced he would hold a White House forum next month to gather new ideas for achieving the robust job creation that has so far eluded stimulus efforts, and opponents and supporters of cap-and-trade legislation both echoed the jobs theme, saying that in the end, any US climate bill must be a jobs bill. These are promising developments that may point the way to an effective climate policy. Because with them, the crucial enabling connection between creating jobs and fighting climate change has finally entered explicitly into our politics. I say “finally” because throughout most of 2009, even as the economy hemorrhaged some 3.8 million jobs, while they were framing proposals for climate change legislation, most members of Congress and their staffs were curiously reluctant to broach the obvious jobs connection. They expressed lots of concern over the impact of regulating carbon on energy producers, coal states and carbon emitters, but very little about its impact on jobs and workers in general. (President Obama’s 2010 budget proposal was a notable exception; it plowed carbon permit revenues back into a payroll tax credit to help working families, but unfortunately that provision didn’t pass Congress) . But it’s not that surprising the jobs dimension of the climate debate has been relatively muted until recently, considering the federal government doesn’t like to be explicit about the true extent of unemployment, either. Unemployment is much worse than official statistics suggest. That official 10.2% rate represents only a fraction of the adult population that is not working; the total figure is closer to 40%. BLS statistics show that of the total non-institutionalized adult population of 235 million, only about 140 million, or about 60%, are working. Officially, there are 15 million unemployed; unofficially, the true number of unemployed is roughly five times higher. But double-digit unemployment crosses an undeniable perceptual threshold in the public’s mind. When we hit it, the political rhetoric around the climate bill shifted, and the jobs connection was finally made explicit. Acknowledged or not, it’s been clear for a long time that in order for climate legislation to pass, it must not exacerbate job loss, and that for it to make sense, it should take advantage of this once-a-century opportunity for retooling the economy to optimize job gain. In October the CBO released a study projecting a net job loss from the climate legislation bill that passed the House. It contradicted the findings of a report released by the Center for American Progress which projected a net job gain. The projections are contentious politically, hence the Senate Finance Committee hearing last week. Part of the debate is about whether a US cap and trade system could in effect create more “green” jobs than “non-green” it destroys, whether it will ultimately grow the economy or shrink it. But there is a more fundamental principle involved than whether the particular cap-and-trade mechanism in the House bill or in Senate proposals can create a certain number of jobs. At the heart of the matter is one of the most basic decisions societies make: how to manage the fundamental tradeoff between the two primary factors of production — labor utilization vs. resource consumption. The two aren’t quite a zero sum, but in general, they are substitutes for one another. The more natural resources such as energy and materials a business uses, the more labor it “saves,” and vice versa. Ideally, in a market economy the two should find an optimal balance. But for decades, through taxation and other interventions, we have pushed our thumb down hard on the scale, and tilted it steeply in favor of employing things over people. Even when U. S. joblessness is obviously deeply damaging our economy, not to mention our communities and families, we continue to define “productivity” in terms of how little labor we can use, and Wall Street can still rally on bad jobs reports. As a result our economy consumes natural resources very aggressively. At the same time, US policy actively discourages labor demand. More or less by accident, we have sent a giant “use things, not people” price signal as payroll taxes have increased from 1% to almost 40% of federal revenues over the last several generations. This raises hiring costs, lowers employment, and hands an effective subsidy to resource consumption, skewing the relative prices of labor vs. resources over 30%. The human impact of this is enormous. The potential contributions of tens of millions of people are wasted (hundreds of millions worldwide), studies show the health of sidelined workers and unemployed retirees suffers, and a whole host of social ills arises, from crime to students who see no future, with debilitating costs to individuals, business, and government. The climate impact is equally enormous. The effective subsidies favoring resource consumption and discouraging hiring mean we are burning a lot more fuel, tearing up more land and emitting a lot more carbon, than if the relative prices of labor and resources were corrected, and we produced utilizing far more people and far fewer natural resources. That’s the bad news, and it’s also the good news. It suggests that if we reverse the current price signals, we can also reverse the perverse incentives that drive joblessness and over consumption of energy and resources. We can do this by taking the tax burden off payrolls and therefore employment, and putting it instead on energy waste and resource consumption. OECD countries that have cut their payroll taxes substantially boosted employment and lost fewer jobs in the downturn than countries which didn’t, like ours. This week The Economist magazine recommended the U.S. adopt a similar policy. If we cut payroll taxes and replaced the lost revenue with levies on non-labor inputs to business, such as a non-labor Value Added Tax (VAT), carbon permit fees and/or energy taxes, we could create tens of millions of jobs and stimulate economic growth while deeply cutting natural resource use and emissions. Such tax switching is a revenue-neutral approach that involves no net increase in taxes. It also creates no bureaucracies, choosing of winners or losers, implementation delays, or risk of corruption. It is, not surprisingly, attractive to smart conservatives and liberals alike. Recent advocates range from Charles Krauthammer to Thomas Friedman, Al Gore to Richard Lugar and T. Boone Pickens. This year Rep. Bob Inglis (R-SC) and Rep. John Larson (D-CT) both introduced climate change bills that recycle over 90% of carbon pricing revenues into payroll tax cuts. That’s a hint of this approach’s broad appeal. It would align the relatively small contingent of committed environmentalists who want strong action on climate with the huge constituency of the tens of millions of Americans of all backgrounds who need a job and the hundreds of millions who want a stronger economy. Whereas now, climate negotiations are fractious and expectations from Copenhagen and Washington are depressingly low, such a coalition for real economic and environmental change would be unstoppable and allow us to aim higher. To fight climate change, we need concrete goals — return to 350 ppm atmospheric carbon, achieve 80% GHG reduction by 2050, hold global warming to an average of 2 degrees Celsius, etc. If we are serious about reaching them, we must add another fundamental one — create tens of millions of jobs by reorienting our economy and our tax structure towards engaging more people and using fewer things.

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Municipal Bonds Gain Most in Two Months as New York Sells $1.47 Billion

