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menafn.com…

(MENAFN – Kuwait News Agency (KUNA)) U.S. Energy Secretary Steven Chu on Wednesday said while the beleaguered American auto industry is making a comeback, automakers must “innovate or be overtaken.” …

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US automakers must "innovate or be overtaken"

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Huffington Post…

WASHINGTON — Democrats are crying foul after a GOP senator blocked a pay raise for Interior Secretary Ken Salazar in an effort to pressure him to approving more deepwater oil and gas drilling permits. At issue is a move by oil state Sen. David Vitter, R-La., to not only block the almost $20,000 raise for Salazar last week but then offer to allow the raise to go forward if the Interior Department issues six new deepwater permits a month. Salazar responded with a letter accusing Vitter of employing strong-arm tactics and of trying to coerce him into approving new drilling permits in order to get the raise. Salazar said Vitter’s move amounted to “attempted coercion of public acts here at the Department” and asked that efforts to give him a pay raise be halted. Salazar’s pay is lower than other Cabinet members because of an obscure constitutional requirement that blocks lawmakers who move to the executive branch from claiming pay raises they’ve voted on while in Congress. Vitter blocked legislation last week to fix the disparity, saying he was keeping the “boot on the neck” of the department. “It is wrong for Sen. Vitter to try to get something in return for moving forward on a matter that the Senate has considered routine for more than a century,” Majority Leader Harry Reid said in a statement. Democrats suggested Vitter was skating close to federal bribery laws that make it a crime to promise “anything of value … to influence any official act.” Vitter’s not backing down. “I’m glad the secretary has dropped his push for a pay raise,” Vitter said. “It was truly offensive to Gulf energy workers who are struggling under his policies. Now I hope he starts earning what he already makes and properly issues new permits for much needed drilling in the Gulf.”

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David Vitter Makes Bold Move In Oil Drilling Battle

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Al Franken To Obama: Give Elizabeth Warren A Recess Appointment

May 25, 2011

WASHINGTON — Sen. Al Franken (D-Minn.) urged President Obama Wednesday to grant Elizabeth Warren a recess appointment to head the Consumer Financial Protection Bureau. In September, the President tapped Warren as the chief architect of the agency charged with protecting consumers from abusive lenders. Since that time, the former Harvard professor has been serving as Special Adviser to the Secretary of the Treasury while helping create the new consumer agency. “Since the president appointed Elizabeth Warren to set up the Consumer Financial Protection Bureau she has proven she can stand up to Wall Street,” Franken wrote in a letter that will be circulated by the Progressive Change Campaign Committee on Wednesday. “Now, it’s time for a permanent leader to be appointed and, because Republican senators have vowed to block anyone, it’s up to President Obama to use his power constitutional power to bypass Republicans and make a recess appointment.” Rep. Barney Frank (D-Mass.) first suggested the possibility of a recess appointment after Senate Republicans promised earlier this month to block anyone the President nominates. “It’s the worst abuse of the confirmation process I’ve ever seen,” said Frank, as The Hill reported. “What it clearly says is that the president will have to make a recess appointment .” PCCC has organized an open letter to Obama to appoint Warren. Signers so far include a mix of lawmakers, academics, economists, progressive activists and Wall Street figures. “Republicans boxed themselves in with their ridiculous letter saying they wouldn’t confirm anybody who is nominated,” said PCCC co-founder Adam Green. “We’re showing the president that the public will have his back if he makes the logical decision — to give Elizabeth Warren a recess appointment.” Warren may be the person Republicans least want to see in charge of the CFPB. The outspoken and respected academic and advocate is credited as the intellectual founder of the agency , which she advocated for four years ago. Earlier this month, Republicans blocked a bid to name Warren the head of the agency. A measure offered by Rep. Carolyn Maloney (D-N.Y.) to give the top job to the person “credited with coming up with the idea” for the CFPB, failed on a party-line vote . On Tuesday, Warren went through a contentious hearing before the House Oversight subcommittee. She frequently had to correct Republican lawmakers who were trying to grill her, and at one point was called a liar by subcommittee chair Rep. Patrick McHenry (R-N.C.). Support for a recess appointment for Warren has even come from a group that once called her ” akin to the Antichrist .” In a May 19 letter, the president and CEO of the Oklahoma Banker’s Association wrote to Obama and encouraged him to name her to the top job.

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Robert Greenwald: Sec. Clinton Has a Choice: Protect Americans or Profit the Kochs

May 24, 2011

There is a raging battle going on in this country over whether we use our resources to benefit the haves or to protect those who don’t have as much as the most wealthy among us . We see this where tax cuts for the millionaires are required in order to continue giving unemployment benefits to the out of work. It took place around the attempt to reform Wall Street. We see it in cuts to education, and attempts to bust unions. The latest battle over whom our country chooses to protect goes straight to the heartland, in the form of the proposed Keystone XL pipeline, currently under review by Secretary of State Clinton. Tell Secretary of State Clinton to say No to the Keystone XL pipeline here! Benefiting The Koch Brothers And Friends Whenever such a harmful project is en route to approval, it needs to be asked who stands to benefit from it. Unsurprisingly, two of the key people positioned to benefit from this pipeline are the notorious Koch brothers . As ClimateProgress writes about a recent SolveClimate reports: The two brothers together own virtually all of Koch Industries Inc. — a giant oil conglomerate headquartered in Wichita, Kan., with annual revenues estimated to be $100 billion. A SolveClimate News analysis, based on publicly available records, shows that Koch Industries is already responsible for close to 25 percent of the oil sands crude that is imported into the United States, and is well-positioned to benefit from increasing Canadian oil imports. A Koch Industries operation in Calgary, Alberta, called Flint Hills Resources Canada LP, supplies about 250,000 barrels of tar sands oil a day to a heavy oil refinery in Minnesota, also owned by the Koch brothers. Flint Hills Resources Canada also operates a crude oil terminal in Hardisty, Alberta, the starting point of the proposed Keystone XL pipeline. The company’s website says it is “among Canada’s largest crude oil purchasers, shippers and exporters.” Koch Industries also owns Koch Exploration Canada, L.P., an oil sands-focused exploration company also based in Calgary that acquires, develops and trades petroleum properties. We’re not the only ones asking how much the Koch brothers stand to gain. On Monday the House Energy and Commerce Committee GOP is holding a hearing on the pipeline, in an attempt to push through approval even quicker than the present process allows. This act of political theater is another attempt by conservative elites to push through the pipeline’s approval, against the wishes of American homeowners, farmers and ranchers. On Friday, House Democrats wrote a letter sent to committee Republicans stating. “We are writing to request that in preparation for the hearing on and markup of this draft legislation, the Committee request documents from Koch Industries relating to the company’s interests in Canadian tar sands and the extent to which it will benefit if the Keystone XL pipeline is constructed.” Keystone XL is only the latest political fight where the Koch brothers hope to keep secret their involvement and financial interest. The Kochs have been exposed as being willing to cause any degree of harm to our country that would increase their profits. And now they’re going after Midwest land, the property passed down through generations of family, and the safety of our drinking water and air. Keystone XL and “Dirty Oil” The proposed Keystone XL pipeline deals with what is called “dirty oil” tar sands . Tar sands production carbon dioxide emissions are three times higher that those of conventional oil. The amount of oil Keystone XL would carry is equal to the pollution level of adding six million new cars to our roads. Tar Sands mining operations involve a vast drilling infrastructure, open pit mines, and toxic wasteland ponds up to three miles wide. The extraction process involves strip mining and drilling that injects steam into the ground to melt the tar-like crude oil from the sand and requires a massive amount of energy and water. In addition to pollution and harm to the environment, Keystone XL directly puts at risk the land of families across a full stretch of our country. The pipeline would cross through six states and several major rivers, in addition to the Ogallala Aquifer, which supplies clean water to two million Americans. The present Keystone pipeline has already experienced 7 leaks, making the question when, not if, Keystone XL will also have a disastrous spill. As if all of that wasn’t reason enough to call this a bad idea, Keystone XL would actually raise the prices of oil in the Midwest, and not bring it down in the rest of the country. Secretary of State Clinton’s Decision, And The Pipeline’s Lobbyist – Questions Unanswered What happens next rests with Secretary of State Clinton . And that’s where the power of wealth and connections continue to serve the rich. Just last week, environmental and ethics groups sued the State Department to gain access to possible communications between a lobbyist for Keystone XL and the State Department. The TransCanada lobbyist in question is Paul Elliott. Elliott formerly worked as the national deputy director for Secretary Clinton’s presidential campaign. Friends of the Earth, Corporate Ethics International and the Center for International Environmental Law filed a Freedom of Information Act request last year, seeking to uncover any possible communications between Elliott and the State Department, to review whether Elliott’s former position is resulting in bias in the granting of the permit for Keystone XL to be built. The State Department initially refused to fulfill the request, before reversing that decision, and have delayed on releasing the information since then. Meanwhile, farmers and ranchers in the pipeline’s path have criticized the rushed nature of the State Department’s review process for approving the pipeline. Hearings have not been held on the department’s latest draft analysis. And questions still have not been answered about why the State Department has refused to release their correspondence with the lobbyist, and what information is held within those records. Americans Left In Limbo: How To Stop The Pipeline As political battle among the wealthy continues in DC, landowners throughout our heartland wait to hear their fate. Secretary of State Clinton has said that a final decision will be made on Keystone XL by the end of 2011. The cards of power and access may be stacked against those concerned about the health of our country, but it is not too late to fight for the protection of Americans. Brave New Foundation has made the above video to raise attention to this call to action. We are also asking those who oppose Keystone XL to sign our petition to Secretary of State Clinton, expressing why they want her to say no to the Koch brothers and big oil, and to protect Americans who can’t afford lobbyists. We need to keep the pressure on and get the word out. Secretary of State Clinton, the country is watching. And we’re not going to stop organizing around this issue until you side with the American people and say no to the Koch brothers.

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Zumiez Inc. Announces Departure of Trevor Lang

May 10, 2011

EVERETT, WA–(Marketwire – May 10, 2011) – Zumiez Inc. ( NASDAQ : ZUMZ ) announced today that Trevor Lang has resigned as Chief Financial Officer, Chief Administrative Officer & Secretary effective June 1, 2011 in order to move back to Atlanta, Georgia. A search for Lang’s successor is underway.

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Cytori Appoints Tommy G. Thompson to its Board; Names Lloyd Dean Chairman

May 3, 2011

SAN DIEGO, CA–(Marketwire – May 3, 2011) – On April 28, 2011, Cytori Therapeutics ( NASDAQ : CYTX ) elected the Honorable Tommy G. Thompson, former Secretary of the US Department of Health & Human Services and Governor of Wisconsin, as an independent member of Cytori’s Board of Directors. In addition, the Company’s Board of Directors has elected Mr. Lloyd H. Dean to serve as Chairman of the Board. Past Chairman Ronald D. Henriksen will continue to serve as an independent member of the Company’s Board of Directors.

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New Protections Coming For Air Travelers

April 21, 2011

The U.S. Transportation Secretary Ray LaHood announced a series of new consumer protection measures that will force airlines to disclose hidden fees, double compensation for passengers that are bumped from flights and require carriers to refund extra bag fees when luggage is lost.

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Video: Chu Says Obama Seeks to Spur U.S. Oil Production

March 30, 2011

March 30 (Bloomberg) — U.S. Energy Secretary Steven Chu discusses President Barack Obama’s proposals for incentives to encourage U.S. oil and gas production. Chu speaks with Mark Crumpton on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

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Fresh Controversy In Wisconsin Union Bill Fight

March 28, 2011

(Reuters) – Opponents of a bill stripping Wisconsin public employees of most of their collective bargaining rights rallied at the state Capitol on Saturday, the day after a state agency published the measure despite an order barring such a move. Republican supporters of the measure said the action by the state’s Legislative Reference Bureau (LRB), which published the bill electronically on Friday, was legal and meant the controversial anti-union measure was now in effect. But Democrats insisted the temporary restraining order (TRO) on publication issued last week by a judge remained in effect and rendered Friday’s publication by the LRB moot. The move injected fresh controversy into the debate here over the measure, which would overturn a 52-year-old state policy encouraging public-sector unionism and sparked massive demonstrations in Madison, the state capital, for weeks. Lester Pines, an attorney who represents unionized teachers in Madison, told the Wisconsin State Journal newspaper the LRB’s action, which appeared to contravene both the court order and specific written instructions from the Secretary of State, would “unleash a tsunami of litigation.” Peter Barca, the top Democrat in the state Assembly, said he had consulted with attorneys at the Wisconsin Legislative Council (WLC), a separate nonpartisan legislative agency, and had been assured the measure would not be deemed legally published without further action by Wisconsin’s secretary of state. Legal publication of the legislation is required for it to go into effect. Barca distributed a memo to the media from Scott Grosz, a staff attorney with the WLC, supporting that interpretation. “While certain statutory obligations regarding publication of Act 10 have been satisfied by the LRB,” Grosz wrote in the memo, “the statutory obligation that relates to the effective date of Act 10 has not yet been satisfied by the Secretary of State, and at this time the Secretary’s actions remain subject to the temporary restraining order issued in Dane County Circuit Court.” Dane County District Attorney Ismael Ozanne, who filed the complaint that generated the restraining order, agreed. He said the judge issuing the order had been clear it was designed to “preserve the status quo” — not to enjoin a particular individual. But Republicans, including Senate Majority Leader Scott Fitzgerald, disagreed. In an interview with Reuters on Saturday, Fitzgerald reiterated his view that the LRB’s action did not violate the TRO because the bureau was not specifically mentioned in the order. “The LRB clearly had authority to do what it did yesterday — not only the authority but the obligation,” Fitzgerald said. “And it’s my understanding that, as of this morning, it’s the law.” Mary Bell, the president of the Wisconsin education Association Council, a teachers union whose members are among those affected by the law, called the Friday move “another sign that the governor and legislature are in a desperate power grab to take away the voice of teachers, support staff, nurses, home health care workers and other public employees.” The court appeal was based on an argument that the state’s open meeting laws had been violated when the bill was passed. rather than a challenge to its contents, meaning even if the appeal were ultimately upheld the Republican-dominated state legislature is likely to simply pass the measure again. But so long as it is not in legal effect, public employee unions can try to use existing bargaining powers to negotiate better contracts before their rights are curbed. Republican Governor Scott Walker had strongly pushed the legislation, saying it was part of a package needed to combat the state’s budget deficit. Union and Democratic critics said that argument was a smoke screen for busting state workers’ unions. The issue attracted hundreds of thousands to demonstrations against the measure. Democratic state senators fled the state in an ultimately unsuccessful effort to block a vote on the measure, and the battle over the bill has become a symbol for other states where unions are trying to preserve bargaining powers as Republican-led legislatures seek to curb them. (Writing by James Kelleher; Editing by Jerry Norton) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Gambits Abound In Wisconsin Union Fight

