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Huffington Post…

“And greed — you mark my words — will not only save Teldar Paper, but that other malfunctioning corporation called the U.S.A.” That’s how the fictional Gordon Gekko finished his famous “Greed is good” speech in the 1987 film “Wall Street.” In the movie, Gekko got his comeuppance. But in real life, Gekkoism triumphed, and policy based on the notion that greed is good is a major reason why income has grown so much more rapidly for the richest 1 percent than for the middle class.

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Krugman: Businessmen Don’t Have Any Special Insight Into Crafting Economic Policy

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Obama Campaign Returns Corzine Donations

by AP on December 24, 2011

Huffington Post…

WASHINGTON — President Barack Obama’s re-election campaign and the Democratic National Committee have returned more than $70,000 in contributions from former New Jersey Gov. Jon Corzine following the collapse of MF Global, Corzine’s financial firm, officials said Friday. Obama’s campaign and the DNC returned contributions of $35,800 from Corzine and his wife, Sharon Elghanayan, said Democratic officials who spoke on condition of anonymity. They were not authorized to speak publicly. Corzine was among Obama’s top fundraisers, raising at least $500,000 for Obama’s re-election campaign since April, according to records released by the campaign. The former Goldman Sachs chief held a fundraiser for the president last April and was considered a main Obama emissary to Wall Street. One of the Democratic officials said the campaign and DNC would evaluate whether to return donations from other MF Global employees on a case-by-case basis. A spokesman for Corzine declined to comment. MF Global filed for bankruptcy protection on Oct. 31 after a disastrous bet on European debt sparked fear among investors and trading partners. It was the eighth-largest U.S. bankruptcy and the largest on Wall Street since the 2008 collapse of Lehman Bros. About $1.2 billion was found to be missing from client accounts when the securities firm failed, with much of the missing money belonging to farmers, ranchers and other business owners who used MF Global to reduce their risks from fluctuating prices of commodities such as corn and wheat. The FBI and federal regulators are investigating MF Global. Corzine, who also is a former U.S. senator, told congressional panels earlier this month that he didn’t know any customer money was missing until the day before MF Global collapsed. Bloomberg News was first to report the returned campaign contributions.

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Obama Campaign Returns Corzine Donations

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Buyer For NYSE Gets Justice Dept. Approval For Deal Worth Billions

December 22, 2011

WASHINGTON (Reuters) – Deutsche Boerse won U.S. antitrust approval to buy NYSE Euronext on Thursday in a $9 billion deal that has hit serious antitrust headwinds in Europe. The Justice Department said on Thursday that the deal, which was announced in February, won approval on condition that a Deutsche Boerse subsidiary, the International Securities Exchange, divest its 31.5 percent interest in Direct Edge. Direct Edge is the fourth-largest U.S. exchange, the department said. Despite the divestiture, Deutsche Boerse and NYSE must continue to provide some services to Direct Edge, the department said. In Europe, there have been weeks of negotiations during which European Union antitrust staff made clear their reservations about approving a combination of Deutsche Boerse’s Eurex and NYSE Euronext’s Liffe on concerns that the merged entity would have a monopoly over European listed derivatives trading. Both Boerse and NYSE Euronext have said they would not pursue the merger if they were asked to divest either Eurex or Liffe. A formal decision by the European Commission is not expected until January or early February. (Reporting By Diane Bartz; Editing by Gerald E. McCormick) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Healthcare Giant Recalls Motrin Pills That May Work Too Slowly

December 22, 2011

TRENTON, N.J. — Healthcare giant Johnson & Johnson has issued another recall of Motrin pain relievers, at least the sixth in two years. It’s part of a string of more than two dozen recalls of consumer health products, prescription drugs and medical devices over 2 1/2 years. This time, it’s because Motrin IB pills may not dissolve and begin working as soon as intended as they approach their three-year expiration date. That could delay relief of pain. The recall covers Motrin IB coated caplets and coated tablets, in packages with either 24 pills or 30 pills. A company spokeswoman said Thursday that J&J is only recalling packages from retailers, not consumers, because there’s no safety concern. “It’s 59 product lots. It’s about 12 million bottles,” said spokeswoman Bonnie Jacobs. Consumers with questions can call J&J’s Consumer Call Center at 1-888-222-6036, Monday through Friday from 8 a.m. to 8 p.m. Eastern Time. The packages were manufactured between February 2009 and July 2011. Some were produced by an outside contract manufacturer and others were manufactured at J&J’s factory in Las Piedras, Puerto Rico. That’s one of three J&J factories that have been under extra scrutiny by the U.S. Food and Drug Administration over a variety of problems with manufacturing quality. Johnson & Johnson’s McNeil Consumer Healthcare factory in Fort Washington, Pa., has been closed since spring 2010 because of serious problems there. The company is in the process of completely gutting and rebuilding the factory. Since September 2009, J&J has recalled a host of prescription and nonprescription medicines, as well as replacement hip joints, contact lenses and diabetes test strips. Among the recalls were tens of millions of bottles of children’s and adult Tylenol and Motrin, Benadryl, Zyrtec, Rolaids and Simply Sleep pills. The prescription drug recalls have included HIV medicine Prezista and epilepsy pill Topamax. Reasons for the recalls have ranged from contamination with metal shards and class particles, to nauseating odors and inaccurate levels of active drug ingredients. The recalls have cost the company $900 million in 2010 alone in lost revenue from products not being on store shelves, on top of costs for upgrading factories and legal expenses. Along with the FDA, Congress has been investigating the handling of the manufacturing problems and recalls by executives at Johnson & Johnson, which stresses in its corporate credo its responsibility to the doctors, patients and parents who use its products.

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Rich Less Likely To Be Attuned To Others’ Suffering, Study Finds

December 22, 2011

Social psychologists are making an argument that Occupy Wall Street protesters have been saying for months: Many rich people just aren’t in the habit of thinking of others. According to researchers at the University of California-Berkeley, people who grew up in economically comfortable circumstances are less attuned to the suffering of other people . In multiple trials that involved both questionnaires and physical-response tests, the researchers found that young adults whose upbringing involved some degree of financial struggle were quicker and more likely to register signs of empathy than young adults who came from affluent backgrounds. Such conclusions are especially relevant now, as the Occupy movement continues to focus national attention and criticism on the growing divide between rich and poor . While some wealthy people have defended themselves as merely embodying the ideals of American capitalism — a system where, the argument goes, anyone can make it to the top if they’re willing to work hard — many Occupy protesters have offered a less flattering theory: that the rich, as a class, simply aren’t concerned with the well-being of anyone else. The findings of the UC Berkeley team seem to suggest that this might be true, though the researchers make a point of saying it’s likely the result of inexperience on the part of the rich, not necessarily malice. “It’s not that the upper classes are coldhearted,” Jennifer Stellar, a social psychologist at UC Berkeley and the lead author of the study, is quoted as saying in a press release. “They may just not be as adept at recognizing the cues and signals of suffering because they haven’t had to deal with as many obstacles in their lives.” This particular piece of research appeared earlier this month in the journal Emotion , but one of the academics involved in the study, psychologist Dacher Keltner, has published at least twice before on the correlation between economic struggle and empathetic response. Last October, Keltner was part of a research team that found that wealthy people had greater difficulty reading facial expressions . In August, Keltner and others argued that financial security seems to be associated with an impulse to think about oneself more than others — and that a dozen separate studies had produced the same implication . But the relationship between wealth and compassion may work both ways. In 2005, researchers found that if a stock trader suffers from some kind of emotional impairment — that is, brain damage that prevents them from fully experiencing their own emotions — it may allow them to make more profit on the market , since they can make decisions based more firmly in rationalism. And in what may be a more extreme example of the same phenomenon, research published earlier this year suggests that some stockbrokers actually have a more pronounced competitive streak than diagnosed psychopaths .

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What’s Causing House Fires From Lightning Strikes?

December 22, 2011

WESTERVILLE, Ohio (AP) — Reports of lightning-related fires and gas leaks in at least a dozen states have raised concerns about the use of flexible gas lines made of corrugated stainless steel tubing and have led to lawsuits, studies and efforts to better track the incidents. Manufacturers have defended the plastic-coated metal tubing, known as CSST, which has become increasingly common in new homes since it was introduced domestically more than two decades ago. Fire officials and researchers are trying to determine whether to blame a faulty product, unsafe installation or something else for the blazes. Four homes caught on fire in central Ohio over a stormy 12-hour period this summer. Genoa Township Fire Chief Gary Honeycutt said he believes lightning struck at or near the homes, and the electrical charge traveled along the CSST before jumping to a less resistant pathway nearby such as a metal ventilation duct. It then punctured a hole the size of a pencil tip in the tubing and created a gas leak that could ignite, he said. One of the fires charred the ceiling in the lowest level of Michael Wagner’s dream home, a two-story property near a country club and golf course in an area where farmland has been turned into neatly manicured neighborhoods of newer homes. “It had been burning the joists much like a blowtorch,” said Wagner, whose family moved into the home a few weeks before the fire and has been displaced for months because of smoke damage. The home passed inspection without problems, they said, but they later learned lightning had struck it and created a gas leak in 2004. Firefighters and gas providers point out that the fires seem to occur with an unusual combination of factors — a newer building that has CSST, a lightning strike in just the right place, the puncture of the tubing and the spark to ignite the gas. Most of the Ohio fires were in the central part of the state, though it’s possible there are others that haven’t been linked to the tubing because the reports didn’t include that detail. “I’d say we’ve got a problem with that product, but it’s very anecdotal evidence that we have,” said state Fire Marshal Larry Flowers, who recently started collecting information about such fires around Ohio. A class-action lawsuit filed in Arkansas against several manufacturers claimed the tubing posed an unreasonable risk of fire from lightning strikes, leading to a 2006 settlement that was worth up to about $29 million, according to a copy of the settlement agreement provided by an attorney not affiliated with the case. Lawyers involved in the case did not respond to messages for comment. And an unresolved wrongful death lawsuit blames a CSST failure for a 2008 blaze that killed three children and their grandmother in rural Jefferson, S.D. “For a homeowner or a business owner, really the problem with the product is it’s very unpredictable when it’s going to fail, and it’s a very difficult product to make safe,” said Mark Utke, a lawyer with the Cozen-O’Connor firm in Philadelphia, which is working on the South Dakota case and dozens more it connects to CSST. Manufacturers say the flexible tubing was developed in Japan as an alternative to rigid gas piping that could break during an earthquake, and hundreds of millions of feet of tubing have been installed in U.S. homes and other buildings. It can cost significantly more than black metal pipe, with one recent estimate putting the cost at 65 cents for a foot of rigid pipe in Ohio and about a dollar more for standard CSST. But the tubing is easier to install and can bend around corners, appearing much like a garden hose affixed to ceiling joists. Both types of lines meet existing product and code requirements, but manufacturers say that CSST is the safer option and that it’s less likely to crack, leak or cause a gas explosion because it doesn’t require as many joints to follow the shape of a building’s interior. “Of course we would like everything in the house to be safe from lightning, but that’s not a requirement,” said Bob Torbin, the director of codes and standards for Exton, Pa.-based Omega Flex Inc., one of the producers targeted in lawsuits. “And so we have to ask ourselves: Does this represent an unreasonable risk compared to other risks that you take when you occupy your home?” That’s a measurement that’s tough to quantify, he said. In response to concerns, Omega Flex stopped offering its earlier CSST product this fall and instead is promoting tubing wrapped in a special covering intended to make it more resistant to lightning strike damage. Some manufacturers and builders say there may be other contributing factors in the tubing fires, including whether gas lines are correctly grounded and bonded, meaning they’re linked into a system that would direct energy from a lightning strike into the earth. The president of the Ohio Home Builders Association said he has used the tubing and has no doubt that it’s a safe product when installed properly. “We have it in our home,” said Bill Owens, who’s also founder and president of Owens Construction in suburban Columbus. “A lot of it is just paying attention to the actual installation requirements and the code requirements associated with safe installation.” In Indiana, officials increased code requirements for bonding and grounding in new homes and expanded the required gap between gas tubing and other metal items to help decrease the risk of a problem. The research foundation affiliated with the National Fire Protection Association, which sets national codes that pertain to construction, is studying how to mitigate any lightning-related dangers of CSST and has sought information from various stakeholders in the discussion, including manufacturers and insurers. “Now that it’s out there, how do we make it safe?” said Mitchell Guthrie, an engineering consultant from Blanch, N.C., who has researched CSST and lightning protection and worked with a panel studying concerns. Iowa Fire Marshal Ray Reynolds said people in the insurance industry have linked the tubing to more than 200 fires in his state over the past two years, and he doesn’t believe proper grounding and bonding is the only solution. He said Iowa has seen some problems with properly bonded systems, and he decided to replace the tubing in his own home with the updated, extra-protected CSST. Wagner, the Ohio homeowner displaced by a fire, said he decided to replace his flexible tubing with rigid lines to help his family feel safer. The American Gas Association, which represents gas providers, doesn’t think CSST is a defective product, but it has helped develop product standards and has supported the industry’s effort to educate the public about concerns and to minimize any dangers. “It’s just a situation that could occur, just like lightning could penetrate a home and damage wiring,” said Jim Ranfone, the AGA’s managing director of codes and standards. “It’s not a panic situation, but it’s one that I would sort of keep tabs on to make sure the system was properly bonded,” he said. ___ Associated Press writer Doug Whiteman contributed to this report. ___ Kantele Franko can be reached at http://www.twitter.com/kantele10.

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Occupy Wall Street Floods ‘Law & Order: SVU’ Set At Foley Square

December 9, 2011

Members of the Occupy Wall Street movement raided a fictional recreation of their former Zuccotti Park camp late Thursday night into Friday morning, interrupting the filming of a new episode of NBC crime drama “Law & Order: SVU” that was taking place in lower Manhattan’s Foley Square. The show, a long running ripped-from-the-headlines police procedural, was in the midst of producing an episode that seemed to involve the economic protests that began in Zuccotti Park in September and have spread throughout the world. Word traveled online through Occupy’s various social channels and a crowd of people quickly showed up to “mockupy” the square. “Basically, obviously, ‘Law & Order’ was using this as a backdrop for some salacious story,” Han Shan, a member of the OWS press team, told The Huffington Post. “People did it in the spirit of absurdity and fun, and we like to come together in public space and share ideas and show our vision through our action and we’re doing that tonight with a good bit of jest and big fat smiles on our faces.” Although it was unclear if the filming permits had been revoked, the protestors were asked to leave the square when the park closed at 1 a.m. Various reports on Twitter stated that police forced out protestors , as well. When reached for comment, the NYPD was unable to provide any information. “There’s a pretty significant NYPD presence at this point,” Shan said as 1 a.m. approached. “They did push us out, I don’t think anyone wanted to take an arrest for this. It’s fun and we were successful in kind of taking back our history, our very young history but taking it back from this TV show that wanted to use it. I don’t know if it was our presence here that caused them to rescind [the permit] but they wouldn’t be able to film, unless the jokes on us and they’ve been filming the whole time.” The “SVU” recreation of Liberty Square, the nickname given to the OWS encampment that was raided and cleared by the NYPD on November 15 , had its own library and kitchen, which was stocked with real food, including animal crackers. “I have to admit, it really felt like a very strange dream, that moment,” Shan said of their initial raid of the recreated square. “There are certainly some folks who feel really offended by the attempt to kind of use this very real, very living movement, this economic justice movement that’s making real change for working families in this country, to use it in some kind of story line in this dramatic cop show,” Shan said. “There are probably other folks among us who think it’s just a fun excuse to get together and share in public.”

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A Catskills Casino? That’s Cuomo’s Plan

December 5, 2011

By MICHAEL GORMLEY, Associated Press ALBANY, N.Y. — New York Gov. Andrew Cuomo on Sunday proposed a major economic development package that would expand gaming, which could mean a Catskills casino, establish a new infrastructure repair fund, provide more tax credits for job growth and create a job-training program. The extensive proposal released to The Associated Press and to newspapers statewide as an opinion column is Cuomo’s response to an unexpected $350 million deficit this year and a projected $3.5 billion deficit in the 2010-13 fiscal year. Cuomo calls for “comprehensive reform of our tax code” to promote investment in jobs in New York. He doesn’t mention raising taxes or adjusting the tax code to raise taxes for wealthier New Yorkers. Democrats in the Assembly and Senate continue to push for a higher tax on wealthier New Yorkers to address the deficits without further cuts to education and health and social programs. Cuomo, a Democrat, led the Legislature to address a $10 billion deficit in April with a state budget that included a rare cut in spending. His plan could be presented in a special session of the Legislature to be held as early as this week, or it could be a centerpiece of his second year in office beginning in January. “We should pursue a comprehensive gaming plan — recognizing the reality that New York is already in the gaming business,” Cuomo said. He called for the creation of “destination gaming locations,” which in past proposals from Albany has included the Catskills, once home to a flourishing resort industry. “Through this plan we can promote job creation and recapture revenue that is currently being lost to other states,” Cuomo said. He said in the fall that he was looking into allowing private sector, non-Indian casinos in New York to capture some of New Yorkers’ gambling dollars now going to Connecticut and Atlantic City, N.J. Cuomo also proposes the “New York Works Initiative,” which would create a fund to finance the repair and development of highways, bridges and major construction. That could create immediate construction jobs as well as aid in the long-term growth of companies and attract new employers. Cuomo called for a second round of regional proposals based on local assets and strengths to fund more job-creating plans. The first round of his proposals for $1 billion in competitive grants is finishing up now. His job-training program would be aimed at helping inner-city youths land jobs, and cut into what Cuomo said is a 40 percent unemployment rate in inner cities. Cuomo called for continued cooperation with legislative leaders to avoid the partisan gridlock seen in Washington. “Now is not the time for rigid partisanship, but for effective leadership,” he said. “New York state government must rise to the occasion and lead once again.” The Senate’s Republican majority had no immediate comment on Cuomo’s proposal, but it will get a fair hearing, according to majority spokesman Scott Reif.