November 17, 2009

By Jeremy R. Cooke Nov. 17 (Bloomberg) — New York state leads municipal borrowers today with a $1.5 billion sale of so-called PIT bonds, backed by a priority pledge of personal income taxes, whose ratings have withstood a 22 percent drop in revenue. The state’s Urban Development Corp. is offering tax-exempt and taxable debt including Build America Bonds to fund public works and economic-development projects. Ten-year tax-exempts from the sale had an estimated 3.46 percent yield yesterday, compared with the 4.54 percent that California agreed last month to pay on similar-maturity debt backed by sales tax revenue. “It doesn’t have the same kind of risk premium that you’re seeing in California bonds,” said Evan Rourke , a municipal portfolio manager who helps oversee $7.5 billion of bonds at a New York-based unit of Eaton Vance Corp. “The PIT name has been pretty well received.” New York, whose total net tax-supported debt is second only to California in the U.S., is commanding better borrowing costs than its West Coast peer, even as the Empire State faces the need to close a recession-induced budget deficit of $3.2 billion for the year ending March 31. Yields on benchmark 10-year general obligation bonds fell 1 basis point, or 0.01 percentage point, to 3.14 percent yesterday, the lowest in five weeks, based on a daily survey by Municipal Market Advisors of Concord, Massachusetts. Personal income-tax collections this fiscal year have fallen $4.4 billion, or 22 percent, the New York Division of the Budget said in a statement on Oct. 30. This will be the seventh time that total PIT revenue has declined since 1964, according to Standard & Poor’s, which gives the bonds offered today its top AAA rating. Set Aside New York sets aside the first 25 percent of its personal income tax revenue to cover PIT bonds, which are sold through different issuers including the state’s Dormitory Authority. The set-aside “fully discounts any concerns about its volatility,” S&P analysts led by David Hitchcock said in a Nov. 10 report. Officials project the decline in PIT revenue will be 5 percent by the end of fiscal 2010, after accounting for a temporary increase in the tax, according to Fitch Ratings, which assigns its AA- grade and a stable outlook. Moody’s Investors Service doesn’t rate the bonds. Fitch expects “the state will be able to address the budget shortfall in a manner consistent with the current rating level,” analysts led by Laura Porter said Nov. 6. “Volatile personal income tax revenues as well as the extent of actual financial services industry losses, and the ultimate shape that the industry takes, remain major uncertainties.” Avoiding PIT Bonds The drop in New York’s tax revenue has been enough for investors such as Rourke’s Tax-Advantaged Bond Strategies group to avoid new investments in the debt. The New York-based team primarily invests in highly rated bonds. “We’re not buying PIT bonds at the moment,” Rourke said. “The TABS group elected not to participate in PIT deals due to the deteriorating condition of tax receipts in New York.” Investment banks led by Goldman Sachs Group Inc. are to offer New York’s PIT bonds to institutions such as funds and insurers today after taking an estimated $200 million in orders from individuals the past two trading days, Rourke said. The proceeds will finance projects for state prisons, courts, public universities and police facilities; grants to local governments; and state-agency equipment purchases. The deal also will help fund a computer-chip research and development center in New York for Sunnyvale, California-based Globalfoundries Inc. New York previously has sold PIT bonds twice through the Build America initiative, under which the federal government pays 35 percent of the taxable interest cost. Taxable New York bonds set to pay 5.628 percent until March 2039 recently had a yield of 5.67 percent, JPMorgan Chase & Co. analysts said in a Nov. 14 note to clients. That was 131 basis points more than Treasuries and 40 basis points more than comparable corporate bonds, according to the note. Following are descriptions of additional pending municipal- bond sales; the timing and amounts may change. CALIFORNIA’S STATE PUBLIC WORKS BOARD intends to raise about $1.34 billion on Nov. 19 by selling federally subsidized taxable Build America Bonds and tax-exempt securities , all payable from state appropriations. Banks led by Jefferies Group Inc. and Wells Fargo & Co. will underwrite the deal, the sixth of $1 billion or larger in the state since the beginning of October. The money raised will fund capital projects including work at San Quentin State Prison, veterans homes in Fresno and Redding and the J. Paul Leonard & Sutro Library at San Francisco State University. All of the bonds received ratings of BBB- from Fitch and A- from S&P. Moody’s Investors Service gave an A1 to the $162.7 million portion of the deal for the university library, and Baa2 to the rest. (Updated Nov. 16) LOS ANGELES INTERNATIONAL AIRPORT, the third-busiest in the U.S. last year, is planning to sell as much as $1.3 billion of bonds beginning this week through banks including Barclays Plc, Morgan Stanley and Ramirez & Co. The sales, comprising taxable Build America and tax-exempt bonds, will cover construction costs and refinance as much as $610 million of debt subject to the federal alternative minimum tax. The two-year U.S. stimulus law passed in February allows airports to replace select recent issues of AMT debt with lower-cost, tax-exempt bonds. Only airports in Atlanta and Chicago handled more passengers than the facility known as LAX last year, according to Airports Council International. (Added Nov. 16) AMERICAN MUNICIPAL POWER , a Columbus, Ohio-based supplier to public electric systems, intends to offer $600 million of bonds this week to refinance short-term notes and fund work on three hydroelectric generators on the Ohio River. Underwriters led by Bank of Montreal’s BMO Capital Markets GKST Inc. will handle the offering. It may include a mix of tax-exempt securities and taxable Build America Bonds, for which the federal government pays 35 percent of the interest cost. The bonds are secured by payments made under power sales contracts with municipal utilities in Ohio, Kentucky, Michigan, Virginia and West Virginia. (Updated Nov. 16) PENNSYLVANIA TURNPIKE COMMISSION, operator of the state’s toll-road system, plans to sell $524.8 million of fixed-rate, tax-exempt bonds as soon as today through Morgan Stanley to replace variable-rate debt and make termination payments on associated interest-rate swaps. The bonds, backed by a senior lien on revenue from the Pennsylvania Turnpike, are rated A+ by Fitch and S&P. (Updated Nov. 17) LOS ANGELES DEPARTMENT OF WATER & POWER, the largest U.S. municipal utility, plans to raise $500 million for its water system this week by selling a mix of federally subsidized, taxable Build America Bonds and tax-exempt securities. Banks led by Citigroup Inc. and Siebert Brandford Shank & Co. are to underwrite the taxable series of bonds, and De La Rosa & Co. will handle the tax-exempt portion. The bonds, backed by revenue from a system that serves about 4.1 million residents in the city of Los Angeles, received ratings of AA from Fitch and S&P and Aa3 from Moody’s. (Updated Nov. 17) CHARLOTTE, NORTH CAROLINA, the state’s most populous city, plans to borrow $367 million for improvements to its water and sewer system and to pay off commercial paper. The tax-exempt revenue bonds, which underwriters led by Wells Fargo & Co.’s Wachovia Bank will market to investors this week, are rated Aa1 by Moody’s and AAA by S&P and Fitch. After the latest sale, Charlotte’s water and sewer system will have more than $1.5 billion in equivalent debt. (Updated Nov. 17) CHILDREN’S HEALTHCARE OF ATLANTA plans to refinance variable-rate debt by selling $302.2 million of fixed-rate, tax- exempt bonds as soon as this week through public authorities in DeKalb and Fulton counties and underwriters led by JPMorgan Chase & Co. Children’s is the only independent, freestanding pediatric hospital in Georgia’s most populous city, according to Moody’s. Its bonds are rated Aa2 by Moody’s and AA by S&P. After the latest deal, about 60 percent of Children’s $500 million in long-term debt will be fixed-rate bonds. The rest is variable and paired with interest-rate swaps, according to S&P. (Added Nov. 16) UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL plans to sell $115 million of 30-year taxable Build America Bonds and $109 million of tax-exempt securities due from 2010 through 2029. Underwriters led by Bank of America Corp.’s Merrill Lynch & Co. will underwrite the offering as soon as today. The proceeds will pay off commercial paper and fund capital projects for utility infrastructure and facilities for athletics and research, Fitch said. The public university, which enrolls almost 29,000 students, is rated AA+ by Fitch and S&P and a comparable Aa1 by Moody’s. (Updated Nov. 17) NEW YORK, the third most-populous U.S. state after California and Texas, will take bids on Nov. 23 from banks seeking to underwrite $351.3 million of tax-exempt general obligation bonds. The transaction will replace variable-rate debt with fixed-rate securities due from 2010 through 2030. The state, home to about 19.5 million people, carries ratings of AA- by Fitch, AA by S&P and Aa3 by Moody’s. Only about 7 percent of New York’s debt carries its general obligation pledge, Fitch said. The rest is secured by state appropriations or dedicated revenue streams. (Added Nov. 17) To contact the reporter on this story: Jeremy R. Cooke in New York at jcooke8@bloomberg.net .

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New York Offering Will Lead Biggest Week for Muni Bond Sales Since April