March 27, 2011

MADISON, Wis. — Wisconsin Republicans were accustomed to getting what they wanted after the election put Scott Walker in the governor’s office and flipped legislative control to the GOP, even gaining some Democratic support for a series of economic measures in his first weeks in office. Then they took on unions. Uproar was swift and furious when Walker unveiled his plan to take away nearly all public employee collective bargaining rights, drawing tens of thousands of protesters to the Capitol and sending Senate Democrats running away from it to stall further action. Delayed but not deterred, GOP leaders found a legislative workaround and passed the measure without even needing the Democrats to be in the state. The move brought quick court action, and a temporary restraining order meant to stop the plan from becoming law while a judge decides whether steps taken to get it approved were legal. But the GOP may have outsmarted the plan’s opponents again. On Friday, in a move Democrats and unions decried as an end-run around the court order barring implementation, Republican Senate Majority Leader Scott Fitzgerald asked the nonpartisan Legislative Reference Bureau to publish the law. Publication typically means a law takes effect. If the law is in effect, the question before the courts would shift from attempting to block it to rescinding it. And the implementation date is significant because the law doesn’t apply to unions that have existing contracts. Those without contracts once the law takes effect cannot enter into new agreements. Fitzgerald defended himself against accusations he has thumbed his nose at the judiciary in a move that appeared to run afoul of the temporary restraining order. He said going to the Reference Bureau was legal because the court order only specifically barred the secretary of state from taking action. Even the Reference Bureau says its move does not put the law into effect. But Fitzgerald insists the bureau’s posting on the Legislature’s website Friday has the same effect as the secretary of state publishing it – meaning the law took effect Saturday. Fitzgerald said he didn’t consult with Walker about the move. “It is not the usual path, I admit that,” he said. “Clearly we’re in this uncharted territory again where we’d like it to be behind us so we can move forward with the budget.” Others doubt the motivations. “It seems to me they must be just offended that their power is questioned by anybody,” said Madison attorney Lester Pines, who plans to file his own lawsuit challenging the law on Monday. Democrats and unions, meanwhile, are flabbergasted. “Their actions continue to show a disregard not only for people’s rights and open government, but also the authority of the courts,” said Democratic Senate Minority Leader Mark Miller. Fitzgerald said he’s only seeking finality and resolution so local governments have certainty in knowing what the law is as they proceed with making budget decisions. The law takes away the ability of teacher and other public sector unions from collectively bargaining for anything other than wage increases no greater than inflation. It also forces them to pay more for health insurance and pensions, amounting to an 8 percent pay cut on average. The concessions are expected to save local governments about $330 million by mid-2013 and without those taking effect it will be much more difficult to absorb more than $1 billion in other cuts Walker is proposing in his pending two-year budget plan. Walker spokesmen did not return messages Saturday seeking comment. Department of Administration Secretary Mike Huebsch said Saturday that he believed the law was now in place. He said he’d begin implementing it, just as the department was required to do after any bill was lawfully published. “We are mindful that this act is continuing to be litigated, and we will continue to be responsive to the courts as the law begins to be applied,” he said in a statement. The head of the Reference Bureau and one of the Legislature’s nonpartisan attorneys both said that despite Fitzgerald’s insistence, the law is not in effect until Secretary of State Doug La Follette acts. The bill passed on March 10 and Walker signed it the next day, after less than 10 weeks on the job. Under normal circumstances, the law would take effect within the next 10 business days. But a judge issued a temporary restraining order on March 18 preventing La Follette from publishing it. That order came in response to a complaint filed by the Democratic Dane County district attorney. He alleged the state open meetings law was violated when a special legislative committee met with less than two hours’ notice March 9 to put the bill into the necessary form so it could pass the Senate without any of the 14 AWOL Democratic senators present. The state appealed and an appeals court earlier this week asked the Wisconsin Supreme Court to take the case. It has yet to say whether it will. La Follette remained adamant Saturday that the law is not in effect until he orders it published and he will not take any action because he remains under the restraining order. “I did not violate the restraining order,” La Follette said. The latest action didn’t spur any massive protests in the hours that followed it like other action had last month that motivated demonstrations of more than 85,000 people. A couple hundred protesters did return to the Capitol on Saturday morning, including one man who stood outside Fitzgerald’s office and repeatedly shouted, “I am the Senate majority leader and I am czar! You will do as I say! I am above the law!”

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Raymond J. Learsy: You Need A Nobel Prize To Be High Dumb on Oil Prices

March 6, 2011

How ‘fortunate’ we are to have two Nobel Laureates bringing their vested Nobel prestige to matters relevant to oil markets. From their authoritative perch they instruct us on matters of oil pricing and get it dangerously wrong while we pay at the pump and the economy sinks. First we had Nobel Laureate Paul Krugman’s May 12, 2008 New York Times’ Op-ed, the “So Called Oil Bubble”(http://www.nytimes.com/2008/05/12/opinion/12krugman.html?_r=1&scp=3&sq=krugman&st=nyt&oref=slogin) with oil prices at $125 a barrel and steaming ahead to $147/bbl a few weeks thereafter, advising us that oil prices were all about ‘supply and demand’ and that neither speculation nor manipulation played a role. He thereby gave umbrage to our sleepwalking regulators and their agencies to continue to snooze away while helping the economy reach a near breaking point in September of that year. (please see “Paul Krugman and his Pious Pontifications at the Pump” 05.16.08) http://www.huffingtonpost.com/raymond-j-learsy/the-new-york-times-pious_b_102046.html?view=print Now we have another Nobel Laureate, Steven Chu, Secretary of the Department of Energy, whose grasp of oil markets and how they function rivals that of Paul Krugman. An erstwhile professor at the University of California, Berkeley he is accustomed to lecturing. In response to last week’s dramatic 6.7% jump in the price of West Texas Intermediate Crude (WTI) Mr. Chu lectured us in tone and in a manner in keeping with the Department of Energy’s doleful performance in protecting the nation and its economy from the rapaciousness of the oil industry and its attendant speculators and the manipulations of the OPEC oil cartel, instructing us all the while our pockets are being picked at the pump and inhabitants in freezing Maine and like environments having their family budgets devastated by soaring heating oil bills: “We don’t want to be totally reactive so that when the price goes up everybody panics and when it goes down everybody goes back to sleep.” (“Anxiety About Oil Spurs Calls to Tap the Strategic Reserve” New York Times, 03.04.11) These fighting words from a Secretary of Energy who has been happily snoozing on his watch almost from day of his swearing in (January 21,2009). From February 2009 the price of oil has skyrocketed from $33 a barrel (bbl), to $104/bbl this week. Most readers know well what this has meant at the pump. On a national basis with a consumption of some 20 million barrels a day that means a transfer of American consumers wealth at the rate of $1.4 billion ($1,400,000,000) a day or $511 billion a year ripped out of the economy going into the pockets of oil interests and their kindred Wall Street speculators. Aside from being asleep at the switch since his swearing in while the nation was being looted through the upward ratcheting of the price of oil, Secretary Chu did arise from his slumber long enough to do a little moonlighting on the side. He continued his scientific research publishing a paper on ‘gravitational redshift’ . http://en.wikipedia.org/wiki/Gravitational_redshift that appeared in ‘Nature’ (463, 926-929) in Feb 2010 and a second paper, co- authored in July 2010. Certainly a brilliant mind but seemingly totally at loss when dealing with the rough and tumble of the oil markets and the insidious influence of the oil lobby. His performance between naps of having the price of oil, the core commodity to our fossil fuel dependent economy, increase, with barely a peep, by over 200 percent ($33/bbl to over $104/bbl) in a little over two years, is a feat that should send him back to Academe in short order. As commented in this corner previously (please see “The Looming Economic Crisis, The Price of Oil and Our Strategic Petroleum Reserve” 02.24.11) and in the closing paragraph of the New York Times article from which the Chu quote was taken, which referenced one Tom Kloza, chief oil analyst of the Oil Price Information Service. Simply put, Mr. Kloza said that releasing oil from the Strategic Petroleum Reserve “would help spank the speculators”. But to spank the speculators, you have to understand what role the speculators along with the manipulators play in the formulation of exchange traded oil prices. And that’s a rough and tumble world not fit for Nobel Laureates. (A seriously informative and amusing look into the oil trading pits can be found in Leah McGrath Goodman’s recently published “The Asylum”). Mr. Chu’s talents would be ideally suited to head a commission seeking alternative energy solutions and helping to formulate government energy polices that reduce our dependence on fossil fuels. There his competence could be focused on issues of vital interest to the nation. On the other hand it is long past due, given the appointments of this and past administrations, that our government find a Secretary of Energy who really understands the real-time dynamics of the oil markets and what is at stake to the economy in the here and now. Someone who will not be led down the garden path by those whose singular interest is in pumping the price of oil.

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Video: Richels Says Oil Should Trade in $75-$90 Range

March 4, 2011

March 4 (Bloomberg) — John Richels, chief executive officer of Devon Energy Corp., discusses the outlook for the U.S. oil industry and the effects of Middle East political unrest. Richels talks with Betty Liu on Bloomberg Television’s “In the Loop.” Former Treasury Secretary Paul O’Neill also speaks. (Source: Bloomberg)

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Video: Richels Says Oil Should Trade in $75-$90 Range

March 4, 2011

March 4 (Bloomberg) — John Richels, chief executive officer of Devon Energy Corp., discusses the outlook for the U.S. oil industry and the effects of Middle East political unrest. Richels talks with Betty Liu on Bloomberg Television’s “In the Loop.” Former Treasury Secretary Paul O’Neill also speaks. (Source: Bloomberg)

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Simon Johnson: No Smoke Without Mirrors — Disinformation About the Consumer Financial Protection Bureau

February 28, 2011

In Washington, before lobbyists try hard to destroy something, they first spread a great deal of disinformation about it. Thus the “End Users’ Coalition” (a front for the derivatives dealers) promotes its lobbying points as fake research. And “fiscal conservatives” attempt to distract from the fact that our largest banks brought us to the brink of budget disaster — this is their preparation for demolishing all vestiges of financial reform. On a closely related front, there is now a concerted effort to undermine the newly formed Consumer Financial Protection Bureau (CFPB), mostly by spreading disinformation about its supposed lack of accountability. This disinformation approach contains the standard elements of exaggeration, misdirection, and distraction (all quotes are via Fred Barnes ): Slogans: “If you like TSA at the airport, you’ll love these guys” (Congressman Spencer Bachus). This is a major step towards dictatorship. “Its powers are very, very vast…. Who in the world would consider it appropriate to have one person appointed–one person!–to set the rules for the entire financial industry. It’s a tremendous overreach. It’s incredible to think about” (Senator Bob Corker) And it would be a one-person dictatorship. “”It would be dangerous to the American economy if Elizabeth Warren were put in that job by a recess appointment, thwarting the will of Congress…. [She would be] accountable to no one” (Senator Richard Shelby) Naturally, none of this is remotely close to the facts — an important principle of disinformation is that it should create an alternative reality which, through repetition by apparently disparate and supposedly credible people, becomes regarded as containing an element of truth. Elizabeth Warren, the interim head of the new agency, has in fact consulted widely with members of Congress (from both sides), as well as with the industry. There is a great deal of accountability, down to the level of explaining exactly how the agency will be structured and the principles that will guide its operation. She has also shared with members of Congress the details of key personnel appointments, as well as the responsibilities that various people will have. Legislators have every right to ask tough questions about the details – and this is exactly what they have been doing. The oversight mechanisms at work here are exactly the same as for existing regulators — the CFPB is largely a consolidation and streamlining of their powers. Of course, we might worry that legislative oversight of regulators in the past helped bring us to the brink of financial and fiscal disaster, but that is another matter (e.g., see Inside Job , which just won the Oscar for Best Documentary.) A particular bone of contention is the role of Elizabeth Warren herself. She is currently Assistant to the President (i.e., a White House role), as well as a Special Advisor to the Secretary of the CFPB. She is not Director of the CFPB — nor is she currently the nominee for that position. Some members of Congress are clearly positioning themselves for a bruising confirmation hearing — and sending signals that they will fight hard against any potential appointment of Professor Warren, presumably mostly on procedural grounds. But everything about her current role, the timing of when and how the agency is established, and the confirmation hearings is exactly as laid down by the Dodd-Frank Act. And remember that Ms. Warren was, until recently, head of the Congressional Oversight Panel for TARP — in other words, she had a prominent role overseeing part of the executive branch. She understands the need to be scrupulous and careful about process in the current situation. Her appointment calendar is posted on-line. By my count, she has met with more than 50 members of Congress in one-on-one meetings since September. Elizabeth Warren stands for transparency. After decades of abuse, consumers of financial products deserve prices that are clearly stated up front, risks that are plainly visible, and absolutely nothing buried in the fine print. This kind of transparency allows people to comparison shop in an effective way; it will also spur market competition and encourage the kind of innovation that really benefits consumers. It’s time to end the deception that comes packaged with complicated agreements wrapped around hidden fees and all kinds of nasty surprises. And please remind all members of Congress, regarding their oversight role during 2000-08, that despite everything Countrywide did, including the horrible way it treated consumers and the many apparent deceptions in its practices, Angelo Mozilo walked away a rich man. According to the research of Professors Sanjai Bhagat and Brian Bolton, as CEO between 2000 and 2008, Mr. Mozilo received over $90 million in salary and bonus and sold Countrywide stock worth over $500 million. (You must read the Bhagat and Bolton paper.) Let’s have the substantive discussion, in the open — before Congress and elsewhere. Which way do we go next: Elizabeth Warren’s way, with transparency for all; or Angelo Mozilo’s way, with vast fortunes for a very few people and great misery for many? This is not about being pro- or anti-market. This is about what kind of market you want: transparent or opaque; honest or based on deceit. But rather than discussing the merits of the debate — and the real issues at stake — instead we are treating to phony procedural complaints and fake claims regarding how the Constitution is supposedly being undermined. “No smoke without fire” is the principle that reasonable people often apply to stories they hear. If enough people are talking about an issue in a particular way, there must be some legitimate grounds for concern. But, as any former official can tell you, while this presumption may be reliable in everyday life, it plays into the hands of politicians who wish to mislead you. All the smoke around the CFPB is designed purely for mirrors; there is no merit to any of the accusations. This is the first stage in a careful and orchestrated campaign to undermine and eventually destroy the agency, with the ultimate goal of allowing some irresponsible elements in the financial industry to go back to the disgusting ways of 2000-08. This post originally appeared at The Baseline Scenario .