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Facebook Announces Big New Buy

December 5, 2011

Facebook has acquired location-based social service Gowalla for an undisclosed sum. Both companies announced the deal on December 5. “We’re excited to confirm that Gowalla co-founders Josh Williams and Scott Raymond, along with other members of the Gowalla team, are moving to Facebook in January to join our design and engineering teams,” a Facebook rep said in a statement emailed to The Huffington Post. According to a post on the Gowalla Blog , at least part of the startup’s staff will relocate from Austin, Texas, to Palo Alto, California. Gowalla services will be shuttered in January 2012. Facebook won’t acquire any of Gowalla’s technology or user data, and the Gowalla Blog explains that the service will give its two million users a chance to extract their data before the service shuts its doors for good. CNN Money published an unconfirmed report on December 2 that Facebook would buy Gowalla. According to CNN’s sources , Gowalla talent will join Facebook’s Timeline development team, which is currently finalizing Facebook’s new profile design that debuted at the company’s recent f8 conference and is expected to begin rolling out to users soon. Since launching in 2009, Gowalla had faced steep competition from check-in service Foursquare and daily deals giant Groupon, as well as a host of other location-based check-in and rewards services. In September, Gowalla announced that it had redesigned its mobile app and planned to shift focus away from check-ins and toward user-generated reviews of local places. Those plans are now kaput. Facebook also found itself struggling to keep up in the local mobile space. The social network’s location-based deals feature, Places , which launched in August 2010, failed to take off. Almost exactly a year later, Facebook said it would shutter the project .

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Scott Brown Follows In Elizabeth Warren’s Footsteps

November 14, 2011

WASHINGTON — Sen. Scott Brown (R-Mass.) endorsed President Barack Obama’s nominee to head the new Consumer Financial Protection Bureau on Monday, according to The Boston Globe . His backing of former Ohio Attorney General Richard Cordray will likely have little to no effect on Cordray’s prospects for actually securing the nomination. A total of 44 other Senate Republicans, more than enough to filibuster a vote on Cordray’s appointment, have already vowed not to approve any CFPB director unless the agency’s capabilities are limited by new laws. Cordray was the law enforcement official most aggressively pursuing action against banks on foreclosure fraud until he was ousted by a Republican challenger in late 2010. Elizabeth Warren, the consumer advocate who conceived of the CFPB and who is now challenging Brown for his Senate seat, hired Cordray to head enforcement activity at the bureau shortly thereafter. Obama nominated him to head the agency after passing over Warren, whose public criticism of big banks and the Wall Street bailout had agitated congressional Republicans and Democratic campaign donors from the financial industry. Meanwhile, Warren has given Cordray her full support for CFPB director, and Republican groups have continued their efforts to tie Warren to the Occupy Wall Street movement and portray that association in a negative light. Warren has not stopped criticizing big banks, although she insists that everyone involved in the protests must “obey the law.” Brown, whose top career campaign donors include Goldman Sachs, Morgan Stanley, Barclays and the hedge fund Paulson & Co., was one of just three Republicans to vote in favor of the Dodd-Frank financial reform bill. He withheld his vote, however, until he had secured highly targeted legislative favors for hometown banking giant State Street.

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Fannie Mae Seeks Additional Federal Aid To Stay Afloat

November 8, 2011

WASHINGTON – Fannie Mae , the biggest source of money for U.S. home loans, on Tuesday reported a $5.1 billion third-quarter loss and said it would seek $7.8 billion in additional federal aid to stay afloat. Fannie Mae, which was seized by the government in September 2008, said the loss was attributed to continued weakness in the housing market and credit-related expenses on home loans made prior to the 2008 financial collapse. In the year-earlier quarter it had a loss of a $1.3 billion. Fannie Mae has drawn $112.6 billion in bailout funds from the Treasury Department since 2008 and has paid $17.2 billion to the government in the form of dividends. Fannie Mae and its smaller rival Freddie Mac were seized by the government as losses on subprime mortgages threatened insolvency. The government has pledged unlimited funds to keep the firms afloat through the end of 2012. (Reporting by Margaret Chadbourn; Editing by Leslie Adler) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Psychics Prosper: Economic Fears Attract New Clients

September 21, 2011

In this challenging economy, when U.S. unemployment is far too high and our national and personal bank balances are much too low, one profession that continues to thrive — and perhaps even benefit from all the uncertainty — is psychics. According to Penelope, a “hands on healer and psychic medium” who charges $125 for an hour session, she has seen an increase in male customers amid these hard times.

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Marty Zwilling: Entrepreneur Success: It’s Not Always About You

September 21, 2011

Many entrepreneurs forget that their success is more about helping other people than about personally becoming famous, or overcoming the odds and getting rich. A successful business has to satisfy customers with a strong team, by helping them solve problems, save money, or experience more pleasure. That means more focus on helping others achieve their goals. How and why this is true was brought home to me in a new book, It’s Not About You: A Little Story About What Matters Most in Business , by Bob Burg and John David Mann. This is a fictional story about how an aggressive young M&A executive comes to realize that his aggressive style is actually making it harder to reach his goals. He concludes that there are five leadership elements that include him, but are not always about him, that lead to success. These are lessons that every entrepreneur should take to heart: Hold the vision. Many entrepreneurs are able to come up with a vision, but far fewer are able to hold on to it through thick and thin, and communicate it effectively and continuously to their team and their customers. Keep your eyes on where the company is going, especially when nobody else does. Watch your use of personal pronouns. Build your people. Give people on your team the means, authority, and the motivation to do the job, you will be surprised at the value delivered. Make sure that the essence of your influence is pull, not push. See people for who they are, realize what they can be, and help to take them there. Walk the talk and do the work. Most startups begin their life as “one-person shows” that over time evolve to teams of people, interacting with customers and vendors. By virtue of the growing workload and stress, too many entrepreneurs isolate themselves from the hands-on as the team builds. Don’t forget to be a mentor as well as a leader. Stand for something. What you have to give, you offer least of all through what you say, and in greatest part through who you are. Competence and character are most important, and visible to everyone. I believe in the old saying: “If you don’t stand for something, you’ll fall for anything.” Share the mantle of leadership. The best way to increase your influence is to give it away. Don’t get stuck thinking that you are the deal. Let others lead in their own area of expertise, and your power will be expanded many-fold. As early-stage entrepreneurs, it’s natural for you to focus on you — what you’re doing, what you want, and what you need. As the business evolves, you must expand your focus beyond yourself to motivating the team and delivering value to customers. At that stage, you are still important, but it’s not about you any more. One mistake many entrepreneurs make, especially with online businesses, is a fundamental misunderstanding of how interesting they need to appear to others. Yes, you are a fascinating person. You know how to bootstrap a business, build it from nothing, and burn sweat-equity for long hours to push your dreams to reality. Your business brand needs to quickly supersede you. Online businesses have removed the convenience of geographic connections. Today, remote relationships are far more important. The best way to turn someone into your devoted fan is to go out of your way to make them feel important. Put yourself first by putting others first as well. It really isn’t about how great you are but how you make others great. What have you done for your team and your customers lately? How did you make your product manager shine in the last meeting? Being an entrepreneurial success is not about grabbing information and power, it’s about helping others succeed.

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Ernan Roman: Help Your Customer Service Reps Engage With Customers

September 21, 2011

Marketing Situation: Recently, a client for whom we were developing Customer Engagement strategies asked for help in identifying the reasons for low customer satisfaction scores. Voice of Customer research determined that a major reason for dissatisfaction was a recent company initiative to limit “talk time” in the Customer Service center. The CSR’s had been told to limit talk time to 90 seconds. The emphasis on talk time made the CSR’s feel pressured to wrap up calls quickly. As a result, they began to rush customers off the phone and in their haste, began to miss key steps in the customer service process. This created an increase in call backs by customers who were now irate because they had to place an extra call to fully resolve their needs. The mandate to “wrap calls up” within a short time was also causing CSR morale problems. Things had to change quickly. We started by changing management’s view that you can increase customer engagement and impose tight “talk time” limits on your CSR’s. You can’t have it both ways. This doesn’t mean that customer engagement necessarily drives significant increases in talk time, but you can’t insist on greater engagement and shorter talk time. Two Questions to Consider: 1. Do your CSR’s have the autonomy and authority to engage customers, create rapport, and deliver win-win outcomes, or, are they bound by talk time limits? 2. Are your CSR’s receiving poor performance reviews because of occasional lengthy calls, which exceed talk time limits, but solve problems and build good will? Three Recommended Actions: Create a Customer Engagement Plan for your CSR’s that will encourage customer centric behavior and reduce stress by: 1. Identifying what is causing increases in talk time and stressful exchanges with customers. Talk about those root causes with your people, not the end-result “talk time” number you want. For instance: Do your front-line service people have to put customers on hold so they can track down a manager to authorize a (common) solution to a problem? Could the team solve more of those problems on their own? 2. Giving your team the autonomy and authority to provide value in every call. Let your people know that you trust them. Remind them that you hired them and trained them to connect with people and solve problems. Ask them to critique their own calls. This level of respect builds trust and allows for calls which truly serve customer’s needs. 3. Creating meaningful individual and team rewards. Don’t dish out rewards based solely on “talk time” metrics. Reward your people for providing exceptional service to your customers. The Takeaway For Marketers: Implementing the three action items will: Increase both customer and employee satisfaction scores. Reduce callbacks. Reduce average call handling times! Ernan Roman is President of the marketing consultancy, Ernan Roman Direct Marketing. Recognized as the industry pioneer who created three transformational methodologies: Integrated Direct Marketing, Opt-In Marketing, and Voice of Customer Relationship Research. Clients include Microsoft, NBC Universal, Disney, Hewlett-Packard and IBM. Ernan was named to “B to B’s Who’s Who” as one of the “100 most influential people” in Business Marketing by Crain’s B to B Magazine. His fourth and latest book on marketing best practices is titled: Voice of the Customer Marketing: A Proven 5-Step Process to Create Customers Who Care, Spend, and Stay .

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Tom Doctoroff: Food in China: Survival and Success

September 1, 2011

China’s relationship with food is a window into basic instincts. The country’s cuisine is a manifestation of a civilization that has never taken survival for granted. An understanding of what and how Chinese want to eat is a quick way to know China. With the ever popular dim sum of Guangdong province literally meaning “touch the heart,” it’s fair to say that food is a window into the Han soul. In most categories, local brands including Mengniu, Yili (both dairy companies) and COFCO (everything from chocolate to pork) rule the roost. Although Chinese cravings differ to those of Westerners — noodles, not burgers, are comfort food — it is a myth that people reject foreign food brands simply because they are foreign. Western marketers were slow to enter China and made huge mistakes. Kellogg, for example, launched cold cereal, an alien category, at prohibitively high prices. Since then, many others have made significant progress. From Kraft to Nestle and Dove to Coca-Cola, brands have tailored products to suit Chinese tastes. Recent successes — Lipton milk tea, Danone fortified calcium biscuits, Pizza Hut’s seafood lover’s pizza -0 are testaments to the power of empathetic insight. Yum! Brands’ KFC menu localization has been particularly impressive. Hot wings and chicken burgers are the biggest sellers, but the menu also includes products like Beijing Chicken Roll, Golden Butterfly Shrimp, Four Seasons Fresh Vegetable Salads, Fragrant Mushroom Rice and Tomato Egg Drop Soup. The following are a few basic principles of marketing food in China. Delicious balance. Chinese cuisine is tremendously varied — Shanghai food is sweet and oily, while Sichuan dishes are hot and spicy — but the balance of yin (cooling) and yang (heating) is important everywhere. From stir-fried beef with broccoli to sweet and sour pork, dishes should be “harmonious.” Yin foods, not necessarily low in temperature, include toast, bean sprouts, cabbage, carrots, cucumber, duck, tofu, watercress and water. Yang foods include bamboo, beef, chicken, eggs, ginger, glutinous rice, mushrooms and sesame oil. China will never be a coffee culture because beverages should be cooling, but Nestle three-in-one coffee is a hit because sweetness balances bitterness. Illness is perceived to spring from yin and yang imbalance. “Heat patterns” (e.g. headaches, bleeding) are remedied with cooling foods while excessive yin (e.g. runny noses, night sweats) are cured with heating foods. Chinese aren’t lactose intolerant, but dairy products, including ice cream, are perceived to be “damp.” Even today, milk sales increase if accompanied by something “dry” like bits of wheat. Safety: Never assumed. Counter-intuitively, international brands are preferred to local brands, assuming compatibility with local taste and acceptable price. This is because Chinese never take safety for granted. Prior to the 2009 tainted milk scandal, local dairy brands were known for purity. But dairy manufacturers, in cahoots with local officials, abused this trust by adulterating products with illegal ingredients. That’s why all leading brands of infant formula are foreign, despite price premiums of up to four hundred percent. That’s also why endorsement from central government organizations — such as national dental and medical associations — are highly sought after for any item that goes inside the body, from toothpaste to orange juice. Protection is king. Chinese fear invasive elements, hence the appeal of germ-kill products in many categories including soap (Safeguard), toothpaste (Colgate, Crest, Zhonghua), mouthwash (Listerine), air conditioners (Midea) and even dishwashers (Little Swan). It is, therefore, not surprising that foods that promote “immunity” are embraced. Infant formula, again, is a case in point. Every brand must demonstrate resistance to disease before moving on to performance benefits. Physical transformation, on the other hand, has less appeal. “Bigger, stronger, taller” babies are not objects of admiration; every mother wants her child to be “perfectly normal.” Emotion protection is important too. Breakfasts are warm and soft, nourishing hugs moms give families before they dive into a cold world — the Chinese don’t “crunch” before noon, so cold cereal will always be niche. Special K would be most effectively positioned as a woman’s energy bar. Advancement always. Once physical safety is a given, food becomes a weapon in the game of life. First, most nutritional benefits ladder up to academic excellence. Energy is closely linked to intelligence or, more specifically, concentration and quick-witted resourcefulness. Calcium strengthens both bones and brains. In a dog-eat-dog society, a sharp mind, not a buff physique, is the difference between success and failure. Second, convenient foods are means to an end. They provide the “fuel”needed start every day with a kick, so every indulgent food must also be “good for you,” a sugar-coated pill. Third, transformation benefits have growing appeal for the mature market. Dietary supplements, particularly in first tier cities, help the older man perform on the basketball court and at the office. Osteoporosis scare mongering is old school. In the hyper competitive business world, the comfort of food lubricates trust and transactional gain. Partnerships are tested in Chinese restaurants at round tables in private rooms. Dishes are meticulously choreographed. Proper seating must be respected, with the guest of honor placed directly opposite the door, flanked by his hosts. Serving oneself prematurely is faux pas. Leaving before the fruit comes is bad. Familiarity at home. A glance through any city’s expat guide gives an impression Chinese are culinary adventurers. Shanghai’s restaurant scene rivals any American or European city. Mexican, tapas, Japanese, Western brunches, Asian-French fusion, Johnny Walker parties, glamour clubs, wine bars… the list is endless. But, deep down, the Chinese are restrained about foreign food or new tastes. Inside the home, a refuge from the outside kaleidoscope, they are loath to experiment. Pizza Hut will receive delivery orders for office parties, but rarely for consumption at home. Despite Starbucks, roast and ground coffee is not purchased in supermarkets. Italian restaurants are ubiquitous in all major cities, but few enjoy pasta with the family. In public, anything goes. People pay a premium to project internationalism, hence Haagen-Dazs’ success as an ice cream parlor but failure as an overpriced in-home treat. With professional acquaintances, the world is a stage.

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Goldman Sachs Wins Dismissal Of Lawsuit Alleging It Misled Investors

July 21, 2011

NEW YORK (Jonathan Stempel) – Goldman Sachs Group Inc won the dismissal of a lawsuit accusing it of causing an investor to become insolvent by fraudulently misleading it about risky debt it expected would tumble in value. In a decision made public on Thursday, U.S. District Judge Barbara Jones in Manhattan said the plaintiff, Basis Yield Alpha Fund, failed to sufficiently show that its investment in the Timberwolf 2007-1 collateralized debt obligation was a “domestic” transaction, entitling it to sue in a U.S. court. She nonetheless gave the Cayman Islands-based fund 30 days to file a new complaint to recover its $56 million loss. Basis had accused Goldman of securities fraud and common law fraud. Bruce Grace, a lawyer for the plaintiff, did not immediately return a call seeking comment. Goldman spokesman Michael DuVally declined to comment. Timberwolf was among the securities cited in a scathing U.S. Senate panel report in April that faulted Goldman (GS.N), Deutsche Bank AG (DBKGn.DE) and others for hawking debt they expected to perform poorly. That report said Goldman kept marketing Timberwolf even after Thomas Montag, a top executive who now runs investment banking at Bank of America Corp (BAC.N), told a colleague in an email that Timberwolf was “one shitty deal” [ID:nN14231964] — a phrase quoted in Basis’ complaint and Jones’ opinion. ABACUS Timberwolf had been marketed in the spring of 2007 as a $1 billion investment-grade product, and Basis that June bought $100 million of “triple-A” and “double-A” rated securities at 81 cents on the dollar. But Basis said it did not know there was then an “increased urgency” at Goldman to sell the securities, reflected in the “ginormous” credits it offered sales staff, because the bank feared CDOs would plunge in value. Losses quickly mounted, and Basis began liquidating just two months after its investment. Jones dismissed Basis’ lawsuit after concluding the fund did not allege that “any purchase of sale” took place in the United States, as required under a 2010 U.S. Supreme Court decision. This was so, she said, even though some of Goldman’s alleged fraudulent statements were made in New York. The judge is also overseeing a separate fraud lawsuit by the U.S. Securities and Exchange Commission against Goldman Vice President Fabrice Tourre over his role in the sale of a CDO tied to subprime mortgages, Abacus 2007-AC1. Goldman had been a defendant in that case, but last July agreed to pay $550 million to settle with the SEC, without admitting wrongdoing. The case is Basis Yield Alpha Fund (Master) v. Goldman Sachs Group Inc et al, U.S. District Court, Southern District of New York, No. 10-04537. (Editing by Gerald E. McCormick and Lisa Von Ahn) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Michele Bachmann: ‘It’s Time For Tough Love’

July 11, 2011

INDIANOLA, Iowa — Republican presidential candidate Michele Bachmann says she’s not worried about the nation defaulting if the debt ceiling isn’t increased. The Minnesota congresswoman says there are several options to keep the government running if the debt ceiling isn’t raised by August. She says members of Congress have offered stop-gap spending measures to keep the government running and she supports those measures. She answered questions from reporters about the debt ceiling after speaking Monday to about 50 workers at a company that builds cement-handling machinery in Indianola, just south of Des Moines. Bachmann says raising the debt ceiling amounted to raising the limit on the nation’s credit card. She says that eventually would cost taxpayers. She claimed President Barack Obama has recklessly supported increased spending and that it had to stop. The Des Moines Register reported on what Bachmann had to say on the fiscal issue in the Hawkeye State over the weekend: Bachmann told a crowd of more than 100 supporters gathered in her Urbandale office’s parking lot that she has never voted to raise the debt ceiling during her time in Congress and won’t this time around, either. “It’s time for tough love,” she said, to applause.

