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Fuel Transfer Runs Smoothly For Iced-In Alaska City

by AP on January 18, 2012

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ANCHORAGE, Alaska (AP) — A Russian tanker that went on an ocean odyssey of 5,000 miles to deliver fuel to the iced-in city of Nome was offloading the gasoline and diesel in what officials say is smooth sailing so far, with one possible problem avoided. Two parallel hoses, 700 yards long each, are stretched between the tanker Renda and a pipeline that will deliver 1.3 million gallons of fuel to storage tanks near the harbor of the iced-in city. The offloading began with gasoline, and then both gasoline and diesel were being transferred separately. Jason Evans, board chairman of Sitnasuak Native Corp., the company that arranged for the fuel delivery, said Tuesday the tanker’s two hoses are pumping between 30,000 and 40,000 gallons of gasoline and diesel an hour. One section of hose had to be switched out early Tuesday morning when a suspected bubble occurred in the line, Evans said. The change-out went smoothly and there have been no spills since the pumping operation began Monday evening. This is the first time petroleum products have been delivered to a western Alaska community by sea in winter. The mayor said festivities were planned, including a Coast Guard helicopter landing on the beach so children can look inside. They also set a basketball game between residents and Coast Guard crew members, and the city invited the crew to a pizza dinner. “It is our way to show our appreciation and how grateful we are and what they did for us,” said Mayor Denise Michels. The transfer could take from 36 hours to five days. It started near sundown Monday, after crews laid the hoses along a stretch of Bering Sea ice to the pipeline that begins on a rock causeway 550 yards from the tanker, Evans said. Sitnasuak owns the local fuel company, Bonanza Fuel, and has been working closely with Vitus Marine, the supplier that arranged for the delivery of the 1.3 million gallons of fuel. State officials said the transfer had to start during daylight, but can continue in darkness. Nome has just five hours of daylight this time of year. The city of 3,500 didn’t get its last pre-winter barge fuel delivery because of a massive November storm. Without the Renda’s delivery, Nome would run out of fuel by March or April, long before the next barge delivery is possible. Alaska has had one of the most severe winters in decades. Snow has piled up 10 feet or higher against the wood-sided buildings in Nome, a former gold rush town that is the final stop on the 1,150-mile Iditarod Trail Sled Dog Race. The Renda began its journey from Russia in mid-December, picking up diesel fuel in South Korea before heading to Dutch Harbor, Alaska, where it took on unleaded gasoline. It arrived last week off Nome on Alaska’s west coast, more than 500 miles from Anchorage. A Coast Guard icebreaker cleared a path for the 370-foot tanker through hundreds of miles of a slow journey stalled by thick ice and strong ocean currents. In total, the tanker traveled an estimated 5,000 miles, said Rear Adm. Thomas Ostebo, commander of District Seventeen with the Coast Guard. “It’s just been an absolutely grand collaboration by all parties involved,” said Stacey Smith of Vitus Marine, the fuel supplier. Smith said the effort is a third of the way over with the arrival of the Renda near Nome. Pumping the fuel from the tanker will be the second part. The third part will be the exiting through ice by the two ships. Personnel will walk the entire length of hosing every 30 minutes to check for leaks, Evans said. Each segment has its own containment area, and extra absorbent boom will be on hand. The Coast Guard is monitoring the effort, working with state, federal, local and tribal representatives, Chief Petty Officer Kip Wadlow said. The fuel participants had to submit a plan to state environmental regulators on how they intended to get the fuel off the Renda, he said. “We want to make sure the fuel transfer from the Renda to the onshore storage facility is conducted in as safe a manner as possible,” he said.

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Remote Alaska Town ‘On The 5-Yard Line’ Waiting To Reconnect With World

by AP on January 15, 2012

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ANCHORAGE, Alaska — The ice that has cut off a remote Alaska town for months will connect it to the world again when crews build a path over it to carry fuel from a Russian tanker that was moored a half-mile from the town’s harbor Sunday morning. Workers were waiting for disturbed ice to freeze again so they could create some sort of roadway across the 2,100 feet from tanker to the harbor in Nome, upon which they’ll rest a hose that will transfer 1.3 million gallons of fuel. A storm prevented Nome’s 3,500 residents from getting a fuel delivery by barge in November. Without the tanker delivery, supplies of diesel fuel, gasoline and home heating fuel Nome are expected to run out in March and April, well before a barge delivery again in late May or June. The tanker began its journey from Russia in mid-December and has slowly made its way toward Nome, stalled by thick ice, strong ocean currents and one Alaska’s snowiest winters in memory. It picked up diesel fuel in South Korea, then headed to Dutch Harbor, Alaska, where it took on unleaded gasoline. Late Thursday, the vessels stopped offshore and began planning the transfer to Nome, more than 500 miles from Anchorage on Alaska’s west coast. A Coast Guard cutter cleared a path through hundreds of miles of Bering Sea ice for the tanker. Now, residents await the journey’s final leg, which comes with its own hurdles: In addition to waiting for the ice to freeze, crews must begin the transfer in daylight, a state mandate. But Nome has just five hours of daylight this time of year. “It’s kind of like a football game. We’re on the 5- yard line and we just want to work into the goal line,” said Sitnasuak Native Corp. board chairman Jason Evans, whose hometown is Nome. Sitnasuak provides fuel and other services to the region. Despite the complicated logistics of delivering fuel by sea in winter, Sitnasuak opted for the extra delivery after determining that it would be much less costly and more practical than flying fuel to Nome. A Coast Guard spokesman didn’t know how long it will be before fuel flows as crews must wait 12 hours, or until about 5 a.m. local time Sunday (6 a.m. Pacific), to ensure that the disturbed ice has refrozen. “We were able to successfully navigate that last bit of ice,” Coast Guard spokesman Kip Wadlow said. “We were able to get it pretty much right on the money, in the position that the industry representatives wanted to start the fuel transfer process.” The crew of the 370-foot tanker Renda was working to ensure the safe transfer of the fuel through a segmented hose that will be laid on top of the ice to the harbor, located about 2,100 feet from the ship, Wadlow said in a telephone interview from Nome on Saturday night. Once crews create a suitable path for the hose to rest on, its segments will have to be bolted together and inspected before the fuel can begin to flow. Though the transfer must start during daylight, it can continue in darkness, Betty Schorr of the Alaska Department of Environmental Conservation has said. It could be finished within 36 hours if everything goes smoothly, but it could take as long as five days, she said. Earlier Saturday, Evans gave details of the transfer process. Once the hose is laid down, he said personnel will walk its entire length every 30 minutes to check it for leaks. Each segment of hose will have its own spill containment area, and extra absorbent boom will be on hand in case of a spill. Evans said he hopes the crew will begin unloading Sunday. Evans, however, cautioned that delivering the fuel is only half the mission. “The ships need to transition back through 300 miles of ice,” he said. “I say we’re not done until the ships are safely back at their home ports” in Seattle and Russia. ___ Online:

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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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Europe Struggles To Expand Bailout Fund

November 11, 2011

Two weeks after European leaders trumpeted an agreement to expand a bailout fund they said would finally become large enough to prevent major countries from sliding into default, investors around the world remain deeply skeptical. That skepticism now looms as a growing source of danger for the global economy. As investors prove reluctant to lend to deeply indebted governments in Italy and Spain, that lack of confidence is increasing their borrowing costs and adding to the nations’ debt burdens. As interest rates on long-term Italian government debt this week spiked to a euro-era high of more than 7 percent, the markets seemed to be signaling more trouble ahead, with the very perception of trouble threatening to become a self-fulfilling prophecy: As confidence erodes in the ability of European governments to repay their mounting debts, lenders demand higher rates of return for their money, sending debt levels higher still — a feedback loop of strife. Some economists are now so pessimistic about the prospect that Europe can summon the finance — not to mention the political will — to arrest its deepening crisis that they are openly discussing the prospect of an Italian default, an event that would spread financial losses worldwide and perhaps trigger a global recession. It might spell the demise of the euro, the continent’s shared currency, unleashing a fraught and messy process of dissolving the monetary union at its root. “If there’s a disorderly default by Italy, then you are really looking at the breakup of the eurozone,” said Bernard Baumohl, chief global economist at the Economic Outlook Group. He added that if the European Central Bank proves unable to muster further support — something that has so far been deemed unlikely — that “would trigger a significant depression in Europe,” with economies around the globe sagging as a result. At the center of the latest concerns are enduring questions about the size of the European Financial Stability Facility, the bailout fund designed to reassure global investors that sufficient money has been set aside to eliminate worry that a major country could default. Ever since it was created last year, investors have focused on the size of the fund — about $600 billion — and the disagreements emanating from European capitals over their willingness to offer guarantees needed to make it big enough to rescue even a sizable nation such as Italy. The deal in Brussels struck late last month was portrayed by participants as the crucial breakthrough that would finally dismiss such worries. Under the deal, the fund was to grow to more than $1.36 trillion by raising money from countries around the world and by providing risk insurance that would entice private investors to buy additional sovereign debt from troubled European countries. But countries such as China, Japan and the United States have proven reluctant to invest in the bailout fund, concerned about the sanctity of their investments. European bickering combined with austerity measures seemed to underscore the reality of lean growth prospects that would make it harder for governments to repay their debts. As interest rates rise for troubled European countries, investors have become even more skittish about investing in European debt absent additional insurance. The fund intends to expand in part by borrowing against its outstanding balance, a plan now limited as borrowing costs rise. All of this uncertainty about the fund’s ability to expand has itself limited that ability by making investors increasingly nervous about participating. “Investors generally are not altruistic,” Baumohl said. “There is still a tremendous lack of clarity on how precisely these funds are going to be raised, what guarantees come with them.” The bailout fund requires at least two trillion dollars to pose an adequate barrier against the chance of an Italian default, Nariman Behravesh, chief economist at IHS Global Insight, told The Huffington Post. For the fund to provide assurances that it could simultaneously rescue Italy, Spain, Greece, Ireland and Portugal, it requires as much as $6.8 trillion, estimated Nicholas Economides, an economist at New York University’s Stern School of Business. Without a credible path toward an expanded bailout fund, Europe is effectively back where it started before the Brussels summit late last month, say experts, only now the borrowing costs for troubled European countries are even higher. As Europe’s options for rescue narrow, experts are increasingly focused on the European Central Bank. The bank has historically refused to print euros en masse to address crisis, citing age-old fears of inflation — a concern that resonates in Germany, where the government has led the charge to prevent the central bank from doing more. But as circumstances grow more dire, Behravesh predicted the central bank would ultimately be forced to set aside its traditional mode and intervene, buying sovereign debt from troubled governments to drive interest rates down and put an end to the crisis. If the central bank does not come to the rescue, European governments could still find their way out of the crisis by concentrating on generating economic growth that would enable them to pay down their debts in the long run, said Wells Fargo global economist Jay Bryson. In that scenario, Italy would need to follow through on promised structural reforms, such as making it easier to replace workers, which would in turn make investors more confident the country it can grow its way out of its debt crisis. Then interest rates on sovereign debt would fall, Bryson said. Italy’s Senate on Thursday passed some debt reduction measures that had been demanded by European leaders, which will raise the retirement age and privatize some services. The passing of the legislation has paved the way for Prime Minister Silvio Berlusconi to step down. He promised earlier in the week that he would resign once the austerity measures were approved. In the estimation of many analysts, the survival of the euro and the immediate fortunes of the broader economy now hinge on whether Italy is able to transcend its political and financial turmoil, and find its way back to stability. If Italy defaults on its debt but does not abandon the euro, the currency could survive though the continent would be in for a recession, said Behravesh. But the central bank would almost certainly be required to rescue European banks holding Italian debt or face the failure of some major banks, especially lenders in France and Germany, he added. But if Italy were to default, it might well feel pressure to abandon the euro in order to devalue its own currency, to make its debt burden smaller and its exports cheaper on global market. That would spell the end of the common currency, Behravesh said, a once unthinkable possibility that has suddenly become thinkable. In that scenario, most other member countries would feel compelled to leave the euro as investors fled the continent, sending interest rates spiking to unbearable levels, and triggering large-scale bank failures. Investments in housing, stock markets, financial institutions and government bonds would all lose substantial value, he said, while consumer spending would collapse. “The ECB can do it,” Behravesh said, referring to the central bank as potential salvation. “If not, then I think this experiment’s over.”

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As Obama Prepares Jobs Speech, Low-Earning Americans Gloomy About Economy

September 8, 2011

With the economy slowing to a near-standstill this year, and the prospect of a turnaround appearing increasingly unlikely, Americans’ spirits — particularly among the country’s lowest earners — seem to be sinking to greater depths all the time. Recent polls show that confidence and happiness are falling, likely as a result of the enervated economy, which has barely grown this year and added no new jobs in the past month. The downturn in public opinion has occurred at about the same time that talk in Washington has increasingly focused on economic growth and job creation, suggesting that many Americans aren’t persuaded their leaders in the public sector have answers. A weekly consumer-sentiment survey from Bloomberg, published Thursday, found that confidence was at its second-lowest point for the year in the week ending September 4. It was especially down amongst Americans who earn less than $15,000 a year — that group reported feeling less confident than at any time since the mid-1990s. Separately, a Gallup poll published Thursday showed that Americans’ overall contentedness — as measured by responses to a survey that asked whether participants felt like they were “thriving,” “struggling” or “suffering” — fell in August to the lowest level since July 2009 , the tail end of the Great Recession. Gallup noted that anxiety brought on by the weak economy may be affecting Americans’ sense of satisfaction with their lives. In particular, an annual poll in August found that a near-record number of people were worried about losing their jobs . In response to the softening economy — which grew at an annualized rate of just 1 percent in the spring , well below what economists say is needed for a robust recovery — President Obama is expected to announce a jobs-creation plan during a special address to a joint session of Congress Thursday evening. The plan, said to be worth at least $300 billion , may include provisions for infrastructure spending, unemployment benefits and payroll tax cut extensions. Meanwhile, Republican presidential candidates Mitt Romney and Jon Huntsman have each publicized jobs-and-growth plans of their own. Huntsman’s plan includes a detailed road map for energy reform , while Romney’s calls for lower taxes, fewer regulations and measures to curtail the powers of labor unions . Federal Reserve Chairman Ben Bernanke, for his part, said that the Fed will “do all it can to help restore high rates of growth and employment” in remarks to the Economic Club of Minnesota on Thursday, though he did not elaborate on what the Fed might do. Still, despite the pledges of proactivity from government officials, Americans appear to recognize the magnitude of the challenges facing the economy. Most analysts predict that the economy will continue to crawl along at a weak rate of growth for at least another several months, which may bode ill for Obama’s re-election prospects.