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Don McNay: A Beginner’s Guide to Stopping Payday Lenders

February 18, 2011

Just like last year and the year before, my home state of Kentucky failed to pass a cap on the interest payday lenders can charge their prey. A bill was proposed to put a 36% cap on the amount of interest that payday lenders could charge. It’s identical to the cap that the federal government put on payday lenders who deal with military personnel and their families. I think payday lending is a scummy business. I suspect many people agree with me. A referendum on capping payday lenders at 28% in Ohio got 63% of the vote. Most states don’t offer ballot initiatives and referendums. They elect legislators and ask them to represent us. Dealing with legislators does not seem to work for people fighting payday lenders. I’ve been rooting for the “good guys” for several years. And I’ve been watching them get clobbered for several years. It’s like watching the Harlem Globetrotters play the Washington Generals in basketball. The victories are few and far between for the Generals. Here is my advice for making something happen. Not just in Kentucky, but in any state: 1. Read Gary Rivlin’s book, Broke USA. Then wait a week and read it again. I reviewed Broke USA for Huffington Post and thought it was one of the most influential books to come out in some time. Rivlin is an incredible storyteller, and the rise of the “poverty industry,” where companies make money off the poorest of the poor, is an incredible story. Rivlin tells us how states like Ohio and North Carolina were able to successfully fight the payday industry. It would be easy for other states to model what they have done. I’ve personally given out over 30 copies of Broke USA, but more need to be purchased. I’m always stunned when someone committed to fighting payday lending tells me that he has never read Broke USA. It’s like a Christian minister preaching even though he or she has never read the Bible. Broke USA is a mandatory read for anyone who wants to fight payday lenders. 2. Embrace the “Great Person Theory.” Larry Diamond, who is now at Stanford, started his teaching career at Vanderbilt. He taught his social movement students, including me, a concept called the “Great Man Theory.” The thrust of that theory espouses is that causes are only successful when they have a central leader, like a Martin Luther King or a Gandhi, to be the focal point. In the days of Twitter and Facebook, it is easier to operate without a “Great Person.” But in fighting payday lending, it would help. Many of the groups fighting payday lending are part of larger coalitions with a litany of other legislative interests. Fighting payday lending is merely one of many issues on their plates. The payday lenders are all-in. It’s life or death for them. They hire the best lobbyists. In Kentucky, they hired former Secretary of State Bob Babbage, the state’s highest paid lobbyist. (Disclosure: Babbage is a former business associate and remains a close friend, despite our extreme differences on payday lending.) Payday lenders have a well-organized, well-financed front and that are going to fight to the death with everything they’ve got. They make lots of contributions to all the right people. Unless a “Great Person” steps up to the lead the other side, it’s going to be hard to defeat them. 3. Find a poster child for the payday industry’s ills. In 1998, I was part of a group that made Kentucky the first state to have model legislation reigning in the companies that purchased structured settlement payments. The bill had Harry Moberly, one of the state’s most effective legislators, as it sponsor. It had the backing of the state’s trial lawyers and bar association. But what really “sealed the deal” was a brave young woman, who had been horribly mistreated by a settlement purchasing company, came forward to tell her story. The day I saw her picture on the front of the Louisville Courier-Journal, I knew the battle was over. She put a human face on a back-burner issue and turned it into a front page issue. The bill passed the legislature unanimously. One of the reasons it was easy for Congress to put a 36% cap on payday lending for military people is that it was easy to imagine a soldier, serving in Iraq or Afghanistan, being taken advantage of. The human victim was present. 4. Show the legislatures you have clout. I’ve yet to see an election lost on the payday lending issue. That needs to happen before elected officials will take the opponents seriously. I can see a scenario where the issue could make or break an election, especially if a legislator got big campaign contributions from payday companies. When people wanting to get rid of payday lending get organized and vote out a couple of payday lending supporters, the rest of the legislatures will take them seriously. And, just maybe, pass this long-needed legislation. Don McNay, CLU, ChFC, MSFS, CSSC of Richmond, Kentucky, is an award-winning columnist, structured settlement consultant and Huffington Post Contributor. He is the author of the book, Son of a Son of a Gambler: Winners, Losers and What to Do When You Win the Lottery. He has appeared on the CBS Evening News With Katie Couric along with numerous other television and radio programs. You can read more about Don at www.donmcnay.com McNay has Master’s Degrees from Vanderbilt and the American College and is in the Hall of Distinguished Alumni of Eastern Kentucky University.

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Michael Pento: Geithner’s Failed Makeover

February 18, 2011

To counter the increasing demands that government reduce its micromanagement of the economy, last week the Obama Administration offered a fig leaf in the form of a white paper entitled “Reforming America’s Housing Finance Market.” In addition to marking the official end of the Bush era “ownership society,” where increasing the level of home ownership was a national priority, the document contains a recommended regulatory overhaul of the Federal Housing Authority (FHA) as well as Fannie Mae and Freddie Mac (together known as Government Sponsored Enterprises “GSE’s”), that intends to bring the share of government owned home loans from the current 95% to 40% over the next 5-7 years. In the report, the Obama Administration makes the important admission that government interference in housing had dangerously distorted the market. And, while the goal of reducing the government’s footprint in the housing market is certainly laudable, the reform plan is not only too little too late, but fails miserably to address the nucleus of the problem. Even if all the recommendations are adopted, the government would actually extend its explicit guarantees to bail out failing lenders. Most importantly, the proposal completely overlooks the most significant government distortion of the housing market: the Federal Reserve’s manipulation of interest rates. Thus, this plan will insure that government’s role in the mortgage market will likely expand in the years ahead. Banks are in the business of borrowing on the short end of the yield curve and lending on the long end. Since interest rates are generally lower for shorter time durations, banks make profits by capturing the spread. But if the gap between long term and short term rates narrow, or sometimes vanish completely, banks have a much harder time operating. Rapid and dramatic changes in interest rates also expose banks to money losing risks. In a free market, whenever the supply of savings contracts the cost of money tends to increase. Those rising interest rates curb the demand for borrowing and increase the propensity to save. Conversely, increased savings rates lower the price of money, thereby encouraging more borrowing. Consequently, in a free economy market forces tend to stabilize interest rate volatility. However in the United States interest rates are anything but free. When interest rates are set by a few people behind closed doors, as they are by the Federal Reserve, massive distortions can occur in the supply demand metric. For example, the S&L crisis of the late 80′s and early 90′s was brought about by the loose monetary policy of the 70′s. Rising interest rates, which were a direct response to rising inflation, soon found S&L’s paying out more on their short-term borrowed funds than they were collecting on their long term assets. The consequences for those imbalances caused by our central bank rendered nearly one thousand banks insolvent. To mitigate this problem, early in the last decade banks began turning more and more to securitization as a way to unload the mortgages on their books by packaging and selling loans to outside investors. Not only does securitization bring in fees and reduce banks’ risk exposure but it also sucks in more capital to the real estate market, while increasing financial sector profits. It’s no wonder that the securitization market grew to over $10 trillion in the U.S. before the credit crisis of 2008. On paper this was a good solution to the problem, but additional government involvement in the securitization market threw in a monkey wrench. Given the size and diversity of the investment market in the U.S. and around the world, there was adequate private demand for securitized mortgages. With relatively low risk and more generous yields than government debt, pension funds and other institutional investors bought heavily. However, as the Federal Reserve continued to lower rates and as the government engineered housing boom finally went bust, this private label demand dried up almost completely. The GSEs now provide financing for 9 out of 10 mortgages. Therefore, the real estate market today is virtually 100% distorted and manipulated by government forces. Treasury Secretary Geithner–the President’s main pitch man for the program–touted the proposed solution of a hybrid federal reinsurance plan that would include a standing federal catastrophic reinsurer for private guarantors of mortgage-backed securities. The government has already clearly shown that its erstwhile implicit guarantee is now in fact explicit for GSE debt. That condition would remain intact. However, now government involvement would also morph into an explicit guarantee to reinsure private label mortgages. Therefore, in typical government fashion, the proposed reforms are merely a repackaging of the previous sham. Even if the plan were to be successfully carried out, the GSEs would still account for nearly half of all mortgage financing. Only now the government would also back private insurance for private label MBS with yet another explicit guarantee in case of emergency. Who can doubt that such conditions will inevitably arise? As to how this can ever satisfy the need to remove moral hazard or getting the government out of the housing market is beyond me. In other words, there is no meaningful governmental withdrawal from the market. Most importantly, the plan does nothing to address the Fed’s role in making interest rates much lower and more volatile than they would otherwise be. Unfortunately the housing market will remain in government control for years to come and another real estate crisis will inevitably occur. Michael Pento is the Senior Economist for Euro Pacific Capital

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Video: Arab League’s Moussa Says `Wind Of Change’ Sweeps Region

February 18, 2011

Feb. 18 (Bloomberg) — Amr Moussa, the secretary-general of the Arab League, talks about the prospect of new democracies emerging in the Middle East following weeks of civil unrest across the region. He spoke in Cairo yesterday with Bloomberg’s Lara Setrakian.

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A QUICK FIX: Bank Regulator’s Easy Solution May Hurt Homeowners

February 17, 2011

The federal bank regulator overseeing the nation’s largest lenders is pushing for a quick and modest settlement to the months-long federal and state probes into abusive mortgage practices, frustrating other federal agencies and state regulators and raising questions over President Barack Obama’s delay in naming a pro-consumer chief to head the agency. The Office of the Comptroller of the Currency, which oversees lenders like JPMorgan Chase and Bank of America, plays a key role in the ongoing investigations launched last September into improper foreclosure practices. The federal review involves the OCC and other bank regulators, as well as the Departments of Justice, Housing and Urban Development and the newly formed Bureau of Consumer Financial Protection. The 50-state probe involves state attorneys general and state bank regulators. But the OCC, known for its light-touch approach, is trying to come to a quick settlement with the banks it supervises, according to officials from multiple agencies involved in the investigations. The agency is negotiating an agreement that would cost the industry less than $5 billion in fines and mortgage modifications for troubled homeowners, including principal reductions, the officials said. Other agencies are pushing for something bigger. On Wednesday, Rep. Patrick McHenry, a North Carolina Republican, said during a House hearing on housing issues that he had heard the potential settlement would be in the “tens of billions range.” In 2008, state attorneys general reached an $8.4 billion agreement with just one company — Countrywide Financial — to settle predatory lending accusations. The money was used to aid distressed homeowners. The OCC is also trying to persuade mortgage companies that collect payments from borrowers, known as servicers, into adopting new standards in how they deal with homeowners. The agency has wide influence over the way banks service mortgages: It supervises firms that control nearly two-thirds of all home mortgages in the U.S., or more than 33 million loans totaling about $5.8 trillion. But officials said the OCC’s proposals give the institutions wide discretion, potentially undercutting their intent. The OCC is said to be rushing to settle in hopes of forcing the hand of other regulators on the federal and state level, weakening their efforts to extract a more meaningful resolution. The probes have cast a pall over the industry as bank executives have been forced to answer questions about the investigations posed by investors and analysts. The industry wants to put the whole matter behind it and move on. Officials at the Treasury Department and Federal Deposit Insurance Corporation have grown frustrated with the OCC’s efforts, people familiar with the matter said. State regulators conducting their own probe said they aren’t a part of the OCC’s seemingly lonely action. “Any statements or actions by the OCC at this point are on the agency’s own behalf and not in conjunction with the 50-state attorneys general,” Iowa Attorney General Tom Miller said in a statement. “Regardless of any federal action, we intend to fully pursue all state claims and remedies.” Spokesmen for the OCC didn’t respond to a request for comment e-mailed after regular business hours. State and federal officials are trying to reach a global settlement that will deter future abuses in the way mortgage servicers modify delinquent home loans and foreclose on homeowners, as well as levy penalties as a measure of restitution and force lenders to restructure distressed mortgages. The OCC’s efforts subvert the possibility of a unified settlement, officials said. In December, Federal Reserve Governor Daniel K. Tarullo said the federal review had found “significant weaknesses in risk-management, quality control, audit, and compliance practices as underlying factors contributing to the problems associated with mortgage servicing and foreclosure documentation.” “We have also found shortcomings in staff training, coordination among loan modification and foreclosure staff, and management and oversight of third-party service providers, including legal services,” he said. In the wake of the worst housing crisis in generations, consumer advocates, housing analysts and bank regulators have heavily criticized the industry’s performance. In addressing the recent controversies of improper foreclosures during a speech last November, Fed governor Sarah Bloom Raskin said procedural flaws like robo-signing and other efforts that cut corners are “part of a deeper, systemic problem.” She added that she was “gravely concerned.” “The complex challenges faced by the loan servicing industry right now are emblematic of the problems that emerge in any industry when incentives are fundamentally misaligned, and when the race for short-term profit overwhelms sustainable, long-term goals and practices,” Raskin said. “I believe that serious and sustained reform is needed to address the larger problems in mortgage servicing.” Tarullo said the “problems are sufficiently widespread that they suggest structural problems in the mortgage servicing industry.” “The servicing industry overall has not been up to the challenge of handling the large volumes of distressed mortgages,” he said in December. “It is clear that the industry will need to make substantial investments to improve its functioning in these areas and supervisors must ensure that these improvements occur.” But as of last week, nothing had changed, Raskin said in another speech. “These problems existed before November and as far as I can tell they remain unaddressed,” Raskin said. “How do I know this? Late last year, the federal banking agencies began a targeted review of loan servicing practices at large financial institutions that had significant market concentrations in mortgage servicing. The preliminary results from this review indicate that widespread weaknesses exist in the servicing industry.” “These deficiencies pose significant risk to mortgage servicing and foreclosure processes, impair the functioning of mortgage markets, and diminish overall accountability to homeowners,” she added. “I’m sure this has been said, but I’ll say it again because I have seen little to no evidence of improvement in the operational performance of servicers since the onset of the crisis in 2007.” Bank regulators will address the issue on Thursday during a Senate hearing. On Wednesday, Federal Housing Administration Commissioner David Stevens said that a settlement would come in the next month. Options include penalties against the nation’s largest banks, more mortgage modifications for borrowers, and the reduction of homeowners’ mortgage principal, he said. Stevens also touched on how regulators aren’t on the same page. “There’s two ways we can go about coming to a conclusion here,” Stevens said. “We can come up with one set of solutions, assuming the general findings are the same, or we can go individually. That process is being worked through right now.” The FHA chief added that the agencies would have to work together “to make this less disruptive in the market,” an acknowledgement that a massive principal write-down scheme would likely impair the nation’s largest financial institutions. The OCC’s actions in trying to derail a more substantial settlement raises questions over the Obama administration’s delay in nominating the agency’s next leader. Its last chief, John C. Dugan, stepped down in August after his five-year term ended, and joined Covington & Burling LLP, where he leads the firm’s financial institutions group. Dugan “advises clients on a range of legal matters affected by significantly increased regulatory requirements resulting from the financial crisis,” according to the firm’s Web site. One of his colleagues is Edward Yingling, who last year stepped down as president and chief executive officer of the American Bankers Association, the industry’s largest trade group. Consumer advocates pushed for the White House to nominate an outsider who was less connected to the OCC’s prior failures. The agency came under withering criticism for its lax oversight of the industry in a report published by the bipartisan, Congressionally-appointed Financial Crisis Inquiry Commission. Treasury Secretary Timothy Geithner picked Dugan’s former chief of staff at the OCC, John Walsh, as Dugan’s interim replacement. Obama has not yet named his successor. The nomination requires Senate approval. But Democrats lost six seats in the Senate in last fall’s election. The administration now faces an uphill battle to get a tough regulator in the role. ************************* Shahien Nasiripour is a business reporter for The Huffington Post. You can send him an e-mail ; bookmark his page ; subscribe to his RSS feed ; follow him on Twitter ; friend him on Facebook ; become a fan ; and/or get e-mail alerts when he reports the latest news. He can be reached at 646-274-2455.