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Angela Haines: Why Pitching Investors Sometimes Misfires

July 11, 2011

According to a recent report from the Center for Venture Research at the University of New Hampshire , women-owned ventures account for 20 percent of entrepreneurs seeking capital, though only 13 percent of them actually receive funds, lagging behind the overall rate by about 5 percent. One crucial step in seeking capital is the pitch. Recently, two seasoned women investors shared their experience about why some pitches don’t persuade investors to write checks. A recognized spokesperson for the technological entrepreneurship community in Silicon Valley, Heidi Roizen has achieved success both as an entrepreneur and as a venture capitalist. Currently a faculty member of Stanford University, Heidi served as VP for Apple, and as a co-founder and CEO of T/Maker Company, a developer and publisher of personal computer software. Heidi was a managing director of Mobius Venture Capital, which had $2 billion under management. Currently, she serves on the board of TiVo, Prysm, Inc. and Springboard Enterprises. Here are Heidi’s top pet peeves when it comes to pitches: Don’t expect to turn a blind date into a marriage proposal in one go-round. Your job when you pitch is to convince investors to start a process by figuring out who you are and whether you can accomplish what you promise. Don’t overwhelm them with PowerPoints. State articulately in two or three sentences what problem you can solve, not by recounting your entire resume but by explaining, for example, a relevant experience that led you to start your company. Own your numbers! Don’t be content to think of yourself as the big-idea person. You have to understand in detail how much your product costs and how many minutes it takes to make a sale. Delegating your numbers is like trying to get fit by sending someone else to the gym to do your workouts. The blood of your company is the numbers — be sure it’s your blood, too. Don’t hire relatives and best friends. Of course, there are times when that works out, as it has at Google or Sun Microsystems, but always look for the best person for your company. If your Uncle Henry is an estates lawyer, he’s not the ideal person to sort out patents or even help with a business plan. Don’t overpromise in the near term and underpromise in the long term. Investors are mostly worried about costs in the short term; they want to understand how you plan to lay the foundation or construct your business. For the long term, they are hoping for big hits, which they don’t expect in the first year or two. Show investors a product that they can touch and feel, or a mock-up, video or audio of your product. Then stay in touch with the investors. Be persistent and polite. But, take the initiative to make something happen if they don’t respond after the first go-round. An active member of a growing high-tech corridor in Salt Lake City, Utah, Judy Robinett has 30 years of executive business experience with Fortune 300 companies, and also with startups and turnarounds. From 2000 to 2008, Judy served as CEO of Medical Discoveries, Inc., a publicly traded, developmental biotech venture. Trained as a social worker, Judy now devotes her energy to consulting on strategic plans and financing for newly emerging companies. A managing director of Golden Seeds, she remains an active investor in startup companies, particularly in life sciences or high-tech, often taking board positions to guide the strategy to market. Here is Judy’s list of dos and don’ts: Treat investors as customers. The product they are buying is you and your company, so they want to know what they will get for their money. Too many entrepreneurs are so in love with their projects that they forget that money has value. If you describe your funding strategy from where you are now to how much you need to reach certain milestones, you appear more credible. With $1 million, maybe you could build infrastructure, hire a team and secure patents, but to get a revenue stream going, you will need more money. Be conservative about what you promise so that you can meet or beat expectations. Show signs that you understand that it takes a team to get to the next level. Be sure you don’t just want to be calling all the shots; focus instead on how to be successful. Early-stage investing carries great risk, so investors bet mostly on the character of the entrepreneur. It’s up to you to show that you value their money and that you want them to act as mentors and open doors for you. Create a strong customer acquisition model; too many entrepreneurs have blind spots about how they will grow. How much does it cost to acquire a customer? What is the size of your segments, and what are your channels for reaching them? If entrepreneurs say they have no competition, it’s safe to assume that there is no market for what they are selling. Ideas are easy; it’s execution that counts. Count on glitches along the way. It’s never a straight line to success, so investors want to hear assumptions about “what if.” These assumptions show the quality of your thinking. Anybody can produce great spreadsheets with hockey-stick numbers; hitting them is the hard part. Understand that good relationships with investors are key. Remember that the path is “know me, like me, trust me.” Numbers alone don’t make an investment. Funding is a relatively small world, so it’s imperative that entrepreneurs be truthful, transparent and congenial in all their dealings. Burning bridges with one investor can cut off multiple sources because of their extensive networks. For more on women entrepreneurs, visit www.wStartup.com .

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Azeem Ibrahim: Saving Greece or Saving the Euro?

July 11, 2011

The EU’s bailout is simply postponing the inevitable. Greece is about 300 billion Euros in debt, with a jobless rate of 16% (42.5% for youth) and its budget deficit is more than four times the Eurozone limit at 13.6% of GDP. Greece is nominally insolvent with a newly imposed austerity program which may or may not work and a disaffected population taking to the streets and squares in violent reaction. Only time will tell if Greece has been “saved” and there is considerable doubt about the future of the Euro. Greece has reached this point through years of mismanagement and profligacy; its reporting to the EU consisted of “severe irregularities” based on “submission of incorrect data.” Yet rescue has come in the form of an EU bailout plus the added contribution from the International Monetary Fund which provides a stringent monitor less prone to political pressures than a European institution might be. Greece has responded by passing the first of a series of austerity measures in its Parliament, ending immediate worries about a Greek debt default. Pressure is now intense to put together a second bailout package, as the markets respond with what Sweden’s Finance Minister, Anders Borg, has called “wolf pack behavior.” Speculators and credit rating agencies are being blamed for trying to break up the monetary union to eliminate it as a potential rival to the US dollar as international reserve currency. As the crisis deepens, Jean-Claude Trichet, President of the European Central Bank, is calling for a single Euro Finance Ministry to be formed to oversee fiscal and competitive policies and direct responsibilities for countries “in fiscal distress.” This is seen as taking one step closer to a United States of Europe with a central fiscal policy, putting an end to the latitude in monetary affairs that has caused the recent crisis. The unpalatable truth becomes glaringly obvious — the EU simply cannot afford to keep bailing out insolvent members, even with the help of the IMF. IMF members will soon get restless if their new head, Christine Lagarde, is too euro-centric in her funding allocations. The Greek crisis has revealed a fault line so deep that it can no longer be ignored. The hypothesis of European convergence has failed to materialize. The imbalance between the Northern countries (Germany, France, etc) and the Southern (Spain, Greece, etc) is growing rather than shrinking. Since the introduction of the euro in 1999, GDP averages have drifted apart by as much as 11% and distinct groups of debtor and creditor countries have emerged. The dream of European monetary convergence has soured, and a Greek EU Commissioner, Maria Damanaki, said on May 25, 2011, “The scenario of removing Greece from the euro is now on the table.” This was contradicted by Greece’s Prime Minister, George Papandreou, who insisted he was determined to keep Greece in the Eurozone, but the issue is still very much alive. However, with France and Germany committed to bailing out the weaker countries, a breakup of the Euro does not look likely in the short term. How important to Europe is the survival of the Euro? The European Union existed for decades before the Euro and a number of successful EU countries have refused to join the Eurozone, notably Great Britain, Sweden and Denmark. One alternative is to forget about convergence and return to an “asymmetric architecture” with Germany as the benchmark economy. Germany’s trade surplus has already caught the attention of Christine Lagarde, the new IMF head, who warned in a Financial Times article on March 15, 2010, that Germany’s position could be unsustainable. If Germany’s strength has become a problem, as is Greece’s weakness, then it emphasizes again the difficulty of creating a one-size-fits-all fiscal and monetary policy for 16 countries. Perhaps it is time for the EU to not just swallow its pride and ask the IMF for help, but to take a deeper swallow and allow the weaker economies to secede from the Eurozone, releasing the others from their obligation to keep bailing them out. But this is not the overruling concern of the IMF. “The IMF does no t bail out poor nations. It bails out banks in rich nations that have made imprudent loans to poor nations.” The French and German banks that made those loans to Greece, Portugal and Ireland have to be protected and it is the survival of the banks, not the welfare of the people of the EU, that is the primary goal of both the EU and the IMF. EC President Jose Manuel Barosso, said in his first State of the Union address on September 7, 2010, “Europe must show that it is more than 27 different national solutions. We must swim together, or sink separately.” Somebody should look more closely to see whether the Euro is still swimming or instead, drowning. Dr Azeem Ibrahim is a Fellow and Member of the Board of Directors at the Institute of Social Policy and Understanding and a former Research Scholar at the Kennedy School of Government at Harvard and World Fellow at Yale. More writings here: www.azeemibrahim.com

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Foxes Guarding The Henhouse? Auditors Criticize Self-Regulation Of Hedge Funds

July 11, 2011

Allowing the hedge fund and private equity fund industry to regulate itself might not be very effective, according to a new Government Accountability Office audit released Monday . Since the Securities and Exchange Commission lacks adequate resources to police the sector, the GAO was tasked under the Dodd-Frank Act with determining the feasibility of forming a self-regulatory organization to provide primary oversight of private fund advisers. Though such an SRO could supplement oversight, it presents challenges and trade-offs, according to the report. By “fragmenting regulation between advisers that advise private funds and those that do not, a private fund adviser SRO could lead to regulatory gaps, duplication and inconsistencies,” concluded the GAO. Some of the disadvantages of a private fund adviser SRO include its potential to (1) increase the overall cost of regulation by adding another layer of oversight; (2) create conflicts of interest, in part because of the possibility for self-regulation to favor the interests of the industry over the interests of investors and the public; and (3) limit transparency and accountability, as the SRO would be accountable primarily to its members rather than to Congress or the public. Treasury Deputy Secretary Neal Wolin offered a vigorous defense of Dodd-Frank in Politico, warning that to carry out the reforms effectively, “we need to make sure regulators have the resources they need to do their jobs.” Warren Heads Back Into The Lion’s Den Elizabeth Warren, the presidential adviser who temporarily heads the Consumer Financial Protection Bureau, heads back to the lion’s den on Thursday — to testify before the House Oversight Committee. At the close of her last appearance before the committee, Rep. Patrick McHenry (R-N.C.) accused her of lying during a YouTube-worthy exchange about how much time she would be testifying. As iWatchNews.com notes, the hearing to be led by Chairman Darrell Issa (R-Calif.) is ominously titled, “”Consumer Financial Protection Efforts: Answers Needed.” Elsewhere in the world of financial regulatory reform, Monday is the deadline for public comments on a proposal to set margin and capital requirements for swap dealers and traders, and on an SEC proposal to raise the threshold at which investment advisers can charge a performance fee. ‘Fracking’ Wastewater Ruins National Forest Wastewater from natural gas hydrofracturing — known as “fracking” — decimated a national forest in West Virginia, according to a new study by a U.S. Forest Service researcher. The fracking fluids killed more than half of the trees and caused radical changes in soil chemistry in a quarter-acre section of the Fernow Experimental Forest in the Monongahela National Forest, reported Public Employees for Environmental Responsibility . The study found the following effects of the application of 75,000 gallons of fracking fluids over a two-day period in June 2008: • Within two days all ground plants were dead; • Within 10 days, leaves of trees began to turn brown. Within two years more than half of the approximately 150 trees were dead; and • “Surface soil concentrations of sodium and chloride increased 50-fold as a result of the land application of hydrofracturing fluids…” These elevated levels eventually declined as chemical leached off-site. The exact chemical composition of these fluids is not known because the chemical formula is classified as confidential proprietary information. SEC Slow to Police Problems at U.S.-Listed Chinese Companies After the SEC promised to overhaul and beef up its enforcement in the wake of the Bernie Madoff scandal, the agency been caught flat-footed with mounting problems at U.S.-listed Chinese companies. Since March, more than two dozen companies have announced auditor resignations or accounting problems, reported Reuters . Yet the SEC has been slow to respond, say critics, taking too long to tighten oversight of U.S. shell companies acquired by Chinese firms through “reverse mergers,” which allow the companies to avoid initial public offerings. Part of the problem is that such mergers fall under state law. This week, SEC officials are in China trying to get Chinese auditors access to inspect such companies. How Big Pharma Cornered Market On Asthma Inhalers Today’s must-read: how pharmaceutical companies took advantage of the 1987 ban on the use of ozone-depleting chlorofluorocarbons to corner the market on CFC-free asthma inhalers — squeezing out competitors and raising prices. Mother Jones’ Nick Bauman reports: Many of the patents for the new inhalers won’t expire for another six years, so there likely won’t be any generics until then, unless the patents are challenged in court. The switch to the new inhalers will cost American consumers, insurance companies, and the government some $8 billion by 2017, according to FDA estimates. That’s money in the drug companies’ pockets. In 2007, a top market-research firm alerted investors that the US inhaler market “will soon change from low-value to significant.” Sure enough, at nearly $1 billion a year, sales of the market-leading inhaler, ProAir, now rival Viagra’s. The FDIC vs. Forbes After Forbes published a tough piece on the Federal Deposition Insurance Corporation’s outgoing director, Sheila Bair, the agency’s counsel penned a sharp retort, calling the editorial “more personal attack than commentary.” That of course prompted editorial co-author Vern McKinley to write his own reply to the reply. It’s not exactly as scintillating as the volleys between Nadal and Djokovic at Wimbledon, but here’s the back and forth . Meanwhile, Bair will have plenty of space to vent in her upcoming book for the Free Press. In a proposal obtained by the New York Times , she wrote: “I will share perspectives on the problems of regulatory capture and the continuing reluctance of bank regulators to fully acknowledge current problems in the financial sector, which are substantial.” The Goat Watching Over The Lettuce Patch A 14-year-old program in Puerto Rico that allows companies to regulate themselves on workplace health and safety issues may not be adequately protecting the workers, reported the Centro de Periodismo Investigativo. Since 1997, the program has resulted in only two findings of a serious nature — one involved a non-work-related death in a parking lot of a company and a second incident, which was resolved outside of court and is confidential. CPI reports : Think it sounds too good to be true? Well, maybe that is precisely the problem with the Voluntary Protection Programs (VPP) – that it contradicts its own definition because it leaves in the hands of employers the establishment of health and safety parameters, with the supposed participation of the workers, and far from the eye of the state’s regulatory agencies. All of this in exchange for less inspections and exemption from fines in the majority of cases.

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Paul Szep: The Daily Szep — Sen. Schumer, Wall Street Cheerleader

July 11, 2011
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Judges Approve Anti-Google Bloc’s $4.5-Billion Buy

July 11, 2011

WILMINGTON, Del. — U.S. and Canadian judges on Monday approved a $4.5 billion cash bid from a consortium that includes smartphone makers Apple and Research In Motion for thousands of patents held by bankrupt telecom-equipment maker Nortel Networks Corp. The judges approved the results of Nortel’s patent auction at a joint hearing Monday, just over a week after the consortium offered five times more than Google Inc.’s initial bid of $900 million for some 6,000 patents and patent applications. The purchase _and its approval_ represent a significant win for a consortium of companies that includes Apple Inc., EMC Corp., LM Ericsson AB, Microsoft Corp., Research in Motion Ltd., and Sony Corp. Phones running Google’s Android system compete with software and devices made by the new holders of the Nortel patents. The patents cover many technologies, including data networking, semiconductors and wireless systems known as fourth generation, or 4G. Nortel has said the portfolio “touches nearly every aspect of telecommunications and additional markets … including Internet search and social networking.” They are among the last major assets of Toronto-based Nortel, which filed for bankruptcy protection in 2009. The company has been selling off its operations bit by bit since then. The sale of the Nortel patents comes as smartphone manufacturers square off in legal battles over such common features as swiping gestures on touch screens. Such lawsuits could allow patent holders to capitalize on their rivals’ success in the market through royalty settlements. Google had said it wanted the patents to defend itself against lawsuits from other companies until Congress enacts broader changes to the patent system to help reduce such litigation. Google gives away its Android software for free, counting on its popularity to drive usage of other Google services, such as search and maps. Attorneys for Nortel and its official committee of unsecured creditors praised the results of the patent auction. Nortel attorney Lisa Schweitzer said the final price, which came after 19 rounds of bidding, is more than the combined total received from Nortel’s previous bankruptcy asset sales. Including the patent sale, Nortel has realized roughly $7.7 billion from its asset sales. “This truly is a `wow’ transaction,” said David Botter, an attorney representing Nortel’s official creditors committee. Derrick Tay, an attorney representing Nortel in Canada, said the auction is a “shining example” of what can be achieved in a bankruptcy case. “I don’t believe a dollar was left on the table,” Tay told Ontario Superior Court of Justice Judge Geoffrey Morawetz, who conducted the joint hearing with U.S. Bankruptcy Judge Kevin Gross in Delaware via videoconference. Gross described the result of the auction as “quite extraordinary” and said it would be a mistake for the court not to give its approval. “It’s not every day that a judge has an opportunity to make a $4.5 billion mistake,” he quipped. The sale, which includes a good faith deposit of $54 million already delivered to Nortel, is expected to close within 30 days.