November 16, 2009

By Jeremy R. Cooke Nov. 16 (Bloomberg) — U.S. state and local governments plan to sell the most fixed-rate bonds in almost seven months this week, including about $2.5 billion of Build America Bonds and non-subsidized taxable issues. New York’s Urban Development Corp. leads $12 billion in municipal borrowing plans, with a $1.5 billion sale of bonds backed by revenue from the state’s personal income taxes. Half of the offering will come in the form of taxable BABs, for which the U.S. government pays 35 percent of the interest expense under the Obama administration’s two-year economic stimulus. The authorization to sell Build America Bonds, which have helped raise more than $51 billion for infrastructure and bring down long-term, tax-exempt borrowing costs, at the end of 2010. The program’s success so far may merit an extension, Obama’s nominee to be assistant secretary for tax policy at the Treasury, Michael Mundaca, said earlier this month. “The future of the BAB program is the most important question facing the municipal bond market today,” John Dillon , a fixed-income strategist in Purchase, New York, for Morgan Stanley Smith Barney, the world’s largest retail brokerage, said in a Nov. 12 report. “The landscape could be permanently altered by an extension and/or expansion of the program.” If the BAB program sunsets and municipal issuers have to rely more on tax-exempt issues to fund public works again, municipal bond yields may be dragged higher along with rates on Treasuries, Dillon said. If Congress allows Build America issues to continue past the end of next year, municipals may “significantly outperform” U.S. debt, he said. 20-Year Index Falls The weekly Bond Buyer 20 index of benchmark 20-year yields has dropped 52 basis points, or hundredths of a percentage point, to 4.4 percent since the first public Build America offerings in mid-April. The New York issuer, which also does business as Empire State Development Corp., is offering $775.6 million of Build America Bonds, $501.5 million of tax-exempt debt and $224.1 million of taxable notes without federal subsidies. Individual investors can place orders today through banks led by Goldman Sachs Group Inc. Tomorrow, institutions such as mutual funds can buy the debt, rated AAA by Standard & Poor’s and AA- by Fitch Ratings. The proceeds will fund projects for state prisons, courts, public universities and police facilities; grants to local governments; and state agency equipment purchases. The deal also will help fund a computer-chip research and development center for Globalfoundries Inc., created by Advanced Micro Devices Inc. and the government of Abu Dhabi, Lisa Willner, an Empire State Development spokeswoman, said in an e-mail. Backed by Income Tax New York has twice previously sold Build America bonds backed by personal income tax revenue through the state’s Dormitory Authority. Taxable bonds set to pay 5.628 percent until March 2039 recently had a yield of 5.72 percent, according to JPMorgan Chase & Co. analysts in a Nov. 11 note to clients. That was 132 basis points more than Treasuries and 41 basis points more than comparable corporate bonds, according to the note. The last time municipal issuers sold more than $12 billion of fixed-rate bonds in one week was the one ended April 24, when a taxable California deal pushed the total to $15.4 billion, Bloomberg data show. Following are descriptions of additional pending municipal- bond sales; the timing and amounts may change. CALIFORNIA’S STATE PUBLIC WORKS BOARD intends to raise about $1.34 billion by selling federally subsidized taxable Build America Bonds and tax-exempt securities , all payable from state appropriations on Nov. 19. Banks led by Jefferies Group Inc. and Wells Fargo & Co. will underwrite the offering, the sixth of $1 billion or larger in the state since the beginning of October. The money raised will fund capital projects including work at San Quentin State Prison, veterans homes in Fresno and Redding and the J. Paul Leonard & Sutro Library at San Francisco State University. All of the bonds received ratings of BBB- from Fitch and A- from S&P. Moody’s Investors Service assigned an A1 to the $162.7 million portion of the deal for the university library, and its Baa2 to the rest. (Updated Nov. 16) LOS ANGELES INTERNATIONAL AIRPORT, the third-busiest in the U.S. last year, is planning to sell as much as $1.3 billion of bonds beginning this week through banks including Barclays Plc, Morgan Stanley and Ramirez & Co. The sales, comprising taxable Build America and tax-exempt bonds, will cover construction costs and refinance as much as $610 million of debt subject to the federal alternative minimum tax. The two-year U.S. stimulus law passed in February allows airports to replace select recent issues of AMT debt with lower-cost, tax-exempt bonds. Only airports in Atlanta and Chicago handled more passengers than the facility known as LAX last year, according to Airports Council International. (Added Nov. 16) AMERICAN MUNICIPAL POWER , a Columbus, Ohio-based supplier to public electric systems, intends to offer $600 million of bonds this week to refinance short-term notes and fund work on three hydroelectric generators on the Ohio River. Underwriters led by Bank of Montreal’s BMO Capital Markets GKST Inc. will handle the offering. It may include a mix of tax-exempt securities and taxable Build America Bonds, for which the federal government pays 35 percent of the interest cost. The bonds are secured by payments made under power sales contracts with municipal utilities in Ohio, Kentucky, Michigan, Virginia and West Virginia. (Updated Nov. 16) LOS ANGELES DEPARTMENT OF WATER & POWER, the largest U.S. municipal utility, plans to raise $500 million for its water system by selling a mix of federally subsidized, taxable Build America Bonds and tax-exempt securities. Banks led by Citigroup Inc. and Siebert Brandford Shank & Co. are to underwrite the taxable series of bonds, and De La Rosa & Co. will handle the tax-exempt portion. The bonds, backed by revenue from a system that serves about 4.1 million residents in the city of Los Angeles, received ratings of AA from Fitch and S&P and Aa3 from Moody’s. (Added Nov. 12) CHARLOTTE, NORTH CAROLINA, the state’s most populous city, plans to borrow $367 million for improvements to its water and sewer system and to pay off commercial paper. The tax-exempt revenue bonds, which underwriters led by Wells Fargo & Co.’s Wachovia Bank will market to investors this week, are rated Aa1 by Moody’s and AAA by S&P and Fitch. After the latest sale, Charlotte’s water and sewer system will have more than $1.5 billion in equivalent debt. (Added Nov. 12) To contact the reporter on this story: Jeremy R. Cooke in New York at jcooke8@bloomberg.net .

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States Sell $9.5 Billion of Bonds as Connecticut Doubles Size of Offering

November 13, 2009

By William Selway Nov. 13 (Bloomberg) — U.S. state and local governments sold $9.5 billion of bonds this week, led by California, as demand from investors allowed Connecticut to almost double the size of its offering of tax-exempt securities. The number of new issues fell from $11 billion last week because the bond markets were closed Wednesday for the Veteran’s Day holiday, according to data compiled by Bloomberg. Prices were little changed as the Bond Buyer 20 Index, a benchmark measurement of yields on bonds maturing in 20 years, slipped 0.01 percentage point to 4.4 percent from a week earlier, leaving it about half a percentage point above the low set on Oct. 1 after a rally in prices. “Over the last couple of weeks they’ve been pushed up, but if you look at it in the totality of the year, we’ve had a big rally,” said Michael Walls , who oversees $540 million in high- yield municipal bonds for Waddell & Reed Financial Inc. in Overland Park, Kansas. “There has been some profit taking.” Municipal bond prices have soared this year as investors poured money into mutual funds, pushing down the yields that local governments needed to pay to raise money. While prices have slipped since last month, municipal bonds still have returned 13 percent this year, marking their best performance since a 17 percent gain in 2000, according to Merrill Lynch & Co. indexes. Connecticut Boost Connecticut used demand to boost the size of its offering this week. The state, which initially planned to offer $600 million of securities, sold $1.08 billion, raising funds to replenish cash used to close last year’s budget deficit and finance school construction projects. Meanwhile, an authority in California sold $1.9 billion of bonds on behalf of local governments whose taxes were tapped to help the state close its budget deficit. The debt, maturing in 2013, is backed by California’s requirement to repay the money, giving the securities the same credit rating as the cash- strapped state government. The sale added to a flood of borrowing by the California, with almost $12.5 billion of debt tied to the state sold since Oct. 5. The bonds sold this week by the California Statewide Communities Development Authority yielded 4 percent, compared with a yield of 3 percent that the state estimated last week. “New issues have been priced cheaper than they have in the past and thus have been well received,” Walls said. Following are descriptions of additional pending sales of municipal bonds; the timing and amounts may change. NEW YORK STATE’S MORTGAGE AGENCY plans to issue $100 million of fixed-rate, tax-exempt bonds backed by private student loans made under the newly created New York Higher Education Loan Program. The loans will be made to New York residents to finance higher education expenses at eligible colleges and universities, beginning in January 2010, preliminary bond documents show. The mortgage agency will issue the bonds under the name of the State of New York Higher Education Finance Authority. Bank of America Corp.’s Merrill Lynch & Co. will set prices and rates on the debt as soon as today. Maturities will range from 2012 to 2026. S&P gave the deal a preliminary rating of A+. (Updated Nov. 12) CALIFORNIA’S STATE PUBLIC WORKS BOARD plans to sell $1.3 billion of bonds backed by state appropriations on Nov. 19 to finance various capital projects. Banks led by Jefferies Group Inc. and Wells Fargo & Co. will underwrite the offering, the sixth of at least $1 billion in the state since the beginning of October. The debt carries a BBB- from Fitch Ratings, the lowest investment grade. (Added Nov. 12) AMERICAN MUNICIPAL POWER , a Columbus, Ohio-based supplier to public electric systems, intends to offer $600 million of bonds next week to refinance short-term notes and fund work on three hydroelectric generators on the Ohio River. Underwriters led by Bank of Montreal’s BMO Capital Markets GKST Inc. will handle the offering. It may include a mix of tax-exempt securities and taxable Build America Bonds, for which the federal government pays 35 percent of the interest cost. The bonds are secured by payments made under power sales contracts with municipal utilities in Ohio, Kentucky, Michigan, Virginia and West Virginia. (Added Nov. 12) To contact the reporter on this story: William Selway in San Francisco at wselway@bloomberg.net .