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Video: Royce Says U.S. Housing Finance Should Be `Market Based’

February 11, 2011

Feb. 11 (Bloomberg) — U.S. Representative Ed Royce, a Republican from California, talks about the role of the U.S. government in housing finance and the future of Fannie Mae and Freddie Mac. Treasury Secretary Timothy F. Geithner presented Congress with a set of options for weaning the $11 trillion mortgage market from its dependence on the government, while calling for changes to be phased in “responsibly and carefully” to avoid economic disruptions. Royce speaks with Carol Massar and Peter Cook on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Video: Lockhart Says Dissolving Freddie, Fannie Is Realistic

February 11, 2011

Feb. 11 (Bloomberg) — James Lockhart, vice chairman for WL Ross & Co. and former head of the Federal Housing Finance Agency, talks about the Treasury Department’s proposal to wind down government mortgage lenders Freddie Mac and Fannie Mae. Treasury Secretary Timothy F. Geithner presented Congress with a set of options for weaning the $11 trillion mortgage market from its dependence on the government, while calling for changes to be phased in “responsibly and carefully” to avoid economic disruptions. Lockhart speaks with Scarlet Fu and Peter Cook on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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Video: Pinto Says U.S. Housing Needs Return to Private Market

February 11, 2011

Feb. 11 (Bloomberg) — Edward Pinto, resident fellow at the American Enterprise Institute and former chief of credit for Fannie Mae, talks about the Treasury’s proposals to reduce the government’s role in housing and wind down lenders Fannie Mae and Freddie Mac. U.S. Treasury Secretary Timothy F. Geithner presented Congress with a set of options for weaning the $11 trillion mortgage market from its dependence on the government, while calling for changes to be phased in “responsibly and carefully” to avoid economic disruptions. Pinto speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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David Isenberg: The Known and Unknown Contractor

February 10, 2011

It is not a secret that as Secretary of Defense during the presidency of George W. Bush Donald Rumsfeld was sympathetic to using private military contractors. In 2003, he said that as many as 320,000 jobs filled by military personnel could be turned over to civilians. Ironically, long before Abu Ghraib, Defense Secretary Rumsfeld was preaching the virtues of using contractors in prisons. The secretary said at a town hall meeting in August 2003 that the Army pays $20,000 to $40,000 to hold a prisoner each year, whereas it costs Kansas only $14,000 per year. “I don’t think of running a prison as a core competency of the United States military,” he said In September 2004 he told the Senate Armed Services Committee that he had identified more than 50,000 positions now filled by uniformed personnel “doing what are essentially nonmilitary jobs.” At the same time, he said, the Army was so short-handed it had to call up tens of thousands of reservists to fight in Iraq. Rumsfeld said he intended to assign the troops to military jobs and hire civilian workers or contractors to take the non-military jobs. “We plan to carry this conversion out at a rate of about 10,000 positions per year,” Rumsfeld told the committee Now, thanks to his just published memoir, ” Known and Unknown ” we have a few more examples of his view on contractors. As part of the book’s promotional effort for the book Rumsfled created a website , where he has posted hundreds of documents from his files. If you search them using the “contractor” keyword you get things like the following 25. 2004-03-30 to (no recipient) re (no subject) Category: George W Bush Secretary of Defense (21) – 2004 – Snowflakes New pay schedules, so that US SOF don’t get enticed out to the CIA or to private contractors at much higher salaries than we are currently able to pay them. One might recall that PMC advocates have claimed that this was an overblown concern but evidently it was serious enough to get Rumsfeld’s attention Then, there was this, which is actually pretty sensible and uncontroversial. TO: Honorable Andrew Card FROM: Donald Rumsfeld SUBJECT: Military Detailees March 28, 200l lo:28 Andy, are you going to take a look sometime at the way the demand for members of the armed services in the total White House complex has ballooned’? 1 am told it has gone from 1,400 to 2,100. 1 don’t know from when, or whether that figure is accurate, but it is worth checking. We might want to think about ways that that number can be cut down and possibly ways more could be reimbursable, rather than non-reimbursable. Also, it may make sense to replace some functions now performed by uniformed military personnel with contract employees, as WC are doing at the Pentagon. For example, mess attendants for U.S. forces in Bosnia are provided by an outside contractor, not by soldiers. Let me know what you think. Thanks. I WlR:dh 03270 l-24 And, proving that Eisenhower’s famed military-industrial complex is now more properly accurately described as a military-industrial-congressional complex, is this: 2001-02-22 Re Ethics Laws Category: George W Bush Secretary of Defense (21) – 2001 – Snowflakes … of the new Congressional ethics laws that apply to the Executive Branch is that the contractor community has to be very careful about dealing with the Executive Branch, but they … February 22, 2001 9:08 PM SUBJECT: Ethics Laws One of the side effects of the new Congressional ethics laws that apply to the Executive Branch is that the contractor community has to be very careful about dealing with the Executive Branch, but they don’t have to be careful about dealing with the Congress. As a result, since I was last here, there has been a process taking place that has knitted the defense contractor community to the Congress with an unfortunate effect on the defense establishment. Finally, there was this. If Rumsfeld has bothered to look at how this training has actually turned out he is probably feeling embarrassed. Contractors such as DynCorp and others have been heavily involved in this and have received loads of criticism for their efforts. 2. 2002-04-23 to Gen Franks re Contractors Category: George W Bush Secretary of Defense (21) – 2002 – Snowflakes … 2002-04-23 to Gen Franks re Contractors … April 23, 2002 6:30 PM TO: Gen. Franks CC: Gen. Myers FROM: Donald Rumsfeld SUBJECT: Contractors Have you thought of using contractors to train the Afghan army? Thanks. DHR:dh 042302-24

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David Isenberg: The Known and Unknown Contractor

February 10, 2011

It is not a secret that as Secretary of Defense during the presidency of George W. Bush Donald Rumsfeld was sympathetic to using private military contractors. In 2003, he said that as many as 320,000 jobs filled by military personnel could be turned over to civilians. Ironically, long before Abu Ghraib, Defense Secretary Rumsfeld was preaching the virtues of using contractors in prisons. The secretary said at a town hall meeting in August 2003 that the Army pays $20,000 to $40,000 to hold a prisoner each year, whereas it costs Kansas only $14,000 per year. “I don’t think of running a prison as a core competency of the United States military,” he said In September 2004 he told the Senate Armed Services Committee that he had identified more than 50,000 positions now filled by uniformed personnel “doing what are essentially nonmilitary jobs.” At the same time, he said, the Army was so short-handed it had to call up tens of thousands of reservists to fight in Iraq. Rumsfeld said he intended to assign the troops to military jobs and hire civilian workers or contractors to take the non-military jobs. “We plan to carry this conversion out at a rate of about 10,000 positions per year,” Rumsfeld told the committee Now, thanks to his just published memoir, ” Known and Unknown ” we have a few more examples of his view on contractors. As part of the book’s promotional effort for the book Rumsfled created a website , where he has posted hundreds of documents from his files. If you search them using the “contractor” keyword you get things like the following 25. 2004-03-30 to (no recipient) re (no subject) Category: George W Bush Secretary of Defense (21) – 2004 – Snowflakes New pay schedules, so that US SOF don’t get enticed out to the CIA or to private contractors at much higher salaries than we are currently able to pay them. One might recall that PMC advocates have claimed that this was an overblown concern but evidently it was serious enough to get Rumsfeld’s attention Then, there was this, which is actually pretty sensible and uncontroversial. TO: Honorable Andrew Card FROM: Donald Rumsfeld SUBJECT: Military Detailees March 28, 200l lo:28 Andy, are you going to take a look sometime at the way the demand for members of the armed services in the total White House complex has ballooned’? 1 am told it has gone from 1,400 to 2,100. 1 don’t know from when, or whether that figure is accurate, but it is worth checking. We might want to think about ways that that number can be cut down and possibly ways more could be reimbursable, rather than non-reimbursable. Also, it may make sense to replace some functions now performed by uniformed military personnel with contract employees, as WC are doing at the Pentagon. For example, mess attendants for U.S. forces in Bosnia are provided by an outside contractor, not by soldiers. Let me know what you think. Thanks. I WlR:dh 03270 l-24 And, proving that Eisenhower’s famed military-industrial complex is now more properly accurately described as a military-industrial-congressional complex, is this: 2001-02-22 Re Ethics Laws Category: George W Bush Secretary of Defense (21) – 2001 – Snowflakes … of the new Congressional ethics laws that apply to the Executive Branch is that the contractor community has to be very careful about dealing with the Executive Branch, but they … February 22, 2001 9:08 PM SUBJECT: Ethics Laws One of the side effects of the new Congressional ethics laws that apply to the Executive Branch is that the contractor community has to be very careful about dealing with the Executive Branch, but they don’t have to be careful about dealing with the Congress. As a result, since I was last here, there has been a process taking place that has knitted the defense contractor community to the Congress with an unfortunate effect on the defense establishment. Finally, there was this. If Rumsfeld has bothered to look at how this training has actually turned out he is probably feeling embarrassed. Contractors such as DynCorp and others have been heavily involved in this and have received loads of criticism for their efforts. 2. 2002-04-23 to Gen Franks re Contractors Category: George W Bush Secretary of Defense (21) – 2002 – Snowflakes … 2002-04-23 to Gen Franks re Contractors … April 23, 2002 6:30 PM TO: Gen. Franks CC: Gen. Myers FROM: Donald Rumsfeld SUBJECT: Contractors Have you thought of using contractors to train the Afghan army? Thanks. DHR:dh 042302-24

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Chris Martenson, Ph.D.: Egypt’s Warning: Are You Listening?

February 10, 2011

One day, a fruit and vegetable seller was arrested in Tunisia, sparking social unrest, and a few weeks later the government of Egypt was set to topple.

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Mike Lux: Obama’s Chamber Speech: The Debates About Regulation and the Social Contract

February 7, 2011

It was hard for this old progressive warrior to see President Obama go give a speech to the Chamber of Commerce. The Chamber was always conservative, but for the last 16 years (since a takeover in 1994 by a hard-right faction), it has become one of the worst institutions in America. With its tens of millions in anonymously funded and blatantly partisan attack ads; its far-right positions on health care, global warming, and taxes; and its blatant selling of its lobbying services for any company that wants to attack legislation but needs a front group, the Chamber has soiled its reputation almost beyond repair. Having said that, I also think the president is the president for the entire country, and I have no problem with him meeting with anyone, even his political opposition. If I have no problem with Obama meeting with Boehner and McConnell — which I don’t — I can’t see why he shouldn’t go give a speech to the Chamber. As long as he understands who they are, and how much damage they want to do to him in most other circumstances, speaking to them is no problem. The other thing is that speaking to them also gives him a chance to challenge them. Did he do that enough in his speech? Not to my tastes, of course. I wish he would have banged on them — directly challenging them on things like all the anonymous ads they ran in the 2010 cycle — a lot more than he did. And I couldn’t disagree more with Obama in his extended embrace of “free trade” deals that do damage to American workers and jobs. But there were two important times when Obama did make at least a nuanced argument in direct opposition to the Chamber’s ideology. On neither point did he say enough, but I thought both were interesting. The first is on the debate over regulations. Obama reached out to the Chamber on the issue of regulatory overhaul, but as in the State of the Union, he gave a relatively strong defense of some government regulations as being both necessary and actually helpful to the economy: So we were just talking about regulations. Even as we eliminate burdensome regulations, America’s businesses have a responsibility as well to recognize that there are some basic safeguards, some basic standards that are necessary to protect the American people from harm or exploitation. Not every regulation is bad. Not every regulation is burdensome on business. A lot of the regulations that are out there are things that all of us welcome in our lives. Few of us would want to live in a society without rules that keep our air and water clean; that give consumers the confidence to do everything from investing in financial markets to buying groceries. And the fact is, when standards like these have been proposed in the past, opponents have often warned that they would be an assault on business and free enterprise. We can look at the history in this country. Early drug companies argued the bill creating the FDA would “practically destroy the sale of… remedies in the United States.” That didn’t happen. Auto executives predicted that having to install seatbelts would bring the downfall of their industry. It didn’t happen. The President of the American Bar Association denounced child labor laws as “a communistic effort to nationalize children.” That’s a quote. None of these things came to pass. In fact, companies adapt and standards often spark competition and innovation. I was traveling when I went up to Penn State to look at some clean energy hubs that have been set up. I was with Steve Chu, my Secretary of Energy. And he won a Nobel Prize in physics, so when you’re in conversations with him you catch about one out of every four things he says. (Laughter.) But he started talking about energy efficiency and about refrigerators, and he pointed out that the government set modest targets a couple decades ago to start increasing efficiency over time. They were well thought through; they weren’t radical. Companies competed to hit these markers. And they hit them every time, and then exceeded them. And as a result, a typical fridge now costs half as much and uses a quarter of the energy that it once did — and you don’t have to defrost, chipping at that stuff — (laughter) — and then putting the warm water inside the freezer and all that stuff. It saves families and businesses billions of dollars. So regulations didn’t destroy the industry; it enhanced it and it made our lives better — if they’re smart, if they’re well designed. And that’s our goal, is to work with you to think through how do we design necessary regulations in a smart way and get rid of regulations that have outlived their usefulness, or don’t work. I also have to point out the perils of too much regulation are also matched by the dangers of too little. And we saw that in the financial crisis, where the absence of sound rules of the road, that wasn’t good for business. Even if you weren’t in the financial sector it wasn’t good for business. And that’s why, with the help of Paul Volcker, who is here today, we passed a set of common-sense reforms. The same can be said of health insurance reform. We simply could not continue to accept a status quo that’s made our entire economy less competitive, as we’ve paid more per person for health care than any other nation on Earth. Nobody is even close. And we couldn’t accept a broken system where insurance companies could drop people because they got sick, or families went into bankruptcy because of medical bills. That is not someone apologizing for the need to regulate just a wee little bit; that is a fairly robust argument in favor of an active regulatory role for the federal government. At a time in our country’s history when Republicans and most business executives think of regulations as the ultimate dirty word, and a time when one of the biggest bank’s spokesperson brags that “the bank CEOs have been collaborating with the Fed” on their regulatory policy, for the president to give that kind of vigorous defense in terms of the need for regulations in front of the Chamber is a very positive thing. By the way, in case you didn’t think you were reading that quote right because a bank spokesman couldn’t possibly be that arrogant, or that perhaps I was taking it out of context, you are wrong. The Bank of America and their CFO Charles Noski really did happily admit that the biggest bank CEOs “collaborate” with regulators on their regulatory policy, in this case on the swipe-fee issue, an issue I have been following closely while working with retailers and consumer groups. Hopefully the Fed will “collaborate” just as closely with all the small businesses and consumers impacted by swipe fees as they are doing with bank CEOs. This is the environment we are in right now, though; bankers feel no need to hide their blatant attempts to seduce and capture regulators. Given that environment, the president standing up for certain strong regulations is a very positive thing. The second area of the president’s speech that I loved was about the social compact. When I first heard that Obama would be speaking to the Chamber, as soon as I stopped cursing, my first thought was this: I hope he makes the case for the social contract, or as he called it, compact. That old but still central idea, totally rejected by the kind of selfishness-is-a-virtue, Ayn Rand conservatives who dominate in too many corporate board rooms and the modern Republican Party, is that there is contract between our country’s citizens, government, and private sector, that much is given to each of us but much is required in return. As President Obama said: But we have to recognize that some common-sense regulations often will make sense for your businesses, as well as your families, as well as your neighbors, as well as your coworkers. Of course, your responsibility goes beyond recognizing the need for certain standards and safeguards. If we’re fighting to reform the tax code and increase exports to help you compete, the benefits can’t just translate into greater profits and bonuses for those at the top. They have to be shared by American workers, who need to know that expanding trade and opening markets will lift their standards of living as well as your bottom line. We can’t go back to the kind of economy and culture that we saw in the years leading up to the recession, where growth and gains in productivity just didn’t translate into rising incomes and opportunity for the middle class. That’s not something necessarily we can legislate, but it’s something that all of us have to take responsibility for thinking about. How do we make sure that everybody’s got a stake in trade, everybody’s got a stake in increasing exports, everybody’s got a stake in rising productivity? Because ordinary folks end up seeing their standards of living rise as well. That’s always been the American promise. That’s what JFK meant when he said, “A rising tide lifts all boats.” Too many boats have been left behind, stuck in the mud. And if we as a nation are going to invest in innovation, that innovation should lead to new jobs and manufacturing on our shores. The end result of tax breaks and investments can’t simply be that new breakthroughs and technologies are discovered here in America, but then the manufacturing takes place overseas. That, too, breaks the social compact. It makes people feel as if the game is fixed and they’re not benefiting from the extraordinary discoveries that take place here. So the key to our success has never been just developing new ideas; it’s also been making new products. So Intel pioneers the microchip, then puts thousands to work building them in Silicon Valley. Henry Ford perfects the assembly line, and then puts a generation to work in the factories of Detroit. That’s how we built the largest middle class in the world. Those folks working in those plants, they go out and they buy a Ford. They buy a personal computer. And the economy grows for everyone. And that’s how we’ll create the base of knowledge and skills that propel the next inventions and the next ideas. The president didn’t challenge the Chamber, or the American business community, enough in his speech. I sure would have banged on them some for sleazy anonymous attack ads paid for by secretive, and possibly foreign, corporations. I would have been more direct in my criticism of too many companies not creating more jobs while making record profits last year, and in outsourcing jobs and escaping taxes through phony offices in foreign countries. But it was good to see him make a strong case for the role of regulation, and for the importance of the social contract. To go before a group like the Chamber and make those arguments required some guts, and I appreciated that he did it.