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Municipal Bonds Market Shows Signs Of Healing

July 5, 2011

CHICAGO (Karen Pierog) – The U.S. municipal bond market had its best quarterly performance in two years in the second quarter of 2011, besting both U.S. Treasuries and corporate debt, according to BofA Merrill Lynch Global Research on Tuesday. Munis had gains of 4.453 percent on a total-returns basis for the quarter, which ended on Thursday. That marked the best performance for the sector since the first quarter of 2009, when the market gained 4.425 percent on BofA Merrill Lynch indices. By comparison, corporate debt gained 2.295 percent and Treasuries gained 2.284 percent in the second quarter of 2011. The $2.9 trillion muni market closed out 2010 with its worst quarterly performance in 16 years, losing 4.522 percent on a total-returns basis. Toward the end of last year, states, cities and other issuers rushed to sell debt to take advantage of an expiring Build America Bond program and its hefty federal rebate on interest costs. That pumped muni annual volume to an all-time high of $430 billion in 2010. At the same time, Wall Street analyst Meredith Whitney warned the market was in for an unprecedented deluge of bond defaults. John Hallacy, municipal research strategist at BofA Merrill Lynch, attributed the market’s performance turn around to a combination of muni supply being at an 11-year low so far this year and eased concerns about a credit meltdown. “The talking heads talking down munis — they created a lot of fear that really softened the retail bid. But retail has come roaring back,” he said. A key for muni performance for the rest of the year is supply, according to Hallacy. “If it does ramp up, you have to find a home for that paper,” he said. Meanwhile, prices of tax-exempt bonds ended unchanged on Tuesday as the market returned from the July 4 holiday, according to Municipal Market Data, a Thomson Reuters unit. Yields on top-rated 10-year munis remained at 2.76 percent, while 30-year yields stayed at 4.36 percent on MMD’s benchmark triple-A scale. (Reporting by Karen Pierog; Editing by Andrew Hay) Copyright 2011 Thomson Reuters. Click for Restrictions .

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‘Megalomania, Insanity, And Evil’ Caused Housing Bubble: Berkshire Exec

July 1, 2011

Charles Munger, the always-quotable vice chairman of Berkshire Hathaway, wasn’t mincing words on Friday. “The bubble in America was caused by some combination of megalomania, insanity and evil in, I would say, investment banking, mortgage banking,” Munger said at a conference in Pasadena. In assigning responsibility for the housing bubble that precipitated the financial-sector collapse of 2008, and ushered in a period of prolonged economic contraction, Munger also took issue with the accounting industry, calling it ” contemptible ” for its role in the debacle. And he had particular scorn for Richard Fuld, the former chairman and CEO of Lehman Brothers. “I would guess that Dick Fuld has not a single ounce of contrition wherever he sits today,” Munger said. Munger was speaking at a “Morning with Charlie” event, held in lieu of the annual shareholder meeting of Wesco Financial, a Berkshire company that Munger had chaired. Berkshire Hathaway recently acquired Wesco’s remaining stock, removing the company from public trading. Munger chose to make a public appearance anyway, though he said in April that the event would only be “ for hard-core addicts .” Munger is known for his blunt, often combative pronouncements. In April, he opined to a group of shareholders that Greece was in trouble because its citizens “don’t want to pay taxes or do much work.” In 2009, he called cap and trade “ monstrously stupid .” Around the same time, he said of Wall Street pay, “A man does not deserve huge amounts of pay for creating tiny spreads on huge amounts of money. Any idiot can do it. And, as a matter of fact, many idiots do do it.” At Friday’s meeting, Munger endorsed Coca-Cola stock , calling it “one of my favorites” and an “easy choice” for investors. He praised Elizabeth Warren, President Obama’s appointee to oversee the Consumer Financial protection Bureau, according to Bloomberg . He had a qualified compliment for former Federal Reserve chairman Alan Greenspan, whom he called “a smart man” but one who “totally overdosed on Ayn Rand at a young age.” And he gave a wry nod to his own fanbase. Noting that Friday’s meeting would be the last of its kind, Munger told the crowd , “You all need a new cult hero.”

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U.S. Recovery’s 2-Year Anniversary Arrives With Little To Celebrate

July 1, 2011

WASHINGTON (AP) — This is one anniversary few feel like celebrating. Two years after economists say the Great Recession ended, the recovery has been the weakest and most lopsided of any since the 1930s. After previous recessions, people in all income groups tended to benefit. This time, ordinary Americans are struggling with job insecurity, too much debt and pay raises that haven’t kept up with prices at the grocery store and gas station. The economy’s meager gains are going mostly to the wealthiest. Workers’ wages and benefits make up 57.5 percent of the economy, an all-time low. Until the mid-2000s, that figure had been remarkably stable — about 64 percent through boom and bust alike. Executive pay is included in this figure, but rank-and-file workers are far more dependent on regular wages and benefits. A big chunk of the economy’s gains has gone to investors in the form of higher corporate profits. “The spoils have really gone to capital, to the shareholders,” says David Rosenberg, chief economist at Gluskin Sheff + Associates in Toronto. Corporate profits are up by almost half since the recession ended in June 2009. In the first two years after the recessions of 1991 and 2001, profits rose 11 percent and 28 percent, respectively. And an Associated Press analysis found that the typical CEO of a major company earned $9 million last year, up a fourth from 2009. Driven by higher profits, the Dow Jones industrial average has staged a breathtaking 90 percent rally since bottoming at 6,547 on March 9, 2009. Those stock market gains go disproportionately to the wealthiest 10 percent of Americans, who own more than 80 percent of outstanding stock, according to an analysis by Edward Wolff, an economist at Bard College. But if the Great Recession is long gone from Wall Street and corporate boardrooms, it lingers on Main Street: — Unemployment has never been so high — 9.1 percent — this long after any recession since World War II. At the same point after the previous three recessions, unemployment averaged just 6.8 percent. — The average worker’s hourly wages, after accounting for inflation, were 1.6 percent lower in May than a year earlier. Rising gasoline and food prices have devoured any pay raises for most Americans. — The jobs that are being created pay less than the ones that vanished in the recession. Higher-paying jobs in the private sector, the ones that pay roughly $19 to $31 an hour, made up 40 percent of the jobs lost from January 2008 to February 2010 but only 27 percent of the jobs created since then. Kathleen Terry is one of those who had to settle for less. Before the recession, she spent 16 years working as a mortgage processor in Southern California, earning as much as $6,500 in a good month, a pace of about $78,000 a year. But her employer was buried in the housing crash. She found herself out of work for two and a half years. As her savings dwindled, the single mother had to move into a motel with her three daughters. They got by on welfare and help from their church and friends. Terry started taking a 90-minute bus ride to job training courses. Eventually, she found work as a secretary in the Riverside County, Calif., employment office. She likes the job, but earns just $27,000 a year. “It’s a humbling experience,” she says. Hard times have made Americans more dependent than ever on social programs, which accounted for a record 18 percent of personal income in the last three months of 2010 before coming down a bit this year. Almost 45 million Americans are on food stamps, another record. Ordinary Americans are suffering because of the way the economy ran into trouble and how companies responded when the Great Recession hit. Soaring housing prices in the mid-2000s made millions of Americans feel wealthier than they were. They borrowed against the inflated equity in their homes or traded up to bigger, more expensive houses. Their debts as a percentage of their annual after-tax income rose to a record 135 percent in 2007. Then housing prices started tumbling, helping cause a financial crisis in the fall of 2008. A recession that had begun in December 2007 turned into the deepest downturn since the Great Depression. Economists Kenneth Rogoff of Harvard University and Carmen Reinhart of the Peterson Institute for International Economics analyzed eight centuries of financial disasters around the world for their 2009 book “This Time Is Different.” They found that severe financial crises create deep recessions and stunt the recoveries that follow. This recovery “is absolutely following the script,” Rogoff says. Federal Reserve numbers crunched by Haver Analytics suggest that Americans have a long way to go before their finances will be strong enough to support robust spending: Despite cutting what they owe the past three years, the average household’s debts equal 119 percent of annual after-tax income. At the same point after the 1981-82 recession, debts were at 66 percent; after the 1990-91 recession, 85 percent; and after the 2001 recession, 114 percent. Because the labor market remains so weak, most workers can’t demand bigger raises or look for better jobs. “In an economic cycle that is turning up, a labor market that is healthy and vibrant, you’d see a large number of people quitting their jobs,” says Gluskin Sheff economist Rosenberg. “They quit because the grass is greener somewhere else.” Instead, workers are toughing it out, thankful they have jobs at all. Just 1.7 million workers have quit their job each month this year, down from 2.8 million a month in 2007. The toll of all this shows in consumer confidence, a measure of how good people feel about the economy. According to the Conference Board’s index, it’s at 58.5. Healthy is more like 90. By this point after the past three recessions, it was an average of 87. How gloomy are Americans? A USA Today/Gallup poll eight weeks ago found that 55 percent think the recession continues, even if the experts say it’s been over for two years. That includes the 29 percent who go even further — they say it feels more like a depression.

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Greek Prime Minister Survives Confidence Vote In Parliament

June 22, 2011

ATHENS, Greece — The Greek prime minister survived a crucial confidence vote early Wednesday, keeping alive a government dedicated to averting a debt default that could spark a financial maelstrom around the world. Lawmakers voted 155 to 143 along party lines to back Prime Minister George Papandreou, who now faces a critical vote next week on a massive austerity package that Greece’s international creditors have said must pass by the end of June. He is seeking euro28 billion ($40.24 billion) in budget cuts and new taxes and euro50 billion worth of privatization of public assets. Unless the new measures pass, Greece will not receive the next batch of bailout funds, worth euro12 billion, and will face a disastrous default in July, when it runs out of money. A default by Greece could drag down Greek and European banks and renew fears over the finances of other eurozone countries such as Portugal, Ireland and Spain. Papandreou must still convince all the lawmakers from his Socialist party to support the austerity bill, which has provoked strikes, riots and a slump in his popularity. While all 155 Socialists voted in favor of the confidence motion, several have publicly criticized the austerity measures and at least one has said he will not back them. After the vote, riot police fired tear gas and stun grenades to push back a group of about 200 protesters who had broken off from a main rally of several thousand to throw bottles and other objects at the police lines guarding Parliament. “We will do everything in our power to end the state of insecurity Greek families face and exit this crisis in a safe way. We have a plan, we have prospects,” Papandreou said during a debate before his victory. “Regardless of the panic caused by some, we are on an organized course, helped by the international community with massive loans – the largest every given in the history of our planet.” Papandreou’s government came to the brink of collapse last week as protesters rioted on the streets of Athens, two party rebels resigned their parliamentary seats and talks with the opposition conservatives over forming a pro-austerity coalition government fell apart. In response, he reshuffled his Cabinet, replaced his increasingly unpopular finance minister with a party heavyweight – his main internal rival – and called for the confidence vote. European officials have been pressing opposition leader Antonis Samaras to back the austerity bill, which will run to 2015, two years beyond the current government’s mandate. But Samaras has insisted the thinking behind it is wrong, saying it is keeping Greece in a recession. He has called for a renegotiation of the initial bailout deal. Papandreou’s losing the confidence vote would have likely led to early elections and thrown into question whether Greece could pass the new austerity measures. Expectations he would win lifted world markets earlier in the day. As deputies voted, several thousand protesters gathered outside Parliament chanting “Thieves! thieves!”, shining green laser lights at the parliament building and into the eyes of riot police protecting it. Continuing strikes by electricity company workers objecting to privatization caused a second day of rolling blackouts. “I understand the anger, the fear, and the question whether we will make it,” Papandreou said. “My answer is that we have been making it every day for the last 20 months, with difficulties and mistakes, with a price to pay and with sacrifices but we are succeeding.” Greece is being kept financially afloat by a euro110 billion ($157 billion) package of bailout loans granted by other eurozone countries and the International Monetary Fund last year, and has implemented strict austerity measures in return, cutting public sector salaries and pensions, increasing taxes and overhauling its welfare system. But the country has struggled to meet it targets, missing many, and is now in negotiations for a second bailout, which Papandreou has said will be roughly the same size as the first. Officials from the IMF, European Commission and European Central Bank who have been overseeing Greece’s reforms were in Athens Wednesday to discuss the new austerity measures. On Tuesday the new finance minister, Evangelos Venizelos, promised that parliament will pass the unpopular austerity package by the end of June. “We must follow this course to save the country,” Venizelos said. “Our European partners … face us with distrust,” he said. “This is an atmosphere that we have to change.” Papandreou’s popularity has been hammered by the latest austerity measures, with an opinion poll published Tuesday giving the Socialists a 20.1 percent approval rating. Rival conservatives fared marginally better, at 21 percent, in the GPO survey for private Mega television of 1,000 adults. No margin of error was given. ____ Menelaos Hadjicostis, Demetris Nellas and AP photographers contributed to this report.

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Obama’s New Message: Welcome The Foreign Boss

June 21, 2011

Faced with stubbornly high unemployment and a steady drip of dispiriting news about the economy, the Obama administration has embraced a new strategy to try to generate jobs at home (or at least make it seem like that’s what’s happening): Invite the rest of the world to show up with business plans and paychecks. The President on Friday issued a formal declaration affirming his administration’s welcoming posture toward investment from abroad, what seemed a clear bid for more of that money. “My Administration is committed to ensuring that the United States continues to be the most attractive place for businesses to locate, invest, grow, and create jobs,” the President said in a written statement . We encourage and support business investment from sources both at home and abroad. Investments by foreign-domiciled companies and investors create well-paid jobs, contribute to economic growth, boost productivity and support American communities.” That statement followed a press briefing earlier in the day with Austan Goolsbee, chairman of the President’s Council of Economic Advisers, who reported that foreign direct investment into the United States surged by 49 percent last year compared to 2009, reaching $228 billion. Both Obama and Goolsbee highlighted the benefits of foreign investment as a source of high-paying jobs, noting that overseas firms with operations in the United States now employ 5.7 million Americans. A recent report from the Commerce Department asserted that foreign companies investing in the United States tend to pay wages as much as 30 percent higher than average jobs, a claim that provokes debate among economists. The new push from the White House to extract the benefits of trade is politically risky. It will almost certainly provoke the anger of labor unions, who tend to portray foreign investment as a threat, making American employment ever more susceptible to changes in the global economy. When foreign companies own American plants, domestic paychecks no longer hinge on decisions made only in Washington or Detroit or Los Angeles, but in boardrooms on the other side of oceans, in Frankfurt, London and Seoul. Not lost on those tasked with securing Obama a second term: Union power and campaign money is more important than ever, particularly amid signs that the President is likely to have a difficult time raising the vast stores of Wall Street cash that helped him get to the White House in the first place. But the upside of this new strategy is considerable as well. From a crudely political standpoint, leaning on trade tends to win support from industry — not a bad move as the administration continues to try to shake off its anti-business label. Obama’s affirmation of an open door to foreign investment earned swift praise from the National Association of Manufacturers , a leading industry group whose members are dependent upon exports. As the logic goes, if the White House puts out the welcome mat for foreign investors, that should make it easier for American manufacturers to sell their wares abroad. Indeed, the administration’s emphasis on foreign investment comes just as it is seeking Congressional approval for three long-stalled trade agreements with South Korea, Panama and Colombia. The administration has been demanding that Congress first approve the continuation of a program that assists American workers who lose jobs in the course of expanding trade by preparing them for new careers in faster-growing industries. That is the proper tack: accept the inevitability of globalization and extract the benefits for American companies, while also cushioning affected workers against the painful reality of lost jobs. The administration’s new course is a welcome indication that Democrats are moving away from the politics of blaming foreigners for our troubles — mostly home-cooked troubles, by the way — to a position that emphasizes our core strengths in the global economy. Despite the Great Recession and an economy that has long operated like a giant Ponzi scheme, gorging on unsustainable bubbles in technology, housing and finance, American companies remain eminently capable of producing goods and services of intrinsic value, if they are only given the chance to sell them to the world. Foreign investors accelerate that process, connecting skilled workers in the Rust Belt to global supply chains that need the piece parts of industry that can still be produced efficiently in this country and enabling creative American minds in entertainment, architecture and law to reach far broader marketplaces. The United States has millions of hard-working, skilled hands in need of a paycheck. What we lack is money. Courting foreign investment is a way to get some. We have stumbled in this process of engaging with the world during the past few decades, struggling to make peace with the reality that globalization is not a synonym for Americanization. It is a two-way street. We demonized Japanese purchases of American corporate icons two decades ago. More recently, we blocked the purchase of Unocal by a Chinese company, CNOOC, that was willing to pay a huge premium, ginning up bogus claims of national security problems (though Unocal controlled a minute fraction of the American energy supply). Perversely, Americans mostly remained mute as Japanese and Chinese central bankers bought trillions of dollars worth of our federal savings bonds — a slow, steady process that effectively handed influence over American monetary policy to foreigners. At any moment in time — a panic prompted by rumors that the Saudis are about to unload dollar assets, say, or a sudden hunger for Euro bonds in Beijing — these foreign holders of American debt can click a computer mouse and sell Uncle Sam’s bonds en masse. That threatens enormous consequences, sending the dollar plunging in value and American interest rates skyward. This has always been a low-likelihood scenario and it remains so, yet it has become more likely with every additional purchase of new treasury bonds by foreign players. Not so in the case of American businesses purchased by foreign investors — an auto plant in the south owned by a Korean manufacturer; a German-owned factory in Michigan that makes waste water treatment equipment. These are investments in every sense of the word. They cannot be unloaded quickly or easily, making them far more productive for the American economy than the foreign purchases of our debt. And yet, the embrace of the latest strategy for job creation from a White House sinking in the approval ratings raises a question that has dogged the administration for many months: What took you guys so long? If this is the right move on the merits, why wasn’t it the right move a year ago, when we were still being told that the economy would recover and employers would soon hire anew, if we were merely patient? Why weren’t the trade agreements front and center then, along with advertisements about the merits of working for European and Asian employers? It is a testament to just how badly this administration has botched the employment crisis, how little it has been willing to advocate for job creation, that now that it finally trots out a decent message, it seems cravenly political.