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Medvedev reportedly in for summit with Kim Jong Il

August 24, 2011

(MENAFN – Khaleej Times) Russian President Dmitry Medvedev reportedly arrived Wednesday in remote eastern Siberia for a summit with North Korean leader Kim Jong Il expected to focus on energy deals, …

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Siberian court sets hearing

August 22, 2011

(MENAFN – Arab Times) MOSCOW, Aug 20, (AFP): BP’s problems in the high-stakes Russian oil market mounted Friday with news that a Siberian court had set a hearing into a $3 billion claim by a local …

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Don Bonker: Is Congress About to Cause Another Great Depression?

July 15, 2011

If you need evidence of how Congress acting irresponsibly can cause a calamity, look no further than the Great Depression. True, the 1920s were prosperous years for the country as a whole, yet there were early warning signs of catastrophic events to come. Excessive investments spurred high levels of production but it also created unsustainable surpluses and depressed prices. The commodity sector, in particular, was coping with over-production that had led to sagging markets and widespread foreclosures, setting the stage for a Tea Party-type revolt in Congress to enact a radical tariff bill which eventually led to collapse of the world economy. By the late twenties, protecting U.S. markets was the banner issue for Republicans, led by Herbert Hoover whose 1928 presidential campaign capitalized on agricultural tariffs. Upon his election, the new president convened a special session of Congress to deal with the tariff issue and suddenly the climate was ripe for Congress to run amok. The tariff issue also prompted the formation of hundreds of special-interest groups and trade associations to mobilize political support for higher tariffs and other protectionist measures that set the stage for an eager Congress to indulge as never before. Oregon’s Representative, Willis C. Hawley, presided over what was an unbridled frenzy of log-rolling, with Members jockeying to insure the maximum protection for their constituent producers. At the end of the day, the House tariff bill hiked import fees up to 100 percent on over twenty thousand products. Not to be outdone, the Senate Finance Committee, headed by Utah’s Reed Smoot, added 1200 amendments to the tariff bill that were so egregious that Democrat Senator Thaedeus H. Caraway of Arkansas was compelled to say, “I might suggest that we have taxed everything in this bill except gall.” “Yes,” Senator Carter Glass, a Vriginia Democrat, replied, “and a tax on that would bring considerable revenue.” While President Hoover’s intent was for a “limited revision” on a tariff measure, he exerted no leadership to curb the outrageous behavior or threaten to veto any bill that was out of bounds. What Congress sent to the president so alarmed the nation’s leading economists that they signed a petition urging President Hoover to veto the Smoot-Hawley Act. It was also printed in the New York Times and carried signatures from 46 states and 179 universities. The reaction abroad was quick and fierce. Within months, America’s leading trade partners — Canada, France, Mexico, Italy, Australia, in all 26 countries — retaliated by passing their own tariff bills. World trade plummeted by more than half of the pre-1929 totals that, more than anything, led to the emerging Great Depression. Those fieriest champions of the Tariff Act — Senator Reed Smoot, Representative William Hawley, and President Herbert Hoover and a host of others — were defeated in the 1932 election. What does all this have in common with the current debate on the debt limit controversy? When Congress puts political demagogy ahead of the national well-being, there are consequences. Today, it is not only the economists, but the chairman of the Federal Reserve Board, Moody’s and others in the financial community, the Chamber of Commerce and even China who are issuing warnings about the dire consequences if Congress does not raise the Federal debt ceiling by August 2. This time it is not about the collapse of the world trading system but the perilous state of America’s financial future. Should the GOP leadership and President Obama fail to address this crisis, the impact will likely be similar to what happened in 1929 — it will gravely threaten the nation’s financial well-being and those responsible, Rep. Eric Cantor and his Tea Party colleagues, will suffer the same fate in the 2012 elections.

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Vinod Thomas: Global Crises, Social Safety Nets and the Poor

July 14, 2011

A striking difference between the recent financial, food, fuel and economic crises of previous decades is the attention some nations — Colombia, Georgia, Ethiopia, and Mexico among them — have been able to give this time around to the plight of the poor from the outset. The handle these countries had on helping protect the poor and vulnerable extended from social safety nets that were already in place before the crisis struck. Development organizations, especially the World Bank, financed some of these programs. Much of the Bank’s support to social safety nets over the past decade, $11.5 billion worth, came during 2009-2010. Such efforts were nevertheless insufficient to prevent about 64 million more people from slipping into poverty by the end of 2010 on account of the financial crisis, or to withstand the additional impacts of the food or fuel price hikes. In West Africa, Pakistan, Haiti, and several other places, devastation from natural disasters severely strained vulnerable segments of the population. But the recent experience with safety nets provides precious lessons going forward. First, it pays to build safety net systems in relatively stable times so that the worst poverty impacts from unanticipated events can be cushioned. The recurring nature of financial, food and fuel crises, as well as climate-related disasters, makes clear the need for all nations to be prepared to protect against shocks with social safety nets. Prior preparation is important because during a crisis it is hard to initiate or even scale up social programs or modify target groups to respond adequately. Organizations like the World Bank are most effective when they engage consistently during stable times to help develop social safety net programs and to build sufficient flexibility into them. Second, the coverage of these programs needs to be expanded to more countries. Thus far, middle-income countries such as Brazil and Mexico, which had built up institutional capacity in this respect, have been in the forefront. But low-income countries too need to give priority to such efforts with more support from development agencies. Of particular importance are efforts to strengthen the capacity in low-income countries to design flexible programs that consider the local context. Ethiopia, a low-income country, set up a large public safety net program to handle chronic and repeated poverty due to predictable shocks, such as droughts. Over time it has built-in an automatic contingency mechanism that provides support in times of food insecurity. During the disastrous 2010 floods, Pakistan, a lower-middle-income country, was able to draw on the experiences of the 2005 earthquake and the 2007 national social protection strategy to create the Citizen’s Damage Compensation program using the national database to identify beneficiaries and provide cash grants through debit cards from the private banking sector. Third, it is key for these programs to reach the right beneficiaries, without corruption or leakage. In many programs when the poverty focus is mentioned, it is often in general terms of poverty reduction rather than as part of a time-bound objective directed toward a specific subset of the population. Countries and external financiers need to develop rigorous mechanisms that effectively identify the targeted beneficiaries and build strong results frameworks that focus on supporting the poor and the vulnerable. The cost of well-targeted programs is usually a small share of GDP, typically below one percent. Yet for their sustainability, it is vital that they focus on the right results and ensure that they indeed reach the poor and vulnerable.

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Sheldon Filger: Sovereign Debt Crisis Is Now Global

July 14, 2011

Any doubt that the Eurozone debt crisis is no longer contained but has metastasized into a full-blown global calamity is rapidly being erased by fast-moving events. With the second bailout of insolvent Greece in the works, followed by a ratings downgrade to junk by Standard & Poor’s, Moody’s has now weighed in with a double whammy. Ireland’s sovereign debt has been downgraded to junk status, with a clear signal that the marketplace expects the Irish Republic to require a second bailout package, as was the case with Greece. Moody’s has now followed up on its action regarding Ireland with a warning that for the first time in its history, the AAA rating on U.S. government debt is under review for a possible downgrade. This inauspicious development is in connection with the political dysfunctionality that has afflicted Washington policymakers in both the executive and legislative branches over extending the national debt limit. With ratings collapsing and bond spreads widening throughout the developed world, it now appears that another member of the infamous PIIGS nations (Portugal, Ireland, Italy, Greece and Spain) is descending into fiscal anarchy. Italy is on the verge of requiring a bailout of its own, one which would exceed what has already been allocated to Greece, Ireland and Portugal. In desperation, the Italian senate has voted in favor of austerity measures. Based on the failure of the austerity measures in Greece to prevent a second bailout being required, the desperate action by Italian decision makers is unlikely to work, and has the look of panic rather than thoughtfulness. Like a tsunami wave that can travel thousands of miles from the epicenter of a major seismic event, the cascading sovereign debt crisis, which had its origins in policy responses to the global financial implosion of 2008 and the Greek debt crisis of 2010, is now ravaging public finances on both sides of the Atlantic. A point may soon be reached where private investors, Eurozone taxpayers and the IMF can no longer cobble together ever-larger “rescue packages,” all of which, with perverse logic, require even larger levels of public debt to construct. A dark truth may soon permeate this ballooning crisis; the policymakers have no real solutions, and have just about run out of gimmicks and short-term fixes. The global economic crisis that began with the financial collapse of 2008, far from being resolved or a clear path to recovery being underway, is entering a more dangerous phase, in which sovereign debt reaches the level of unsustainability. The result could very well be paralyzing insolvency among the advanced economies, which could destroy the economic future of an entire generation.

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Georges Ugeux: Is Madame Lagarde the Ideal IMF Leader?

June 2, 2011

The extraordinary push and unusual consensus of the European Union on the candidacy of Madame Lagarde deserves some attention and maybe scrutiny. Being a lawyer and politician who ran a U.S. law firm in Chicago, Madame Lagarde is undoubtedly a very serious candidate. France considers the IMF top job as “theirs,” and has provided a succession of quite remarkable leaders of the IMF. Whether that means the next one should be French was “beyond reasonable doubt” for the Elysée Palace where Président Sarkozy rules. The fact that he or she should be European is part of a “deal” between the United States and Europe, whereby, at Bretton Woods in 1944, the World Bank goes to an American and the IMF to a European. That deal reflects the fact that, at Bretton Woods, the U.S. and Europe were alone to split the jobs. More than ever, this position is no longer defendable. The IMF, under the leadership of Dominique Strauss-Kahn, embarked in a co-financing process, together with the Eurozone, of the bail-out of Greece ($150 billion), Ireland ($130 billion) and Portugal ($120 billion). The Eurozone was indeed unable or unwilling to put on the table the full amount and is now in the unenviable position to have to call on the International Monetary Fund. The new Director General will have to represent the interests of all the members of the Fund in these negotiations. Is a European the best candidate to have the necessary objectivity and dispassionate view of the situation? One could also argue that Madame Lagarde is a crucial part of the negotiations that are taking place which could lead to a further $60 billion loan to Greece, which has not fulfilled its commitments. She supported the European Central Bank view that the Greek debt should be restructured, thereby protecting the ECB’s substantial portfolio of Greek bonds, as well as the European bank’s exposure to Greece. The IMF has always insisted on loans associated with strict application of its conditionality to pay the additional tranches. In this case, it departed from its sound and historical practice. Last but not least, with 43% of the capital of the IMF, the emerging countries are asking for more say and would be perfectly legitimate in requesting that seat for one of them. Agustin Carstens, the Mexican Finance Minister, is campaigning in their name. It seems that the United States, which stayed silent on the matter, will not support Madame Lagarde unless she gets some support from the key emerging countries. They are right. She was in Brazil starting a campaign. The G8 talked about it but, as he often does, Président Sarkozy pretended that it was not the place for such discussions. His Minister of Foreign Affairs, Alain Juppé, pretended that the candidacy of Madame Lagarde was agreed upon, contradicting the statement by Russian President Medvedev that there was a “near-accord” on the fact that an emerging market candidate would be considered. Prime Minister Manmohan Singh of India indicated to German Chancellor Merkel in Delhi that it was not the nationality that should define the right candidate. The reality is that the European attitude has literally infuriated the other countries who saw in it a sign of colonialism and arrogance. In France, Madame Lagarde is under investigation by the Court Supérieure de Justice for allegedly abusing her power in bypassing the procedure to grant $300 million for a former French Minister and businessman Bernard Tapie. The Court was established by President Mitterrand to investigate irregularities committed by Cabinet Members, in the exercise of their function. Those elements should at least require a serious look, for a candidacy that cannot be treated as ideal, without further consideration. This being said, as Patrick Stewart of the Council on Foreign Relations wrote today: “The apparent lesson of this episode is that while emerging powers are quite content to criticize existing global institutional arrangements, they do not yet constitute an effective bloc that can unite behind an agreed program of action.”