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David Kroodsma: 40 Interviews in Davos

February 4, 2011

Cross posted on Hub Culture . For five days last week I was a fly on the wall in Davos, watching CEOs and leaders discuss the planet’s major issues at the World Economic Forum. I attended the conference as a social media producer for Hub Culture , producing short video interviews of thought leaders. Hub Culture is a social network of “global urban influencers,” and in Davos we occupied a building that served as a center for work, collaboration, and evening events . At the Hub Culture Social Media Center we interviewed forty influential leaders. These five-minute interviews, conducted by our executive editor Edie Lush, let individuals share why they were at Davos. CEOs of major corporations, directors of global non-profits, and other thought leaders sat in the Hub Culture “hot seat” and shared their concerns. The following is an attempt to distill some of the major themes of these interviews. Obviously, the forty interviews don’t fall neatly into the categories below, and many people touched on multiple themes in their few minutes. All of the links below lead to videos of the individuals; click to hear the full stories. Did Davos Have a Theme? Every World Economic Forum has a stated “theme,” which sometimes relates to the actual theme of the conference. Last year, as the world was emerging from the global recession, the theme was “Improve the State of the World: Rethink, Redesign, Rebuild.” This year the theme was “Shared Norms for the New Reality,” which made everyone scratch their head. What is the “new reality” of the world, and what are the norms? The former Prime Minister of Australia, Kevin Rudd , said he would rather state the goal as “shared values for common challenges.” (Off camera he asked, “Who are these guys named Norm that we are sharing?”) Rudd said that in the sessions he attended there was active debate over whether different countries of the world shared values or not. In one session the audience was split 50/50 on whether or not the West has common values with China with respect to global challenges. Justin Blake, a managing director at Edelman , has now attended nine World Economic Forums, giving him a unique perspective. He said that this was the first Davos where there was no clear focus or theme, as if the world appears more splintered as it becomes more connected. Moreover, outside news–notably the chaos in Egypt–over shadowed any news from the conference. Ian Bremmer, the President of the Eurasia Group , a firm that consults with businesses on political risk, expounded on what he thought was the “new reality.” He said that we are seeing a new type of globalization as the emerging markets flex their muscles and no longer take orders from the western powers. His major concern is what he called the “G-0″ (as opposed to the G-20)–the fact that there is no effective global governance. He cited the failures of climate and trade negotiations. Some claimed that a major focus of this year’s Forum was social inequality, which is on the rise in many parts of the world. Jasmine Whitbread, the CEO of Save the Children , felt that in previous years her comments on social inequity were ignored; this year she gained more attention. The Way Workers Interact with the Economy has Fundamentally Changed. Malcom Frank, the Senior Vice President of Cognizant Technology Solutions , said that we are seeing the “future of work” because the generation now entering the workforce won’t accept the rigid hierarchies common in corporations. Businesses will need to be more flexible. In the information age, work no longer has to be done “at work,” but can be performed remotely and at any time. This message was echoed by Jeffery Joerris, the CEO of Manpower , who even argued that we are no longer in the “Information Age,” but instead in the “Human Age.” In the “Human Age” ( see article here ), the focus is on individual talent instead of the corporation. He also remarked that companies have been reluctant to hire during this economic recovery because they’ve realized they can be just as productive with fewer people. Arianna Huffington, the chief editor of the Huffington Post , talked about the explosion in unemployment, and how many in the United States’ middle class have experienced “downward mobility” as individuals have dropped into poverty. She implored governments to do more. Media and Social Media are Rapidly Changing One career that has changed dramatically in the past few years is journalism. We talked with Mike Perlis, the President and CEO of Forbes . Perlis described how Forbes’s online media has succeeded because it has adapted quickly to the changing ways that people consume information. Likewise, Justin Blake of Edelman (mentioned earlier), said that a few years ago everyone was surprised when the first blogger showed up at the Forum. Forum meetings were supposed to be “off the record.” Now, because of twitter and blogging, everything is shared and no one expects secrecy. Robert Scoble, a Rackspace Innovation Journalist and blogger on the popular site Scobleizer.com , described how twitter gave him his own little news feed on the world, giving him updates every second. “It’s like having a CNN news feed on my screen. I’ve always wanted that!” The Global Gender Imbalance A number of our interviews highlighted the need to empower women in business. Rachel Kyte, the Vice-President of the International Finance Corporation , told us that women run sixty percent of the world’s small businesses, but in some countries only five percent of the bank credit is awarded to females. She also cited numerous studies revealing that companies do better if women are on the corporate boards. Wendy Clark, the senior Vice President of Integrated Marketing and Communications for The Coca-Cola Company , talked about Coca-Cola’s efforts to empower women franchise owners. Coca-Cola has a goal of empowering five million female entrepreneurs by 2020. Currently, many female entrepreneurs lack sufficient training, networks, or access to capital. Clark admitted that these efforts are good business practice for Coca-Cola, because small beverage outfits run by women tend to do better than those run by men. Laura Liswood, the Secretary General of the Council of Women’s Leaders , lamented the slow progress in getting women into corporate boardrooms. She also gave a cultural anecdote to explain why corporate boardrooms ate still dominated by western males. And while we did see female executives (Indra Nooyi, the CEO of PepsiCo spent time at Hub Culture, and we also interviewed Beth Comstock, a senior Vice President of GE ), Davos remains a mostly male affair. Only 16 percent of the roughly 2,500 fully accredited attendees were women. Consumer Empowerment We interviewed the heads of two organizations that are attempting to empower consumers. Joost Martens, the Director-General of Consumers International (a global umbrella organization that includes U.S.-based Consumer Reports), said that the world is becoming more globalized but there are not yet global standards for the quality and safety of products. His organization hopes to change that. Dara O’Rouke, the founder of GoodGuide , described how his company researches the social and environmental impacts of various products and makes the information freely available. In the interview he showed us a new iPhone app that allows consumers to scan a product’s barcode and get vital statistics about the social, health, or environmental consequences of the item. Sustainability Has Become Popular and Profitable, But Will It Be Enough? To promote collaboration and climate solutions, Hub Culture hosted Climate Deal Day during the World Economic Forum ( watch a Wall Street Journal video about the event ). Consequently, we interviewed many individuals concerned with climate and other environmental issues. These conversations gave us many reasons to be hopeful; the question is whether our solutions will be sufficient. Peter Lacy, the Managing Director of Sustainability Services for Accenture , said that businesses now understand the importance of sustainability. In a global survey of CEOs, Accenture found that 93% of company leaders say that environmental sustainability is key to their long-term success. Just three years ago, this figure was twenty percent lower. Lacy also said that the challenge is no longer recognizing the issue, but instead figuring out how to embed sustainability in the companies. He then added that more organizations see sustainability as “an opportunity” instead of a burden or a risk. We interviewed the founders of two companies who believe in this opportunity. Kevin Surace, the CEO of Serious Materials , spoke about the high tech windows and walls that his company has developed to improve building efficiency. Nearly all of his company’s products have a payback time of less than two years, making them great investments for consumers. Likewise, Graham Andrews, the founder of Andrews Power , talked about his extremely high efficient air conditioners that dramatically reduce energy use. The challenge is to get people to use these new technologies. Peggy Liu, the chairperson of JUCCCE (The Joint U.S-China Collaboration on Clean Energy), talked about the difficulties of getting knowledge to the right places. “There is no lack of interest to go green in China,” said Liu. The problem is access to technology, and Liu announced an innovative new plan to allow Chinese investors and U.S. research institutions to cooperate and develop clean technology. Dr. Han Seung-soo, the former Prime Minister of South Korea and the current Chairman of the Global Green Growth Institute , partially echoed Liu’s ideas. Seung-soo’s country developed rapidly in the past few decades, converting itself from a poor country to a rich one in less than half a century. Dr. Seung-soo said that the rest of the world can’t develop in the same intensive way that South Korea did, and the Green Growth Institute will help developing nations grow their economies more sustainably. Ian Cheshire, the Group Chief Executive for Kingfisher , Europe’s leading home improvement store, talked in depth about his company’s efforts to provide sustainable, efficient products for home owners and builders. We also spoke with Ann Davlin, the Director of Development for the Carbon War Room , who told of a number of other companies who are also stepping up and taking action. One of Hub Culture’s partners in Davos was the Renault-Nissan Alliance, which has developed the electric cars the Nissan Leaf and Renault Fluence. At Hub Culture we had two charging stations for these cars, and we spoke with a number of people involved in the marketing or design of these vehicles. Nissan’s Head of Marketing, Simon Sproule , said that in 2011 the electric vehicle has finally come of age. Gilles Gautherot, the Communications Manager of the Renault-Nissan Alliance , told us that the real breakthrough has been making these cars “just like any other ordinary car, except much quieter.” Jack Hidary, the Global Electric Vehicle Leader for Hertz , talked about making electric cars available through Hertz, and he described innovative new car sharing programs for electric cars. We felt we saw the future when Hidetushi Kadota, the Chief Engineer for the Nissan Leaf , walked us outside and proudly showed off his company’s car. Unfortunately, the environmental challenges that we face are acute. Christiana Figueres, the Executive Secretary of the UNFCCC (United Nations Framework Convention on Climate Change), said that the global agreement reached in Cancun last December was “A big step forward for the community of nations, but a small step for the planet.” In other words, even though substantial progress was made, the progress still falls far short of what is needed to stop climate change. The Executive Director of Greenpeace International, Kumi Naido , agreed, saying that “time is running out,” and cited various scientific reports. Carl Ganter, the founder of Circle of Blue , a firm focused on freshwater issues, pointed out that water shortages could also limit our energy use. Finally, the President of the Environmental Defense Fund, Fred Krupp , talked about the dire state of the world’s fisheries and his organization’s efforts to change the way we fish. — A few of our interviews couldn’t be lumped into these categories, but they provided important insights nonetheless. Beth Comstock, General Electric’s Senior Vice President and Chief Marketing Officer , talked about innovation around the world and her company’s “Innovation Barometer.” Malini Mehra, the founder and CEO of the Centre for Social Markets , discussed the need to look at climate issues, food security, and water issues as an integrated set. Johnathan Reckford, the CEO of Habitat for Humanity International , talked about providing micro financing to help people build homes around the world. Simon Zadek, the founder of AccountAbility , talked about the challenge of taking ideas generated during meetings in Davos and then applying them. Atsutoshi Nishida, the Chairman of Toshiba , talked about many issues related to innovation, and he also convinced us that we needed a 3D television. Bernardo Guillamon, the Manager of the Office of Partnerships at the Inter-American Development Bank , talked about the bank’s efforts to help Haiti and invest in education there. Salil Shetty, the Secretary General of Amnesty International , explained how the growing power of corporations had changed his organization’s strategy. Amnesty International has traditionally pressured governments to protect human rights. Now, as corporations become more powerful and more global, Amnesty International need to increasingly engage with companies in order to protect the rights of people around the world. As these interviews have shown, the world is a rapidly changing place. The way we work is changing, as is the way we consume media and interact. Although environmental challenges are getting much more attention, it is not yet clear if that attention will translate into sufficient action. Likewise, more are aware of the need for gender equality in business, but we need to move from awareness to action. The global community faces countless issues, and as many of these leaders said in these interviews, it will take much more than just talk to solve them.

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Katherine Warman Kern: What Comes First, Innovation or the Consumer?