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Walmart: Too Big To Sue

June 21, 2011

As the Supreme Court on Monday derailed claims of gender discrimination by scores of women workers at Walmart stores, the American labor movement absorbed yet another substantial blow. In recent years, class-action lawsuits have been employed by workers — particularly lower-wage workers — as a substitute for the force that collective bargaining once held in an era of broader union representation: By banding together in large-scale lawsuits, workers have effectively organized themselves into unified, powerful voices, gaining leverage in negotiations with management. But as it decreed that the Walmart employees were not entitled to be treated as one class — because they worked in so many different places under myriad bosses — the Supreme Court effectively reinforced the advantages of corporate scale, said legal experts. “Respondents wish to sue for millions of employment decisions at once,” Justice Antonin Scalia wrote in the leading opinion for the court in the 5-4 decision denying claims that the workers amount to a unified class. “Without some glue holding together the alleged reasons for those decisions, it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question.” In short, Walmart successfully immunized itself against legal action aimed at rectifying alleged abuses through the very same feature that makes it so powerful to begin with: its status as the largest retailer on earth, large enough to dictate the terms of commerce, say labor experts. “In a sense the court has said, the banks we have were too big to fail, with Walmart we have too big to sue,” said Ken Jacobs, the chair of the labor Center at University of California-Berkeley. “Basically if you’re saying that the overall corporation is off the hook for what local managers are doing, that removes the incentive for corporate headquarters to really pay attention and to set up structures to make sure you do have the law being followed.” Walmart has denied any wrongdoing and emphasizes that its corporate policy forbids discrimination, encourages diversity and ensures fair treatment. “Walmart has a policy: Their policy is not to discriminate,” said Fatima Goss Graves, vice president for education and employment at the National Women’s Law Center. “Anyone who has been in the modern workplace knows that most employers have policies that say don’t discriminate. What matters is what’s happening in practice.” The Walmart decision landed only three days after workers at a Target store outside New York City failed in their bid to gain the representation of the United Food and Commercial Workers Union. Labor advocates portrayed that effort as a crucial campaign in a larger attempt to organize workers in the growing — and typically low-paying — retail industry. Together, the Supreme Court decision and the Target vote underscored the diminishing tools for employees to seek redress of their grievances and press for greater rewards for their work, say labor advocates. “The class-action lawsuit was really a substitute for unionism,” said Nelson Lichtenstein, a labor historian at the University of California, Santa Barbara who has written two books about Walmart. “By blunting that weapon, the Supreme Court has truly left millions of American workers without recourse.” He mentioned several key examples of workers gaining ground through class-action suits: In 1994, in what was at the time called the largest race discrimination case in civil rights history, Shoney’s Nashville restaurant chain was forced to pay more than $134 million in a class-action suit brought by employees to settle race discrimination charges. In 1996, Microsoft paid $97 million to settle a class-action suit brought by workers who said they had been misclassified as temporary and freelance. In a 1997 class-action suit — the first class-action sexual harassment lawsuit brought in the U.S. — female employees working at a mine in Minnesota accused the company of discrimination and won. Walmart employs 2.1 million workers worldwide and is one of the largest employers in the United States. Last year, the big-box retailer was the world’s largest public corporation by revenue. Class-action suits were previously the best tool a worker had to fight discrimination at work. While individual suits are expensive and can be exceedingly difficult to prove, a class-action vehicle allowed workers to band together to fight the corporate powers that be. The Supreme Court’s ruling doesn’t prevent individuals — or, say, a group of employees at a single store — from suing their employers for discrimination. But low-wage workers employed by large corporations typically lack the resources required to pursue a lawsuit, making the class-action a particularly fruitful avenue. “We’re talking about access to the courts: Very few people other than the super rich can afford the costs of litigation,” said John Coffee, a law professor at Columbia University who specializes in class-action suits. “There are other mechanisms to fight discrimination: unions or a tight job market which gives workers leverage. But the employer has all the leverage in today’s weak job market, and unions aren’t quite the same force they used to be.” The latest blow to the labor movement comes amid broad discontent over the widening gap in American economic fortunes, with the wealthiest people continuing to pull away from the rest of the population. In the wake of the Great Recession, retail wages have remained stagnant, with a median hourly pay of $10.94 according to the labor Department. Meanwhile, corporate profits and CEO compensation have sharply rebounded. Walmart has never been unionized. But the content of the women’s complaints, Lichtenstein said, were once the bread and butter of union collective bargaining agreements: equal pay and equal raises for employees. Beginning in 2001, more than 100 female employees accused Walmart — which pulled in $14.1 billion in profits last year despite lagging U.S. sales — of paying its female employees less than men in equivalent positions and favoring men in promotions at 3,400 U.S. stores since late 1998. “This ruling really ensures the continuation of a kind of slow grinding immiseration of the whole private service sector workforce,” Lichtenstein said. “And it’s it’s very difficult to see any remedy.”

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Peri Pakroo: Systematize One Process at a Time

June 20, 2011

It can seem like such an insurmountable burden to develop business systems, operational policies and procedures — including finalizing them in writing, which is an essential step — but the thing is, you don’t need to do this for every single aspect of your business. Here are some quick tips about how to tackle a little system-building without feeling overwhelmed. Start with your overall personal goals and get clear on how much time you want to spend on the business. The less hours you want to work, the more efficient you’ll have to be, right? Exactly. Next, look at what aspects of the business are taking you the most time — especially things that really seem they shouldn’t take so much time. Focus on these. Set a goal of how many systems you’re going to develop. My advice? Start with one or two. The point is mostly to stop ignoring this task altogether. Start small! Starting with the most time-consuming/inefficient/vexing area, focus on figuring out where things get complicated, duplicated, where errors tend to crop up, or in general things go wack. Talk with others (if any) in your biz to flush out where the problems lurk — make it a long business lunch at a swell restaurant where you can spread out for a few hours. Have wine with lunch! In other words, this doesn’t need to be a dour business meeting. (Bear in mind your partner/spouse might also have insight, so if business conversations are kosher between you two (with some couples, business talk can be bad news), ask her/him for any ideas on improving your process(es).) Come up with some simple procedures (checklists are great) to avoid the problems you identified. For example, if you’re constantly having to call clients on the phone to get information that should have been collected in the first place, develop a 7-point checklist for what information to collect from a new customer, and what information to provide to them. Or if you’re fielding endless questions from your office assistant about bookkeeping issues, write out a step-by-step description of how certain types of expenses should be entered into your bookkeeping software. The point here is to focus on the things that take the most time and/or tend to be “problem” areas of your business. You don’t need an encyclopedic operations manual — not at all! Just a few simple checklists and step-by-step procedures, kept in a slim binder with enough copies for key staff and managers, can make a major difference in how efficiently your business runs. Depending on lots of different factors you might decide to give copies to all staff, or just let the department manager decide how to train staff on the procedures. But Step 1 is coming up with the procedure in the first place. And don’t feel bad if you have your head in the sand about tackling these sorts of system/organizational issues. Tons of small business owners blow this stuff off for years. (But these are the owners who tend to be the ones still working too much, many years into business.) Hopefully by following the advice above and focusing just on one or two areas, the whole concept of “systems” will no longer freak you out. And believe me, once you get a system or two implemented, you’ll start feeling all tingly and freer almost immediately. Quick note: I’m not talking about an employee handbook here, which would include important information and policies about sick leave, vacation, employee reviews, grievance procedures, etc. And with an employee manual, all staff should get a copy, not just key managers. Nolo has great resources on employee handbooks; go to www.nolo.com and search for “employee handbook”.

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U.S. Nuke Regulators Weaken Safety Rules

June 20, 2011

LACEY TOWNSHIP, N.J. — Federal regulators have been working closely with the nuclear power industry to keep the nation’s aging reactors operating within safety standards by repeatedly weakening those standards, or simply failing to enforce them, an investigation by The Associated Press has found. Time after time, officials at the U.S. Nuclear Regulatory Commission have decided that original regulations were too strict, arguing that safety margins could be eased without peril, according to records and interviews. The result? Rising fears that these accommodations by the NRC are significantly undermining safety – and inching the reactors closer to an accident that could harm the public and jeopardize the future of nuclear power in the United States. Examples abound. When valves leaked, more leakage was allowed – up to 20 times the original limit. When rampant cracking caused radioactive leaks from steam generator tubing, an easier test of the tubes was devised, so plants could meet standards. Failed cables. Busted seals. Broken nozzles, clogged screens, cracked concrete, dented containers, corroded metals and rusty underground pipes – all of these and thousands of other problems linked to aging were uncovered in the AP’s yearlong investigation. And all of them could escalate dangers in the event of an accident. Yet despite the many problems linked to aging, not a single official body in government or industry has studied the overall frequency and potential impact on safety of such breakdowns in recent years, even as the NRC has extended the licenses of dozens of reactors. Industry and government officials defend their actions, and insist that no chances are being taken. But the AP investigation found that with billions of dollars and 19 percent of America’s electricity supply at stake, a cozy relationship prevails between the industry and its regulator, the NRC. Records show a recurring pattern: Reactor parts or systems fall out of compliance with the rules. Studies are conducted by the industry and government, and all agree that existing standards are “unnecessarily conservative.” Regulations are loosened, and the reactors are back in compliance. “That’s what they say for everything, whether that’s the case or not,” said Demetrios Basdekas, an engineer retired from the NRC. “Every time you turn around, they say `We have all this built-in conservatism.’” The ongoing crisis at the stricken, decades-old Fukushima Dai-ichi nuclear facility in Japan has focused attention on the safety of plants elsewhere in the world; it prompted the NRC to look at U.S. reactors, and a report is due in July. But the factor of aging goes far beyond the issues posed by the disaster at Fukushima. Commercial nuclear reactors in the United States were designed and licensed for 40 years. When the first ones were being built in the 1960s and 1970s, it was expected that they would be replaced with improved models long before those licenses expired. But that never happened. The 1979 accident at Three Mile Island, massive cost overruns, crushing debt and high interest rates ended new construction proposals for several decades. Instead, 66 of the 104 operating units have been relicensed for 20 more years, mostly with scant public attention. Renewal applications are under review for 16 other reactors. By the standards in place when they were built, these reactors are old and getting older. As of today, 82 reactors are more than 25 years old. The AP found proof that aging reactors have been allowed to run less safely to prolong operations. As equipment has approached or violated safety limits, regulators and reactor operators have loosened or bent the rules. Last year, the NRC weakened the safety margin for acceptable radiation damage to reactor vessels – for a second time. The standard is based on a measurement known as a reactor vessel’s “reference temperature,” which predicts when it will become dangerously brittle and vulnerable to failure. Over the years, many plants have violated or come close to violating the standard. As a result, the minimum standard was relaxed first by raising the reference temperature 50 percent, and then 78 percent above the original – even though a broken vessel could spill its radioactive contents into the environment. “We’ve seen the pattern,” said nuclear safety scientist Dana Powers, who works for Sandia National Laboratories and also sits on an NRC advisory committee. “They’re … trying to get more and more out of these plants.” ___ SHARPENING THE PENCIL The AP collected and analyzed government and industry documents – including some never-before released. The examination looked at both types of reactor designs: pressurized water units that keep radioactivity confined to the reactor building and the less common boiling water types like those at Fukushima, which send radioactive water away from the reactor to drive electricity-generating turbines. Tens of thousands of pages of government and industry studies were examined, along with test results, inspection reports and regulatory policy statements filed over four decades. Interviews were conducted with scores of managers, regulators, engineers, scientists, whistleblowers, activists, and residents living near the reactors, which are located at 65 sites, mostly in the East and Midwest. AP reporting teams toured some of the oldest reactors – the unit here at Oyster Creek, near the Atlantic coast 50 miles east of Philadelphia, and two units at Indian Point, 25 miles north of New York City along the Hudson River. Called “Oyster Creak” by some critics because of its aging problems, this boiling water reactor began running in 1969 and ranks as the country’s oldest operating commercial nuclear power plant. Its license was extended in 2009 until 2029, though utility officials announced in December that they’ll shut the reactor 10 years earlier rather than build state-ordered cooling towers. Applications to extend the lives of pressurized water units 2 and 3 at Indian Point, each more than 36 years old, are under review by the NRC. Unprompted, several nuclear engineers and former regulators used nearly identical terminology to describe how industry and government research has frequently justified loosening safety standards to keep aging reactors within operating rules. They call the approach “sharpening the pencil” or “pencil engineering” – the fudging of calculations and assumptions to yield answers that enable plants with deteriorating conditions to remain in compliance. “Many utilities are doing that sort of thing,” said engineer Richard T. Lahey Jr., who used to design nuclear safety systems for General Electric Co., which makes boiling water reactors. “I think we need nuclear power, but we can’t compromise on safety. I think the vulnerability is on these older plants.” Added Paul Blanch, an engineer who left the industry over safety issues but later returned to work on solving them: “It’s a philosophical position that (federal regulators) take that’s driven by the industry and by the economics: What do we need to do to let those plants continue to operate? They somehow sharpen their pencil to either modify their interpretation of the regulations, or they modify their assumptions in the risk assessment.” In public pronouncements, industry and government say aging is well under control. “I see an effort on the part of this agency to always make sure that we’re doing the right things for safety. I’m not sure that I see a pattern of staff simply doing things because there’s an interest to reduce requirements – that’s certainly not the case,” NRC chairman Gregory Jaczko said in an interview at agency headquarters in Rockville, Md. Neil Wilmshurst, director of plant technology for the industry’s Electric Power Research Institute, acknowledged that the industry and NRC often collaborate on research that supports rule changes. But he maintained that there’s “no kind of misplaced alliance … to get the right answer.” Yet agency staff, plant operators, and consultants paint a different picture in little-known reports, where evidence of industry-wide problems is striking: _The AP reviewed 226 preliminary notifications – alerts on emerging safety problems – issued by the NRC since 2005. Wear and tear in the form of clogged lines, cracked parts, leaky seals, rust and other deterioration contributed to at least 26 alerts over the past six years. Other notifications lack detail, but aging also was a probable factor in 113 additional alerts. That would constitute up to 62 percent in all. For example, the 39-year-old Palisades reactor in Michigan shut Jan. 22 when an electrical cable failed, a fuse blew, and a valve stuck shut, expelling steam with low levels of radioactive tritium into the air outside. And a one-inch crack in a valve weld aborted a restart in February at the LaSalle site west of Chicago. _One 2008 NRC report blamed 70 percent of potentially serious safety problems on “degraded conditions.” Some involve human factors, but many stem from equipment wear, including cracked nozzles, loose paint, electrical problems, or offline cooling components. _Confronted with worn parts that need maintenance, the industry has repeatedly requested – and regulators have often allowed – inspections and repairs to be delayed for months until scheduled refueling outages. Again and again, problems worsened before they were fixed. Postponed inspections inside a steam generator at Indian Point allowed tubing to burst, leading to a radioactive release in 2000. Two years later, cracking was allowed to grow so bad in nozzles on the reactor vessel at the Davis-Besse plant near Toledo, Ohio, that it came within two months of a possible breach, the NRC acknowledged in a report. A hole in the vessel could release radiation into the environment, yet inspections failed to catch the same problem on the replacement vessel head until more nozzles were found to be cracked last year. ___ TIME CRUMBLES THINGS Nuclear plants are fundamentally no more immune to the incremental abuses of time than our cars or homes: Metals grow weak and rusty, concrete crumbles, paint peels, crud accumulates. Big components like 17-story-tall concrete containment buildings or 800-ton reactor vessels are all but impossible to replace. Smaller parts and systems can be swapped, but still pose risks as a result of weak maintenance and lax regulation or hard-to-predict failures. Even when things are fixed or replaced, the same parts or others nearby often fail later. Even mundane deterioration at a reactor can carry harsh consequences. For example, peeling paint and debris can be swept toward pumps that circulate cooling water in a reactor accident. A properly functioning containment building is needed to create air pressure that helps clear those pumps. The fact is, a containment building could fail in a severe accident. Yet the NRC has allowed operators to make safety calculations that assume containment buildings will hold. In a 2009 letter, Mario V. Bonaca, then-chairman of the NRC’s Advisory Committee on Reactor Safeguards, warned that this approach represents “a decrease in the safety margin” and makes a fuel-melting accident more likely. At Fukushima, hydrogen explosions blew apart two of six containment buildings, allowing radiation to escape from overheated fuel in storage pools. Many photos in NRC archives – some released in response to AP requests under the federal Freedom of Information Act – show rust accumulated in a thick crust or paint peeling in long sheets on untended equipment at nuclear plants. Other breakdowns can’t be observed or predicted, even with sophisticated analytic methods – especially for buried, hidden or hard-to-reach parts. Industry and government reports are packed with troubling evidence of unrelenting wear – and repeated regulatory compromises. Four areas stand out: BRITTLE VESSELS: For years, operators have rearranged fuel rods to limit gradual radiation damage to the steel vessels protecting the core and to keep them strong enough to meet safety standards. It hasn’t worked well enough. Even with last year’s weakening of the safety margins, engineers and metal scientists say some plants may be forced to close over these concerns before their licenses run out – unless, of course, new compromises with regulations are made. But the stakes are high: A vessel damaged by radiation becomes brittle and prone to cracking in certain accidents at pressurized water reactors, potentially releasing its radioactive contents into the environment. LEAKY VALVES: Operators have repeatedly violated leakage standards for valves designed to bottle up radioactive steam in the event of earthquakes and other accidents at boiling water reactors. Many plants have found they could not adhere to the general standard allowing each of these parts – known as main steam isolation valves – to leak at a rate of no more than 11.5 cubic feet per hour. In 1999, the NRC decided to permit individual plants to seek amendments of up to 200 cubic feet per hour for all four steam valves combined. But plants keep violating even those higher limits. For example, in 2007, Hatch Unit 2, in Baxley, Ga., reported combined leakage of 574 cubic feet per hour. CRACKED TUBING: The industry has long known of cracking in steel alloy tubing originally used in the steam generators of pressurized water reactors. Ruptures were rampant in these tubes containing radioactive coolant; in 1993 alone, there were seven. Even today, as many as 18 reactors are still running on old generators. Problems can arise even in a newer metal alloy, according to a report of a 2008 industry-government workshop. CORRODED PIPING: Nuclear operators have failed to stop an epidemic of leaks in pipes and other underground equipment in damp settings. The country’s nuclear sites have suffered more than 400 accidental radioactive leaks during their history, the activist Union of Concerned Scientists reported in September. Plant operators have been drilling monitoring wells and patching hidden or buried piping and other equipment for several years to control an escalating outbreak. Here, too, they have failed. Between 2000 and 2009, the annual number of leaks from underground piping shot up fivefold, according to an internal industry document obtained and analyzed by the AP. ___ CONCERNS OF LONG STANDING Even as they reassured the public, regulators have been worrying about aging reactors since at least the 1980s, when the first ones were entering only their second decade of operation. A 1984 report for the NRC blamed wear, corrosion, crud and fatigue for more than a third of 3,098 failures of parts or systems within the first 12 years of industry operations; the authors believed the number was actually much higher. A decade later, in 1994, the NRC reported to Congress that the critical shrouds lining reactor cores were cracked at a minimum of 11 units, including five with extensive damage. The NRC ordered more aggressive maintenance, but an agency report last year said cracking of internal core components – spurred by radiation – remains “a major concern” in boiling water reactors. A 1995 study by Oak Ridge National Laboratory covering a seven-year period found that aging contributed to 19 percent of scenarios that could have ended in severe accidents. In 2001, the Union of Concerned Scientists, which does not oppose nuclear power, told Congress that aging problems had shut reactors eight times within 13 months. And an NRC presentation for an international workshop that same year warned of escalating wear at reactor buildings meant to bottle up radiation during accidents. A total of 66 cases of damage were cited in the presentation, with corrosion reported at a quarter of all containment buildings. In at least two cases – at the two-reactor North Anna site 40 miles northwest of Richmond, Va., and the two-unit Brunswick facility near Wilmington, N.C. – steel containment liners designed to shield the public had rusted through. And in 2009, a one-third-inch hole was discovered in a liner at Beaver Valley Unit 1 in Shippingport, Pa. Long-standing, unresolved problems persist with electrical cables, too. In a 1993 report labeled “official use only,” an NRC staffer warned that electrical parts throughout plants were subject to dangerous age-related breakdowns unforeseen by the agency. Almost a fifth of cables failed in testing that simulated the effects of 40 years of wear. The report warned that as a result, reactor core damage could occur much more often than expected. Fifteen years later, the problem appeared to have worsened. An NRC report warned in 2008 that rising numbers of electrical cables are failing with age, prompting temporary shutdowns and degrading safety. Agency staff tallied 269 known failures over the life of the industry. Two industry-funded reports obtained by the AP said that managers and regulators have worried increasingly about the reliability of sometimes wet, hard-to-reach underground cables over the past five-to-10 years. One of the reports last year acknowledged many electrical-related aging failures at plants around the country. “Multiple cable circuits may fail when called on to perform functions affecting safety,” the report warned. ___ EATEN AWAY FROM WITHIN Few aging problems have been more challenging than chemical corrosion from within. In one of the industry’s worst accidents, a corroded pipe burst at Virginia’s Surry 2 reactor in 1986 and showered workers with scalding steam, killing four. In summer 2001, the NRC was confronted with a new problem: Corrosive chemicals were cracking nozzles on reactors. But the NRC let operators delay inspections to coincide with scheduled outages. Inspection finally took place in February 2002 at the Davis-Besse unit in Ohio. What workers found shocked the industry. They discovered extensive cracking and a place where acidic boron had spurted from the reactor and eaten a gouge as big as a football. When the problem was found, just a fraction of an inch of inner lining remained. An NRC analysis determined that the vessel head could have burst within two months – what former NRC Commissioner Peter Bradford has called a “near rupture” which could have released large amounts of radiation into the environment. In 2001-3 alone, at least 10 plants developed these cracks, according to an NRC analysis. Industry defenders blame human failings at Davis-Besse. Owner FirstEnergy Corp. paid a $28 million fine, and courts convicted two plant employees of hiding the deterioration. NRC spokesman Scott Burnell declared that the agency “learned from the incident and improved resident inspector training and knowledge-sharing to ensure that such a situation is never repeated.” Yet on the same March day last year that Burnell’s comments were released, Davis-Besse workers again found dried boron on the nozzles of a replacement vessel head, indicating more leaks. Inspecting further, they again found cracks in 24 of 69 nozzles. “We were not expecting this issue,” said plant spokesman Todd Schneider. In August, the operator applied for a 20-year license extension. Under pressure from the NRC, the company has agreed to replace the replacement head in October. As far back as the 1990s, the industry and NRC also were well aware that the steel-alloy tubing in many steam generators was subject to chemical corrosion. It could crack over time, releasing radioactive gases that can bypass the containment building. If too much spurts out, there may be too little water to cool down the reactor, prompting a core melt. In 1993, NRC personnel reported seven outright ruptures inside the generators, several forced outages per year, and some complete replacements. Personnel at the Catawba plant near Charlotte, N.C., found more than 8,000 corroded tubes – more than half its total. For plants with their original generators, “there is no end in sight to the steam generator tube degradation problems,” a top agency manager declared. NRC staffers warned: “Crack depth is difficult to measure reliably and the crack growth rate is difficult to determine.” Yet no broad order was issued for shutdowns to inspect generators. Instead, the staff began to talk to operators about how to deal with the standard that no cracks could go deeper than 40 percent through the tube wall. In 1995, the NRC staff put out alternative criteria that let reactors keep running if they could reach positive results with remote checks known as “eddy-currents tests.” The new test standard gave more breathing room to reactors. According to a 2001 report by the Advisory Committee on Reactor Safeguards, the staff “acknowledged that there would be some possibility that cracks of objectionable depth might be overlooked and left in the steam generator for an additional operating cycle.” The alternative, the report said, would be to repair or remove potentially many tubes from service. NRC engineer Joe Hopenfeld, who had worked previously in the industry, challenged this approach at the time from within the agency. He warned that multiple ruptures in corroded tubing could release radiation. The NRC said radiation would be confined. Hopenfeld now says this conclusion wasn’t based on solid analysis but “wishful thinking” and research meant to reach a certain conclusion – another instance of “sharpening the pencil.” “It was a hard problem to solve, and they did not want to say it was a problem, because if they really said it was a problem, they would have to shut down a lot of reactors.” ___ AGE IS NO ISSUE, SAYS INDUSTRY With financial pressures mounting in the 1990s to extend the life of aging reactors, new NRC calculations using something called the “Master Curve” put questionable reactor vessels back into the safe zone. A 1999 NRC review of the Master Curve, used to analyze metal toughness, noted that energy deregulation had put financial pressure on nuclear plants. It went on: “So utility executives are considering new operational scenarios, some of which were unheard of as little as five years ago: extending the licensed life of the plant beyond 40 years.” As a result, it said, the industry and the NRC were considering “refinements” of embrittlement calculations “with an eye to reducing known over-conservatisms.” Asked about references to economic pressures, NRC spokesman Burnell said motivations are irrelevant if a technology works. Former NRC commissioner Peter Lyons said, “There certainly is plenty of research … to support a relaxation of the conservativisms that had been built in before. I don’t see that as decreasing safety. I see that as an appropriate standard.” Though some parts are too big and too expensive to replace, industry defenders also point out that many others are routinely replaced over the years. Tony Pietrangelo, chief nuclear officer of the industry’s Nuclear Energy Institute, acknowledges that you’d expect to see a growing failure rate at some point – “if we didn’t replace and do consistent maintenance.” In a sense, then, supporters of aging nukes say an old reactor is essentially a collection of new parts. “When a plant gets to be 40 years old, about the only thing that’s 40 years old is the ink on the license,” said NRC chief spokesman Eliot Brenner. “Most, if not all of the major components, will have been changed out.” Oyster Creek spokesman David Benson said the reactor “is as safe today as when it was built.” Yet plant officials have been trying to arrest rust on its 100-foot-high, radiation-blocking steel drywell for decades. The problem was declared solved long ago, but a rust patch was found again in late 2008. Benson said the new rust was only the size of a dime, but acknowledged there was “some indication of water getting in.” In an effort to meet safety standards, aging reactors have been forced to come up with backfit on top of backfit. As Ivan Selin, a retired NRC chairman, put it: “It’s as if we were all driving Model T’s today and trying to bring them up to current mileage standards.” For example, the state of New Jersey – not the NRC – had ordered Oyster Creek to build cooling towers to protect sea life in nearby Barnegat Bay. Owner Exelon Corp. said that would cost about $750 million and force it to close the reactor – 20-year license extension notwithstanding. Even with the announcement to close in 2019, Oyster Creek will have been in operation for 50 years. Many of the safety changes have been justified by something called “risk-informed” analysis, which the industry has employed widely since the 1990s: Regulators set aside a strict check list applied to all systems and focus instead on features deemed to carry the highest risk. But one flaw of risk-informed analysis is that it doesn’t explicitly account for age. An older reactor is not viewed as inherently more unpredictable than a younger one. Ed Lyman, a physicist with the Union of Concerned Scientists, says risk-informed analysis has usually served “to weaken regulations, rather than strengthen them.” Even without the right research, the NRC has long reserved legal wiggle room to enforce procedures, rules and standards as it sees fit. A 2008 position paper by the industry group EPRI said the approach has brought “a more tractable enforcement process and a significant reduction in the number of cited violations.” But some safety experts call it “tombstone regulation,” implying that problems fester until something goes very wrong. “Until there are tombstones, they don’t regulate,” said Blanch, the longtime industry engineer who became a whistleblower. Barry Bendar, a database administrator who lives one mile from Oyster Creek, said representatives of Exelon were asked at a public meeting in 2009 if the plant had a specific life span. “Their answer was, `No, we can fix it, we can replace, we can patch,’” said Bendar. “To me, everything reaches an end of its life span.” ___ The AP National Investigative Team can be reached at investigate(at)ap.org