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Paris Youths Squat in 17th-Century Mansion to Protest Record Unemployment

November 12, 2009

By Helene Fouquet Nov. 12 (Bloomberg) — A group of French students and workers, protesting against record youth unemployment and a lack of state help, are squatting at a mansion on one of Paris’s oldest and most fashionable squares, the Place des Vosges . “Squatting here is maybe the best thing for my morale, but as far as the rest is concerned, I can’t see a light at the end of the tunnel,” said Margaux, a 24-year-old urban planning student at Paris University, who declined to provide her last name. “I’m struggling to find a home and in the future I know I will struggle to find a job. You’d be surprised how little there is for young people to look forward to in France.” The worst economic crisis since World War II has hit French youth hard. Their jobless rate rose at the fastest pace of any age group, with a record 24 percent of them now unemployed, more than two-and-a-half times the national average, government statistics show. Their disenchantment resonates in opinion polls as 61 percent of them say they disapprove of President Nicolas Sarkozy’s policies, according to the Paris-based Ifop institute. Margaux and 30 other activists broke into and occupied the three-storey, 17th-century building late last month. With its high, carved and painted ceilings and oak floors, the stone mansion stands in same square where Victor Hugo , the author of “Les Miserables,” once lived . It is also near a house owned by International Monetary Fund Chief Dominique Strauss-Kahn’s wife Anne Sinclair . The squatters, who may be ejected by the police, will try to stay in the house, once owned by the Marquise de Sevigne , until winter ends in March. The 2,000 square-meter (21,528 sq- feet) house overlooking a manicured lawn and other red and white mansions with dark blue slate roofs, belongs to an 84-year-old French woman, who bought it in 1963 and has never lived in it. Hurting Youth Data from the French statistics office, Insee, shows that unemployment among people aged 15 to 24 rose at the fastest pace on record during the economic crisis, adding 6.5 percentage points between the first quarter of 2008 and the second quarter of this year. During the 1993 crisis, youth unemployment rose 3.3 percentage points. “Young people are the shock absorbers of the French labor market,” said Corinne Prost , an economist and labor market specialist at Insee . “They are hit the hardest in times of crisis and they take the longest to recover.” The number of jobseekers in France rose in September to the highest in almost four years and the euro zone’s second-largest economy expects more jobs to be lost. French unemployment will rise to 11.2 percent in 2010 from 7.4 percent in 2008, the Organization for Economic Cooperation and Development estimates. Young people in France along with those in Spain, Latvia and Hungary are among the most affected, figures from Eurostat , the European Union’s statistics office, show. ‘Not Aid, Jobs’ Unemployment among those aged between 15 and 24 in the 27- member nations added on average 4.5 percentage points in the 12 months ended Sept. 30 to 20.2 percent. The Netherlands, where many young people work and study at the same time, has a youth unemployment rate of 6.8 percent. A survey ordered in October by Martin Hirsch , France’s High Commissioner for social inclusion and youth employment, showed students who completed their studies face “exceptional difficulties this year” to get an internship or a job. Sarkozy asked him to come up with measures to boost youth housing and employment . “Action for Youth,” as the plan was dubbed , has incentives for employers, sponsorships for unqualified school leavers and training. It also extends aid to jobseekers aged 25 or less, who have held a job for at least two years over a three-year period. ‘Black Thursday’ Action “Youth has been the first casualty of our inability to reform,” Sarkozy said in Avignon , southern France, in September when he presented the plan. Margaux said that “instead of trying to change that lose- lose situation, Sarkozy is institutionalizing our precarious situation. It’s not aid we ask for, it’s homes and jobs.” The group of activists she is squatting with is called ”Black Thursday .” The group is named after the 1929 crash that brought on the Great Depression, and also the day classified ads for home rentals are published in French newspapers. It claims Sarkozy isn’t improving housing for students as promised in the 2007 presidential campaign. France today has 2.2 million university students and houses 157,000 of them, according to Crous, the state-run organization in charge . About 40 years ago, the country had a student population of about 400,000 and about 100,000 homes for them. The state is running behind on its construction program. The Black Thursday action comes as Sarkozy’s approval rating has fallen to its lowest since his May 2007 election. “There is no love lost between him and the country’s youth,” Frederic Dabi , head of Ifop said in a telephone interview. “Those starting their working life are those with whom he is least popular.” To contact the reporters on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.net

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Nitro PDF Software Announces Appointment of SEEK Co-Founder, Matthew Rockman, as Chairman

November 5, 2009

SAN FRANCISCO, CA–(Marketwire – November 5, 2009) – Nitro PDF Software, the company that revolutionized the PDF software space with the introduction of the first true alternative to Adobe® Acrobat®, Nitro PDF Professional, today announced the appointment of Matthew Rockman as non-executive Chairman. His appointment represents another significant addition to the board of directors, joining Andrew Barlow, co-founder of Hitwise. As a co-founder of SEEK Ltd. ( ASX : SEK ), Mr. Rockman was instrumental in creating one of Australia’s largest, most successful online media companies. Since SEEK’s IPO in 2005, the company has grown to a market capitalization of over $2 billion and has operations in Australia, the United Kingdom, China, Brazil, New Zealand, and Malaysia.

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Nitro PDF Software Announces Appointment of SEEK Co-Founder, Matthew Rockman, as Chairman

November 5, 2009

SAN FRANCISCO, CA–(Marketwire – November 5, 2009) – Nitro PDF Software, the company that revolutionized the PDF software space with the introduction of the first true alternative to Adobe® Acrobat®, Nitro PDF Professional, today announced the appointment of Matthew Rockman as non-executive Chairman. His appointment represents another significant addition to the board of directors, joining Andrew Barlow, co-founder of Hitwise. As a co-founder of SEEK Ltd. ( ASX : SEK ), Mr. Rockman was instrumental in creating one of Australia’s largest, most successful online media companies. Since SEEK’s IPO in 2005, the company has grown to a market capitalization of over $2 billion and has operations in Australia, the United Kingdom, China, Brazil, New Zealand, and Malaysia.

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Montreal Takes Back Sin City Name as Yacht, Cash Scandals Mar Mayoral Race