February 3, 2011

In December 2010, the Department of Commerce published a greenpaper from the Internet Privacy Task Force for public comment. According to the press release issuing the greenpaper, the intent is “Protecting Consumer Privacy Online While Supporting Innovation.” But we all know how difficult it is to establish a framework to execute potentially conflicting objectives. And the green paper fails to overcome this challenge. In the Foreward (pp.iv.), General Counsel Cameron Kerry calls for a “Dynamic Policy Framework” to offer “a clear lens through which to assess current policy”. While policies need to be “dynamic” to leave room for future unanticipated consequences, the framework should be consistent and clear to give flexibility in execution but maintain fundamental integrity. Although the detailed discussion about execution is comprehensive and thoughtful, the leadership level communication is contradictory and confusing by failing to establish whether innovation or the consumer comes first. For example, there are contradictions in the goals set in Secretary Locke’s introductory letter and the Foreword from General Counsel Kerry. The paper begins with a letter from Secretary of Commerce, Gary Locke, in which he clearly states there is a problem from the consumer point of view, compelling a “fresh look”: New devices and applications allow the collection and use of personal information in ways that, at times, can be contrary to many consumers’ privacy expectations . Addressing these issues in a way that protects the tremendous economic and social value of the Internet without stifling innovation requires a fresh look at Internet policy (emphasis mine) . However, Cameron Kerry, General Counsel, asserts that the current model builds trust and protects consumers: The United States has developed a model that facilitates transparency, promotes cooperation, and strengthens multistakeholder governance that has allowed innovation to flourish while building trust and protecting a broad array of other rights and interests. As a result of the task force’s satisfactory assessment of the status quo, Kerry asserts that the goal of the task force is to maintain consumer trust: Privacy protections are crucial to maintaining the consumer trust that nurtures the Internet’s growth. And instead of taking a fresh look , the recommendation is to “reinvigorate” transparency: …the green paper recommends reinvigorating the commitment to providing consumers with effective transparency into data practices, and outlines a process for translating transparency into consumer choices through a voluntary, multistakeholder process. In other words, Kerry presumes that consumer trust is “good enough” when third parties are transparent about taking raw data without consumers’ express consent, interpreting it without consumers’ corroboration and participation , yet representing that interpretation as actionable and expected by consumers to Vendors, for commercial purposes. The assertion that consumer trust is satisfactory contradicts both Secretary Locke and the body of the greenpaper, which cites research revealing consumers of all ages do not trust these commercial uses of their information. Separately, despite the representation of consumer marketing companies in the list of inquiry respondents, there is little reference anywhere to the industry’s desired improvement in the effectiveness of internet marketing tools and media. How can the Commerce Department ignore that the fastest growing segment of the Internet is “custom digital publishing”? Marketing companies like Procter and Gamble are taking a detour around media companies to connect with consumers and are producing their own media properties to build relationships. This is specifically because marketing professionals realize that growing the business through short term promotions is not as effective nor as efficient as building long term relationships with consumers. Instead of advocating for the status quo and endorsing current practices through regulation and policy — as if this is the best business can do to both build consumer trust and promote innovation — the government should “disrupt ambiguity” with policies which encourage innovation that improves consumer trust, relationship building with commercial enterprises, and consequently the value of information to develop, market, and communicate with consumers. There are many initiatives working to achieve these objectives. For example, Project VRM , and the Personal Data Ecosystem . It is hard enough for entrepreneurs in these communities to raise investment dollars and educate consumers in today’s highly competitive market. We wonder why the government would endorse or sanction existing practices as “best” making it even more difficult for these initiatives to overcome hurdles for success? In the spirit of promoting innovation to improve consumer trust, here’s the opinion of one consultant and entrepreneur, Comradity , on the greenpaper’s recommendations. As background, the paper’s “Dynamic Privacy Framework” makes 4 recommendations: Fair Information Practice Principles (FIPPs) : “clearly articulated purposes for data collection, commitments to limit data uses to fulfill these purposes, and expanded use of robust audit systems to bolster accountability.” Privacy Policy Office in the Department of Commerce (PPO) : “work with the FTC in leading efforts to develop voluntary but enforceable codes of conduct. Companies would voluntarily adopt the appropriate code developed through this process. This commitment, however, would be enforceable by the Federal Trade Commission. Compliance with such a code would serve as a safe harbor for companies facing certain complaints about their privacy practices.” Encourage Global Interoperability: “build on accountability, mutual recognition and reciprocity, and enforcement cooperation principles pioneered in the Organisation for Economic Cooperation and Development (OECD) and Asia-Pacific Economic Cooperation (APEC).” Ensure Nationally Consistent Security Breach Rules : “Federal commercial data security breach notification (SBN) law that sets national standards, addresses how to reconcile inconsistent State laws, and authorizes enforcement by State authorities… The FTC and individual States should have authority to enforce this law.” Here are Comradity’s responses: The value of the FIPPs is directly related to whether the goal is to maintain consumer trust or improve it. For example, we believe that if the default were “opt-in” instead of “opt-out”, companies would be naturally inclined to be transparent and limit data uses to those that clearly and directly benefits the consumer in order to increase “opt in” rates. To avoid potentially deceptive or empty promises, we believe an independent multi-stakeholder agency review (e.g., the Privacy Impact Assessment (PIA) ratings) would assure audit systems are used to prevent drops in PIA ratings. To encourage new companies or existing companies who are innovative to make such a dramatic shift, why not give companies a free pass on regulations or favorable tax incentives when they make the default “opt-in” and volunteer for the PIA ratings? Why recommend adding the PPO, another representative to represent business interests? If there’s a need for a new government agency, shouldn’t it be a multi-stakeholder representative agency with representatives from Commerce, the FTC, the new Consumer protection agency, individual States Attorney Generals, the State Department, and others? If the objective of the Department of Commerce is to encourage global interoperability, why does it fail to acknowledge the existence of Privacy Commissions in Europe and Canada? In fact, another example of the contradictions between different sections of the greenpaper, in the body of the discussion about FIPPs, Privacy Impact Assessments (PIAs) are recommended, following the example of the European Commission: An industry standards organization pointed to the example of PIAs for radio frequency identification (RFID) tags, readers, and writers; 106 the European Commission recommended that EU Member States and RFID users develop a framework to assess the privacy risks (and safeguards) of using RFID applications. It’s expected that the Department of Commerce will advocate nationally consistent rules across all states, but instead of mandating state compliance, why not engage the states to participate in the collaborative process the Department of Commerce purports to be executing through the Internet Privacy Task Force? To see all the public’s responses to the Department of Commerce Internet Privacy Task Force Green Paper questions, the link is here .

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Raymond J. Learsy: ‘Noble’ OPEC Criticzes The International Energy Agency

January 19, 2011

OPEC (the Organization of Petroleum Exporting Countries supplying over 40% of the world’s oil consumption) feels put upon. It’s Secretary General lashed out at the International Energy Agency for having categorized current oil prices as “alarming”, calling for OPEC to show more flexibility in boosting supplies (see CNBC “OPEC Says World Well Supplied, Criticizes IEA” 01.1811). OPEC’s Secretary General Abdalla Salem El-Badri immediately countered that “At the moment there is more than enough oil on the market… Oil prices have been driven by technical means… the weak dollar and speculation” all the while critical of the IEA for warning of the risks to economic growth due to rising oil prices. It is significant that El-Badri’s comments come while OPEC’s official output quota has remained unchanged since instituting a record cut in its production in December 2008. December 2008 was a fateful moment for OPEC and the price of oil. At the time oil was hovering around $40/barrel and OPEC and its minions in the oil universe were rattled, to say the least. Even the Saudi monarch, King Abdullah got into maelstrom by promulgating that he considered $75 a barrel to be a “fair price” (please see “Big Oil Prices Put in Jeopardy by Fall in Oil Prices” New York Times 12.15.08). But with the price at $40/bbl we were summoned to a far higher calling. You see, according to that font of wisdom on all matters oil, Saudi Oil Minister Ali al-Naimi instructed, “You must understand that the purpose of the $75 price is a much more noble cause. You need every producer to produce, and marginal producers cannot produce at $40 a barrel” (please see “OPEC’s Noble Cause” 12.17.08). That was then, and the price was $40/bbl. This is now with West Texas Crude selling for over $90/bbl and London Brent crude selling just under $100/bbl at $98/bbl. More than a doubling of price since December 2008, shooting past Al Naimi’s “noble” and King Abdullah’s “fair” price of $75/bbl months ago. The IEA opined in a report last Tuesday that OPEC would need to pump 400.000 barrels per day more than expected this year to balance the market. El Badri said OPEC would respond if there is a need for more supply. “OPEC”, he reiterated “as always, is watching the market carefully. We remain committed to market stability.” Translation. OPEC is prepared to do little or nothing to help reduce the current level of prices. Their lack of willingness to hold the price at moderate levels gives the speculators a one way bet on ever higher prices. What if El Badri had said in response to the IEA, “Yes we agree with you, current prices are alarming and a risk to the world’s economy. Especially a levels so significantly higher than the $75/bbl we consider to be “fair”. We will do what we can to rectify the situation. As you are aware Saudi Oil Minister al Naimi has at his disposal some 4.5 million barrels per day (bpd) pumping capability which are being held idle and on standby. Certainly he and all of us at OPEC will do our utmost to bring about a price which we consider as “fair” and tolerable to the world’s economy.” Don’t hold your breath, but were it to come to pass it would send the speculators running for the hills and evolve and entirely new relationship between suppliers and consumers around the world, one of mutual respect and true interdependence. One last observation. We in the United States are by far the largest consumers of oil in the world. Yet we have done little or nothing to significantly reduce our oil consumption and to politically confront an intransigent OPEC with the authority and interplay that an industry’s largest consumer normally has on the sway of a given industry’s outlook and policies. We have been silent and have permitted our Department of Energy to remain mute while prices have escalated by well over 200% or $1 billion rent a day on the nation’s economy ($90/bbl plus today – $40/bbl December 2008 = $50/bbl x 20,000,000 bpd US consumption= $1 Billion/day). Or more to the point, gasoline at well over $3.00 a gallon. We have permitted our oversight agencies such as the CFTC to stall and stall and equivocate rather than bringing massive and destructive speculation to heel. The lack of meaningful oversight and action by our government agencies is exemplified by a Department of the Interior and its Minerals Management Service whose ineptitude has already bequeathed to us the massive Deepwater Horizon oil spill disaster. Where is our national policy on this issue? We not only owe it to ourselves but to oil consumers throughout the world who are paying a heavy price in part because of our lack of meaningful leadership.

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Chris Birk: Special Consumer Protection Agency to Safeguard U.S. Service Members

January 14, 2011

The fight against the financial exploitation of America’s service members got a huge boost last week with the unveiling of a new consumer protection arm for military families. The Office of Servicemember Affairs aims to increase financial education for military members and better monitor and respond to problems and complaints. Part of the recently created Consumer Financial Protection Bureau, this new military-focused agency will be headed by Holly Petraeus, wife of Gen. David Petraeus, current commander of U.S. forces in Afghanistan. While it’s still taking shape, this new advocacy and awareness entity could significantly curb the unscrupulous lending practices and financial chicanery that impact scores of military families nationwide. Studies have shown military members are more likely to be financially overburdened than civilians. That leaves them vulnerable to sales pitches and advances from companies and individuals bent on taking advantage. “Those who serve in the military should be able to focus on their jobs and their families without having to worry about getting trapped by abusive financial practices,” Elizabeth Warren, special advisor to the Treasury secretary for the CFPB, wrote last week on The White House blog . “America’s national security depends on that basic premise.” Recent online surveys found that nearly 25 percent of enlisted personnel or junior NCOs had used payday loans, auto title loans or other high-cost borrowing practices in the last five years. More than half of respondents reported only making the minimum payment on credit cards, and nearly a third said they had made a late payment in the previous year. About 15 percent of those surveyed had both a mortgage and a credit card balance of at least $10,000. These issues are far from merely financial concerns. Money problems at home can weigh heavily on military members serving abroad and even affect mission readiness. Army Secretary John McHugh wrote about this in May in response to unscrupulous auto lenders targeting military members. Defense Department surveys consistently rank finances among the leading causes of stress for most military families. “Soldiers who are distracted by financial issues at home are not fully focused on fighting the enemy,” McHugh’s letter read in part. Service members sacrifice a great deal to keep America safe. They and their families should no longer have to battle craven financial predators at home.

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Video: Solis Says U.S. on `Slow, Steady Path’ for Jobs Growth

January 7, 2011

Jan. 7 (Bloomberg) — U.S. Labor Secretary Hilda Solis talks about today’s December U.S. jobs report and the prospects for the labor market. Payrolls increased 103,000 in December and employment in the previous two months increased more than previously estimated. Solis speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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Michael Thornton: Gibbs: 99ers Will be Saved by Jobs, Not Unemployment Benefits. But Honestly….

December 31, 2010

In replying to ABC’s Jake Tapper’s question about 99ers and what can be done to help the millions of long-term unemployed, Presidential Press Secretary Robert Gibbs offered a baffling, disjointed, mishmash answer chock full of clichés and lacking any substance. Gibbs-speak, shall we say? First let’s look at the unedited version of the 99er exchange. TAPPER: … they’re individuals who have been — whose unemployment insurance has run out. They were not included in the deal, the tax deal that the president signed with Mr. McConnell, the Republicans and others. Is there anything that the president can do for them? GIBBS: Well, I think the best thing that we can do as a country is to get — get a fragile economy more stable, and one that creates more jobs. I think that’s — that’s why I think, you know, economists said that they would reorient their growth estimates based on the agreement that the president signed. And obviously, the best thing we can do for them is to create an environment where businesses are hiring. Look, we have — what you’ve heard me say on a number of occasions, that one of the great benefits of the agreement was taking the politics out of — out of unemployment insurance. We — we — we have — it’s been a contentious battle just to get unemployment insurance to continue up to 99 weeks. It’s not — it’s not in any way been easy. And this takes the politics out of that throughout 2011 and hopefully we can focus — continue to focus on getting the economy moving again and providing — providing those guys with a helping hand with a job. As Mr. Tapper alludes, the 99ers, those who have exhausted all unemployment benefits, were not part of the $856 billion tax agreement brokered between Obama and the Republicans. While many 99ers are certainly glad that Mr. Tapper at least brought up the subject of 99ers, his question to Mr. Gibbs lacked any sense of urgency or breath of the issue. After all, millions have exhausted all available unemployment benefits and have no other means of support What was most telling was that the interview Q & A ignored reality. Mr. Tapper posed a softball question to a hardball subject and Mr. Gibbs tried his best to spin a bad situation into a confusing situation. Let’s see if this interview can be better understood with some realities added to the question and answer. Here’s how the interview segment would have made more sense: Honest Mr. Tapper: Estimates are that 4-5 million unemployed have exhausted all their unemployment benefits – the 99ers. Since job creation is near zero and millions more 99ers are in the pipeline for 2011, why didn’t the president demand some relief for these long-suffering jobless, instead of just giving billions more in tax cuts to businesses that aren’t hiring and to the wealthy who don’t need the extra money? Honest Mr. Gibbs: Yes, the economy is still unable to create the jobs needed to help the four to five million and growing ranks of 99ers. We didn’t include 99ers in the monster tax package plan because economists think job growth will increase and you know how much you can trust economists to be correct (LOL)! We are more concerned about continually giving untold billions in tax breaks to businesses that still are not hiring even though they have recorded record profits and are sitting on over one trillion dollars in capital. Eventually, they will have to hire some additional people, maybe even a couple 99ers, just to count all that extra cash! We took the politics out of the next 13 months of unemployment benefits extensions for those who haven’t exhausted benefits, but when millions more do exhaust benefits in 2011, well, honestly, tough luck. In fact we didn’t even bring up the matter of unemployment benefits exhaustion because we were afraid to make Republicans angry. You know how nasty Republicans can get if you bring up government job creation or longer term benefits! Are you crazy (LOL)? Did you see what that whacko Sen. Bunning did last year when we tried to extend unemployment benefits? We didn’t want to go there again. Those guys are nuts! We feel it’s much more important to bailout corrupt and mismanaged Wall Street and foreign banks, large insurance companies and auto manufacturers than it is to bailout the long-term unemployed. I mean, do you think the president will receive more money for his 2012 reelection campaign from corrupt business leaders or 99ers? Get real, Jake. Sure, we hope 99ers support us, but we know where our bread is buttered and it’s not from contributions from unemployment checks! We will continue to go down the same path of giving billions in tax breaks to businesses and the wealthy, but we have our fingers crossed that they create a few jobs for the very long-term unemployed. Our job creation policies haven’t worked for the past two years, but we’re certain, certain those same policies will work this time. Third time lucky, we think! Tapper: Thank you for being honest with your answers. Gibbs: Thank you for asking a probing, difficult question. Although that interpretation is over the top, many long-term unemployed 99ers may not see it that way. They have been ignored for almost a year and their ranks are growing quickly. 99ers were and are being ignored by elected representatives, but the media has a responsibility to do more than simply ask questions, they need to investigate and determine why so many are being ignored for so long. You can see the entire interview: Power, pop, and probings from ABC News Senior White House Correspondent Jake Tapper . Weakness, fizzle and pleasantries may be a more appropriate title to Mr. Tapper’s interview, but he does deserve some credit for having the decency to ask the 99er question. Observing how many politicians and media pundits avoid, disparage, manipulate and dismiss those who have exhausted unemployment benefits is disturbing, but it’s demoralizing, depressing, damaging and destructive to those families who have to live through it, the long-term unemployed, the 99ers.