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China Sees No End To Rule Of Communist Party

June 9, 2011

BEIJING (Reuters) – China’s Communist Party sees no reason why it cannot stay in power indefinitely, having made the nation into the envy of the world with its economic success, one of the Party’s top official historians said on Thursday. Li Zhongjie, a deputy head of the Party’s History Research Center, made it clear that China will use the impending 90th anniversary of the Party’s founding as a time for rousing pride, rather than reflection on a history that has spanned war, revolution, mass famine and deadly purges. Under the Party’s rule, China had made leapfrog developments, Li told a news conference, and he said it was foolish to expect any party to want to give up power. “Over the last 90 years, especially the last 30 years of reform and opening up, we have made major achievements. This is something the world basically recognizes,” Li said, ahead of the Party’s anniversary of its 1921 founding on July 1. “I could ask, ‘Mr. Obama, does your Democratic Party still want to contest the election’? Do you still want to stay in power? They would think that a weird question. Of course our Party hopes to remain in power. “…Objectively, the issue is rather: how is your rule, and how effective is it? Is it welcomed by the people? Are you running the country well, or into the ground? The Communist Party has built China to what it is today. Many countries in the world are extremely envious. So why can’t we carry on? It’s a very simple question.” His impassioned answer drew applause from the audience, made up mainly of state media and Chinese academics, with a smattering of foreign reporters. While the Party’s rule has seen China become the world’s second-largest economy, lift millions out of abject poverty and put men in space, critics say it has come at the expense of individual freedoms, with the Party brooking no dissent. Under the late Mao Zedong, China went through disasters such as the 1958 Great Leap Forward campaign to catapult it to prosperity, but ended in a three-year famine in which an estimated 30 million people starved to death. “Objectively speaking, Comrade Mao made some mistakes later in his life, which created major damage,” Li said. “But looking at Mao’s whole life, his achievements should be put first, and his mistakes second … He established ‘New China’ and socialism’s basic system. “We should ‘seek truth from the facts’ in analyzing and researching the lessons from Mao’s mistakes,” he added. “What Mao hoped to do, we should ensure we do even better.” Pressed after the news conference on whether China would one day set up a public memorial to those who suffered during the Great Leap Forward, or the chaos of the 1966-76 Cultural Revolution, Li answered cryptically: “We are making overall plans. It’s being considered.” But there would be no atonement for the bloody crackdown on pro-democracy demonstrators around Tiananmen Square in 1989, which the Party these days labels a “political disturbance.” “We have already reached a solemn conclusion,” Li said. “There’s really nothing more to say.” (Editing by Nick Macfie)

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$969m top bid for Boon Lay Way site « mypropertyblog

June 3, 2011

The third highest bid of $785.1 million or $820 psf ppr came from a Keppel Land-led joint venture together with Perennial Real Estate . Other participants in the tender were Frasers Centrepoint, … CMA, CMT and CapitaLand’s wholly-owned unit, CapitaLand Commercial , submitted their bid through JG Trustee and JG2 Trustee in a joint venture . CMA holds a 50 per cent stake in the venture, CMT has a 30 per cent stake, and CapitaLand owns a 20 per cent stake. …

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Angel Gurría: Déjà Vu All Over Again?

May 25, 2011

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

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As France’s Lagarde Launches IMF Bid, China, Criticism Surfaces

May 25, 2011

PARIS/WASHINGTON (Jean-Baptiste Vey and Lesley Wroughton) – France’s Christine Lagarde has entered the race to head the IMF despite anger in big emerging economies over Europe’s “obsolete” lock on the job. France’s finance minister announced her candidacy on Wednesday, the eve of a G8 summit, after securing the unanimous backing of the 27-nation European Union and, diplomats said, support from the United States and China. “It is an immense challenge which I approach with humility and in the hope of achieving the broadest possible consensus,” Lagarde told a Paris news conference. The 55-year-old former corporate lawyer, who speaks fluent English, has won plaudits for her deft chairing of the G20 finance ministers and communications skills. But unlike Dominique Strauss-Kahn, who resigned last week after being charged with attempted rape, she is not an economist and may struggle to match his thought leadership over the management of the world economy. Brazil, Russia, India, China and South Africa criticized EU officials in a joint statement for suggesting the next International Monetary Fund head should be a European, a convention that dates back to the founding of the global lender at the end of the Second World War. However, the countries known as the BRICs failed to unite behind a common alternative candidate, leaving the way clear for Lagarde unless she slips on a pending French legal case. Diplomats said the complaint was mostly aimed at securing a commitment from developed countries that nationality will no longer be a covert criterion for selecting future IMF chiefs. In a nod to the emerging nations’ concerns, Lagarde said she would work for “greater representativity and greater flexibility” at the IMF if elected. BRICS AGGRIEVED In the first joint statement issued by their directors at the Fund, the BRICs said the choice of who heads the IMF should be based on competence, not nationality. They called for “abandoning the obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe.” Lagarde said she was running as a candidate to serve all IMF members, not just Europe, although she noted her experience and good relations with European officials would be an advantage in steering the IMF’s role in the bloc’s debt crisis. “Being European shouldn’t be a plus, but it shouldn’t be a minus either,” Lagarde said. Hours before the statement was issued in Washington, France’s government said China would back Lagarde. The Chinese Foreign Ministry declined comment. Some emerging market government officials say privately that although they are fed up with advanced economies controlling the selection process, they are not in a position to put forward a challenger who could stand up to Lagarde. Mexico has nominated its central bank chief for the job and he said some countries had welcomed his decision to run. South Africa and Kazakhstan may put forward their own candidates. Under a long-standing agreement between the United States and Europe, the top job at the IMF goes to a European while an American leads its sister organization, the World Bank. The United States also fills the number two position at the IMF. European diplomats said Washington had asked the French government about the legal case hanging over Lagarde, in which she faces accusations of abusing her authority. The Court of Justice of the Republic, a special court created to try ministers for alleged offences committed while in office, is examining the procedure followed in awarding the 285 million euro settlement to Bernard Tapie, a convicted ex-minister who backed Sarkozy’s 2007 election campaign. French officials have told other governments privately the case will not be a show-stopper, the diplomats said. Lagarde said her conscience was clear. “I have every confidence in this procedure because my conscience is perfectly clear,” she said. “I acted in the interest of the state and in respect of the law.” U.S. BACKS EUROPEAN The EU and the United States, which sources in Washington have said will back a European, have enough joint voting power to decide who leads the IMF. Securing support from some emerging economies would defuse a potentially bitter row over the decision though. In April 2009, the Group of 20 leading nations endorsed “an open, transparent and merit-based selection process” for heads of the global institutions. France, which presides over the G20 this year, has made an effort to work with Beijing on key issues for developing nations like global monetary reform and commodity market speculation. Last week, the head of China’s central bank, Zhou Xiaochuan, said the IMF’s leadership should reflect the growing stature of emerging economies. But he stopped short of saying its new boss should be from an emerging economy. Wu Qing, a researcher with the Development Research Center government think tank in Beijing, said it was plausible that China would support Lagarde as there weren’t many qualified candidates from China or Asia in general. The IMF’s board will draw up a shortlist of three candidates and has a June 30 deadline for picking a successor. (Additional reporting by Julien Toyer in Paris, Jiang Yan in Beijing, Leigh Jones and Michelle Nichols in New York; Writing by Emily Kaiser and Paul Taylor) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Obama Heading To Europe