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Gemma Godfrey: Russian Investment Opportunities: The Drivers and the Hidden Gems

May 31, 2011

From the world’s best performing index in the first three months of this year, to a laggard this quarter, the Russian index has offered dramatic returns as well as downside risk. What has driven investor sentiment and what are many investors missing? The World Leader Slips to World Laggard Russia’s RTS Index was the world’s best performing index in the first three months of this year but has now fallen by around 11% in value so far this quarter (Source: Bloomberg). Moves in this market are often attributed to sentiment over the oil price due to the significant revenues generated by the country exporting this commodity. Therefore speculation over economic growth (read: oil demand) is highly influential. This year has been no different. Turmoil in the Middle East can be attributed as one of the main drivers of a strong rally in oil in the first quarter and concerns over economic growth has caused a reversal since that time. However, is this too simplistic a view and aren’t there other factors to which an investor in Russia should be paying attention? Beyond Oil It is clear to see why investors place so much emphasis on the oil price as a dictator of Russia’s financial health. Supplying some 11.4% of the world’s oil supply last year, Russia is the ” biggest single source outside the OPEC cartel .” Although official figures calculate its contribution to Russia’s GDP at 9% , it is important to be aware that speculation over tax avoidance suggests the value may be nearer to 25% . Nevertheless, what is often overlooked is the specific oil price factored into their budget. For this year, a price above $75 /barrel will produce a deficit reduction. With Brent currently standing at $115 /barrel, a fall in the Russian Index in reaction to a fall in the oil price to anything above $75/barrel may be missing the point. Boosting Ties with Iraq With Russian oil fields maturing and production growth resting heavily on foreign investment , the country is looking externally for new sources. Iraq offers potential opportunities and TNK-BP , Russia’s 3rd largest oil producer and BP Plc’s 50-50 joint venture, isn’t holding back. The relationship between the two countries dates back many years and in 2008 Russia wrote off most of their $12.9bn debt mainly generated pre-gulf war from the Saddam Hussein government purchases of Soviet weapons . Interestingly, last October the Russian President, Dmitry Medvedev announced his country was ready to strengthen co-operation with Iraq, the same month TNK-BP gained the right to bid for 3 natural gas areas in the region, Mediating the Exit of Qaddafi Within the political arena, Russia has been just as active. In addition to fighting for a stronger developing market influence at the IMF, Russia has offered its services to facilitate the exit of Qaddafi from rule in Libya. This is the first time it has shown support for the NATO-led military campaign after abstaining from UN Security council vote in March which authorised the intervention and accusing NATO of violating the resolution by backing anti-Qaddafi rebels and causing civilian casualties from air raids. Due to the belief that Qaddafi has ” forfeited legitimacy “, they are willing to negotiate his fate with members of his entourage. Evidence of the country’s powerful network, the value of their political clout has been highlighted. Driving the Agriculture Market Back to commodities but from a different angle, the Russian weather is an influencer to watch for investing in the agriculture markets. Fine weather has prompted an upward revision of Russian grain production with the Federal Hydrometerological Center reporting the warmer weather has improved the prospects for crops. This has led to speculation that Russia’s ban on grain exports may be lifted on 1 July . Wheat future prices saw double digit losses. The Chinese Buyer One particular potential buyer of Russia’s resources is China, state media reported last Monday. China Investment Corp (CIC), the country’s $300bn sovereign wealth fund, was set up in 2007 to invest some of the country’s massive foreign exchange reserves. With the world’s largest foreign capital resource, at $3.0tn , they are keen to find better sources of return and commodities to fuel their rapid economic growth. G-8 Bullishness Boosting Appetite for Risk Despite these many factors which may influence Russia’s outlook, financially, economically and politically; its index continues to exhibit a strong correlation to the oil price. This week we’ve seen oil (and Russian equities) respond positively to the declaration by the Group of Eight that the global recovery is strengthening . But to differentiate between short-term over-reaction and more logical fundamental moves, being aware of all the issues will equip you with the insight to navigate this volatile but potentially profitable market.

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Ellen Brown: Japan Shows How to Defuse Debt Time-Bomb

May 27, 2011

[T]hreatening to default should not be a partisan issue. In view of all the hazards it entails, one wonders why any responsible person would even flirt with the idea. — Alan S. Blinder , Princeton professor of economics, former vice chairman of the Federal Reserve A game of Russian roulette is being played with the national debt ceiling. Fire the wrong chamber of the gun, and the result could be the second Great Depression. The first Great Depression led to totalitarian dictatorships, war to consolidate power, and concentrations of capital in the hands of a financial elite. The trigger was a default on the global reserve currency, in that case the pound sterling. The U.S. dollar is now the global reserve currency. The concern is that default could create the same sort of global panic today. Dark visions are evoked of the president declaring a national emergency, FEMA plans locking into place, camps being readied for protesters, and the secret government taking over . . . . This may all just be political theater, but do we really want to get close enough to the economic precipice to find out? The conservative ideologues toying with the debt ceiling are doing it to force cuts in the budget, a budget that was already approved by Congress. Congress is being held hostage by a radical minority pushing a risky agenda, one that is based on an economic model that is obsolete. High-stakes Gambling On May 16, the Wall Street Journal published an opinion piece titled ” The Armaggedon Lobby ,” which claimed that a “technical default” on the federal debt was just “political melodrama” and not really a big deal: [B]ond markets can figure out the difference between a genuine default when a country can’t pay its bills and a technical default of a few days if it serves the purpose of fixing America’s fiscal mess. Not so, said Saudi Prince Alwaleed bin Talal in a May 20 interview on CNBC. “That’s gambling. This is the United States. You’re leading the whole world. You cannot play games with that.” It is not just that the government could be brought to a standstill, with a third of its bills now being paid by borrowing or that interest rates would shoot up, forcing thousands of homeowners into foreclosure. Failure to pay on the national debt could trigger a default on the global reserve currency. As one commentator described what could go wrong: [T]he consequences of a US default could spark yet another global financial crisis. The US could lose its triple-A rating, which could cause a sell-off in Treasury notes by institutional and foreign investors. This sell-off could lead to higher interest rates, and banks’ balance sheets might be decimated by the decline in their bond portfolios. Thus, global banking and financial market liquidity could dry up. Lending between institutions and people or businesses could possibly cease altogether or become cost prohibitive. A Rerun of 1931? The sort of chaos that could ensue was seen when Great Britain reneged on its deal to redeem pound sterling banknotes in gold in 1931. The result was the worst global depression in history. When the pound went off the gold standard, markets panicked. People rushed to exchange their paper money for gold, in any currencies in which that was still possible. The gold wound up hidden under mattresses and in safety deposit boxes, unspent and the banks from which it was pulled, having no reserves to back their loans, quit lending or closed their doors. Credit froze; business ground to a halt. As other countries ran short of gold, they too were forced to take their currencies off the gold standard. The last holdouts suffered the most, including the United States, which kept its gold window open until 1933. The 19th century had been plagued by bank runs, caused by banks having too little gold to back their outstanding loans. The Federal Reserve was instituted in 1913 ostensibly to prevent those runs, but its levee did not hold back the run of the 1930s. In 1933, the country suffered a massive banking collapse, forcing President Roosevelt to declare a banking holiday and take the U.S. dollar, too, off the gold standard. Freed from the Bankers’ “Cross of Gold” The transition off the gold standard was a painful one but according to Beardsley Ruml, Chairman of the Federal Reserve Bank of New York, the country was the better for it. In a paper read before the American Bar Association in 1946, he said that going off the gold standard had finally allowed the country to be economically sovereign: Final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity. Freed from the strictures of gold, Roosevelt was able to jump-start the economy with deficit spending. As Marshall Auerback details , the next four years constituted the biggest cyclical boom in U.S. economic history. Real GDP grew at a 12% rate and nominal GDP grew at a 14% rate. Then in 1937, Roosevelt listened to the deficit hawks of his day and slashed the deficit. The result was a surge in unemployment, and the economy slipped back into depression. What lifted the country out of the doldrums was again deficit spending, liberally engaged in to fund World War II. In wartime, few people worry about the national debt. The debt grew to 120% of GDP — twice what it is today — and wound up sustaining another very productive period in U.S. history, one that set the country up to lead the world in manufacturing for the next half century. On Inflation and Taxes Ruml said federal taxes were no longer needed to fund the budget, which could be financed by issuing bonds. The principal purpose of taxes, he said, was “the maintenance of a dollar which has stable purchasing power over the years. Sometimes this purpose is stated as ‘the avoidance of inflation.’” The government could spend as needed to meet its budget, drawing on credit issued by its own central bank. It could do this until price inflation indicated a weakened purchasing power of the currency. Then, and only then, would the money supply need to be contracted with taxes. “The dollars the government spends become purchasing power in the hands of the people who have received them,” Ruml said. “The dollars the government takes by taxes cannot be spent by the people,” so the money supply can be contracted with taxes as needed. When the economy is in a recession, however — as it is now — the government needs to spend in order to get purchasing power into the hands of the people. Businesses cannot hire more workers until they have more customers demanding their products, and the customers won’t come until they have money to spend. The money (“demand”) must come first. Adding money will not drive up prices until the economy is at full employment. Before that, increasing “demand” will drive up “supply” by setting the engines of production in motion. When supply and demand rise together, prices remain stable. We now know that a government can go quite far into debt without a dangerous level of price inflation occurring — much farther than the U.S. has gone today. Besides World War II, when U.S. debt was 120% of GDP, there is the remarkable example of Japan. Japan has retained its status as the world’s third largest economy, although it has a debt to GDP ratio of 226% — and it is still fighting deflation. Critics of the deflationary theory point to commodity prices, which are soaring today. But if those prices were due to the economy being awash with “too much money chasing too few goods,” real estate prices would be soaring too. Instead, the real estate market has collapsed. What has actually happened is that the housing bubble has transmuted into the commodity bubble, as “hot money” has fled from one to the other. The overall money supply is still in decline . The deficit hawks have been predicting for years that the federal debt would sink the dollar and the economy, and it hasn’t happened yet. In fact the federal debt has not been paid off since 1835, and no disaster has resulted. The debt has not only been carried on the government’s books but has continued to grow, and the economy has grown and flourished along with it. This is not an economic anomaly. The economy has flourished because of the national debt. Nothing backs the currency today but “the full faith and credit of the United States.” Money is no longer a metal; it is an inflow and outflow, credits and debits . The liabilities of the government are the assets of the private economy. The national debt is what backs the money supply. Dealing with the Rising Cost of Debt Service There is a potential time bomb in a growing federal debt, but it is one that can be defused. The debt has risen from $10 trillion to $14 trillion just since the banking crisis of 2008, not from “entitlements” but due to the Wall Street collapse and bailout. Just the interest on this growing debt could cripple the tax base if interest rates were at normal levels, so they have had to be pushed almost to zero. The result has been to create a dollar carry trade . This has facilitated speculation in commodities, a major cause of today’s commodity bubbles. There is, however, a solution to this problem, and it was discovered by Japan. The government can spend, not by issuing bonds at interest to the public, but simply by creating an overdraft at the central bank, as Beardsley Ruml recommended. The Bank of Japan now holds an amount of public debt equal to the country’s GDP! As noted by the Center for Economic and Policy Research: Interest on [Japanese] debt held by the central bank is refunded back to the treasury, leaving no net cost to the government on this debt. . . . Japan continues to experience deflation, in spite of the fact that its central bank holds an amount of debt that is roughly equal to its GDP. This would be equivalent to the Fed holding $15 trillion in debt. Like the Bank of Japan, the Federal Reserve now returns the interest it receives to the government. With a rising interest tab on the federal debt no longer a problem, private interest rates could be allowed to rise to normal levels. Today the Fed is not permitted to buy bonds directly from the Treasury but must go through middleman bond dealers. But that problem too could be fixed. In a supporting statement in 1947, Federal Reserve Chairman Marriner Eccles discussed a bill to eliminate the unnecessary cost of these middlemen. He said the Federal Reserve had been allowed to purchase securities directly from the government from its inception in 1914 until the Banking Act of 1935. Then: A provision was inserted in that act requiring all purchases of government securities by Federal Reserve banks to be made in the open market, which means purchased chiefly from dealers in Government bonds. Those who inserted this proviso were motivated by the mistaken theory that it would help to prevent deficit financing. . . . Nothing constructive would be accomplished by the proviso that the Reserve System must purchase Government securities exclusively in the open market. About all such a ban means is that in making such purchases a commission has to be paid to Government bond dealers. The interest cost and the bond dealers’ cut could both be eliminated by allowing the Treasury to borrow directly from its own central bank, interest free. Nothing to Fear But Fear Itself We have been frightened into believing that government debt is a bad thing, but nearly all money today originates as debt. As Marriner Eccles observed in the 1930s, “That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.” The public debt is the people’s money, and today the people are coming up short. Shrinking the public debt means shrinking more than just the services the government is expected to provide. It means shrinking the money supply itself, along with the ability to provide the jobs, wages and purchasing power necessary for a thriving economy. Originally posted on Asia Times .

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Ukraine to reduce Russian gas imports

May 17, 2011

Ukraine to reduce Russian gas imports

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Naveen Jain: Our Sputnik Moment: US Entrepreneurs Needed for the "Space Race"