October 31, 2009

By Chris Fournier and Frederic Tomesco Oct. 31 (Bloomberg) — Montreal got the nickname Sin City during Prohibition, when Americans crossed the border into Canada to drink, gamble and buy sex. The epithet is making a comeback this month. Allegations of price fixing, kickbacks and ties to organized crime are marring tomorrow’s election for mayor of Canada’s second-biggest city. Almost two-thirds of respondents in an Angus Reid poll released yesterday said the scandals will influence their vote. “This is Sin City all over again,” said Harold Chorney, a political science professor at Concordia University in Montreal. “Corruption is part of the history here.” Gerald Tremblay , the mayor since 2001, in September canceled a C$356 million ($330 million) pact to install water meters after La Presse newspaper reported that a city councilor vacationed on a yacht owned by the contractor who led the winning bid. Challenger Louise Harel , who leads in the polls, ousted her deputy this month after he admitted that his staff took improper cash donations. The corruption allegations are diverting attention from economic challenges facing the city of about 1.7 million people. The winner of the election faces rising costs for mass transit, policing and water, according to a May 21 Moody’s Investors Service report. Montreal has the highest debt load of any Canadian city, and ran a deficit of about C$330 million in 2008, compared with a surplus the previous year, said Ryan Domsy , senior financial analyst in Toronto at DBRS Ltd., a debt-rating company. Close Race The mayoral race is too close to call, according to an Angus Reid poll published yesterday in La Presse. Tremblay , 67, a Harvard Business School graduate, trails with 30 percent support. Harel, 63, a non-English-speaking lawyer and former minister in the separatist Parti Quebecois provincial government, leads with 34 percent. Richard Bergeron , 54, an architect who says the Sept. 11 attacks were carried out by the U.S. government and wants to ban cars from Rue Saint Catherine, the city’s busiest shopping street, is second at 32 percent. About 25 percent of respondents in the Angus Reid poll singled out transparency and the fight against corruption as the city’s No. 1 priority. Angus Reid polled 804 Montreal residents Oct. 28 and 29, with a margin of error of plus or minus 3.5 percentage points. “It’s one of the first really open races for years in Montreal,” Julie Belanger, 32, a Montreal office worker, said after an Oct. 27 candidates’ debate. “Usually you can guess who’s going to win, but this time it could be anybody.” Yacht Trips Tremblay canceled the water-meter contract, won by a group of local engineering firms, and fired two top bureaucrats after a report from Montreal’s auditor general found that elected officials lacked the necessary information before approving the project. The probe was sparked this year by a La Presse report that Frank Zampino, formerly head of the city’s executive committee, vacationed in January 2007 and February 2008 on a yacht owned by Tony Accurso , who led the group that won the water-meter order, the city’s biggest contract. Zampino retired from politics last year. Accurso’s lawyer, Louis Demers at De Grandpre Chait, didn’t return a call seeking comment. According to the auditor general’s report, the water-meter project was estimated in 2004 to cost C$36 million, about a 10th of the final contract’s price. “All of these allegations of corruption certainly don’t help Montreal’s reputation,” said David Love , a trader of interest-rate derivatives at Le Group Jitney Inc., a Montreal brokerage. “The city looks bad right now.” Sweeping Clean Harel’s Vision Montreal party based its platform on ridding city hall of its “culture of secrecy and collusion” and restoring trust in the municipal administration. Harel has called for public inquiries into the allegations of corruption at city hall, as has Bergeron’s Project Montreal party. “At first I thought a broom would be useful to clean this mess, but now I think I will need a very large vacuum cleaner,” Harel said in a television interview Oct. 28. Harel’s credibility was undermined after she forced the resignation on Oct. 18 of the head of her executive committee, Benoit Labonte , for ties to Accurso. Three days later, Labonte told Radio-Canada television in an interview that people close to him took money from Accurso, owner of Simard-Beaudry Construction Inc. Labonte said kickbacks and corruption are rampant in city hall. Maclean’s, Canada’s weekly news magazine, ran this headline on its cover this week: “Montreal is a corrupt, crumbling, mob-ridden disgrace.” “There’s an underground system,” Alex Dion, economic development officer for the borough of Montreal, said after a candidates’ debate. He said the allegations hurt Montreal’s reputation in the rest of Canada. Home of Ponzi Still, Howard Silverman, chief executive officer of CAI Global Inc., a consulting firm that helps foreign companies invest in Quebec, doesn’t think the allegations will deter investors from Montreal, the city that Charles Ponzi called home for almost a decade a century ago. Ponzi was charged in 1920 for using new funds from investors to pay redemptions by other investors, a type of fraud that now bears his name. “It’s not good for the city, it looks bad, but it won’t have much of an impact,” said Silverman, who counts investors such as London-based miner Rio Tinto Group among his clients. “Every North American or global city has its scandals or its problems.” To contact the reporters on this story: Chris Fournier in Montreal at Cfournier3@bloomberg.net ; Frederic Tomesco in Montreal at tomesco@bloomberg.net

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SABB: Amanah Saudi Equity Fund Fact Sheet (Sep-09)

October 25, 2009

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SABB: Amanah GCC Equity Fund Fact Sheet (Sep-09)

October 25, 2009

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SABB: Saudi Equity Trading Fund Fact Sheet (Sep-09)

October 25, 2009

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HSBC Saudi Equity Index Fund Fact Sheet (Sep-09)

October 25, 2009

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SABB: Saudi Equity Fund Fact Sheet (Sep-09)

October 25, 2009

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SICO: Al Islami GCC Equity Fund Fact Sheet (Sep-09)

October 18, 2009

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SICO: Al Islami GCC Equity Fund Fact Sheet (Sep-09)

October 18, 2009

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Delta Rasmala: ABC Equity Fund Weekly Market Report (15-Oct-09)

October 18, 2009

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Delta Rasmala: ABC Equity Fund Weekly Market Report (15-Oct-09)

October 18, 2009

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More Pressure On Chamber Of Commerce Over Climate Change Stance

October 13, 2009

The U.S. Chamber of Commerce’s hostility to climate change legislation is making for something of a hostile climate for the U.S. Chamber of Commerce. Picking up on the momentum of the high-profile defections of Apple and the PG&E Corp from the business association, the Environmental Defense Fund and Silicon Valley groups are running ads in the San Jose Mercury News and the National Journal ‘s Congress Daily to let the Chamber know that “Silicon Valley is ready to lead the world in the next great technological revolution: clean energy.” “No one can look at a Chamber executive and believe they speak for American businesses on climate change,” said Environmental Defense Action Fund prez David Yarnold in a statement. “The Chamber is spoon-feeding Congress and the public a tired message that’s stuck in the past. Thousands of companies are ready to move on to a new energy future, and a number of them are leaving the Chamber to prove it.” (The EDAF is the lobbying arm of the Environmental Defense Fund .) Last week, Chamber CEO Tom Donahue complained that environmental groups are waging an “orchestrated pressure campaign” to get Chamber members to defect. The ad, designed to look like an email from Silicon Valley to the U.S. Chamber of Commerce, is signed by Silicon Valley Joint Venture president Russell Hancock and Silicon Valley Leadership Group president Carl Guardino. Here’s a shot of the ad: Click here to view a PDF of the ad.

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Merkel, Coalition Partner FDP Start Talks Amid Tensions Over Taxes, Labor

September 28, 2009

By Leon Mangasarian and Tony Czuczka Sept. 28 (Bloomberg) — Chancellor Angela Merkel faces disagreements over taxes and labor regulations when she begins coalition negotiations with the pro-business Free Democrats to form Germany’s next government. While Merkel won yesterday’s elections, her Christian Democrats had their worst result since modern Germany was created after World War II. The FDP scored 14.6 percent, its best result. “With this terrific result for the FDP, Merkel can’t expect her coalition partner to slot into its historic role as the junior mascot,” Hans-Juergen Hoffmann , managing director of Berlin-based polling company Psephos GmbH , said in interview. “The FDP will have none of that. It’s the kingmaker of Merkel’s new coalition.” Merkel, who called for tax cuts of 15 billion euros ($22 billion), will have to try to merge the platform of her bloc with the Christian Social Union with demands by the FDP to both cut income-tax rates and simplify the entire system. “We will naturally have arguments with the FDP on some points,” Merkel said in a television talk show with the five other party leaders after the results were announced yesterday. “The gap between us and them is so great that it will allow us to make an argument for social balance — and we will.” ‘Hard Discussions’ Kurt Lauk , president of the CDU’s economic council , said in an interview that his party would face “hard discussions on substance” to form a coalition. Merkel has governed with her traditional rivals, the Social Democratic Party, since 2005. Overshadowing negotiations are Germany’s deteriorating finances. Merkel’s administration will borrow a record 329 billion euros in 2010 as it boosts spending to speed economic recovery. The forecast was made in June by Social Democratic Finance Minister Peer Steinbrueck and takes no account of 35 billion euros in tax cuts sought by the FDP. “There will certainly be tension between Merkel and the FDP but don’t forget that the policy differences between her CDU/CSU and the SPD in the outgoing government were far greater than with the FDP,” Jan Techau , an analyst at the German Council on Foreign Relations in Berlin, said in an interview. “Merkel’s government held four years with the SPD so she’ll certainly do fine with the FDP.” FDP leaders, buoyed by their election results, attributed their electoral success to their tax-cut pledges. The FDP served in coalition governments from 1969 to 1998 with between 5.8 percent and 11 percent of the vote. FDP Promises “We now expect to deliver, step by step, on what we promised voters,” FDP leader Guido Westerwelle said on ARD television. A “big tax reform” is a non-negotiable demand for the coalition with Merkel, Hermann Otto Solms , the FDP’s finance policy spokesman who may become the next finance minister, said in an Aug. 26 interview. The FDP’s platform calls for the elimination of tax deductions and a reduction in income tax rates to between 10 percent and 35 percent. Germany’s top rate is currently 45 percent and the lowest is 14 percent. Merkel’s CDU wants to drop the lowest bracket to 12 percent and raise the threshold for the 45 percent rate to 60,000 euros from 52,000 euros. Revamping inheritance tax on family businesses, which Solms said “is driving lots of business people abroad,” is also a key FDP demand. The FDP wants to make it easier for German companies to dismiss workers. Firing rules currently apply for companies with more than 10 employees and the FDP wants to raise the threshold to more than 20 employees. Holger Schmieding , chief European economist at Bank of America-Merrill Lynch in London, said any moves to ease firing rules would be a flashpoint for Merkel’s second-term coalition that she may choose to ignore. “That’s a highly contentious, highly emotive subject,” Schmieding said, adding that Merkel and the FDP will probably look for other ways to change labor laws. To contact the reporters on this story: Leon Mangasarian in Berlin at lmangasarian@bloomberg.net ; Tony Czuczka in Berlin at aczuczka@bloomberg.net .