May 22, 2011

WASHINGTON — Weaving together strands of pomp, policy and summitry, President Barack Obama’s weeklong European tour is all about tending to old friends in the Western alliance and securing their help with daunting challenges, from the political upheaval in the Mideast and North Africa to the protracted war in Afghanistan. Obama’s eighth trip to Europe as president, with a quick-moving itinerary that dips into four countries in six days, unfolds against the backdrop of the NATO-led bombing campaign in Libya and stubborn economic weakness on both sides of the Atlantic. A priority for the president and his allies will be to more clearly define the West’s role in promoting stability and democracy in the Arab world without being overly meddlesome and within tight financial limitations. Obama, who departs late Sunday, will visit Ireland, England, France and Poland. Each is weathering an economic downturn that has forced European nations to adopt strict austerity measures. The U.S. has pushed its national debt to the limit, and Obama and congressional Republicans are in contentious talks about how steeply to cut spending. But never mind all that, at least for a moment. A highlight of Obama’s opening stop in Ireland will be a feel-good pilgrimage to the hamlet of Moneygall, where America’s first black president will explore his Irish – yes, Irish – roots, and most likely raise a pint. It turns out that Falmouth Kearney, who immigrated to the United States in 1850 at the age of 19, is the great great great grandfather of Obama on his white, Kansas-born mother’s side. Obama, whose father was born in Kenya, will connect in Moneygall with distant relatives from the Irish branch of his family tree. Michael Collins, the Irish ambassador to the United States, says the president’s visit will be “a golden moment” for a country that’s been on the economic ropes after its boom time. The visit is sure to play well at home for Obama – make that O’bama – as he heads into re-election season after being pushed to great lengths simply to prove he was born on U.S. soil. After his day in Ireland, Obama spends two in England, where he and first lady Michelle Obama will be treated to all the pomp and pageantry that the monarchy can muster for the president’s first European state visit. The Obamas even get a Buckingham Palace sleepover. Though the United States and Britain remain the closest of allies, the relationship has been strained by recent events, including last year’s oil spill in the Gulf of Mexico triggered by the explosion of an oil rig owned by British-based BP. Britain’s unilateral announcement of a timetable for withdrawal of its 10,000 troops from Afghanistan also rankled the United States. Heather Conley, director of the Europe program at the private Center for Strategic and International Studies, said Obama’s stop in Britain could help “put the `special’ back into the U.S.-U.K. special relationship.” Obama on Wednesday will become the first American president to speak to members of Parliament from the historic Palace of Westminster. European leaders are eager to see how president frames the U.S.-European partnership at a time when Obama has prodded Western allies to shoulder greater responsibility in areas such as Afghanistan and Libya. A NATO-led mission is working to protect civilians and assist the rebel fighters trying to oust Libyan leader Moammar Gadhafi. Former Liberal Democrat leader Menzies Campbell, a member of the House of Commons foreign affairs committee, said British politicians would be listening keenly to what Obama had to say about Afghanistan when he addresses both houses of Parliament on Wednesday. “The death of Osama bin Laden can only encourage those with the ear of the president to proceed more quickly with the draw-down of American forces in Afghanistan,” Campbell said. “MPs and peers alike will be listening closely to what he says about America’s intentions for Afghanistan.” In private, Obama and British Prime Minister David Cameron will plunge into the details of a host of international challenges on which the U.S. and Britain have worked together: Afghanistan, Libya, counterterrorism, the global economy and more. Both leaders then scoot to a French summit of the Group of Eight industrialized nations, where the president hopes to build on momentum from his speech days ago about how best to promote stability and democracy in the Middle East. Obama has called on the World Bank and International Monetary Fund to present the G-8 with an ambitious plan to help Egypt and Tunisia, in particular, recover from the disruptions caused by their democratic revolutions and prepare for elections later this year. The U.S. and its allies don’t want those elections to occur against a backdrop of economic chaos that could increase support for extremists. But there’s no expectation of a big aid measure emerging from the G-8. Rather, the countries in the region will present their plans for democratization and stabilizing their economies, and the G-8 will consider ways to help. Although not on the official agenda, the G-8 leaders are sure to be talking about future leadership of the IMF now that former chief Dominique Strauss-Kahn has resigned after being arrested on attempted rape charges in New York. European leaders are anxious to put another European in that position while emerging economies would like to see a process that is open to someone from the developing world. U.S. officials have said they favor an open process, without being more specific. Obama’s visit to Europe comes a little more than a month before the U.S. is scheduled to start its gradual troop withdrawal in Afghanistan. The president has said the initial drawdown will be significant, but it’s unclear how many specific answers he’ll have for European leaders. Britain and France, in particular, are looking for details on the U.S. withdrawal timetable for signs of how NATO will move from combat missions to a training role by the end of 2014. The Afghan mission is deeply unpopular in many European countries, and political pressure has led some leaders to set timetables for their withdrawal. The British are planning to draw down 400 of their nearly 10,000 troops this year, with all British troops out by the end of 2014. France, which has 4,000 troops in Afghanistan, has said it is considering speeding up its withdrawal now that al-Qaida leader Osama bin Laden is dead. During his two-day stay in Deauville, France, Obama will take time for one-on-one meetings on the side of the G-8 with several world leaders, including Russian President Dmitry Medvedev and Japanese Prime Minister Naoto Kan. The U.S.-Russia relationship, though much improved since the Bush administration, remains complex. Medvedev has spoken out strongly in recent weeks against U.S. plans to plant missile interceptors in Romania as part of a U.S. shield over Europe, saying that could threaten Russia. He’s warned that Washington’s failure to cooperate with Russia on the missile shield could lead to a new arms race, and also threatened to pull out of the New START nuclear treaty with the U.S. if Russia feels at risk. Obama’s meeting with Kan would be his first with the Japanese prime minister since the March tsunami and earthquake that triggered a nuclear crisis in Japan. The U.S. has sent military and humanitarian assistance to Japan, as well as nuclear experts, to help the country recover from the disaster. Obama’s visit to Poland is emblematic of a growing front in the administration’s engagement in Europe, as the U.S. expands its economic and security relationship with Central European nations. Robert Kupiecki, Poland’s ambassador to the United States, says Central Europe’s experiences in moving toward democracy offer many lessons that are “directly applicable” in the Middle East and North Africa, and that Poles and others in the region are anxious to help the democratic movement spread. Lech Walesa, the former Polish president who founded the Solidarity freedom movement, has visited Tunisia, and Walesa will meet with Obama in Poland to talk about the experience. Obama can point to Poland, with its stable government and growing economy, as a benefactor of democracy’s virtues.

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RICS Survey Reveals Increasing Investor Sentiment

May 12, 2011

Investment is picking up around the world and emerging economies are catching up with Brazil, Russia, India, and China, or BRIC economies, according to the Royal Inst read more

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Dominique Desruelle: BRICs and Mortar — Building Growth in Low-Income Countries

May 9, 2011

The so-called BRIC nations–Brazil, Russia, India and China–could be a game changer for how low-income countries build their economic futures. The growing economic and financial reach of the BRICs has seen them become a new source of growth for low-income countries (LICs). LIC-BRIC ties–particularly trade, investment and development financing–have surged over the past decade. And the relationship could take on even more prominence after the global financial crisis, with stronger growth in the BRICs and their demand for LIC exports helping to buffer against sluggish demand in most advanced economies. The potential benefits from LIC-BRIC ties are enormous. But, so too are challenges and risks that must be managed if the LIC-BRIC relationship to support durable and balanced growth in LICs. Unlocking the new sources of growth and investment financing–particularly given the massive investment needs of LICs –raises a raft of other issues, including: how to finance investment without taking on too much debt; how to attract investment without sacrificing too much fiscal revenue through costly tax incentives ; and how to avoid resource dependency in the long run. Most of these challenges and risks are not new, but they deserve renewed attention. In that spirit, the IMF recently sponsored a panel discussion to explore these issues, drawing on perspectives from LIC and BRIC policymakers, and development experts. Strengthened ties have certainly boosted exports, helping to stimulate growth in LICs and contribute to their resilience during the global economic crisis. But, over the longer haul, what will matter is whether BRICs will be a positive force in making LICs more dynamic and productive through structural change–where economies shift from, say, agriculture to labor-intensive manufactures having a larger role. So, the extent to which BRICs could be the building blocks for lasting growth in LICs may still be an open question. But, we took away from the panel discussion six essential factors that will help LICs lay the groundwork to benefit from this important relationship. Current LIC-BRIC ties may pose a risk to LICs becoming too reliant on raw materials–a commodity trap–but LICs can also learn from successful BRICs. –On one hand, India and China’s competitiveness in manufacturing and their large demand for natural resources may push up the relative price of commodities undermining incentives for LICs to shift into manufacturing. –At the same time, Brazil and Russia (as well as advanced economies, such as Australia and Canada) have benefited from natural resources as a lynchpin for growth. Boosting manufacturing is central to stimulating growth. Here too there are mixed views as to whether or not BRIC development financing has helped transfer technology and improved labor skills particularly in manufacturing. Greater provision of trade preferences (including beyond commodities) could help ensure that the relationship is mutually beneficial and de-bunk the notion that BRICs are simply “looting” the LICs for their natural resources. Concessional financing can provide a good jump start, but commercial financing will be vital to sustained growth. BRIC development financing is complementary to traditional donor support, but can also have important knock-on effects. China’s experience points to two possible advantages: commercially-oriented development financing is less constrained by the size of the flows, and provides incentives for competition, efficiency and permanent interest in ensuring that the project remains viable. LICs can learn from the BRICs in how they balance these various challenges. Countries need a coherent strategy for scaling up infrastructure and development that maximizes their growth potential. China, for instance, has had tremendous success in coherent investment planning, constantly reassessing infrastructure gaps and reorienting resources. Multilateral institutions and donors can play an important role in complementing the LIC-BRIC relationship , through: analysis and policy advice to support macroeconomic stability and debt sustainability; and capacity building and facilitating improvements in the investment environment to boost LICs’ absorptive capacity. Greater transparency of BRIC financing, particularly development financing, is needed. Perhaps the biggest gap is the lack of official data on development financing by China. It would be helpful for China to publish this data. While it’s difficult to do justice to the richness of the panel discussions, we hope it can foster an ongoing dialogue about how LICs can–particularly in building their relationships with BRICs–increase the volume and quality of investment, and associated financing, in a sustainable way. From iMFdirect blog

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Global Warming Causing Food Prices To Rise

May 5, 2011

Over the last few decades, global warming has hindered the world’s food production causing prices to rise, new research reveals. The study, which NewScientist says is the first “to demonstrate a link between global crop yields and climate change,” not only tracks the link between rising temperatures and its effect on food production, but highlights the importance of finding new ways to adapt farming methods to the changing climate. From The Guardian : The drop in the productivity of crop plants around the world was not caused by changes in rainfall but was because higher temperatures can cause dehydration, prevent pollination and lead to slowed photosynthesis. According to David Lobell, a Stanford University scientist and an author of the report, “This is tens of billions of dollars a year in lost productivity because of warming,” The Washington Post reports. To conduct the study, Lobell and his colleagues gathered data dating from 1980 to 2008 for growing regions around the world, including their temperature, rain fall, and crop production. Then, they compared annual yields of four staple crops — corn, wheat, rice and soy beans — from every country in the world to what production would have been given precipitation and temperature remained the same since 1980, calculating the predictions with statistical models. Corn yields were 5.5 percent lower than the predictions showed they would have been if the environmental factors remained constant, and wheat yields were 3.8 percent lower. Wheat production in Russia showed the biggest drop, with yields 15 percent lower than what they could’ve been. Soy beans and rice were relatively unaffected due to being grown in areas not experiencing as much warming and thriving in higher temperatures, respectively. “Agriculture as it exists today evolved over 11,000 years of reasonably stable climate, but that climate system is no more,” Lester Brown, president of the Earth Policy Institute, told The Guardian . Not everyone agrees with the findings. Ken Cassman, a professor of systems agronomy at the University of Nebraska, told The Washington Post , “It’s not clear how well these analyses are capturing how well farmers can respond, and have been responding, to changing temperatures.” Kevin Trenberth of the National Center for Atmospheric Research in Colorado told NewScientist that the results were undermined by using a purely statistical model. Food prices have reached a record high this year , fueling unrest in regions like North Africa and the Middle East. A recent study presented at 2010′s UN climate summit in Cancun predicted that global warming could double grain prices by 2050 and leave millions more malnourished. This latest research, “Climate Trends and Global Crop Production Since 1980,” was published in Thursday’s issue of the journal Science .

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Total to increase Russia output 30-fold

April 25, 2011

Total to increase Russia output 30-fold

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Gordon Brown: Global ‘Mini-Lateralism’ Will Get Us Nowhere

April 22, 2011

Two years ago the formal creation of the G20 helped prevent the world recession from becoming a world depression. World leaders agreed to a one trillion dollar underpinning of the world economy, and strengthened the World Bank, the IMF and the World Trade Organization. In its concluding statement, however, the G20 promised more: that it would work towards implementing new global standards and regulations across the world’s banking system and that it would be the architect of a global growth agreement designed to deliver rising prosperity and create jobs in the decades ahead. Two years on, what some now call mini-lateralism, seems to be the order of the day. The immediate crisis has passed and despite outstanding leadership in our international institutions and bold international initiatives by some national leaders, many governments have retreated into their national shells. We cannot agree on the proposed ‘global growth pact’, a world trade agreement is yet again stalled, risking the first failure of a planned trade agreement since 1948, and, even after a nuclear catastrophe in Japan and a period of violent volatility in oil prices, there is still insufficient momentum for a global climate change agreement. So what has happened? The need for cooperation cannot be in dispute. Indeed this year the world is facing an unremitting onslaught of new challenges – food shortages, commodity price rises, youth unemployment and social unrest ; and large imbalances even as inflation reappears. Some now talk not of a crisis but of crisis-ism, a state of ever recurring crises that cannot easily be resolved by nations acting autonomously. Our interdependent world means that our problems are no longer just problems we share in common but are global, interwoven between countries and only concerted action across continents can effectively tackle them. The IMF has already shown that we might have been in a position to raise world growth by an extra 3 per cent by 2015, and create anything between 25 and 50 million new jobs if the enhanced global cooperation that the G20 promised in 2009 had happened. But we need better global coordination not just to address the problems of today but the challenges of tomorrow, triggered by the next revolution ahead in global markets. Indeed, this generation finds itself in a unique place — at the vanguard of the biggest transformation of the world economy in history. In the last twenty years, two billion men and women have joined the ranks of industrial producers, trebling the size of the world’s industrial economy. In the next ten to fifteen years this revolution will be augmented by at least two billion people joining the ranks of the world’s middle-class, trebling its current numbers. So the recent shift in producer power will soon be matched by a coming shift in consumer power, and we will see and feel this transformation powering through our lives and shaping our national fortunes with an irresistible force. The world’s biggest market, for instance, will no longer be in America but in Asia and it will grow to around 40 percent of all consumer spending, twice the size of the American market, and substantially bigger than the German market (4 percent) and the British market (3 percent). So who will be the biggest beneficiaries of these changes? With the right opening up of trade, European and American brand names, with high value added, and technology driven, niche and custom-built products and services, could be providing us with engines of growth and employment as demand for these products and services rises in Asia (as well as in other areas with increasing consumer power, like Brazil, Turkey, Indonesia and parts of Africa). Yet without enhanced international cooperation the west will not be in the best position to take advantage of these changes. Indeed unless we enshrine market access in a global agreement we will lose out on some of the greatest economic opportunities for rising standards of living we have ever seen. And global coordination is necessary for other reasons, too. The world has been too ready to unlearn the lessons of the financial crisis and there is a danger that we are sowing the seeds of the next financial crash. Without agreement on global financial standards -and currently individual continents and even countries are going their own way- finance will be in a race to the bottom with the good financial centers at risk of being undercut by the bad and the bad by the worst. And of course, if present trends continue, if markets remain closed to certain countries or operate randomly and in an unfettered way, the world will become structurally more unequal — India, China, Indonesia, Brazil and Russia will see inequality grow and Africa will become more isolated. The economic discontents of the peoples of North Africa and the Middle East will not be met without international support. Enhanced cooperation is essential in helping to prevent embryonic problems in poorer parts of the world from escalating into crises that could threaten the security of and through mass migration risk the stability of all the peoples of the world. Without global flows of investment to empower entrepreneurship in Africa and to facilitate economic and educational development, the region will become the source of new migration, climate change and security crises that will threaten us all. Today, the responsibility to pick up the reins of global cooperation falls on all of us. We need to argue more strongly than ever for the employment benefits that will flow from a world growth plan. Civic organizations, especially churches and faith groups, often underestimate the resonance of their collective voice: their voice should be listened to as they demand action against poverty and youth unemployment. There should be a stronger partnership with business which, in a world of heightened risk, needs avoidable uncertainty removed not least the stable environment that comes from a clean banking system operating to global standards. Business benefits too when we act to end the volatility in energy prices, when we organize effectively to increase food production and reduce food prices and when we take active steps to raise employment levels. Enhanced global cooperation needs to be championed by a strengthened coalition of business, NGOs, international institutions and public leaders working together on global issues. That opportunity is being championed today by the vision of the World Economic Forum led by Professor Klaus Schwab, which is already part of the business outreach President Sarkozy has championed for the G20, following President Obamas lead in 2009. Today there is, indeed, too much mini-lateralism: we cannot succeed without enhanced cooperation and it’s time once again to raise our ambitions on what global co-operation can achieve. Gordon Brown is the former Prime Minister of the United Kingdom and author of Beyond the Crash; Overcoming the First Crisis of Globalisation. He is to be Chairman of the Global Policy Coordination Board of the World Economic Forum in an unpaid capacity.