April 20, 2011

Fifty years ago, Russian cosmonaut Yuri Gagarin became the first man in space. It was an event that spurred on America to catch up and exceed Russia’s achievement, as President John F. Kennedy outlined in 1962: “…this country of the United States was not built by those who waited and rested and wished to look behind them. This country was conquered by those who moved forward — and so will space.” Moving forward to 2011, it looks like we’re in a similar “catch-up” position. Russia is greatly expanding its space program and is considering investing $7 billion to build a base on the Moon as part of a plan to send a mission to Mars. China’s Lunar Exploration Program has announced its intention to mine the Moon for the substance Helium-3, and the Russian government has made similar statements about its wish to harvest it. While Kennedy exhorted Americans to throw their support behind the government’s efforts to reach the Moon, President Obama has made it clear that this job now belongs to private enterprise. In his 2011 State of the Union speech, he referred to this generation’s “Sputnik moment” — that is, the realization that a foreign superpower could usurp our economic leadership position. The president has indicated that the private sector should take over the job of Moon exploration, so now’s the time to use private enterprise know-how to tap into resources beyond those of the Earth. There have been some steps in the right direction. NASA has committed $30 million to buy information that is gleaned from future missions to the Moon; the money has been contracted to six teams who are also competing for the Google Lunar X PRIZE, managed by the X PRIZE Foundation . That’s a good beginning, but government and private enterprise need additional mechanisms to find funding, and make government expenditures for data worth the investment. As Obama has logically said, NASA’s mission should focus on exploring deep space, and private companies should take on the task of building ships to carry cargo and passengers to the International Space Station, and to the Moon. Rocket companies can get in on this market, as can mining companies. The time may be right to think about going to the Moon as a business rather than a hobby. That’s the goal of Moon Express , a new company of which I am a cofounder. We’re working on building vehicles that can deliver payloads to the Moon and search the lunar surface for precious materials. Why does this discussion of space exploration matter now, especially at a time when so many problems demand our attention here on this planet? Are we trying to go back to the Moon just because we can or is there a benefit to the world in lunar exploration? The answer is the latter. Moon exploration promises to yield new energy sources that could finally break our hold on fossil fuel, and our overdependence on sometimes hostile nations that control its supply. But this time around, we don’t need to rely on government funding to fuel Moon exploration — we can encourage private entrepreneurs to take on this role. The value in Moon exploration comes in part from the presence of valuable resources such as Helium-3, a source of energy that is rare on Earth but is abundant on the Moon. It can “generate vast amounts of electrical power without creating the troublesome radioactive byproducts produced in conventional nuclear reactors,” a Popular Mechanics article explains. In addition, platinum is present on the Moon, and could be mined for use in energy applications, where it is a key catalyst for fuel-cell vehicles. If China and Russia succeed in their goals to obtain Helium-3 and other rare resources for the development of energy, the U.S. could end up relying on these countries for its own energy needs. That’s a tricky thing from a political standpoint: What happens if our relations with these countries turn sour? What happens if Russia and China decide to severely restrict the sale of Helium-3 to other countries, which will drive prices sky-high? We’ll be in the same boat that we’re in now, where we are beholden to oil-rich countries that are often in turmoil. However, if we allow private enterprise to explore and take advantage of the Moon’s resources, we may set ourselves on the road to energy independence. To re-launch our space program, we need private enterprise to step into the void. Government funding only needs to take us to the point where the technology has been developed to get us to the Moon — and we already have that. It’s a model that’s been used successfully in the past: the military first developed the Internet, and private enterprise then seized on its commercial potential; the same thing occurred with GPS technology. Naturally, there are barriers to entrepreneurs leading the charge to the Moon. For one thing, ownership is always a point of discussion — but the fact is that “everyone” and “no one” owns the Moon. Much like when mining resources from international waters (as in fishing), entrepreneurs would need to respect the rights of other business and government players. There is legal precedent for explorers finding and keeping resources that they have uncovered via private investment. There’s also the question of whether we can transport resources from the Moon in a cost-effective manner. Perhaps the cost of rocket launches — by far the greatest expense for a Moon mission — will come down as more entrepreneurs move into this market, or new technology will make them cheaper. It’s even possible to create rocket fuel from resources on the Moon, which would slash return costs and even lower launch costs from Earth. On the other hand, mining and transporting these resources back to the Earth could depress prices as supplies grow, making such ventures less appealing to entrepreneurs. As with all private market endeavors, many will want to take a wait-and-see approach to the Moon’s market potential. But therein lies the opportunity for early movers who apply entrepreneurship to the opening of whole new markets, and in the case of the Moon, a whole new world.

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Steve Rosenbaum: Can Venture Capitalize on Curation?

April 8, 2011

The sheer volume of Web content makes it clear that content without curation is simply noise Yuri Milner, the VC whose Russian Digital Sky Technologies (DST) group has put money into Facebook, Zynga and Groupon, was quoted at the Abu Dhabi Media Summit as saying, Curation is the next big thing. Said Milner: “The question is, ‘How do you select what’s relevant for you?’ And my guess is that it’s probably going to be 50% driven by your network and 50% driven by algorithms.” Upon hearing Milner’s prophetic words, thousands of PowerPoint decks were reworked overnight to find a way to edge the word “Curation” into executive summaries. An understandable impulse. But perhaps premature. What Yuri meant, and what venture is now scouring the incubators and business plan competitions for, is a way to manage the madness that is promiscuous production of data. But first, let’s look back at the history of why venture has been allergic to content. In order for investors to be able to put a small number of dollars in — and get an outsized return out — businesses need to be able to grow very large with relatively little human intervention. The portfolio theory of investing requires that the hits are big, and the misses are manageable. Content hasn’t ever fit into this equation. Studios tried to balance hits and misses, but the spiky nature of hits and the relatively large cost of failures has made hollywood a game that only those with money to lose could afford to play. VCs never liked those odds. Now, along comes curation with an entirely different economic bargain. Curation is the mixing, and re-mixing of content to create things that are partially or wholly new. Quickly, venture took notice. Why? Because now content wasn’t about ‘creation’ it was about finding, sorting, filtering, contextualizing. Sure, there was a human element to curation. But the venture economic could kick in, in ways it never could. Audiences and revenue could grow, and margins could grow while the costs of curation remained relatively fixed. There are some early wins already. Huffington Post’s $315 million exit to AOL was like a starting bell for venture sized returns. So where are VC’s looking in the curation space? There are three categories that have the potential to attract venture dollars. Curation software . There are already a large number of software solutions looking to act as curation solutions. Many of them curate the growing twitter content stream, while others look to offer users a way to search multiple social networks, and produce a single curated content output. Venture would do well to look for a service that breaks out ahead of the pack – and bet the market leader. Curated content platforms . Sites like SBNation, a collection of over 290 individual communities, each with coverage and conversation led by fans. There’s no doubt that the larger of these communities themselves will catch the eye of the Venture community. (Comcast Interactive Capital (CIC) and Accel Partners are in SBNation). Their move in to tech with the announcement of a deal with the former editors of Engadget is a sign of things to come. Platform Services. The rapidly growing nature of web content makes it critically important that curation and publishing platforms are SaaS offerings that have access to scale and support. This means that while some folks will try to build curation platforms, the large majority of content oriented entrepreneurs will choose to build on existing or emerging curation platform offerings. Curation has come of age. The sheer volume of Web content, and the increasing demand of both content consumers and Web advertisers makes it clear that content without curation is simply noise. There is huge value that will be created as the web shifts from content created for search to curation built to find and contextualize. Stay tuned for big wins in this space.  (Originally published in Vator News )

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Representatives Defend Joint Strike Fighter Program Against ‘Irresponsible’ Budget Cuts

April 5, 2011

By Colin Clark Editor, AOL Defense WASHINGTON — As GOP budget ace Rep. Paul Ryan rolled out his ambitious 2012 budget plan, supporters of the country’s largest defense program urged their House Budget Committee colleagues not to touch the Joint Strike Fighter program. An April 1 letter, signed by 41 members of the House, describes Lockheed Martin’s JSF program as a “quantum leap” over current US fighters, such as the F-15 and the F/A-18. The letter points to Chinese-designed and -built J-20 stealth fighter and its Russian cousin, saying those planes help make the case for the JSF. The signers said they would “oppose any action” that might hurt the program. Their fears may be overblown; Ryan’s budget proposal largely gives a pass to defense spending. The proposed $692.5 billion for the Pentagon’s budget marks an important victory for mainline GOP members over the Tea Party caucus. House Armed Services Committee chairman Rep. Buck McKeon and Rep. Todd Akin have strongly supported of defense spending, even in the face of Tea Party calls for cuts. The Obama administration requested $712 billion in defense spending for 2011, with $159 billion of that intended for operations in Afghanistan and Iraq. That puts the requested base budget for the Pentagon at $549 billion. Akin may have played a key role in turning the tide on the defense budget. As a member of both the HASC and the Budget Committee, he has been arguing for weeks with his GOP budget colleagues to prevent cuts to defense spending. In a commentary posted to the conservative Heritage Foundation’s blog The Foundry last week, Akin rejected the argument that Pentagon spending on weapons is inherently wasteful: While we may not agree that all of these missions are essential, it would be irresponsible to cut funds for troops that are in harms’ way. While some may think that downsizing defense is as simple as cutting funding for futuristic weapons technology or changing our foreign policy posture, the reality is that most defense funding is paying for the military we have today, including fuel, maintenance, health care and salaries. Cutting defense spending will have a serious impact on the Soldiers, Sailors, Airmen and Marines that are serving our country today as well as in the future. Secondly, many who propose defense cuts argue that there must be waste in a budget the size of the Department of Defense, so cutting the defense budget is reasonable. I agree that there is waste, but simply chopping a percentage off the top of defense funding is an inefficient and irresponsible way of trying to eliminate wasteful spending. Congress is part of the problem, with funding levels that are unpredictable and oversight that is often weak or lacking. Getting rid of waste, fraud and abuse is necessary but it is a wholly inadequate budget strategy because these cuts represent a small percentage of the defense budget. Ryan’s budget plan echoes Akin, arguing that “defense spending as a share of the budget has fallen from around 25 percent thirty years ago to around 20 percent today.” Eager to bring Tea Party skeptics on board, Ryan notes, “Defense spending should be executed with greater efficiency and accountability. But responsible budgeting must never lose sight of the fact that the first responsibility of the federal government is to provide for the defense of the nation.” Launching in Spring 2011, AOL Defense will provide news, insight and tools about the defense sector. Follow Colin on Twitter at @colinclarkaol .

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Raymond J. Learsy: Nuclear Nay-Sayers and the National Interest

March 28, 2011

The events in Japan as they relate to issues of nuclear energy have been an urgent and important clarion call to all regarding the safety of our nuclear facilities and the role nuclear energy will play in our energy future. It is an issue of vital importance to the nation given its impact on global warming, national security and the economy. It is an issue that needs be examined openly and not simply left to those who are pre-programmed to present us with the familiar saws railing against nuclear energy with the tailwind of current events at their back. Almost the first out-of-the-box of nuclear energy dismissal was Rep. Ed Markey (D-Mass.) who on March 13, but two days after the tsunami hit Japan, set forth a list of nuclear policy objectives ranging from a call to imposing a moratorium on siting new reactors to requiring a review of the U.S. Department of Energy’s loan guarantee program, without which the construction of new facilities would be brought to a screeching halt. All points certainly to be put on the table, but Markey’s haste to be out front bespeaks where he is coming from. His views were more succinctly enunciated but a week later on March 20th speaking to ‘ Face the Nation ‘, he was quoted: “the nuclear industry as an electrical-generating part of our mix for the future” would likely “meet its maker” in light of the recent tragedy in Japan. Coming from the ranking member of the house Energy and Commerce Committee one can well imagine what lies ahead. Then we have Mr. Gregory Jaczko, head of the Nuclear Regulatory Commission testifying before the Energy and Commerce Committee about the nuclear situation in Japan. His testimony was broadcast around the world and fueled growing criticism of Japan’s government handling of events while frightening all who were paying attention. The New York Times would banner headline its first page on March 17, ” U.S. Sees ‘Extremely High’ Radiation Level at Plant, Focusing on Spent Fuels Impact ” and went on to write “More Dire Appraisal of Crisis Creates Split With Japan.” In these situations perhaps it is best to err on the side of caution. Yet in the retrospect of now twelve days since Jaczko’s testimony, it would appear the Japanese assessment was closer to the mark. Interestingly Gregory Jaczko worked as a Congressional Science Fellow on Representative Markey’s staff. Jaczko also seved as Senator Harry Reid’s science policy advisor. And therein lies the rub. Senator Harry Reid (D-Nev), probably more than anyone in public office has slowed down to a virtual halt the expansion of nuclear power in the United States (not a single nuclear power plant has been built here since the late 1970′s) by forcing the shutdown of the multi-billion Yucca Mountain, Nevada repository project for nuclear waste. In doing so he enormously complicated the siting of new plants and the safe handling of spent fuels, an issue now again in laser-like focus in response to the Japanese disaster. Without a program to effectively deal with nuclear waste, pools holding spent fuels at nuclear plants in the United States are even more heavily loaded than those at the Japanese reactors. Yet no plan has emerged to replace the Yucca Mountain repository, ( NYTimes : ” Japan Nuclear Crisis Reviving Long U.S. Fight On Spent Fuel ” 03.24.11). Certainly at Harry Reid’s insistence, President Obama told his Department of Energy to withdraw their application for the construction license for Yucca Mountain facility that was submitted to the Nuclear Regulatory Commission (NRC). When the Energy Department sought withdrawal of their license application last June, a panel of three administrative law judges maintained there was no provision in law to do so and rejected the NRC’s request to withdraw. The issue was automatically appealed to the full five member NRC . With one commissioner having recused himself the NRC voted 2-to-2 leaving the commission deadlocked thereby failing to override the panel of judges ruling. Thus the administrative judges’ ruling was left to stand. However Commission Chairman Jaczko has refused to bring the matter to a final vote, continuing to leave the issue unsettled, much to the consternation of many in Congress, not to speak of the utility industry and raising the question altogether, to whose benefit? Solution to the waste disposal problem has been under endless examination. Some years ago this writer proposed, at risk of being pilloried, siting such a facility in northern Alaska much in keeping with the effectively resolved Russian depots on the Novaya Zemlya archipelago in the Northern Arkhangelsk region (please see ” Nuclear Waste: ‘Not in My Backyard!’ Then Whose? ” 07.07.06) Another crucial initiative that could play a major role and has in many national nuclear programs such as that of France as but one example, is the reprocessing of spent fuel to recover plutonium produced in uranium powered reactors for reuse as reactor fuel. It is an issue that has been off the table in the U.S. since the 70′s when Jimmy Carter banned the process because of proliferation concerns (please see ” Climate Change and Nuclear Energy: America’s Missed Opportunity “, 12.13.09). Certainly the benefits and risks inherent in a nuclear energy program are enormous. It is important for the nation’s future when all is said and done, in spite of the current reaction to events in Japan, that the benefits attributable to nuclear energy are given temperate and fair consideration in all policy assessments.