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Jet Air Cancels About Half India Flights for a Second Day on Pilot Dispute

September 8, 2009

By Ben Livesey and Anand Krishnamoorthy Sept. 9 (Bloomberg) — Jet Airways (India) Ltd., the country’s largest carrier by market value, canceled about half its flights for a second consecutive day due to an ongoing labor dispute with the airline’s pilots. The carrier canceled 169 flights, according to a statement on its Web site . Flights to Europe, the U.K. and North America will run as normal amid “continued pilot agitation,” the company said in an e-mailed statement. As many as 304, or about a third, of the carrier’s pilots called in sick yesterday, airline spokeswoman Ragini Chopra said in a phone interview. Jet Airways is in conciliation discussions with the pilots, and Chairman Naresh Goyal has threatened to shut down the airline, the Economic Times reported today, citing Goyal. The Mumbai-based airline asked a court yesterday to force the pilots to return to work. Yesterday’s stoppage stranded 13,000 passengers. The National Aviator’s Guild, a newly formed union of the airline’s pilots, is demanding the company reinstate two pilots whose jobs were terminated without reason, the Business Standard reported, without saying where it got the information. Girish Kaushik, a spokesman for the union, didn’t return calls to his mobile phone. To contact the reporter on this story: Anand Krishnamoorthy in Singapore at anandk@bloomberg.net

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Stanford Investors, Unlike Madoff’s, Won’t Get Their Money Back From SIPC

September 4, 2009

By Laurel Brubaker Calkins and Andrew M. Harris Sept. 4 (Bloomberg) — Peter Kaltman, a retired accountant, says he was reassured by the Securities Investor Protection Corp. logo on the stationery of the brokerage that sold him $550,000 in Stanford International Bank certificates of deposit. “The CDs were sold by a SIPC-insured organization,’’ Kaltman said, referring to Stanford Group Co., the Antigua-based bank’s sister firm. “At the bottom of their business cards and stationary, there was the SIPC logo. Any correspondence I received with account information also had it. I absolutely thought I was covered.” Kaltman was wrong, unfortunately for him and other investors who lost $7 billion in the alleged Ponzi scheme involving Stanford CDs. The federal corporation won’t help any of them as it has some victims of swindler Bernard Madoff , SIPC’s president notified Stanford’s court-appointed receiver. “There’s an inordinately fine line being drawn here,’’ Kaltman, 63, of Reno, Nevada, said of SIPC’s decision to treat the two groups viewed by the government as Ponzi scheme victims differently. “It’s worse than a slap in the face. If I was allowed to use four-letter words, I would.” Under U.S. law, SIPC repays up to $500,000 in custodial losses to investors whose securities are missing from accounts at member firms, SIPC President Stephen Harbeck said in an interview. The protection doesn’t extend to investors who’ve got their certificates, even if the securities have been rendered worthless by fraudulent conduct, he said. Fall in Value “The fact that they went down in value is of no consequence,” Harbeck said Aug. 26. “The investors have custody of those CDs.” If the fraudulent securities were issued by a non-member institution, such as Stanford International Bank, investors are doubly out of luck, Harbeck said. Bernard Madoff Investment Securities LLC in Manhattan was a SIPC member. Stanford International Bank, unlike the related brokerage, wasn’t. Madoff was sentenced to 150 years in prison June 29 after pleading guilty to running a Ponzi scheme that paid fictitious returns without ever buying the securities customers paid for. Stanford, who denies wrongdoing, is in jail awaiting trial on charges he misled investors about the safety of their investments and took more than $1 billion for his personal use. “With Madoff, the money was entrusted to him, and he just spent it,’’ Dallas lawyer Stephen Malouf , who represents more than 600 Stanford investors, said in an interview. “There was an extra step at Stanford, the purchase of the CDs, which are still there. SIPC doesn’t cover securities that are purchased but then decline in value.” SIPC’s Position Upheld SIPC’s position is in keeping with its traditional stance on investment losses, no matter how disappointed the agency’s decision leaves Stanford investors, a legal scholar said. “SIPC has never undertaken to reimburse investors when worthless securities are sold to them,” said David B. Ruder , a former chairman of the U.S. Securities and Exchange Commission who teaches at Chicago’s Northwestern University law school. Blaine Smith of Baton Rouge, Louisiana, who saw his $1.5 million Stanford nest egg dwindle to $206, thought he had done proper due diligence before he invested 30 years of savings with a Stanford broker he knew from church. “I just wanted to find somewhere with a decent return, where my money would be safe,” Smith said. He and friends investigated Stanford and its investment strategy before turning over their money, he said in a phone interview. Smart People “These friends were doctors, lawyers, really smart people, who did their due diligence, too,” said Smith, 53, a retired refinery technician and homebuilder. “We trusted that they weren’t lying to us. I talked to these Stanford people over and over again, and they reassured me there was insurance” coverage on the Antiguan CDs. Smith said he doesn’t understand why SIPC views Stanford and Madoff investors differently. “I bought from an American broker at an American brokerage house that I thought was just like Merrill Lynch or any other brokerage,” Smith said. “But it turns out we didn’t buy anything. Our money was just cash that passed through the brokerage and the bank, and then Stanford spent it, just like Madoff did.” Some investors’ lawyers complain SIPC is splitting hairs by limiting coverage to securities that are “missing” instead of rendered worthless by fraud. “It’s a distinction without a difference,’’ Houston lawyer Michael Stanley said of SIPC’s interpretation. Lost Value “The Madoff clients’ securities were never there, so SIPC covers that loss and has been paying like slot machines,” Stanley, who represents Stanford investors, said in an interview. “But SIPC doesn’t pay if the underlying securities are there but the value has dropped, even if it dropped because of hanky panky. If you’ve got the certificate, SIPC says it is not paying.” Stanford receiver Ralph Janvey asked SIPC last month if investors’ losses on the Antiguan CDs could be partially covered. “Unfortunately, the answer is no,” Janvey said in a statement posted on his Web site . Janvey’s spokeswoman Nancy Sims said the receiver isn’t taking any further action on the matter because he “doesn’t believe there’s an appeal process available to him.” Malouf, who represents mostly Latin American investors, said he explored suing SIPC for failing to provide the same coverage for Stanford’s investors it is for Madoff’s. He found a Supreme Court ruling bars suits against the agency, he said. No Remedy “There is no private remedy to compel SIPC coverage,” Malouf said. “Congress could do it, and the SEC could do it. But they’re getting away with it until somebody raises hell about it.” Malouf said the SEC, which gives SIPC its marching orders, treats Stanford’s 130 business entities as a single commercial enterprise when it comes to the fraud litigation and the receiver’s sale of Stanford’s assets to repay claims against the estate. In contrast, he said, the SEC and SIPC take the opposite view when it comes to SIPC insurance, viewing the Antiguan bank as a separate entity that doesn’t qualify. “The SEC can’t have it both ways,” Malouf said. “They’re taking my clients’ money and using it to pay non-bank debts. If it is all one company, then there couldn’t have been any CDs purchased from a separate independent bank.” The Stanford Universe If the SEC believes that “all the Stanford universe is one consolidated entity,” Malouf said, then Stanford’s Antiguan certificates of deposit “are exactly what SIPC covers, fraud.’’ SEC spokesman Kevin Callahan declined to comment when asked to clarify the agency’s position on whether Stanford’s businesses should be treated as a consolidated entity. The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 3:09-cv-00298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 4:09-cr-00342, U.S. District Court, Southern District of Texas (Houston). To contact the reporters on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com : Andrew M. Harris in Chicago at aharris16@bloomberg.net .