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Sen. Fritz Hollings: Solutions Avoided

March 28, 2011

The CBS program “60 Minutes” last night related how business was avoiding “the highest business tax in the world” by moving to Zug, Switzerland. General Electric has just found another way to avoid paying the corporate tax — hire a stable of Certified Public Accountants to prepare its return. GE just filed a 46,000 page return, paying no taxes, and claiming a tax benefit of $3.2 billion. This leaves the Main Street merchant paying the corporate tax, and they need relief. Everyone agrees that the nation’s number one problem is jobs, while Congress is in gridlock trying to lower the deficit. Congress can solve all three problems by canceling the corporate income tax and replacing it with a 5% value added tax. One hundred thirty-five nations in world trade have a VAT, which is rebated on export. The U. S. corporate tax is not rebated, which penalizes U. S. production in world trade. Offshore profits by Corporate America are tax free unless repatriated, so this encourages more offshore production. Corporate America avoids the corporate tax by offshoring production and parking or reinvesting the profits offshore. Last year’s corporate tax is estimated to bring in $156.7 billion, whereas a 5% VAT reaps $600 billion. The regressive nature of a VAT is eliminated by exempting food, health and housing for the low income which would not exceed an exemption of $100 billion. This leaves $350 billion to pay down the debt. At present, the Republicans in the House of Representatives are aiming for a $60 billion cut in the budget, and the Democrats are holding up at $20 billion. So the $350 billion ought please everyone. But surprisingly, Corporate America won’t be pleased. It depends on the big banks and Wall Street, and beginning in 1973, the big banks made a majority of their profits offshore. And Corporate America for the moment loves offshore production. It has no labor worries, health costs, safety or environmental concerns. The profit is from year-to-year, and if it doesn’t work out, Corporate America walks away with no legacy cost. But this system will soon run out. In four or five years, China will need not just 51% of the offshored profit, but 100% to take care of the remaining millions brought from poverty into the middle class. China has already brought 300 million from poverty to the middle class. It is on-course to bring in another 400 to 500 million in about five years, and then it will need 100% for the remaining 500 million. In the meantime, China slightly alters the obtained technology, patents it, and it becomes the article of trade. When China kisses Corporate America “goodbye,” it will return home with nothing to produce. Globalization is nothing more than a trade war with production looking for a cheaper country to produce. If the president stayed in Washington and enforced the trade laws, far more jobs would be created than those coming from Brazil, and the economy would recover. General Electric has just announced a $550 million research center for Brazil, while the President of GE heads up President Obama’s program for jobs. Our defenses are down. The Pentagon has been offshoring its needs for defense materiel so that we are begging Russia for helicopters for the war in Afghanistan. If President Obama would enforce the War Production Act of 1950, as President John F. Kennedy did for the textile industry, millions of jobs would be created. If President Obama would impose a 10% surcharge on imports as President Richard Nixon did in 1971 when our trade deficit was a miniscule of what it is today, it would create millions of jobs. If President Obama would impose import tariffs or quotas on endangered production as President Reagan did for Harley-Davidson motorcycles, it would create millions of jobs. If President Obama would obtain voluntary restraint agreements on autos, steel, computers, and machine tools, as President Reagan did, it would create millions of jobs. We developed Sematech in the ’80s, saving Intel and Hewlett-Packard. I launched the Advanced Technology Program in the State, Justice, Commerce, Appropriation Bill to support innovation. The National Academy of Engineering had to certify the technology as innovative and it had to be approved by a committee in the Department of Commerce — no earmarks. The industry had to provide 50% of the funding. The Advanced Technology Program was highly successful, but President George W. Bush defunded it as “corporate welfare.” Instead of crying for innovation, if President Obama would reinstitute the Advanced Technology Program, it would create millions of jobs. But it doesn’t pay to develop innovation in the United States. Intel has long since closed up in Silicon Valley, moved to Dublin, Ireland, then to China, and now in Vietnam. Steve Jobs has 700,000 workers developing innovation in China with more in South Korea and Taiwan. If President Obama had enforced Section 201 of the Trade Act to save General Motors when it was endangered, GM would not have gone bankrupt, needing a bailout. Enforcing Section 201 would create millions of jobs. In the trade war which ensues, President Obama cries for education but refuses to protect the economy. We need a lot more education in South Carolina, and we never have produced an airplane. But Republican leaders in the legislature packaged a $900 million benefit for Boeing, and we are now producing Boeing’s Dreamliner. Governors and state legislators know how to solve problems. But the president and Congress are so intent on getting the money for re-election that solutions to problems are avoided.

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The Lottery Mentality: America’s Growing Income Gap

March 22, 2011

Americans actually live in Russia, although they think they live in Sweden. And they would like to live on a kibbutz. This isn’t the set-up for some sort of politically incorrect Catskills stand-up joke circa 1960. It is the takeaway from a remarkable study by Michael Norton and Dan Ariely on how Americans think about income inequality.

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Diane Francis: Japan and Libya Mark Canada’s Energy Victory

March 21, 2011

Japan’s nuclear catastrophe, and the UN Security Council’s support for Libyan people against Muammar Gaddafi, have financial implications well beyond market volatility. The Japanese “brand”, based on brilliant planning and execution, has been permanently tarnished. First it was Toyota’s colossal recalls and now the world discovers that six reactors were built in an earthquake zone, subject to tsunamis, without sufficient fortifications or back-ups to back-ups. Instead, the repair job has become a Kamikaze-like effort by several dozen middle-aged volunteers whose failure will take the world into uncharted territory. This fiasco guarantees that the nuclear option, to replace fossil fuels and save the world from the effects of over-population, is about as attractive as having Colonel Gaddafi drop by for dinner. This increases dramatically the probability that two Canadian pipeline projects, and others, will be invited to dinner: The Keystone Pipeline expansion bringing oil sands output to US refineries and the Mackenzie Valley Gas Pipeline will proceed. The US government has been dithering about Keystone’s environmental impact (they already have 50,000 miles of pipelines there) and the Canadian government has dithered for decades about Mackenzie, mostly recently over a request to back a small portion of the line so aboriginals can own a piece of the action. Both governments must approve these lines. In the US, this is because, without construction of new nuclear facilities, the country will need more oil and Middle East volatility means that region is undesirable as a supplier. So Canada’s oil sands are essential. Tellingly, USA Today editorialized in favor of Canada’s “dirty” oil. “The Keystone expansion would provide an extra 500,000 barrels of oil a day from a secure ally and neighbor, enabling the US to offset declining supplies from Mexico and Venezuela and avoid having to reach out to less-stable oil exporters. At a time of rising gasoline prices and turmoil in the Middle East, the US is in no position to be finicky about its oil imports,” said the newspaper. “And here’s something else to consider: If the US blocks the pipeline, Canadian developers have made it clear they’ll be glad to build west instead of south — and sell oil from the West Coast to China.” The Mackenzie Pipeline will, and should, proceed because increasing oil sands production (which needs natural gas), removal of the nuclear option in Canada and commitments to take coal plants out of service by 2025 will require four times more natural gas than it can bring to markets. According to Ziff Energy, a leading energy consultancy, the Mackenzie, Alaska gas pipeline, producible shale gas and conventional gas deposits would all be needed and viable in future. For instance, Ziff said that Canadian conventional gas reserves are declining by up to 20% per year, which requires the replacement of up to 4 billion cubic feet per day of new supplies. That’s equivalent to the total production from three Mackenzie Valley Pipelines. Decline rates are similar south of the border and will require at least ten times’ more gas. Power generation is also starting to switch from coal or oil to natural gas for environmental reasons. In June 2010, this was mandated in a Canadian Federal Government policy which will phase out 33 inefficient coal-fired plants in Canada whose economic life will end by 2025. Their licenses will not be renewed unless their emissions are reduced dramatically to the same level as gas-fired plants. The amount of gas needed to replace these 33 dirty coal plants totals 1.2 billion cubic feet per day, or the entire annual output of the Mackenzie Valley Pipeline. Fossil fuels brings me to the democratization of the Arab world and this week’s Libya support in the United Nations. Ten countries voted in favor of a resolution to crush him some time soon by any method necessary, while the other five — China, India, Russia, Brazil and Germany — were smart enough to simply abstain and get out of the way. This vote was historically significant for two reasons: It was backed by broad-based support for democracy and against tyrants and, secondly, it marked a stepping down by the United States from the role of superpower which, frankly, it cannot any longer afford financially or reputationally. The fact is that President Obama is delivering on his promises to take the training wheels off Iraq’s fragile democracy and to be multilateral and let others do the heavy lifting. As an American taxpayer, and a Canadian one, I applaud his behind-the-scenes community activist role in letting if not encouraging the French, of all nations, to take the lead in the Libya initiative, followed by the British, Arab League and African Union. It’s also a sign of fiscal prudence on the part of Washington which is good news for Americans and Canadians alike. Cross-posted in the Financial Post .

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Ex-Goldman Progammer Gets Big Sentence For Stealing Codes

March 19, 2011

(Reuters) – A former Goldman Sachs Group Inc (GS.N) computer programmer was sentenced to eight years in prison on Friday for stealing secret code used in the Wall Street bank’s valuable high-frequency trading system. Sergey Aleynikov, was arrested by the FBI and charged in July 2009 with copying and removing trading code from Goldman before taking a new job at Teza Technologies LLC, a high-frequency trading startup firm in Chicago. A onetime collegiate-level competitive ballroom dancer, Aleynikov, 41, was convicted of trade secrets theft and transporting stolen property across state lines on December 10 after a two-week long jury trial in Manhattan federal court. High-frequency, computer-driven trading has become an important and competitive business. The software codes that trade shares in milliseconds are closely guarded secrets. “I very much regret the foolish thing of downloading information,” the Russian-born father of three said at his sentencing on Friday. “Part of this information was proprietary to Goldman. I never meant to cause Goldman any harm or harm anyone at the bank.” Aleynikov’s words fell short of U.S. District Judge Denise Cote’s hopes for “an open and honest statement of responsibility” for his criminal conduct. “You did not do that,” said Cote, imposing a sentence of 97 months that was within the eight to 10 years recommended by the government. Cote also fined him $12,500. Aleynikov’s lawyer, Kevin Marino, had originally asked for a sentence of probation but in court on Friday he suggested two years was adequate for what he called Aleynikov’s “foolish, tragic, horrible, ridiculous mistake.” Aleynikov has the right to appeal the sentence. His defense lawyers have argued that the matter belonged in civil, not criminal court. U.S. prosecutor Joseph Facciponti said the stolen code was Aleynikov’s “golden ticket” to Teza and “he stood to make millions more” there than he did at the bank. Facciponti said Aleynikov spent several months planning his move, eventually transferring 500,000 lines of Goldman Sachs source code to an outside server. Cote had revoked the bail of Aleynikov, a dual citizen of the United States and Russia, on the grounds that there was a risk of him fleeing before sentencing. Throughout the trial and sentencing phase, many comparisons were made with a similar case in the same courthouse against a former Societe Generale (SOGN.PA) trader, Samarth Agrawal. The citizen of India was found guilty by a jury last November of stealing high-frequency trading code from the French bank before going to a new job. On February 28, a judge sentenced him to three years in prison and he will be deported when he completes his sentence. The case is USA v Aleynikov, U.S. District Court for the Southern District of New York, No. 10-00096. (Reporting by Grant McCool; Editing by Tim Dobbyn) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Wheat prices climb after Russia cuts crop forecast

March 19, 2011

Wheat prices climb after Russia cuts crop forecast

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Bill Aulet: Do Innovation Ecosystems Need Universities?

March 4, 2011

In my role at the head of the MIT Entrepreneurship Center , I have the great opportunity, at times, to travel the world and learn about entrepreneurship on a global scale, and to gain knowledge and perspective to help us be more effective in our mission at home. This past week was such an experience. There is an underlying assumption that to have an innovation-based entrepreneurial ecosystem, there has to be an “MIT-like” anchor university in the ecosystem (Technion in Israel, Stanford in Silicon Valley, IIT in India). The presence of such an institution that attracts, trains, and continually feeds skilled and talented workers into the ecosystem makes perfect sense. What if I told you of a place where there is a growing and vibrant IT entrepreneurial community, and yet it is in a country that lacks a single university in the top 500 in the world? This is exactly what I found in Romania these past few days. As I met dynamic entrepreneurs and heard stories of their friends, a pattern emerged. Most have never studied computer science at a university; they said they did have time to do so, and that it was better to get real experience (some did not even graduate from high school). Romania is a poor country, but it is also an industrious and diverse society (both of which are important). Since people don’t have much and life is hard, they have to be creative to get by and get ahead. Necessity is the mother of invention and, in this case, entrepreneurship. There is also optimism in the air, partly a result of Romania joining the EU four years ago. That is helpful, but for now let’s focus instead on the “adjita” (an Italian-American word for stomach agitation) driving things in this situation. The Romanians are learning programming without formal institutions to train them, which seems perfectly natural to them. They are driven and they have no choice. They note that Bill Gates, Steve Jobs, and Mark Zuckerberg didn’t graduate from college, either (Not a great analogy, but that’s how they see it). In my recent travels I have also found thriving, robust entrepreneurship in Scotland and Finland as well. Interestingly, if you ask people in any of these three countries if they are good at = entrepreneurship, their answer is “Oh, no.” This very humility and scrappiness is what makes these regional groups have a higher propensity for entrepreneurship than their counterparts in, say, Germany, Russia, England, France, or Spain. Should this surprise us? Not really, because here in the United States, the studies of MIT professor Ed Roberts show that immigrants are more likely to start companies than more comfortable, long-term American residents. As Eva Peron, who rose from the lowest levels of Argentine society and power to the very top, is described by narrator Che Guevarra in the immortalizing musical and film ‘Evita’, “Eva Peron had every disadvantage you need if you’re going to succeed. No money, no cash, no father, no bright light.” So the moral of the Romanian tale is to reinforce a point made in an earlier article , that while other factors like the presence of a world class research institute close to MIT’s caliber is extremely valuable, never underestimate the importance of culture in creation of an entrepreneurial ecosystem. In descriptions of such a culture, you should not see the words like “comfortable —you should see words synonymous with scrappy. Just remember Evita. [Note: Special thanks to my colleague Howard Anderson at the MIT Sloan School of Management with whom I discussed this topic and who also first pointed out the "Evita" quote].

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Andrew Ireland: Making the Most of Global Investing in a Brave New World

February 28, 2011

There was a time when global meant looking to Europe or Japan, or perhaps Australia if you were bold. That’s no longer the case. The changes that are driving many of the emerging nations are profound and offer significant new investment opportunities for mass affluent Americans (consumers with total investable assets of $250,000 or more) looking to allocate a portion of assets outside the U.S., specifically in emerging markets. The acronyms we hear often tell the story of opportunity: BRIC, CIVETS, MAVINS, representing countries that are changing in dramatic ways such as Russia, Vietnam, and Mexico. They represent areas of the world that are changing patterns of wealth, driving the growth of an enormous middle class and trending to be more comfortable with globalization than their developed counterparts. They are also some of the most interesting areas for long-term growth, keeping in mind there are risks inherent in these markets, including currency fluctuations, changes in political and economic conditions which will result in market fluctuations, as we’re seeing now. As developed nations grapple with a still hesitant recovery, some of the greatest changes are happening across Latin America, Southeast Asia and Africa. These and other emerging markets are expected to expand significantly faster than most developed ones over the next few years — with some estimates citing three times the growth. While still small, these are some of the key drivers of a new global economy, warranting investors to keep a watchful eye. Never before has the impetus been greater for U.S. investors to understand the role emerging countries play in the global economy and their own portfolios. We have long been convinced that we live in a world where substantial macro opportunities exist for these burgeoning nations, and also for those investors looking for a stake in their growth. So what does this mean for investors? Global investing is important, not only for long-term growth but also for portfolio diversification. Since reaching significant new levels in the past few years, emerging market stocks are continuing to present solid development potential. HSBC Bank USA recently conducted a survey on behalf of its Premier banking and wealth management service, offered through HSBC Securities (USA) Inc. (“HSI”), which found that while 82 percent of America’s mass affluent investors believe emerging markets present a great opportunity, some 67 percent say they require more knowledge before allocating their investments there. The survey also highlighted an industry opportunity. Some 80 percent of respondents believe having an experienced global advisor is necessary to successfully invest globally, yet more than one-third (38 percent) are currently relying on themselves to make investment decisions. Countries, such as some of the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa), with upside consumer purchasing power, raw material deposits and robust manufacturing, look poised to be the new group of success stories. Investing in emerging markets will not be for everyone. Investors need to be comfortable with the risks and volatility of such investments, finding the right balance in their portfolio to meet their tolerance for risk and overall investment objectives. Education and understanding are essential. We in the financial services community must recognize our role in helping investors make the most of opportunities in the high-growth economies. This is the decade in which new emerging economies will come of age. Brazil, Russia, India and China have established a new course for optimizing global opportunities investors should consider. Of course, there will be times of caution. We’re experiencing one of those right now. But, working closely with an experienced financial advisor with in-market knowledge and real-time information makes the climb to emerging market success much easier despite currency fluctuations and political climate changes.

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Ford, Sollers new venture in Russia

February 19, 2011

Ford, Sollers new venture in Russia

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Potential higher inflation in Russia in 2011

February 1, 2011

Potential higher inflation in Russia in 2011

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Daniel Dicker: Food Commodity Speculation Adds to Egypt Unrest

January 30, 2011

While the protests in Egypt are politically motivated, there is also little doubt that the rage of the populace there, as well as in Tunisia, Yemen, Algeria and elsewhere, is being inflamed by the huge and volatile increases in basic food prices. While the seeds for huge percentage increases in corn, wheat, sugar, coffee and of course oil are based in some fundamental supply shortages, they have been unnecessarily hypercharged by the influx of investor money, speculative energy and the panic of governments trying to stockpile basic foods and quench the growing hostility of its people. We’ve seen this movie before, in 2007-2008, but it hasn’t looked nearly as bad as this. Massively spiking commodity price inflation, before the global financial collapse, was a far easier problem to find solutions for and contain. Now, with practically all Western governments in the midst of austerity budgeting, less money is available to help Middle Eastern and other emerging nations find adequate and subsidized supplies. But this movie rerun is in widescreen Technicolor: the across-the-board food price increases have never seen this kind of spike before, ever. Wheat is up 75% in the last 12 months, corn up a little more. Coffee is up 85% and cotton a spectacular 140%. While flooding in Australia, a drought in Russia and weak harvests in India and China are the fundamental drivers for this upwards trend, there is little doubt that investors and traders looking to diversify and capitalize on the supply shortages are moving these prices much more significantly and faster. Commodity index investment increased an estimated and whopping $80B dollars last year, bringing total long-only commodity index investment to $350B, according to Barclays. Another $30B of commodity ETF investment is also overwhelmingly long-only, as short commitment in these instruments is normally well under 5% of float. Financial buying of commodities in indexes and ETF’s, with the speed that these instruments operate, overwhelm the futures mechanisms and cause much greater volatility and overall higher prices. We’ve seen this roller coaster ride play itself out once already in oil, moving from 2005-2008 to $147 a barrel, only to collapse to $32 dollars in March of 2009, before re-initiating its upwards trajectory. Whether financial investment in commodities can be absorbed by a free market or not, this kind of boom/bust cycle, now playing itself out again in other critical foodstuffs, is intensely destabilizing and threatens the order in brittle governments around the globe. And governments have been forced to play into this struggle. Increased stockpiling of basic commodities has added to the frenzy of price increases: Algeria and Saudi Arabia have doubled their usual stockpile of wheat, Bangladesh and Indonesia have tripled orders for rice. The mechanism for halting, or even slowing down the massive money flows into financialized commodities is lacking. Small steps on position limits and transparent clearing, mandated under Dodd-Frank legislation, have seen widespread pushback from industry advocates and trading companies. Rules for the energy markets, mandated by Dodd-Frank to be in place and operating today under the Commodity Futures Trading Commission (CFTC), are at least another year away, if they are coming at all. Very little looks to be changing. And with very little changing, we might have to get used to these street scenes in Egypt and other emerging nations elsewhere, as rage from native populations spills over from the spiking prices of simple food basics.

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