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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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McConnell Issues Threat Over The Deficit

March 13, 2011

WASHINGTON — Senate Minority Leader Mitch McConnell issued a direct challenge to the Obama administration on Sunday, telling “Fox News Sunday” that Republicans will vote against raising the debt ceiling if it is not coupled with a “credible effort” to shrink the nation’s overall debt. “I don’t intend to support raising the debt ceiling, and I don’t believe any Senate Republicans do unless we do something important related to spending and debt,” McConnell said. “It is going to have to carry something with it that the markets, foreign countries and the American people believe is a credible effort to get a handle on spending and the debt effort.” The United States will reach its debt ceiling within the next few months, setting the stage for another battle over government spending. Lifting the debt ceiling, or authorizing the Treasury to borrow money to pay its obligations, was once a routine action. But Republicans have opposed increasing the limit in recent years, voting against it multiple times in the 111th Congress. Because Democrats hold a majority in the Senate, efforts to block an increase to the debt limit have been thwarted. McConnell acknowledged that Republicans would be out-voted on raising the debt ceiling. “The Democrats can raise it themselves if they choose to and try do nothing whatsoever about the problem,” he said. Not raising the debt limit would have a disastrous effect on financial markets by causing the United States to default on its loans, according to government officials. Sen. Mark Warner (D-Va.), a member of the bipartisan “Gang of Six” working toward shrinking the deficit, told “Fox News Sunday” he opposes Republican efforts to tie the debt ceiling vote to other actions on the deficit. “I get a little worried when we start tying it to the debt limit vote,” Warner said. “Because as Chairman Ben Bernanke of the Federal Reserve has said, if we play Russian Roulette with the instability of the financial markets, if we were to default on America’s obligation to pay, you could end up seeing us back in a financial crisis like 2008.” Senate Majority Whip Dick Durbin (D-Ill.) said Congress should focus on shrinking the deficit, but must be realistic about the timeline. “We’re not going to balance America’s budget in the next six months,” Durbin said on CNN’s “State of the Union.” “It’s time for people of goodwill in both political parties to sit down and work it out. If there are going to be new revenues or cuts in other areas, let’s get it done. Let’s move forward.”

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SLIDESHOW: The World’s Nine Richest People

March 9, 2011

This 25th year of tracking global wealth was one to remember. The 2011 Billionaires List breaks two records: total number of listees (1,210) and combined wealth ($4.5 trillion). This horde surpasses the gross domestic product of Germany, one of only six nations to have fewer billionaires this year. BRICs led the way: Brazil, Russia, India and China produced 108 of the 214 new names. These four nations are home to one in four members, up from one in ten five years ago. Before this year only the U.S. had ever produced more than 100 billionaires. China now has 115 and Russia 101. Atop the heap is Mexico’s Carlos Slim Helu , who added $20.5 billion to his fortune, more than any other billionaire. The telecom mogul, who gets 62% of his fortune from America Movil , is now worth $74 billion and has pulled far ahead of his two closest rivals. Bill Gates , No. 2, and Warren Buffett, No. 3, both added a more modest $3 billion to their piles and are now worth $56 billion and $50 billion, respectively. Gates, who now gets 70% of his fortune from investments outside of Microsoft , has actually been investing in the Mexican stock market and has holdings in Mexican Coke bottler Femsa and Grupo Televisa . While nearly all emerging markets showed solid gains, wealth creation is moving at an especially breakneck speed in Asia-Pacific. The region now has a record 332 billionaires, up from 234 a year ago and 130 at the depth of the financial crisis in 2009. Sizzling stock markets are behind the surge. Three-fourths of Asia’s 105 newcomers get the bulk of their fortunes from stakes in publicly traded companies, 25 of which have been public only since the start of 2010. America’s wealthiest still dominate the global ranks, but the U.S. is losing its grip. One in three billionaires is an American, down from nearly one out of two a decade ago. It has 10 more than last year but 56 fewer than its 2008 peak. The U.S. is adding new billionaires at a much slower pace; just 6% of its 413 billionaires are new this year compared with 47% of China’s and 30% of Russia’s. Still there are plenty of inspiring newcomers who figured out clever ways to get rich. The most obvious example is the success of Facebook, whose soaring valuation over the past couple of years–based on the most recent institutional round the company is worth $50 billion–has spawned six billionaires. Leading the group is Facebook’s CEO Mark Zuckerberg , whose fortune jumped 238% to $13.5 billion in the past year. Also joining him in the world ranks are his cofounders Eduardo Saverin and Dustin Moskovitz , its first president Sean Parker (played by Justin Timberlake in The Social Network) and the Russian Internet investor Yuri Milner. Moskovitz, 26, is eight days younger than his former college roommate Zuckerberg, making him the world’s youngest billionaire. The frenzy among big investors for all things social pushed up private market values of online gaming outfit Zynga and online group-buying site Groupon, creating two more new billionaires, Mark Pincus (who taught people to farm on Facebook) and Eric Lefkofsky (who was Groupon’s lead investor). Other notable American newcomers include Do Won and Jin Sook Chang, the cofounders of Forever21, and Chris Cline, who owns 3 billion tons of coal reserves, mostly in Illinois. Why do we spend so much time counting other people’s money? Because these moguls have the power to shape our world. Telecom billionaire turned prime minister Najib Mikati is keeping Lebanon’s government together. Ernesto Bertarelli, who lost the America’s Cup to Larry Elliso n last year, is now focusing on saving the oceans from mass extinction. Gates and Buffett have already traveled to three continents working to change giving practices among the ultra-rich. Where their inspiration leads, we will follow. A note on methodology: More than 50 reporters in 13 countries worked on compiling the list this year, valuing individuals’ public holdings, private companies, real estate, yachts, art and cash. Net worths were locked in using stock prices and exchange rates from Feb. 14. For more on all 1,210 of The World’s Billionaires, go to the Forbes Website . Click here to see the entire list of The Richest People On The Planet

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Fiat submits agreement to Russian govt

February 27, 2011

Fiat submits agreement to Russian govt

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Judge Read Khodorkovsky Verdict Against His Will, Assistant Says

February 14, 2011

MOSCOW — The assistant to the judge who convicted oil tycoon Mikhail Khodorkovsky said Monday that the judge did not write the verdict and read it against his will in the Moscow courtroom. Judge Viktor Danilkin found Khodorkovsky guilty in December of stealing oil from his own oil company and extended his prison term through 2017. The judge’s assistant, Natalya Vasilyeva, who is also the spokeswoman for the court, said the verdict was imposed upon the judge when it became clear that his own ruling would not please the top Russian officials behind the politically driven case. “Danilkin began to write the verdict. I suspect that what was in that verdict did not suit his higher ups, and therefore he received another verdict, which he had to read,” Vasilyeva said in an interview broadcast on the cable television channel Dozhd and printed in the online news portal Gazeta.ru. Danilkin issued a brief statement Monday saying he was “convinced that the assertion by Natalya Vasilyeva was nothing more than slander.” Prime Minister Vladimir Putin has been seen as the driving force behind the unrelenting legal attack on Khodorkovsky, who has been imprisoned since 2003. Shortly before the verdict was announced, Putin called Khodorkovsky a thief and said he should stay in prison. Vasilyeva’s claim appeared to be a public acknowledgment of what many observers of the trial had assumed. During the 20-month trial, Danilkin had given the impression that he was seriously considering the merits of the case and often joined the defense lawyers and audience in laughing at the prosecutors’ gaffes. He treated Khodorkovsky with respect and allowed current and former government officials to testify in his defense. But when he began reading the verdict – a summary of the trial that took him four days to get through – it was immediately clear that whatever hopes there had been for leniency were gone. He rarely raised his eyes while speed reading through the hundreds of pages. Khodorkovsky’s mother put it bluntly, saying: “They must have tortured him to get him to say what he did.” The defense lawyers said much of the verdict was copied from the indictment and the prosecutors’ final arguments.

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Video: HSBC’s Morozov Says Russian Rate Rises Justified in 2011

January 24, 2011

Jan. 24 (Bloomberg) — Alexander Morozov, chief economist for Russia at HSBC Holdings Plc, discusses the outlook for the Russian economy and monetary policy. He speaks from Moscow with Mark Barton on Bloomberg Television’s “Countdown.”

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Deborah Levine: Unemployment: Dispatch From Among the 9.4%

January 20, 2011

A week ago, I found myself surrounded by a room full of strangers listening to confident young man expound on the dos and don’ts of resume writing and acing a job interview. Ok, so “found myself” isn’t exactly accurate. In truth, I was required to be there by the Department of Labor, as were my classmates who, like me, had all been collecting unemployment for at least six months, most of us more. We were a diverse group, united by the fact of being out of work for longer than the higher-ups at the DOL believe we should be. A little guidance was what we needed, our Job Search Follow-Up summonses explained, in the form of a mandatory hour-long workshop on the myriad ways in which the Department of Labor is here to help — preceded by 60 minutes of waiting in an unstaffed windowless room wondering if anyone actually knew we were there. If we failed to attend, the letters said, we would risk losing our weekly unemployment benefits. The room was full. The workshop was led by a deep-voiced 30-something man in a standard-issue jacket and tie. I had to give the guy credit. Day in and day out he stands before countless representatives of the disgruntled formerly-employed and manages to maintain both professionalism and a sense of humor while doing so. Ironically, as jobs go, telling people how to get one — especially people who didn’t ask in the first place — is probably not high on anyone’s list. Among our instructor’s words of wisdom was a warning: “Showing up for an interview 15 minutes early is appropriate — showing up an hour early is desperate,” and an existential question to ponder: “People put on masks every day — to the employer, are you the true you or are you the interview you?” My classmates and I listened dutifully to our leader, hopeful that if we just sat quietly and let him do his thing, we could be out of there in less than the proscribed hour. But he wanted class participation, and so, ever covetous of our weekly $405 checks, we participated. From their replies to questions about the average length of a job interview and the proper timing of a thank you note, I learned a few things about my classmates. My neighbor to the right was a former professor of Russian history so concerned with following the letter of the law that he didn’t file his claim during the week he spent interviewing at a University in Florida because he wouldn’t be able to answer truthfully that we was “ready and able to work” in New York. On my left was a former Human Resources manager with whom the instructor frequently checked his facts, in front of her a client services type copiously taking notes, and behind me a media Jill-of-all-trades not unlike myself, a writer and editor whose position was “eliminated” in a company reorganization after I loyally and enthusiastically put in over a decade at what I had once considered my dream job. In the 19 months since I was laid off (19 and a half, but who’s counting?), I’ve experienced many “firsts”: first time filing for unemployment, first time going into double-digit credit card debt, first time dipping into my rolled-over 401K. Withdrawing from my retirement savings more than two decades before I was technically eligible was something it never occurred to me I might do, let alone do again and again. In the past year alone, overdrawn checking accounts have forced me to tap those once-taboo funds three times, diminishing my meager nest egg nearly by half. Last year’s monetary gifts from relatives earmarked for my kids’ college accounts went instead to bills and rent. On a more positive note, being “downsized” has meant not being a full-time working parent for the first time since I became a mother. This too has led to a number of unexpected firsts: first time picking up my kids at dismissal time rather than from after-school (I actually had to ask someone where in the building I would find them at 3), first time accompanying them on a field trip without nagging guilt about skipping out on work, first time staying home with a sick child without furtively checking my email while playing Connect Four. I’m 40-years-old and for the first time in my adult life I honestly have no idea what the future holds in the way of a career or overall financial security. Still, I know I’m among the lucky ones. Just as my severance was ending a year ago, my husband — who had been laid off from his own publishing job two years earlier — miraculously landed a long-term freelance assignment and is now slated to become staff. Rather than how we’ll pay the rent or make our car payments, our worries are now of the slightly less dire “How will we pay for summer camp, let alone college?” and “Will we ever get out of debt?” variety. We are resigned to having no washer-dryer, dishwasher or second bathroom for the foreseeable future. Having lost faith in the concepts of job security and financial stability, it’s the unforeseeable future we worry about now. While continuing to plug away at freelance work, peruse the industry job sites and pound the pavement for interviews, I’ve gone back to school for yet another degree. This time I’m studying to be a teacher, one of the most underrated jobs one can have in this country, but also among the most rewarding. I have no illusions that I’ll ever be able to kick up my heels and relax into retirement. But if I have to be working for a paycheck into my old age, at least as a teacher I’ll be doing something positive for the world, rather than promoting products I no longer believe in that this planet doesn’t need. Of course, no one’s hiring teachers around here right now either. But a girl’s gotta have a dream.

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Video: BP’s Svanberg Says Rosneft Agreement `Good Deal for Us’

January 15, 2011

Jan. 14 (Bloomberg) — Carl-Henric Svanberg, chairman of BP Plc, talks about BP’s agreement to form a strategic alliance with Russian state oil producer OAO Rosneft. BP agreed to swap a $7.8 billion stake in the company for a 9.5 percent share of Rosneft as part of a drive to extract billions of barrels of petroleum from above the Arctic Circle. Svanberg talks with Ryan Chilcote on Bloomberg Television’s “Bloomberg Rewind.” Bloomberg’s Matt Miller also speaks. (Source: Bloomberg)

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Video: Vale de Almeida Says Europe Will `Safeguard’ the Euro

January 15, 2011

Jan. 14 (Bloomberg) — João Vale de Almeida, the European Union’s ambassador to the U.S., discusses the European debt crisis and BP Plc’s agreement to form a global strategic alliance with Russian state oil producer OAO Rosneft. BP agreed to swap a $7.8 billion stake in the company for a 9.5 percent share of Rosneft as part of a drive to extract billions of barrels of oil from above the Arctic Circle. Vale de Almeida talks with Carol Massar and Matt Miller on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Video: Licamele Says BP-Rosneft Deal `Breakthrough’ for Russia

January 14, 2011

Jan. 14 (Bloomberg) — Scott Licamele, a consultant for Emerging Markets Investment Advisory, and Bloomberg’s Ryan Chilcote talk about BP Plc’s agreement with Russian state oil producer OAO Rosneft to form a global strategic alliance. BP will take 9.5 percent of Rosneft shares after the agreement and the Russian company will hold 5 percent of BP, valued at $7.8 billion, according to a statement released during a signing ceremony in London. The companies agreed to develop three blocks in Russia’s Arctic Ocean. Licamele and Chilcote talk with Pimm Fox and Julie Hyman on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

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Video: Weiss Says Rosneft Deal May Give BP Access to Resources

January 14, 2011

Jan. 14 (Bloomberg) — Philip Weiss, an analyst at Argus Research, talks about BP Plc’s agreement with Russia’s state oil producer OAO Rosneft to form a global strategic alliance. BP will take 9.5 percent of Rosneft shares after the agreement and the Russian company will hold 5 percent of BP, valued at $7.8 billion, according to a statement released during a signing ceremony in London. The companies agreed to develop three blocks in Russia’s Arctic Ocean. Weiss talked with Carol Massar and Matt Miller on Bloomberg Television’s “Street Smart” before the statement was released. (This is an excerpt of the full interview. Source: Bloomberg)