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Stanford Investors, Unlike Madoff’s, Won’t Get Their Money Back From SIPC

September 4, 2009

By Laurel Brubaker Calkins and Andrew M. Harris Sept. 4 (Bloomberg) — Peter Kaltman, a retired accountant, says he was reassured by the Securities Investor Protection Corp. logo on the stationery of the brokerage that sold him $550,000 in Stanford International Bank certificates of deposit. “The CDs were sold by a SIPC-insured organization,’’ Kaltman said, referring to Stanford Group Co., the Antigua-based bank’s sister firm. “At the bottom of their business cards and stationary, there was the SIPC logo. Any correspondence I received with account information also had it. I absolutely thought I was covered.” Kaltman was wrong, unfortunately for him and other investors who lost $7 billion in the alleged Ponzi scheme involving Stanford CDs. The federal corporation won’t help any of them as it has some victims of swindler Bernard Madoff , SIPC’s president notified Stanford’s court-appointed receiver. “There’s an inordinately fine line being drawn here,’’ Kaltman, 63, of Reno, Nevada, said of SIPC’s decision to treat the two groups viewed by the government as Ponzi scheme victims differently. “It’s worse than a slap in the face. If I was allowed to use four-letter words, I would.” Under U.S. law, SIPC repays up to $500,000 in custodial losses to investors whose securities are missing from accounts at member firms, SIPC President Stephen Harbeck said in an interview. The protection doesn’t extend to investors who’ve got their certificates, even if the securities have been rendered worthless by fraudulent conduct, he said. Fall in Value “The fact that they went down in value is of no consequence,” Harbeck said Aug. 26. “The investors have custody of those CDs.” If the fraudulent securities were issued by a non-member institution, such as Stanford International Bank, investors are doubly out of luck, Harbeck said. Bernard Madoff Investment Securities LLC in Manhattan was a SIPC member. Stanford International Bank, unlike the related brokerage, wasn’t. Madoff was sentenced to 150 years in prison June 29 after pleading guilty to running a Ponzi scheme that paid fictitious returns without ever buying the securities customers paid for. Stanford, who denies wrongdoing, is in jail awaiting trial on charges he misled investors about the safety of their investments and took more than $1 billion for his personal use. “With Madoff, the money was entrusted to him, and he just spent it,’’ Dallas lawyer Stephen Malouf , who represents more than 600 Stanford investors, said in an interview. “There was an extra step at Stanford, the purchase of the CDs, which are still there. SIPC doesn’t cover securities that are purchased but then decline in value.” SIPC’s Position Upheld SIPC’s position is in keeping with its traditional stance on investment losses, no matter how disappointed the agency’s decision leaves Stanford investors, a legal scholar said. “SIPC has never undertaken to reimburse investors when worthless securities are sold to them,” said David B. Ruder , a former chairman of the U.S. Securities and Exchange Commission who teaches at Chicago’s Northwestern University law school. Blaine Smith of Baton Rouge, Louisiana, who saw his $1.5 million Stanford nest egg dwindle to $206, thought he had done proper due diligence before he invested 30 years of savings with a Stanford broker he knew from church. “I just wanted to find somewhere with a decent return, where my money would be safe,” Smith said. He and friends investigated Stanford and its investment strategy before turning over their money, he said in a phone interview. Smart People “These friends were doctors, lawyers, really smart people, who did their due diligence, too,” said Smith, 53, a retired refinery technician and homebuilder. “We trusted that they weren’t lying to us. I talked to these Stanford people over and over again, and they reassured me there was insurance” coverage on the Antiguan CDs. Smith said he doesn’t understand why SIPC views Stanford and Madoff investors differently. “I bought from an American broker at an American brokerage house that I thought was just like Merrill Lynch or any other brokerage,” Smith said. “But it turns out we didn’t buy anything. Our money was just cash that passed through the brokerage and the bank, and then Stanford spent it, just like Madoff did.” Some investors’ lawyers complain SIPC is splitting hairs by limiting coverage to securities that are “missing” instead of rendered worthless by fraud. “It’s a distinction without a difference,’’ Houston lawyer Michael Stanley said of SIPC’s interpretation. Lost Value “The Madoff clients’ securities were never there, so SIPC covers that loss and has been paying like slot machines,” Stanley, who represents Stanford investors, said in an interview. “But SIPC doesn’t pay if the underlying securities are there but the value has dropped, even if it dropped because of hanky panky. If you’ve got the certificate, SIPC says it is not paying.” Stanford receiver Ralph Janvey asked SIPC last month if investors’ losses on the Antiguan CDs could be partially covered. “Unfortunately, the answer is no,” Janvey said in a statement posted on his Web site . Janvey’s spokeswoman Nancy Sims said the receiver isn’t taking any further action on the matter because he “doesn’t believe there’s an appeal process available to him.” Malouf, who represents mostly Latin American investors, said he explored suing SIPC for failing to provide the same coverage for Stanford’s investors it is for Madoff’s. He found a Supreme Court ruling bars suits against the agency, he said. No Remedy “There is no private remedy to compel SIPC coverage,” Malouf said. “Congress could do it, and the SEC could do it. But they’re getting away with it until somebody raises hell about it.” Malouf said the SEC, which gives SIPC its marching orders, treats Stanford’s 130 business entities as a single commercial enterprise when it comes to the fraud litigation and the receiver’s sale of Stanford’s assets to repay claims against the estate. In contrast, he said, the SEC and SIPC take the opposite view when it comes to SIPC insurance, viewing the Antiguan bank as a separate entity that doesn’t qualify. “The SEC can’t have it both ways,” Malouf said. “They’re taking my clients’ money and using it to pay non-bank debts. If it is all one company, then there couldn’t have been any CDs purchased from a separate independent bank.” The Stanford Universe If the SEC believes that “all the Stanford universe is one consolidated entity,” Malouf said, then Stanford’s Antiguan certificates of deposit “are exactly what SIPC covers, fraud.’’ SEC spokesman Kevin Callahan declined to comment when asked to clarify the agency’s position on whether Stanford’s businesses should be treated as a consolidated entity. The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 3:09-cv-00298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 4:09-cr-00342, U.S. District Court, Southern District of Texas (Houston). To contact the reporters on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com : Andrew M. Harris in Chicago at aharris16@bloomberg.net .