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Art Levine: No Home for Xmas: Can Labor — or Anyone — Stop the Foreclosure Mess?

December 24, 2010

As Americans head home for the holidays or look forward to a Christmas meal with friends and family nearby, it’s worth remembering that over two million people have had their homes repossessed in the last few years — and another 6.5 million are in foreclosure or will face it soon. Thousands of current and pending foreclosures may have been carried out due to forged documents, bank negligence or lack of court authority to do so. And as NPR reported recently, people like Jennifer Ryan-Voltaire may be spending their last Christmas in the home that Wells Fargo now owns after it allegedly lost her tax paperwork needed to stay in a loan modification program. As NPR noted: “We’re trying to make it as fun for the kids as possible without them knowing or having to worry about what we’re going through,” says Voltaire, an office manager at a medical practice. She hasn’t told her three kids that they don’t own their house anymore.

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Kevin Connor: Celebrating Ten Years of Derivatives Deregulation

December 21, 2010

Today marks the tenth anniversary of President Clinton’s signing of the Commodity Futures Modernization Act (CFMA). At passage, the bill was said to establish “legal certainty” for derivatives. In other words, the bill assured bankers that they wouldn’t face any legal consequences in the United States when they manipulated, defrauded, and colluded their way to billions in profits using financial derivatives that no one understood. The CFMA led to serious consequences for the rest of us, including the exacerbation of the housing bubble and the subsequent bank bailouts and foreclosure crisis; the California electricity crisis; periodic food and energy price spikes that have hit consumer pocketbooks hard; and, of course, the continued reign of an unaccountable shadow banking sector over the economy. The legislation was a bipartisan effort, but Clinton Treasury Secretary Larry Summers — who will soon be leaving the Obama White House — deserves the bulk of the credit for its passage. Summers, along with Robert Rubin and Alan Greenspan, had prevailed over CFTC chair Brooksley Born two years earlier when she attempted to subject derivatives to regulatory oversight. Born was essentially forced out by Summers & co, who then went to work putting together the deregulatory gift basket that later became known as the CFMA. Summers worked Congress in the year preceding the bill’s passage, and testified in June 2000 that it was his “very great hope” that the bill should pass. Democrats have blamed Republican Senator Phil Gramm for one of the more controversial measures in the bill, the so-called “Enron loophole,” which has enabled destructive energy speculation of the sort that caused California’s electricity crisis and the fuel price spikes of 2008. The story goes that Gramm used an extraordinary legislative maneuver to slip the loophole into the bill at the last minute, unbeknownst to other Senators or the Clinton Treasury. During the 2008 presidential race, the Obama campaign suggested that Gramm, a McCain adviser, was the creator of the loophole. Journalists ran with that story. This version of events is extremely far-fetched. Summers and his lieutenants deserve just as much of the credit, if not more, for the inclusion of Enron’s language in the final bill. As early as August 2000 — four months before the passage of the CFMA — Summers lieutenant Lee Sachs , who handled energy negotiations for Summers, indicated to Enron lobbyists that Treasury would support the Enron language, which appeared in the House bill (but not the Senate bill). Here is Enron lobbyist Chris Long describing the meeting to higher-ups in an email from the Enron archive: I told Lee that we shared his desire to move the legislation as long as it contains a full exclusion for all non-agriculture commodities (including metals). He said that we would have a difficult time defending the metals provision politically. But, Lee said “we would not find Treasury opposition to the House Commerce Committee language” (which includes favourable language on energy and metals). This is a positive development, because it isolates the CFTC from its key defenders and I hope ensures no veto threat on our issues. However, I do not expect Treasury to be vocal in support of our position. Enron spent much of the next several months strategizing to get Gramm — whose wife sat on Enron’s board — to recognize how important the legislation was to Enron, support it, and ensure its passage. Gramm was opposed to the bill on the grounds that it didn’t go far enough to deregulate banking products unrelated to Enron’s business. The Clinton administration’s support was never in question. The plan, all along, was to go with Enron’s language despite some opposition in the Senate. It helped that the Clinton Treasury was very cozy with Enron. Just four days before Congress passed the CFMA, Summers awarded Enron lobbyist Linda Robertson — formerly an assistant secretary in the Summers Treasury — Treasury’s highest honor, the Alexander Hamilton award. Summers had recommended Robertson, who now works at the Federal Reserve, for the lobbyist job at Enron. Enron CEO Ken Lay later offered Summers a seat on the board of Enron, as he had done with the previous Treasury Secretary, Robert Rubin, at the close of the Clinton administration; Summers turned it down in light of his appointment as president of Harvard. Summers had also famously assured Lay that “I’ll keep my eye on power deregulation and energy market infrastructure issues” shortly after becoming Treasury Secretary, in hand-written scrawl at the bottom of a letter. Enron lobbyist Robertson later recommended Lee Sachs — who served in the Geithner Treasury from 2009 to 2010 — for a spot on Enron’s advisory committee in an email to Lay assistant Steve Kean and lobbyist Richard Shapiro. The email is worth printing in full (she also mentions the Summers board appointment at the beginning): As you know, Ken has talked to Larry Summers about serving on Enron’s Board of Directors. Larry told Ken that in light of his selection to head Harvard, he wants to hold off going on any corporate boards for now. My understanding is that Larry will most likely accept Ken’s offer at the end of the year. In the meantime, let me suggest a candidate for Enron’s Advisory Committee. Lee Sachs was Assistant Secretary of Treasury for Financial Markets under Bob Rubin and Larry. Lee coordinated the energy negotiations for Larry at the end of the Clinton Administration. You probably met Lee at those meetings. Lee is brilliant. He was a Managing Director at Bear Sterns before joining the Treasury team. He is a huge fan of Enron and is constantly telling me how extremely well positioned Enron is for the future. He has done considerable research on our business model and is constantly talking to his buddies on Wall Street about us. Lee will undoubtedly be a significant player in any future Democratic Administration. I know he would be an invaluable addition to this Committee. He has not decided what he is going to do next, but has several extremely good offers on the table from large investment firms and hedge funds. None of these would conflict with this type of activity. I thought I would plant this suggestion with you not knowing exactly how these things are done. [emphasis mine] Sachs went on to work for Perseus LLC , a private equity firm run by top Democratic insiders Jim Johnson, Richard Holbrooke, and Frank Pearl. He later joined the hedge fund Mariner Investment Group , where he sold toxic CDOs to investors . In 2009 he became Geithner’s right-hand man at Treasury, but left in March 2010 in the wake of controversy surrounding those CDOs, and landed on his feet at Brookings. When he leaves the Obama administration, Summers will inevitably slip out the revolving door and land some lucrative consulting contracts with investment firms that he helped bail out. The deep corporate consensus in this age of deep corporate capture will be the same as it was when Summers last exited a presidential administration — that he did a heckuva job, in Obama’s words. The markets are modernized! the bailouts are booking profits! — and other such nonsense. It’s enough to make one hope for another data dump in the style of the Enron email archive, one that would contain insider communications between bank executives and government officials, thereby further illuminating the wholly captured and compromised state of our political system, where individuals like Larry Summers and Lee Sachs are ascendant, and corporations are able to secure legislation like the CFMA on the strength of powerful friends and bottomless pockets. One can hope… *** I’d like to share one last email from the archive, in case you were still on the fence about whether the Summers Treasury was completely captured by Enron. The following email, from Enron lobbyist Linda Robertson to her higher-ups in the summer of 2001, recounts a conversation between Lee Sachs and NYT reporter Jeff Gerth in which Sachs defends Enron’s favored regulatory exemptions and answers questions related to Enron’s influence of the bill: Lee Sachs was contacted for a second interview by Girth [sic]. Lee concluded from this interview that Girth is going down the “Enron influence” path. Girth did not probe the question of whether derivatives drive the physical commodity market, which as noted below was a big part of the first interview. Girth asked Lee extensive questions about Enron’s involvement in the legislation and who talked to whom and when. Girth said that he had talked to the CFTC who said they got steamrolled on the energy exemption by the Hill. Lee reminded Girth how the CFTC got themselves into this bind when they first issued the “Concept Release” paper, which the President’s working group immediately denounced. Lee said that the Working Group constantly told the CFTC that they should work out the issue with the Hill and to do so quickly because the CFTC had made a massive mistake with the Concept Release document. Lee reminded Girth that while the Working group did not get into the specifics of the energy exemption, that in fact energy was already exempted prior to reauthorization and that it continued to meet the criteria laid out in the President’s report. I can go into that part of the discussion more thoroughly, but just suffice it to say Lee meticulously walked Girth through the safe harbor test and the background of the issue. Girth asked Lee if I had talked to Lee about the issue after leaving Treasury, to which Lee said we talked but not about this subject and that he instead talked to Chris Long. Girth asked if Ken Lay had talked to either Summers or Phil Gramm. Lee said he did not think Ken talked to Summers about the CFTC reauthorization (but mentioned Ken’s very constructive engagement on the Calif energy talks) and that as far as Ken talking to Gramm, Lee had no idea but assumed two Republican Texans would have lots of reasons to talk to each other. Girth told Lee he would soon go on vacation and that they story would come after Labor Day.

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Mike Lux: Strategy Number One: Shift Money From the Big Banks

December 20, 2010

One of the most discouraging things about the last two years was seeing swing voters in focus groups, when asked what President Obama’s economic strategy was, repeat different versions of “Well, I know he said we needed to save the banks. Beyond that, I’m not sure.” When Obama in his first State of the Union gave a vigorous defense of bailing out the banks, saying he knew it about as popular as a root canal, and saying “I get it”, it was very memorable to voters. But when his predictions about what would happen when the banks were stabilized — they would start making loans to businesses, and businesses would start hiring — didn’t happen, and instead the banks gave themselves record breaking bonuses, voters turned on Obama fast. In exit polls on Nov. 2nd, when asked who was most to blame for the bad economy, voters by a wide margin said Wall St. was most to blame, and the voters who said that went Republican by a 14-point margin. Obviously, saving the banks hasn’t been the President’s only economic strategy. The stimulus bill, while too small, was an important job creator/saver. Saving the American auto industry was an incredibly important thing to do. Health care reform was in part a long term economic strategy. The infrastructure bank idea is a great potential job creator. Extending unemployment insurance helps keep money in the economy. And all the tax cutting going on is clearly meant to have some stimulative effect, although how much is highly debatable. However, there have certainly been times where Secretary Geithner, who has been the main driver of the economic strategy, seems to think and act as if helping the big banks and helping the economy amount to the same thing. The tepid reaction to the foreclosure crisis has sure felt that way — apparently we can’t freeze foreclosures or do much to help homeowners because it might “endanger” the banks. In fact, I would argue the exact opposite: that our number one economic strategy right now should be to shift money from the big banks to the real economy, to Main Street businesses and workers and consumers. The big banks are hoarding extraordinary amounts of money, and they are clearly not investing it in job creating businesses. They are speculating with it, they are trading with it, they are investing in complicated financial instruments that do nothing to create jobs- in fact, they are sucking capital out of the real economy that might actually create jobs. These massive financial conglomerates have way too much concentrated wealth and market power, and that is weakening the rest of the economy. This is one reason why, as I wrote a couple of times last week, it is so important to write down the mortgages of homeowners who are underwater. Taking that money out of the bankers’ hands and putting it in the hands of the hard pressed middle class would do more to stimulate the economy than any other thing the President could do right now. This is also why the Federal Reserve’s new proposed rule, out last week, on swipe fees is so good. It would generally limit swipe fees to 12 cents per transaction. Right now the average is 44 cents, and with most small businesses it’s quite a bit higher. If this rule is upheld, this is money that will go straight from the big banks’ profit margins into the main street economy — all told, probably a $15 billion boost going back to retailers, restaurant owners, taxi cab drivers, and hopefully consumers. $15 billion going from Wall Street, speculative economy into the real economy is a nice lift right now. This is why I have been working with retail business leaders and consumer groups to support this new regulation. Unfortunately, not all Democrats see it this way. Tom Carper and Mark Warner tried to head off the amendment that made this regulation happen in the Senate, and have been lobbying the Federal Reserve against a strong regulation on the subject ever since they lost the legislative fight. And Barney Frank, who is a great liberal on social issues but spends way too much time with bank lobbyists, was whining on Friday how unfair the proposed rule was to the poor bankers. Barney, you got this one wrong. Democrats should not be looking out for the bankers, we should be looking for every single opportunity we can to drain the Wall St. swamp. The big banks are hoarding money. They have way too much market power, and when their profits expand, they put that money into the speculative economy rather than the real economy that manufactures goods, sells products and services, and creates jobs. When we take a dollar away from them, and put it into the real economy, there is actually a multiplier effect as people on Main Street spend or invest the money in real products. When mortgages get written down, it helps the real economy. When swipe fees on credit or debit card transactions get lessened, it helps the real economy. If we instituted a transactions tax on every trade made on Wall St, and put that money into a jobs program, that would help the real economy. The big banks are hoarding our money. Our best economic program right now is to shift money from the banks, and put it into the hands of consumers who might actually buy products and businesses who might actually hire more workers.

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Video: Timothy Geithner in Hospital for Kidney Stone Operation

December 10, 2010

Dec. 10 (Bloomberg) — U.S. Treasury Secretary Timothy Geithner was hospitalized today in Washington to have surgery to remove a kidney stone. Bloomberg’s Margaret Brennan reports. (Source: Bloomberg)

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Video: Timothy Geithner in Hospital for Kidney Stone Operation

December 10, 2010

Dec. 10 (Bloomberg) — U.S. Treasury Secretary Timothy Geithner was hospitalized today in Washington to have surgery to remove a kidney stone. Bloomberg’s Margaret Brennan reports. (Source: Bloomberg)

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Tim Geithner Hospitalized

December 10, 2010

Tim Geithner will undergo minor surgery to have a kidney stone removed, according to various reporters. The Treasury secretary was hospitalized on Friday. Geithner experienced severe pain Thursday evening, Treasury spokesman Steve Adamske said. According to reports , the secretary was admitted to George Washington University hospital Friday morning, where he awaits treatment for a kidney stone. Geithner will have a “minor surgical procedure” to remove the kidney stone Friday afternoon, Adamske said, adding that Geithner should be ready to return to work on Monday. Still, he’s had to cancel plans to appear on Sunday talk shows, the WSJ notes. With lawmakers struggling to hammer out a tax cut plan during the lame duck session, Geithner has been busy, serving a key role in negotiations. With all levels of tax cuts set to expire by the end of the year, the pressure is on for Congress to pass some sort of plan in the coming weeks.