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EXCLUSIVE: Obama Team Dysfunction Hurt Economic Policy, Says New Epilogue To Book

December 30, 2010

Some revelations about the Obama administration detailed in the new epilogue to the upcoming paperback release of Jonathan Alter’s bestseller, “The Promise,” probably won’t please too many folks at the White House. Alter claims that a dysfunctional relationship between top White House aides hurt the administration’s policy on job creation, the Consumer Financial Protection Bureau was almost dropped from financial reform legislation and was only reinstated after complaints by Elizabeth Warren, and Bill Clinton continually grumbles about being disrespected by the administration. The Obama administration’s perceived failure to take laser-like aim at the unemployment crisis was partly due to the dysfunctional relationship between White House chief of staff Rahm Emanuel, top economic adviser Larry Summers and senior adviser David Axelrod, specifically the intransigence of Summers, according to Alter: “The inability to pivot in 2010 to a single-minded focus on jobs was a by-product of what one senior aide called “dysfunction” between Emanuel, Summers, and Axelrod. Rahm had always admired Larry, but he was becoming exasperated with his failure to give him a jobs plan he could sell. ‘Week after week, Rahm would say, ‘Let’s explore this’ or ‘How about that?’ and Larry would slow-walk everything,’ recalled one senior advisor. ‘He basically doesn’t believe in the government helping small business’.” Alter writes that the CFPB survived certain death only because of Warren’s commitment: “The most popular provision of Dodd-Frank almost didn’t happen. In late 2009 Elizabeth Warren learned that a proposed bureau of consumer financial protection had been dropped from the bill. She went to the White House to object, and the bureau, to the dismay of predatory lenders, was reinstated.” Obama’s relationship with the Clintons remains strained and Bill Clinton constantly complains in private about how he’s been disrespected by the administration, writes Alter. Though they talk frequently, the former president was annoyed that Obama didn’t give him credit for helping to negotiate a spy swap that led to the release from Russian jails of four Russians who had been working for the CIA (in the wake of the bust of Russian spies living in American suburbs six months ago), Clinton’s aides tell Alter. In addition, Clinton was miffed that Samantha Power, who insulted Hillary during the 2008 campaign, was chosen as an emissary to Bosnia in July. (“Bill Clinton might not have accepted the job, but he wanted to be asked,” Alter writes.) “An old friend compared him [Clinton] to a big puppy dog who just needed some attention to be happy and helpful.” Clinton felt dissed because, after negotiating the release by North Korea of two imprisoned American journalists, he was told to travel on a separate plane so as not to overshadow the arrival of the women. “Some of these guys in the White House act small,” one aide told Alter. And Clinton’s team was angry that former protégés like Rahm Emanuel didn’t show the former president proper respect. After Clinton “worked like a nerd” to prepare a detailed 30-page memo on how to incentivize banks with loan guarantees to spur job creation, the White House ignored the memo for a few months, and then treated Clinton like a “prop” during Obama’s meeting with CEOs. When a Clinton aide complained to Emanuel, “Are you serious?”, the chief of staff replied that Clinton should be grateful he was on the president’s schedule at all, writes Alter. “Clinton felt better disposed toward his 1992 opponent, George H.W. Bush… one senior aide described Bush as a ‘father figure’ to Clinton, who never knew his natural father…” Tough media coverage continued to annoy the administration. When the New York Times reported in August that BP was rising to the challenge of cleaning up the oil spill but hardly noted the administration’s role, Obama snapped, “I’m getting pounded for not pushing BP hard enough and now they turn around and say BP did an acceptable job in spite of Obama. We can’t win.” Alter details Obama’s poisonous relationship with Congressional Republican leaders John Boehner and Mitch McConnell — though the president talked to John McCain in spite of his 2008 rival’s anti-Obama rhetoric, he refused for months to meet one-on-one with McConnell, because he thought it was unfair to Senate Majority Leader Harry Reid. After a frustrating mid-summer meeting with Republican leadership at the White House, Obama expressed his annoyance at Boehner’s insistence on extending tax cuts for the wealthy despite the budget deficit. The president told friends: “All I want for Christmas is an opposition I can negotiate with.” The White House has not yet responded to a late-afternoon request for comment.

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Groupon Raises $500 Million

December 30, 2010

NEW YORK — Groupon Inc., the fast-growing Internet startup that offers local deals and discounts to members, has raised $500 million of the $950 million it is planning to collect in its latest financing round. The Chicago company said in a regulatory filing Thursday it plans to use up to $344.5 million of the proceeds to buy back shares from existing shareholders, including founder and CEO Andrew Mason. Groupon raised the money just a few weeks after Google Inc.’s attempt to buy the 2-year-old company for a reported $5 billion to $6 billion fell through. If it hadn’t, it would have been Google’s largest acquisition. Previous funding – $135 million – came from Mail.ru Group, also known as Digital Sky Technologies, a Russian Internet investment firm that also holds a stake in Facebook. Groupon employs about 3,000 people, about 1,000 more than the much-larger Facebook. Most of these people work in sales, dealing with local and national merchants who set up discount deals. This has some analysts questioning how easily Groupon can grow its business, since it needs to hire a lot of salespeople to set up deals. Groupon’s more than 35 million subscribers receive e-mails or posts on their Twitter or Facebook pages about daily bargains in their region, such as $40 worth of food at a restaurant for $20 in San Francisco, or $49 for $130 worth of yoga classes in Anchorage, Alaska. The deals only become active if enough people sign up for them, to make it worthwhile for the businesses. Groupon did not say who the investors were that took part in its offering, only that there were 33 of them. Venture capital data provider VC Experts estimates that if Groupon raises the full $950 million, it will be worth about $6.4 billion total.

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Serbia ends Russian oil monopoly

December 29, 2010

Serbia ends Russian oil monopoly

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David Isenberg: Can’t Anyone at DoD Do Oversight? Anyone at All?

December 22, 2010

The perennial issue regarding private military security contractors is the degree to which they are subject to effective oversight. In that regard there is only one item in today’s news worth looking at. That is the report issued by the House Subcommittee on National Security and Foreign Affairs, chaired by John F. Tierney (D-MA). The Majority staff report is titled, Mystery at Manas: Strategic Blind Spots in the Department of Defense’s Fuel Contracts in Kyrgyzstan . The report culminates an eight-month investigation into the Department of Defense’s multi-billion dollar aviation fuel contracts at the Manas Transit Center in Kyrgyzstan. Reminding one of the famous line by 1st Lieutenant Milo Minderbinder in Joseph Heller’s famous Catch-22 novel, “We’re gonna come out of this war rich!” the report found that to keep U.S. warplanes flying over Afghanistan, the Pentagon allowed a “secrecy obsessed” business group to supply jet fuel to a U.S. air base in Kyrgyzstan, turning a blind eye to an elaborate fraud involving fuel deliveries from Russia. The subcommittee found that the Pentagon and State Department diplomats ignored red flags raised by jet fuel contracts worth nearly $2 billion for the Manas Transit Center, a U.S. base used for in-flight refueling over Afghanistan. The fuel was supplied by a Gibraltar-registered business group comprising Mina Corp. and Red Star Enterprises. True, the report found no evidence of corrupt ties between Mina Corp. or Red Star and the families of Kyrgyz leaders. Yet it cautioned that a lack of proper oversight and a neglect of America’s broader interests in the region had often left Washington blind to “political, diplomatic and geopolitical collateral consequences.” These include the ouster of two Kyrgyz governments in popular revolts stirred in part by anger over alleged jet fuel corruption and also U.S. ties with Moscow. Since 2002, the Defense Logistics Agency-Energy has awarded Mina and its sister- company, Red Star Enterprises, four contracts worth $2 billion for fuel at Manas, and has awarded several additional contracts to Red Star for fuel supply to the United States’ Bagram Air Base in Afghanistan. The day after the 2010 contract award, an official from DLA-Energy called the Majority staff of the Subcommittee to ask who owned the companies. The Pentagon did not know. As the New York Times reported , for a number of years ending in April 2010, two Pentagon middleman companies misled the Russian authorities, by using falsified export documents, into thinking that the large quantities of jet fuel they were purchasing were for civilian use, not military, apparently with the intention of evading a tariff. But the fuel was being bought by the Pentagon for shipment to the American airbase in Manas, Kyrgyzstan, and from there on to Afghanistan, the report said. Once Russian officials discovered the true identity of the recipient, they cut off supplies, creating a major logistical headache for United States military commanders. Officials for the contractors expressed little remorse for their actions, the report shows. “We got one over on ‘em,” the report quotes one company official, Charles Squires, as telling investigators. “I’m an old cold warrior, I’m proud of it, we beat the Russians, and we did it for four or five years.” Until, that is, the Russians objected and the system unraveled. That breakdown forced a major redrawing of supply routes into Afghanistan for jet fuel, which is in chronically short supply in landlocked Afghanistan. It also touched off a major behind-the-scenes diplomatic effort by the Obama administration to rebuild the fuel lines. If this is an example of effective contract oversight I’m the Chief of Naval Operations. This fuel supply system accounted for more than half of the jet fuel used in the war, the report said. It is suggested that the Russian authorities knew all along about the falsified certificates, but did not act because the subsidiary of the Russian energy giant Gazprom which supplied the fuel was making profits on the sales. In any case, the Russian Federal Security Service and the Russian Parliament investigated in 2009, the report said, and the trainloads of jet fuel from Gazprom started to dry up, halting altogether on April 1. In a deposition with Congressional investigators, Red Star and Mina Corporation officials characterized the false certificates as necessary to circumvent Russian export restrictions on jet fuel sales to foreign militaries. In interviews, Kyrgyz officials characterized them as an effort to avoid export tariffs. While those assertions remain in dispute, there is no question that the supply disruption caused major problems. Contractors were compelled to buy far more costly fuel that had to be shipped through the Black Sea and sent overland to Kyrgyzstan and Afghanistan. It also forced the military to rely more heavily on supply routes from Pakistan into Afghanistan on vulnerable mountain roads where trucks came under repeated attack this summer. Putting aside for the moment of just how bad the oversight was the strategic question, as geopolitical types like to phrase it, was whether anyone was really interested in doing it in the first place. Here is how the report puts it: Like many of the logistics contracting agencies that support the U.S. war effort in Afghanistan, DLA-Energy has a single-minded focus on providing the warfghters with the goods they need to achieve their mission. Judged by that metric, DLA-Energy’s efforts have been remarkable. The U.S. mission in Afghanistan has required the delivery of billions of gallons of fuel to some of the most remote and hostile locations in the world. Simply stated, without this fuel, the war would come to a grinding halt. But DLA-Energy’s by-the-book focus on performance and price was inadequate for proper strategic oversight of multi-billion dollar fuel contracting in a highly graft-prone region of the world. Policy officials at the Pentagon and State Department did little to nothing to assist DLA-Energy in oversight of its massive fuel procurement contracts. As long as the flow of fuel met demand, the civilian and military officials at the Department of Defense showed little interest in fuel contracting. Te State Department, meanwhile, viewed the fuel contracts as solely a mater for the Pentagon to manage, even when fallout from the contracts badly damaged U.S.-Kyrgyz relations. In short, DLA-Energy, the Pentagon, and State Department all turned a blind eye to the fuel contracts’ serious political, diplomatic, and geopolitical collateral consequences. Evidently what we had here, as was memorably said in the classic movie Cool Hand Luke, was a failure to communicate. Returning to the oversight, or lack thereof, consider just these few paragraphs: 6. DLA-Energy conducted only superficial due diligence on Mina and Red Star, and turned a blind eye to allegations of corruption. Until recently, DLA-Energy never knew Mina and Red Star’s beneficial ownership and never had any clear visibility into their subcontracting relationships. When the interim government of Kyrgyzstan alleged that Mina and Red Star had corrupt relations with the Bakiyev family, DLA-Energy made no inquiry to determine whether the allegations might be true. 7. DLA-Energy took few steps to mitigate potential corruption and ignored red fags of anti-competitive behavior. DLA-Energy had little independent understanding of fuel supply at Manas or in Central Asia and took few steps to mitigate the high potential for corruption in a graft-prone region. When red flags of potentially corrupt or anti-competitive behavior did arise, the agency took no steps to address them. 8. The Department of Defense failed to oversee a highly sensitive fuel supply arrangement created by Mina and Red Star to disguise their fuel procurement. For most of the past five years, Mina and Red Star procured a majority of their fuel from refineries in Russia despite a perceived official Russian ban on the export of fuel for military use. Mina and Red Star constructed complex arrangements in which proxy subcontractors obtained certifications from Kyrgyz authorities stating that the fuel was being procured for domestic civil aviation. According to Mina and Red Star, the Russian refineries were aware that the U.S. military was the ultimate end-user of the fuel, and they believed that the Russian export control authorities were also aware because of the large quantity of fuel being procured. Mina and Red star told DLA-Energy and Pentagon officials about the deception; but, despite extensive memoranda and e-mails documenting the arrangements, senior DLA-Energy officials claimed that they were not aware of the scheme and asserted that there might not have been a Russian ban.