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Chris Gunn: Small Business Administration Continues to Fabricate Contracting Data

August 21, 2009

On Friday, August 21, 2009, the Small Business Administration (SBA) released its fiscal year (FY) 2008 small business goaling report and procurement scorecard, which indicated that the government awarded 21.50 percent or $93.3 billion in prime contract awards to small businesses. That said, there are a host of reasons why 21.5 percent is simply unacceptable. Most notably, the numbers are significantly inflated with some of the largest corporations in the world. In some cases the numbers even appear to be the result of fabrication by high-level government officials at the SBA and other government agencies. For more than eight years the SBA and its executives have claimed that computer coding mistakes were responsible for billions of dollars in misplaced federal contracts. However, a series of federal investigations into the diversion of federal small business contracts to large corporations speak to a very different truth. Since 2003, more than 15 federal investigations have found that billions of dollars in federal small business contracts have been diverted to corporate giants because of fraud, abuse, loopholes and a lack of oversight by government officials. Despite the SBA’s mode of denial, the following reports illuminate an unchecked reality, which has pulled up to $100 billion a year out of the middle class economy. – In Report 5-15 PDF , the SBA Office of Inspector General (OIG) referred to the diversion of federal small business contracts to large corporations as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.” – In Report 5-14 PDF , the SBA OIG found that the SBA itself was counting small business contracts to large corporations. In a memorable quote the report stated, “The SBA awarded four of the six high dollar procurements, reported as small business procurements, to large companies at the time of the procurements.” – In Report 5-16 PDF , the SBA OIG reported that in some cases large businesses received federal small business contracts because of “False certifications,” and “improper certifications.” FY 2008 represents the eighth consecutive year that the federal government has allowed billions of dollars in federal small business contracts to flow into the hands of some of the largest corporations in the United States and Europe. The American Small Business League (ASBL), the only small business advocate focused on this issue, has estimated that over the last ten years nearly $1 trillion in federal small business contracts have been diverted to some of the largest corporations on earth. Through investigations and examinations of third party data, firms such as British Aerospace (BAE), Xerox, Dell Computer, John Deere, Microsoft, Wal-Mart and Rolls-Royce have been exposed as recipients of federal small business contracts. Despite this mountain of evidence pointing to fraud, abuse, loopholes and a lack of oversight as primary contributing factors to the diversion of billions of dollars in federal small business contracts to large corporations, the SBA refuses to acknowledge the extent of the problems. Additionally, through two administrations the agency has refused to take responsibility for stopping these abuses, or for protecting the small businesses the agency was designed to protect. It is not reasonable that a federal agency designed to support the interests of small businesses has been involved with, responsible for, and lied about the continued diversion of billions of dollars in federal small business contracts to corporate giants.

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Mike Simonsen of AltosReaserch Featured On Tomato Radio – Aug 21st, 3pm PST

August 20, 2009

(We know we missed our last 2 episode dates 1st and 15th of Aug – Our successful trip to Inman SF made it impossible to produce the show – But we’re happy to be back!) Altos Research is the leader in providing consumer friendly market statistics for your website or blog. We are fortunate to get Mike’s perspective on how to use this data to attract, engage and convert visitors to your site. Together, we will be discussing Mike Simonsen’s 3 Question Philiosphy The consumer shows up on your site and they only have 3 questions: What’s for sale? How much is the house worth? How’s the market? …and therefore your site needs to answer those three questions immediately. How does clear market data help accomplish this? We will also be getting Mike’s take on:   What makes a good blog post? What do real estate consumers need to know? How do people respond to and understand data? How do you use data for lead conversion? How effective are the PDF data reports?  I know it all sounds a bit boring (now that I type it out) but trust me, we’ll make market statistics and data seem sexy by the time we’re done! Starting in the second half of the show will be Mike answering your questions!  Click here to Listen Live at 3pm PST on August 21st. Call in to listen away from your computer, and Ask Questions: (347) 884-9764 (Hit the #1 on the keypad to get our attn, and we’ll bring you on live!)  There’s a Chat Room too! Yes, there will be a podcast in case you missed the live show… but being there is where it’s at!

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Dave Johnson: Stimulus Package’s Buy American Clause In The News

August 10, 2009

President Obama, at the “Three Amigos” summit today in Mexico, responded to Canadian and Mexican complaints about the “Buy American Clause” in the stimulus package, reiterated that the clause is legal within existing trade agreements and does not threaten our trading partners. From an Edmonton Sun report, Obama: ‘Buy American’ won’t hurt Canadian trade While he didn’t leap to the defence of the contentious “Buy American” program, U.S. President Barack Obama urged Canadians to take a deep breath and put things in perspective. The policy is a one-off to help weather tough economic times and will have minimal impact on multi-billion trade between our two countries, he said. . . . Obama said the policy is geared only to the massive American stimulus package, not part of a larger pattern of protectionism. He insisted it complies with World Trade Organization rules, and suggested provinces and states can work on cross-border procurement practices that expand trade. Back in February Paul Krugman wrote about “policy externalities,”pointing out that the only way a stimulus package can work is if it stimulates. In the absence of a coordinated worldwide response to the financial crisis each country has to be responsible for stimulating its own economy. Or not. Since the world’s economy is far too large for just the U.S. to provide adequate stimulus, our stimulus needs to focus on our economy. Other countries need to stimulate their economies. In Protectionism and stimulus (wonkish) , Krugman wrote, Let’s be clear: this isn’t an argument for beggaring thy neighbor, it’s an argument that protectionism can make the world as a whole better off. It’s a second-best argument — coordinated policy is the first-best answer. But it needs to be taken seriously. What’s the counter-argument? Don’t say that any theory which has good things to say about protectionism must be wrong: that’s theology, not economics. The right argument, I think, is in terms of political economy. Everything I’ve just said applies only when the world is stuck in a liquidity trap; that’s where we are now, but it won’t be the normal situation. And if we go all protectionist, that will shatter the hard-won achievements of 70 years of trade negotiations — and it might take decades to put Humpty-Dumpty back together again. Also in February, the Alliance for American Manufacturing published a report, Buy America: Key To America’s Economic Recovery (PDF), that knocks down several myths about the legality of the clause, points out the steps that other countries take to protect their own economics, and points out that this provision is essential to creating the necessary jobs in America. From the report, The recovery package will create an estimated 3,675,000 jobs, 408,000 of which will be in manufacturing. Buy American provisions will maximize the number of recovery program jobs that are created in America, kick starting domestic demand and economic growth here at home. A recent analysis found that application of Buy American requirements to recovery projects would raise the number of jobs created by such projects by as much as 33 percent. It is important to note that the Hufbauer and Schott estimate of additional manufacturing jobs created directly by the inclusion of Buy American provisions in the recovery legislation is based on the understanding that, absent the inclusion of such provisions in the legislation, domestic preferences already in existing legislation would apply to economic recovery spending. Thus, their estimates only measure the additional jobs created due to including Buy American language in the recovery legislation itself, not the number of jobs owed to the application of any Buy American rules at all. The President is correct to say that the “Buy American” clause is beneficial and necessary. The package, with this clause has already saved hundreds of thousands of American jobs and stands to save millions more.

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Ross Says `Never Again’ on Bank Purchases Under Proposed FDIC Guidelines

July 28, 2009

By Jason Kelly and Jonathan Keehner July 28 (Bloomberg) — Wilbur Ross , the billionaire private-equity investor, said the Federal Deposit Insurance Corp.’s proposed guidelines for bank takeovers are onerous and will deter buyout firms from making offers for lenders. “I assure you that my firm will never again bid if the proposed policy statement is adopted in its present form,” he wrote in a letter to the FDIC as part of the regulator’s public- comment process for the rules issued July 2. Ross’s firm was among the buyers of failed BankUnited Financial Corp. in May.

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Brandon Roberts: Job Training: Often Misunderstood But Too Important to Dismiss

July 21, 2009

This article was co-written by Brandon Roberts and David Fischer on behalf of the Working Poor Families Project . David Jason Fischer is Project Director for Workforce Development and Social Policy at the Center for an Urban Future , a New York City-based public policy think tank. Job retraining has had a bum rap in public policy circles. The latest indictment of retraining came in a New York Times article on July 6 , describing the difficulties of laid-off workers in Michigan–home of the country’s highest unemployment rate (14.1 percent) and a much-touted state program, No Worker Left Behind, that offers up to two years of tuition assistance toward an educational or occupational credential in any “high-demand” economic sector

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Delta Air Courts New York Fliers `Nobody Owns’ With Mojitos, Yankee Tie-In

July 20, 2009

By Mary Jane Credeur July 20 (Bloomberg) — Delta Air Lines Inc. , based in Atlanta since 1941 , is promoting itself as New York City’s “hometown carrier” with mojitos in Manhattan and sponsorships of the Yankees and Mets baseball teams. Plastering the Delta name across sports stadiums, the Tribeca Film Festival and the Bronx Zoo, the world’s largest airline seeks to build on its 70 percent increase in flying at John F

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2008 MLS Technology Survey

November 19, 2008

The 2008 MLS Technology Report (PDF: 3.76MB) analyzes technology trends in Multiple Listing Services (MLSs).

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