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David Isenberg: Jack Bauer Beats Blackwater

December 21, 2010

Who knew that we will needed Jack Bauer, he of the famed Counter Terrorist Unit on the 24 TV show, to fight Blackwater as it prepares to set off a nuclear device? I certainly didn’t. Well okay, not Blackwater, exactly. And fortunately, it appears that it doesn’t have the capability, at least for now. Still, after all the years of covering private security contractors, and watching them be depicted as the newest villains in popular culture, the idea that private military contractors (PMC) potentially represent a class of non-state actors who may pose a risk of nuclear terrorism for their state masters is, to say, the least, new. Yet a paper published earlier this year finds that the technical and military capabilities of PMCs may be greater than those of terrorist organizations with respect to nuclear weapon construction or delivery. But, they are still insufficient, and PMCs must also somehow acquire fissile materials. Thus, while PMCs may be more capable than most terrorist organizations if they sought to acquire nuclear weapons they are still unlikely to succeed. Good news for us; I guess we don’t have to call Austin Powers out of retirement to make another sequel as he battles Erik Prince, I mean Dr. Evil. The paper, Private Military Corporations: A Non-State Actor-Nuclear Terror Nexus? by Robert L. Brown of Temple University, which was delivered at the Annual Meeting of the American Political Science Association in September considered the question of whether PMCs have sufficient autonomy from states to permit the illicit acquisition of nuclear weapons. In fairness Brown notes that there is no empirical data suggesting that any PMC desires or is pursuing nuclear weapons; he simply argues that PMCs provide an interesting case to learn about the relative probability for NSA nuclear acquisition for terrorist use. Brown finds, for a variety of reasons, that the answer is no, for which we can all be thankful. But he does make some points that should give us pause. First the oversight of PMCs by multiple agencies represents a risk of nuclear terror because PMC are more capable than most NSAs. So we can comfort ourselves that most PMC are more efficient than Al-Qaeda. But consider that at its peak, when Blackwater had nine business units, including an air wing, it had some capacity to illicitly transport and deliver a nuclear weapon, assuming it not only acquired the device but also the ability to arm and activate it. While ground transport is within the capacity of any non-state actor, Blackwater also had air (medium-lift helicopters and a Boeing767) and marine (survey-class ship) transport options with cargo capacity sufficient to carry many weapons currently in the US or Russian arsenal. And, even assuming the best of intentions on the part of PMCs they can never be completely sure of their staff, as they have little control over who is in their employ, despite their screening and selection processes. Remember that in 2007, Blackwater reported dismissing 122 employees during 2004-2006 for excessive force, drug and alcohol abuse, inappropriate/lewd conduct, insubordination, aggressive/violent behavior, and other causes. Fortunately for us, though oversight of PMC is deliberately designed to cut PMC some slack, what the author calls ‘autonomy” from governmental oversight, and we’ve all seen what results that has brought us in the past, it is not that bad to give PMC the ability to plan or organize a nuclear attack. Though if a PMC does ever use a nuclear weapon the PMC trade organization who have called for more self-regulation of the industry are going to have some explaining to do.

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Bulgaria to host Russian gas pipeline project

November 14, 2010

Bulgaria to host Russian gas pipeline project

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Lorrie Febus: Sheep With Wool Pulled Over Its Eyes

November 5, 2010

Yesterday the Federal Reserve announced they are pouring $600 billion into the economy to buy US bonds other countries are no longer buying. The Wall Street Journal.com wrote: The Federal Reserve, in a dramatic effort to rev up a “disappointingly slow” economic recovery, said it will buy $600 billion of U.S. government bonds over the next eight months to drive down interest rates and encourage more borrowing and growth. QE2 here we come. It is frustrating to see our economic foundation crumbling before our eyes, and most people are not aware of the potential ramifications. Today, I expressed this frustration with a colleague who is from Russia. She said that yesterday this news was all over Russian TV. In Russia, they are warning citizens of the possibility of the US dollar declining rapidly in value due to this ‘printing’ of money. She further explained that in Russia most people only hold the amount of Rubles they need to transact purchases, and hold most of their savings in US Dollars or Euros. In the past, it was considered safer to hold long term cash in more stable currencies. So the warning yesterday was to let the common citizens know there is an increased danger to hold the US currency. She said this was headline news and everyone was talking about de-investing from the US dollar. They further discussed how this could increase the possibility of inflation, not only in the US, but in the entire world. They warned their citizens of what this could mean and to prepare. The big question is — where was the warning in the US? There was no warning. This news was not present at all for the common citizen on their local daily news. Most people are oblivious of the huge impact these decisions are having on their immediate future, and the future of their lives forever. I am so saddened to see hard working, financially responsible people ‘drinking the Kool-Aid’ and half-heartedly hoping somehow, someone else will solve the problem and everything will be all right. They are sheep with the wool pulled over their eyes — being led by the sheepherder. Sadly, they are being led to the slaughter of the middle class. What would happen to you and your family if suddenly tomorrow, a big bank collapsed and all your credit and debit cards did not work? Would you have cash on hand to buy food and gas for your car? What if a few days later there was no food, water or supplies in the stores because the delivery trucks could not make deliveries? Would you have enough food in your home to survive until the situation improved? What if the US dollar became worth less and eventually worthless? Would you have goods or services you could barter to get by until commerce could resume? These are the hard questions we need to ask ourselves and be prepared to answer. Hopefully, these questions will never have to be asked — but, what if? Consider the warning of Russian TV — even if you do live in the United States.

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Video: Simonov Says ‘Russian Silicon Valley’ Good Investment

October 12, 2010

Oct. 12 (Bloomberg) — Roman Simonov, a venture partner at Russian Partners LP, talks about technology companies investing to develop a “Silicon Valley” complex in Russia. He speaks with Andrea Catherwood on Bloomberg Television’s “The Pulse.”

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Video: Prokhorov Flies Nets to Moscow to Build Russian Fan Base

October 11, 2010

Oct. 11 (Bloomberg) — Mikhail Prokhorov met his New Jersey Nets for the first time on his old home basketball court in Moscow, where the players got a taste of the Russian billionaire’s ownership style. Prokhorov introduced himself to the National Basketball Association team yesterday at the CSKA Universal Sports Hall. He pledged to make the Nets, who had the NBA’s worst record last year, champions within five years and get them a global fan base. Bloomberg’s Ryan Chilcote reports.

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Exxon launches production at Russian oilfield

September 30, 2010

Exxon launches production at Russian oilfield

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Jeffrey Rubin: Will the Fed’s Zero Rate Policy Bring Another Speculative Bubble?

September 28, 2010

At the recent Federal Open Market Committee meeting, Federal Reserve Board Chairman Ben Bernanke signalled that he plans to keep interest rates effectively at zero for as long as possible, and that he’s ready to stand by with more quantitative easing (i.e. printing money) if necessary. But if the Fed’s blaming the last recession on the financial meltdown from the subprime mortgage market, why is it so committed to recreating those same credit conditions that spawned Wall Street’s worst-ever post-Depression crash? There is no shortage of people to blame for the subprime mortgage fiasco: wayward rating agencies that ranked the risk of mortgage default as comparable to the risk of a US Treasury default; unscrupulous lenders who eagerly approved mortgages and then quickly resold them to financial institutions; over-leveraged banks that used depositors’ money to play Russian roulette in the financial derivatives market; and asleep-at-the-wheel regulators (like the Securities Exchange Commission ), who were either blind or indifferent to Wall Street’s systemic risk to the subprime mortgage market. However, the real culprits behind the subprime mortgage crisis were the incredibly low interest rates that sustained the bubble. All the greed in the world could not have done what the Fed’s easy-money policy made so simple. Was it not the desperate search for yield that threw many an otherwise cautious pension fund into the arms of seemingly safe CDOs (collateralized debt obligations)? Beneath the AAA-rated vanilla wrapping paper were pools of subprime mortgages just waiting to go bust. The measly extra basis points they offered over government-funded AAA bonds may not seem like much when Treasury yields are 5 to 6 per cent, but they meant a lot more to return-starved pension plans when government bond yields fell to near-record lows. Similarly, was it not the ridiculously low cost of credit that allowed banks to become so leveraged–hence exposed–to the subprime mortgage market? And of course, it was the same low cost of capital that allowed interest-free mortgages (negative amortization types) to be given out to anyone who would take them in the first place. Neither the demand for financial products like CDOs that were funded by subprime mortgages, nor the supply of subprime mortgages themselves would have been possible in a world of normal interest rates. When the federal funds rate rose to 5 per cent, an historically average setting, the subprime mortgage market collapsed, creating an insolvency crisis for financial institutions whose vaults were filled with reeking CDOs. Of course it won’t be subprime mortgages and CDOs next time, but if the Fed keeps rates at zero for long enough, you can count on financial markets’ insatiable desire for yield to invent something just as toxic.

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Report: Russian economy may grow 4.3% this year

September 14, 2010

Report: Russian economy may grow 4.3% this year

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HP Bribery Scandal: U.S. Widens Probe Of Allegations

September 10, 2010

NEW YORK — U.S. investigators have widened their probe of alleged kickbacks paid to Russian authorities by employees of a Hewlett-Packard Co. subsidiary in Germany. Authorities in Russia, Germany and the U.S. have been looking into alleged bribes totaling $11 million paid to secure a $44.5 million contract that ran from 2001 until 2006.

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HP Bribery Investigation Heats Up

August 13, 2010

WASHINGTON — Hewlett-Packard Co. said Thursday it is cooperating with U.S. and German authorities investigating allegations that three company executives used bribes to win a contract to sell computer gear to the Russian prosecutors’ office. German prosecutors have been looking into whether the executives, plus at least six accomplices who did not work for the company, paid bribes totaling 8 million euros (about $10.3 million) to win a 35 million-euro contract to supply computers, software and hardware to the Russians. Prosecutors say at least two of the executives no longer work for HP. The Wall Street Journal reported Thursday that the Justice Department has asked HP to hand over internal documents to German prosecutors after they complained that the company had refused to provide them with relevant records. The Securities and Exchange Commission is also investigating possible violations of the foreign Corrupt Practices Act, which prohibits bribes of foreign officials. Russian officials, who raided HP’s Moscow offices in April at the request of German prosecutors, have joined the investigation, too. “HP is and has been fully cooperating with all authorities on this matter,” the company said in a statement. The Justice Department and SEC declined comment to The Associated Press. The latest development came just days after HP CEO Mark Hurd abruptly resigned following an investigation into sexual-harassment claims. The company said it found that its sexual harassment policy wasn’t violated, but it uncovered falsified expense reports connected to dinners and other meetings with the woman who made those claims, Jodie Fisher. Hurd has settled with Fisher for an undisclosed sum. HP, based in Palo Alto, Calif., is the world’s No. 1 personal computer maker. The contract for the Russian deal was signed in 2000, and the deliveries continued until 2006 or 2007, German authorities have said. The three executives were arrested in Germany and Switzerland in December and later freed on bail. The participants are suspected of offenses including breach of trust, tax evasion and money laundering, authorities said. Authorities say it’s unclear who took the bribes, which flowed through a network of foreign firms and bank accounts. The matter came to the attention of Dresden prosecutors when a tax office in Germany’s Saxony state inspected a local company whose account was used in the kickback scheme, authorities said.

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Leo W. Gerard: What’s Green, White and Blue? American Jobs

August 10, 2010

Red, as in furiously red, defined the day last fall when a consortium of companies announced it wanted $450 million in U.S. stimulus money to build a wind farm in Texas , creating 2,000 jobs in China and 300 in America. Now, nine months later, things have cooled down and turned around. In a deal with the United Steelworkers (USW), two Chinese companies have agreed to build as much of the wind turbines as possible in America, using American-made steel, and creating perhaps 1,000 American jobs. The deal is a result of white collar Chinese executives negotiating with blue collar union officers to create green collar jobs in the U.S. The agreement defies stereotypes about unions as constantly combative, excessively expensive and environmentally challenged. The USW has a track record of engaging with enlightened CEOs for mutual benefit. It has a long green history. And it has worked to return off-shored jobs to the U.S. The USW, like the Democrats in the House and Senate with their Make It in America program, is devoted to preserving and creating family-supporting, prosperity-generating manufacturing jobs in America. And if they’re green, all the better. Billionaire investor Wilbur Ross has first-hand experience negotiating with unions, including the USW, to sustain U.S. manufacturing. He describes it positively. Here he is on PBS’ Charlie Rose on Aug. 2 : “I have found the leaders of big industrial unions, the steelworkers, the auto workers, they understand dynamics of industry at least as well as the senior management of the companies.” Ross talked to Rose about dealing with the USW during the time when he was buying LTV Steel: “We worked out a contract that took 32 job classifications down to five, changed work rules to make it more flexible and most important of all, we put in a blue collar bonus system. . .We became the most efficient steel company in America. We were making steel with less than one man hour per ton. The Chinese at the time were using six man hours per ton. We were actually exporting some steel to China.” Ross accomplished that while paying among the highest wages for manufacturing workers in America. The USW approached the Chinese companies that planned the $1.5 billion Texas wind farm, A-Power Energy Generation Systems Ltd. and Shenyang Power Group, the same way it did Ross. The meetings occurred with the help of U.S. Renewable Energy Group, a private equity firm that facilitates international financing and investment in renewable energy projects. Jinxiang Lu, chairman and chief executive of Shenyang Power, said talking to the union enabled him to see its “vision for win-win relationships between manufacturers and workers.” For the USW, this deal means the Chinese firms will initially buy approximately 50,000 tons of steel manufactured in unionized American mills to fabricate towers and rebar for the 615 megawatt wind farm in Texas, will employ Americans at a wind turbine assembly plant to be built in Nevada, and will employ more American workers in green jobs at plants constructing the blades, towers and thousands of other wind turbine parts. For the Chinese companies, the USW, the largest manufacturing union in America, will use its long list of industry contacts to help construct an American supply chain essential to amass the approximately 8,000 components in a wind turbine. The idea is to collaboratively create a solid manufacturing, assembly, component sourcing, and distribution system so that this team – the Chinese companies, U.S. Renewable Energy Group and the USW — will build many more wind farms after the first in Texas. Additional wind farms mean more renewable energy freeing the U.S. from reliance on foreign oil. As U.S. Sen. Sherrod Brown, D-Ohio, says, there’s no point in replacing imported foreign oil with imported wind turbines. For energy and economic independence, green manufacturing capacity and green jobs must be in the U.S. This deal does that. And there’s nothing unusual about foreign companies employing Americans. Many Americans, including USW members, already work in factories owned by many different foreign national companies, including German, Russian, Japanese, Mexican, and Brazilian, with names like Bridgestone-Firestone, Arcelor-Mittal, Rio Tinto, Grupo Mexico, Svenska Cellulosa AB (SCA) and Severstal. In at least one other case, action by the USW forced the hand of a Chinese company to move jobs to the U.S. Tianjin Pipe, the world’s largest manufacturer of steel pipe, said it could not export profitably to the United States if tariffs rose above 20 percent. This was after the USW and seven steel manufacturers filed a petition with U.S. trade agencies in April of 2009 accusing China of illegally dumping and subsidizing the type of pipe used in the oil and gas industry. The union won that case this past April, and the U.S. Commerce Department imposed import duties ranging from 30 to 100 percent to give the domestic industry relief from the unfair trade practices. To continue selling in the U.S., Tianjin Pipe had no choice but to build an American pipe mill. Construction is expected to begin in Texas this fall on the $1 billion plant to employ 600 by 2010. Although the USW is cooperating with A-Power and Shenyang Power, it will not back off its trade cases involving exported Chinese steel, pipe, tires, paper and other manufactured products. The stakes for U.S. jobs are just too high. Back in 1990, when green was not as trendy, the USW recognized that the environment would be among the most important issues of the era and issued the report, “Our Children’s World.” Since then, it has steadily promoted green — became a founding member of the BlueGreen Alliance and Apollo Alliance, which promote renewable energy and renewable energy jobs. Good, green American manufacturing jobs. Establishing American energy independence. It is win-win. And it’s getting a green light now.

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Leo W. Gerard: What’s Green, White and Blue? American Jobs

August 10, 2010

Red, as in furiously red, defined the day last fall when a consortium of companies announced it wanted $450 million in U.S. stimulus money to build a wind farm in Texas , creating 2,000 jobs in China and 300 in America. Now, nine months later, things have cooled down and turned around. In a deal with the United Steelworkers (USW), two Chinese companies have agreed to build as much of the wind turbines as possible in America, using American-made steel, and creating perhaps 1,000 American jobs. The deal is a result of white collar Chinese executives negotiating with blue collar union officers to create green collar jobs in the U.S. The agreement defies stereotypes about unions as constantly combative, excessively expensive and environmentally challenged. The USW has a track record of engaging with enlightened CEOs for mutual benefit. It has a long green history. And it has worked to return off-shored jobs to the U.S. The USW, like the Democrats in the House and Senate with their Make It in America program, is devoted to preserving and creating family-supporting, prosperity-generating manufacturing jobs in America. And if they’re green, all the better. Billionaire investor Wilbur Ross has first-hand experience negotiating with unions, including the USW, to sustain U.S. manufacturing. He describes it positively. Here he is on PBS’ Charlie Rose on Aug. 2 : “I have found the leaders of big industrial unions, the steelworkers, the auto workers, they understand dynamics of industry at least as well as the senior management of the companies.” Ross talked to Rose about dealing with the USW during the time when he was buying LTV Steel: “We worked out a contract that took 32 job classifications down to five, changed work rules to make it more flexible and most important of all, we put in a blue collar bonus system. . .We became the most efficient steel company in America. We were making steel with less than one man hour per ton. The Chinese at the time were using six man hours per ton. We were actually exporting some steel to China.” Ross accomplished that while paying among the highest wages for manufacturing workers in America. The USW approached the Chinese companies that planned the $1.5 billion Texas wind farm, A-Power Energy Generation Systems Ltd. and Shenyang Power Group, the same way it did Ross. The meetings occurred with the help of U.S. Renewable Energy Group, a private equity firm that facilitates international financing and investment in renewable energy projects. Jinxiang Lu, chairman and chief executive of Shenyang Power, said talking to the union enabled him to see its “vision for win-win relationships between manufacturers and workers.” For the USW, this deal means the Chinese firms will initially buy approximately 50,000 tons of steel manufactured in unionized American mills to fabricate towers and rebar for the 615 megawatt wind farm in Texas, will employ Americans at a wind turbine assembly plant to be built in Nevada, and will employ more American workers in green jobs at plants constructing the blades, towers and thousands of other wind turbine parts. For the Chinese companies, the USW, the largest manufacturing union in America, will use its long list of industry contacts to help construct an American supply chain essential to amass the approximately 8,000 components in a wind turbine. The idea is to collaboratively create a solid manufacturing, assembly, component sourcing, and distribution system so that this team – the Chinese companies, U.S. Renewable Energy Group and the USW — will build many more wind farms after the first in Texas. Additional wind farms mean more renewable energy freeing the U.S. from reliance on foreign oil. As U.S. Sen. Sherrod Brown, D-Ohio, says, there’s no point in replacing imported foreign oil with imported wind turbines. For energy and economic independence, green manufacturing capacity and green jobs must be in the U.S. This deal does that. And there’s nothing unusual about foreign companies employing Americans. Many Americans, including USW members, already work in factories owned by many different foreign national companies, including German, Russian, Japanese, Mexican, and Brazilian, with names like Bridgestone-Firestone, Arcelor-Mittal, Rio Tinto, Grupo Mexico, Svenska Cellulosa AB (SCA) and Severstal. In at least one other case, action by the USW forced the hand of a Chinese company to move jobs to the U.S. Tianjin Pipe, the world’s largest manufacturer of steel pipe, said it could not export profitably to the United States if tariffs rose above 20 percent. This was after the USW and seven steel manufacturers filed a petition with U.S. trade agencies in April of 2009 accusing China of illegally dumping and subsidizing the type of pipe used in the oil and gas industry. The union won that case this past April, and the U.S. Commerce Department imposed import duties ranging from 30 to 100 percent to give the domestic industry relief from the unfair trade practices. To continue selling in the U.S., Tianjin Pipe had no choice but to build an American pipe mill. Construction is expected to begin in Texas this fall on the $1 billion plant to employ 600 by 2010. Although the USW is cooperating with A-Power and Shenyang Power, it will not back off its trade cases involving exported Chinese steel, pipe, tires, paper and other manufactured products. The stakes for U.S. jobs are just too high. Back in 1990, when green was not as trendy, the USW recognized that the environment would be among the most important issues of the era and issued the report, “Our Children’s World.” Since then, it has steadily promoted green — became a founding member of the BlueGreen Alliance and Apollo Alliance, which promote renewable energy and renewable energy jobs. Good, green American manufacturing jobs. Establishing American energy independence. It is win-win. And it’s getting a green light now.

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Raymond J. Learsy: The New York Times Slays the "Peak Oil" Dinosaur

August 4, 2010

Well there you have it in the opening sentence of an eye-opening article in this Sunday’s New York Times , Tracing Oil Reserves to Their Tiny Origins : “If you believe petroleum came from dinosaurs, think again and look toward the seas.” Here, in the Science section, the Times tells us that the emphasis these many years on “fossil fuels turned out to be wrong.” The article goes on to detail the evolution of vast reservoirs of oil that owe their origins to microscopic life that fell into the sea over the ages and was “cooked” into oil through the earth’s inner heat. That over 95% of the world’s oil traces its genesis to these origins. That the most productive regions are centered on shorelines and coastal regions (think the Gulf of Mexico). According to the article, the broad shelf areas are some of “the best “factories for biogenic proliferation,” especially the shore of the Tethys Sea (a prehistoric, ancient ocean that bordered the equator some 100 million years ago and was to form along its southern shore the oil laden sectors of the Middle East). Similar Cretaceous period events, we are now learning, may have yielded munificent reservoirs of oil. As an example: when the mass of Africa pulled away from South America, “Big rivers poured in nutrients. A biological frenzy on the western shores of the narrow ocean ended up forming the vast oil fields now being discovered.” It is not for naught that Brazil alone has unveiled a five-year, $224 billion investment plan to tap and develop these vast oil deposits. Combine this information with equally impressive work done by Russian and Ukrainian geologists on the theory of Abiotic Oil , (which states that oil is inherent to the geological make up of the earth) and the dimension of extant oil takes on a whole new meaning. It has been the cornerstone of Peak Oil dogma, which has indoctrinated us into believing that oil is imminently running out. It has permitted the oil industry to get away with setting prices unrelated to the forces of supply and demand — prices achieved by having successfully lulled the oil consuming public and their governments into a trance of blind acceptance of costly oil . The peak oil geologists and their prediction of the imminent arrival of peak oil is science paid for in large measure by the best geology that oil money can buy. One after another, the Peak Oil Pranksters are falling all over themselves, fine tuning their prophecies of physical depletion to “well its not so much that there is a physical shortage, but it is more difficult and costly to access.” That may be the case (especially with regards to offshore reservoirs, as we all now know). But that is a very different argument than the oil industry’s self-serving cries of, “there just ain’t no more, so please pay, pay, pay.”

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Jim Randel: Necessity is the Mother of Invention

August 4, 2010

As I do research for my new book, The Skinny on Creativity , I reach certain conclusions. One conclusion is that people will be as creative as they need to be. In other words, when pressed, people can be very creative. By way of testing my various hypotheses, I make a list of famous creative people – in this case the 10 most creative women I can think of: Mary Kay Ash – started Mary Kay Cosmetics (direct sales business) Jane Fonda – kicked off the personal workout craze Madonna – no explanation needed Ayn Rand – author of Atlas Shrugged Anita Roddick – creator of The Body Shop (natural cosmetics) J.K. Rowling – invented Harry Potter Martha Stewart – no explanation necessary Lillian Vernon – started the mail-order catalogue business Dr. Ruth Westheimer – sex education and entertainment Oprah Winfrey – no explanation needed And then I do research on each woman, trying to figure out what might have triggered her amazing creativity. Here is what I learned about each: Mary Kay Ash – single mother raising 3 children Jane Fonda – mother committed suicide when Jane was 12 Madonna – mother died when Madonna was 5 Ayn Rand – fled Russian oppression Anita Roddick – born in a born in a bomb shelter during WWII J.K. Rowling – single mom living on welfare Martha Stewart – raised in Nutley, New Jersey Lillian Vernon – fled Germany just before WWII Dr. Ruth Westheimer – parents killed in the Holocaust Oprah Winfrey – raped as a teenager, gave birth to stillborn In other words, each of these famous women had to deal with some serious adversity. And each rose to the occasion – finding an inner strength to elevate her life with creative thinking and expression. The lesson for all of us? Creativity is not handed out to some and not others. We all have the ability to think creatively. But, you may need to challenge yourself to find out just how creative you can be. Jim Randel is the Founder of The Skinny On™ book series. See www.theskinnyon.com .

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Video: Firestone Discusses YouTube Videos on Russian Police: Video

July 19, 2010

July 19 (Bloomberg) — Jamison “Jamie” Firestone, managing partner of the law firm Firestone Duncan, discusses videos posted on YouTube about alleged corruption in the Russian police system. Firestone, whose colleague Sergei Magnitsky died in pre-trial detention in Moscow last year, speaks with Erik Schatzker on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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36 Arrested In Massive $251 Million Medicare Scam

July 16, 2010

MIAMI — Federal authorities said Friday they are conducting the largest Medicare fraud bust ever in five different states and arrested dozens of suspects accused in scams totaling $251 million. Several doctors and nurses were among those arrested in Miami, New York City, Detroit, Houston and Baton Rouge, La., accused of billing Medicare for unnecessary equipment, physical therapy and HIV treatments that patients typically never received. Ninety-four suspects were indicted, and authorities said 36 people had been arrested as of Friday morning. More than 360 agents participated in Friday’s raids, announced by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius at a health care fraud prevention summit in Miami. Officials said they chose Miami because it is ground zero for Medicare fraud. Authorities indicted 33 suspects in the Miami area, accused of charging Medicare for about $140 million in various scams. “With today’s arrests we’re putting would-be criminals on notice: health care fraud is no longer a safe bet,” Holder said Friday. Cleaning up an estimated $60 billion to $90 billion a year in Medicare fraud will be key to paying for President Barack Obama’s proposed health care overhaul. Federal officials have promised more money and manpower to fight fraud, setting up strike forces in several cities. Around the country, the schemes have morphed from the typical medical equipment scam in which clinic owners billed Medicare dozens of times for the same wheelchair, while never giving the medical equipment to patients. Now, officials say, the schemes involve a sophisticated network of doctors, clinic owners, patients and patient recruiters. Violent criminals and mobsters are also tapping into the scams, seeing Medicare fraud as more lucrative than dealing drugs and having less severe criminal penalties, officials said. For instance, agents bugged a medical center in Brooklyn, N.Y., where eight people are charged with running a $72 million scam that submitted bogus claims for physical therapy for elderly Russian immigrants. Clinic owners paid patients, including undercover agents, in exchange for using their Medicare numbers and a bonus fee for recruiting new patients. Recording devices captured hundreds of kickback payments in a private room where a man sat at a table and did nothing but pay patients all day, authorities said. The so-called “kickback” room had a poster on the wall resembling Soviet-era propaganda, showing a woman with a finger to her lips and two messages in Russian: “Don’t Gossip” and “Be on the lookout: In these days, the walls talk.” With the surveillance, the walls “had ears and they had eyes,” U.S. Attorney Loretta Lynch said at a news conference in Brooklyn. In a separate Brooklyn case, authorities indicted six patients who shopped their Medicare numbers to various clinics. More than 3,744 claims were submitted on behalf of one woman in the past six years. The patients did not receive the services billed to Medicare, authorities said. “Today’s arrests illustrate how health care fraud schemes can replicate virally and migrate rapidly across communities,” said Daniel R. Levinson, inspector general of the U.S. Department of Health and Human Services, which oversees Medicare. Federal authorities launched a strike force in Miami in 2007 to target the problem. The program has since expanded to seven cities and is responsible for more than 720 indictments that collectively have billed the Medicare program for more than $1.6 billion. Miami-Dade County received about $520 million from Medicare in home health care payments intended for the sickest patients in 2008, which is more than the rest of the country combined, according to a federal report. Only 2 percent of the patients live here. It used to take 90 days before the government detected a scam. By then, the crooks were long gone, sometimes with millions of dollars. Now authorities get billing data as it’s submitted, allowing them to catch suspects in real time, “as opposed to the typical pay and chase model we’ve had for years,” said Gerald Roy, assistant inspector general for investigations. __ Associated Press Writer Tom Hays in New York contributed to this report.

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