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Video: O’Neill Says `Day of Reckoning Is Coming’ on Debt Levels

December 3, 2010

Dec. 3 (Bloomberg) — Former U.S. Treasury Secretary Paul O’Neill speaks about how “our day of reckoning is coming if we don’t change our course” on national debt levels. O’Neill talks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (This is an excerpt. Source: Bloomberg)

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Unemployment Benefits Expire For 2 Million

December 2, 2010

Shawn Slonsky’s children know by now not to give him Christmas lists filled with the latest gizmos. The 44-year-old union electrician is one of nearly 2 million Americans whose extended unemployment benefits will run out this month, making the holiday season less about celebration than survival. “We’ll put up decorations, but we just don’t have the money for a Christmas tree,” Slonsky said. Benefits that had been extended up to 99 weeks started running out Wednesday. Unless Congress approves a longer extension, the Labor Department estimates about 2 million people will be cut off by Christmas. Support groups for the so-called 99ers have sprung up online, offering chances to vent along with tips on resumes and job interviews. Advocacy groups such as the National Employment Law Project have turned their plight into a rallying cry for Congress to extend jobless benefits. Things used to be different for Slonsky, who lives in Massillon, Ohio. Before work dried up, he earned about $100,000 a year. He and his wife lived in a three-bedroom house where deer meandered through the backyard. Then they lost their jobs. Their house went into foreclosure and they had to move in with his 73-year-old father. Now, Slonsky is dreading the holidays as his 99 weeks run out. “It’s hard to be in a jovial mood all the time when you’ve got this storm cloud hanging over your head,” he said. The average weekly unemployment benefit in the U.S. is $302.90, though it varies widely depending on how states calculate the payment. Because of supplemental state programs and other factors, it’s hard to know for sure who will lose their benefits at any given time. Congressional opponents of extending the benefits beyond this month say fiscal responsibility should come first. Republicans in the House and Senate, along with a handful of conservative Democrats, say they’re open to extending benefits, but not if it means adding to the $13.8 trillion national debt. Republicans maintain they are willing to instead use unspent money from Obama stimulus programs to foot the bill: a $12.5 billion tab for three months. Democrats argue that the extended benefits should be paid for with deficit spending because it injects money into the economy. The GOP didn’t pay any political price for stalling efforts earlier this year to extend jobless benefits that provide critical help to the unemployed – including a seven-week stretch over the summer when jobless benefits were a piece of a failed Democratic tax and jobs bill. But bad publicity because the benefits end over the holidays has long been forecast. Democrats hope that a final deal on extending Bush-era income tax cuts to the wealthy and middle class will include an agreement from Republicans to another extension of deficit-financed emergency unemployment benefits. U.S. Rep. Mike Pence, R-Ind., the No. 3 Republican in the House, said extended benefits must be paid for now, rather than later, if they’re going to win support from fiscal conservatives. “The fact that we have to keep extending unemployment benefits shows that the economic policies of this administration have failed,” said Pence spokeswoman Courtney Kolb. Labor Secretary Hilda Solis told The Associated Press on Wednesday that declining to extend the benefits would be a mistake for Congress. “This is a bad way to start off the new, incoming season of new politicians that said that they wanted to make government work for people in a better way,” she said. Even if Congress does lengthen benefits, cash assistance is at best a stopgap measure, said Carol Hardison, executive director of Crisis Assistance Ministry in Charlotte, N.C., which has seen 20,000 new clients since the Great Recession started in December 2007. “We’re going to have to have a new conversation with the people who are still suffering, about the potentially drastic changes they’re going to have to make to stay out of the homeless shelter,” she said. Forget Christmas presents. What the 99ers want most of all is what remains elusive in the worst economy in generations: a job. “I am not searching for a job, I am begging for one,” said Felicia Robbins, 30, as she prepared to move out of a homeless shelter in Pensacola, Fla., where she and her five children have been living. She is using the last of her cash, about $500, to move into a small, unfurnished rental home. Robbins lost her job as a juvenile justice worker in 2009 and her last $235 unemployment check will arrive Dec. 13. Her 10-year-old car isn’t running, and she walks each day to the local unemployment office to look for work. Jeanne Reinman, 61, of Greenville, S.C., still has her house, but even that comes with a downside. After losing her computer design job a year and a half ago, Reinman scraped by with her savings and a weekly $351 unemployment check. When her nest egg vanished in July, she started using her unemployment to pay off her mortgage and stopped paying her credit card bills. She recently informed a creditor she couldn’t make payments on a loan because her benefits were ending. “I’m more concerned about trying to hang onto my house than paying you,” she told the creditor. Ninety-nine weeks may seem like a long time to find a job. But even as the economy grows, jobs that vanished in the Great Recession have not returned. The private sector added about 159,000 jobs in October – half as many as needed to reduce the unemployment rate of 9.6 percent, which the Federal Reserve expects will hover around 9 percent for all of next year. For people like JoAnn Sampson, decisions made by Congress can seem very distant. The former cart driver at U.S. Airways in Charlotte and her husband are both facing the end of unemployment benefits, and she can’t get so much as an entry-level job. “When you try to apply for retail or fast food, they say ‘You’re overqualified,’ they say ‘We don’t pay that much money,’ they say, ‘You don’t want this job,’” she said. Sampson counts her blessings: At least her two children, a teenager and a college student, are too old to expect much from Christmas this year. Wayne Pittman has been telling his family not expect much for Christmas either. The 46-year-old carpenter, along with his wife and 9-year-old son, have stopped going to movies and restaurants and buying new clothes. With his $297 weekly checks gone, holiday gifts are definitely out. “It’s not in our budget,” Pittman said. “I have a little boy, and that’s kind of hard to explain to him. To try to let him know, certain things he’s not going to be getting.” ___ This report includes contributions from Associated Press writers Meg Kinnard, in Columbia, S.C.; Ray Henry, in Atlanta; Melissa Nelson, in Pensacola, Fla.; Lucas L. Johnson II in Nashville, Tenn.; Mark Hamrick in Washington; and Jeannie Nuss in Columbus, Ohio.

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Pakistani Journalist Seeks $500 Million From U.S. For Relatives’ Deaths, Threatens To Sue CIA

November 30, 2010

ISLAMABAD, PAKISTAN – A Pakistani man who said two of his relatives were killed in a U.S. drone strike said Monday that he planned to sue the CIA in Pakistani courts for “wrongful death” if he is not compensated within two weeks, a move that could renew debate over the legality of the covert program. Kareem Khan, a journalist from the semi-autonomous Pakistani tribal area of North Waziristan, said he was seeking $500 million in damages from U.S. Defense Secretary Robert M. Gates, CIA director Leon Panetta and the CIA station chief in this capital city. Khan said the strike killed his brother, his son and another man. He said that they were not connected to Taliban and al-Qaeda militants who are based in the region and are the targets of regular CIA drone strikes. The U.S. carries out unmanned drone strikes in the tribal areas with the cooperation of the Pakistani government, but neither nation publicly acknowledges the clandestine program, and it is unlikely U.S. officials would cooperate with a court case. The attacks have increased sharply this year, and the vast majority have targeted militants in North Waziristan.

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Rep. Luis Gutierrez: BP: Busy Promoting a culture of recklessness

November 19, 2010

In just five short months, on April 20, 2011, we will commemorate the anniversary of the Deepwater Horizon oil rig explosion and we will honor the 11 individuals who lost their lives that day. These 11 brothers, fathers, sons, and husbands died because BP’s culture of recklessness, a corporate approach willingly accepts significant risk to BP’s employees, the environment, and countless innocent individuals whose livelihoods could be lost by the company’s actions. However, the national attention has been caught by elections and power shifts and we seem to have forgotten Deepwater Horizon – a very clear example of how big oil’s impressive lobbying power can impact lives. Today, we are no longer inundated with images of the oil slick or shuttered businesses. Today, the nightly news no longer contains B roll of cleaning crews and oil booms attempting to contain this massive spill. Personally, I can’t forget the pained face of Mike Williams, Chief Electronics Technician for the Deepwater Horizon, as he recounted the terrors of his escape from the burning rig. As he recalled thinking, “all these things that are supposed to protect us are failing. And nothing is going right.” And I can’t get the images of oil soaked birds, weighed down and choking, stranded on the Louisiana shoreline, out of my mind. Mistakes can happen and can have serious consequences as a result. But, this is not simply a case of one rig, one blowout preventer, one bad batch of cement or one bad call. The reason why so much went so wrong is because BP is guilty of encouraging a culture of recklessness on its rigs. We don’t have to dig too deep to find alarming evidence of their recklessness. On another deepwater drilling rig, BP’s Atlantis, a whistleblower alerted the Minerals Management Service that he believed that BP did not have proper documentation and approval of its subsea components. BP itself acknowledged that this could “lead to catastrophic operator errors.” And the list goes on: In March of 2005, an explosion and fire at the BP Texas City refinery resulted in 15 deaths and 180 injuries. Investigators from the U.S. Chemical Safety and Hazard Investigation Board (CSB) believe this explosion could have been avoided had it not been for the “organizational and safety deficiencies at all levels of the BP Corporation.” Since safety does not appear to be a valued part of their mandate, BP refused to change its practices. And it’s not as though BP is deterred by the costs of these errors: In 2009 the Occupational Safety and Health Administration (OSHA) fined BP $87 million for hundreds of safety violations at the Texas City refinery, many of which were originally identified after the 2005 explosion at the facility but never addressed. As recently as March 2010, BP was fined another $3 million dollars for violations at a Toledo, Ohio refinery similar to those that contributed to the 2005 Texas City refinery explosion. Again, just like in 2005, no steps were taken to correct the safety violations. And the culture of recklessness is prevalent at BP’s operations all across our country: In 2006, failure to conduct necessary pipeline maintenance resulted in spills of over 200,000 gallons of crude in Prudhoe Bay, Alaska. Once again, BP did not follow established safety regulations, ignored warning signs, and was reluctant to make the necessary fixes once the problem was discovered. Major problems continued in 2008 and 2009 in the region, some of which resulted in major gas leaks, oil spills, injuries, and deaths. All of this following a $500,000 fine in 2000 for failing to report illegal dumping of hazardous materials by one of its contractors between 1993 and 1995. I say enough is enough, which is why I introduced and won an amendment to the Department of Defense Authorization bill which would require that the Secretary of Defense consider debarring BP from Defense Department contracts if he finds that BP is not a “responsible source.” The definition of “responsible source” includes the provision that a prospective contractor must have “a satisfactory record of integrity and business ethics” and I am confident that the evidence will show that BP does not meet this requirement. Barely a month has passed since the Obama Administration lifted the deepwater drilling moratorium and already the oil companies believe that the Department of the Interior (DOI) should have an express lane for approving permits. The DOI has even been taken to court over this matter. What’s the rush? I support Secretary Salazar in taking his time to review and approve these permits. We have seen what rushing ahead brings us and we have seen what too many permits and too few investigators bring us. The oil companies need to chill and acknowledge that the pre- Deepwater Horizon status quo is unacceptable. We simply cannot continue approving permits that are rife with false claims such as support from experts who have long since passed away or environmental impact reports on animals that don’t even reside in the region. Imagine if we accepted this kind of recklessness in other industries. Would it be acceptable if the airline industry was allowed to build planes out of materials that had not completed stress tests? What if the pilot on the plane you take home for Thanksgiving decided only to lower half the plane’s wheels during landing? While the limelight on the Deepwater Horizon and BP’s culture of recklessness has faded, we must do everything we can to ensure that we are never again faced with another massive oil spill. Even if BP refuses to learn the necessary lessons and insists on repeating costly mistakes, we must know better and do better. Part of moving away from BP’s culture of recklessness is to understand and accept that the DOI must have the tools and time it needs to properly review permit requests. I strongly support Secretary Salazar’s efforts to make the permit review process more demanding and I hope that the oil companies will step up and realize that rig safety starts with them.

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Lawrence G. McDonald: 3 Reasons Why the Fed Might Be Done

November 6, 2010

QE2, QE3, and QE4? Not so fast. The official FOMC announcement of QE2 has already been greeted by new speculation on the possibility of additional quantitative easing measure. This has raised concerns across the ideological spectrum. Key questions for investors are: o Are financial markets putting the cart before the horse given the limits of QE2′s impact and the lack of underlying consensus within the FOMC? o When will markets begin to digest the possibility of negative fallout from QE2? · The FOMC statement again noted the importance of carefully monitoring and responding to economic performance in the weeks ahead, stating “The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.” · QE proponents read this comment as opening the door to QE3 and beyond. Opponents, or those concerned with the Fed’s choice, can just as easily read this statement as the FOMC taking a measured approach to implementing QE2, particularly if commodity prices continue to rise and payroll numbers move beyond those necessary to maintain stable employment (today’s announcement was better than expected). · According to www.DCTripwire.com , former Fed Chairman Paul Volcker said while speaking in Singapore on November 2, before the FOMC announcement, the Fed’s debt buying in itself isn’t a concern as the U.S. jobless rate, 9.6 percent in September, has little chance of going down soon and the nation’s economic problems can’t all be cured in the short run. Mr. Volcker also noted that monetary policy in the US is close to the limits of what it can do and that if money is “too easy” for “too long,” asset bubbles are a distinct possibility. This should be sobering news, since the U.S. economy has not yet fully recovered from the bursting of the housing bubble. · Another critical perspective comes from Joseph Stiglitz, who argues that the flood of liquidity from QE and now QE2, is adding to foreign-exchange instability. Expect the issue of “hot money” and instability abroad to receive increasing attention. Stiglitz also points out that the small and medium-size businesses that are being starved of credit are unlikely to benefit from QE2, particularly as a number of the community banks who typically lend to these types of businesses remain on the FDIC problem bank list. · Chairman Bernanke’s unusual Washington Post opinion piece included a subtle call for action on the part of other policymakers as well, making clear that the Federal Reserve cannot solve economic problems on its own. Bernanke cited the need for the combined efforts of many parties, including the central bank, Congress, the administration, regulators and the private sector. While Chairman Bernanke has long been loath to adopt the more aggressive posture of former Chairman Greenspan, that may change as the Federal Reserve continues to face criticism over its efforts and if the Fed determines that low economic growth and high unemployment are unable to be fully solved through Fed action. What to Watch in the Weeks Ahead · Backlash from Overseas: The G-20 Summit in Seoul on November 11-12 will provide a forum for major world economic powers to express their views on the FOMC’s QE2 strategy, as well as Secretary Geithner’s proposal to establish a new accord on current account imbalances. · QE2′s effect on the U.S. dollar and the release of FOMC Minutes on November 24: More details on the internal debate during the November 2-3 FOMC meeting will provide a better sense of the degree of unity behind the QE2 announcement. While the vote drew only one dissenter (Hoenig), a nearly unanimous FOMC vote may disguise more unease amongst the members. That unease may grow as economic data comes in over the weeks ahead and international reaction continues. · FOMC Meeting December 19: This will be the final meeting of the FOMC with its current membership. As we have previously noted, the Federal Reserve Bank presidents (Fischer of Dallas, Plosser of Philadelphia, and Kocherlakota of Minneapolis) joining the Committee in January 2011 may bring more dissenting views. Maintaining the appearance of consensus on the FOMC will likely get trickier, which could undermine efforts to implement QE2 fully, let alone further QE measures. For more updates on Federal Reserve policy, go to my website www.lawrencegmcdonald.com

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Video: Solis Says U.S. Jobless Report a Sign of `Better Growth’

November 5, 2010

Nov. 5 (Bloomberg) — U.S. Labor Secretary Hilda Solis talks about the U.S. employment report for October and the outlook for the economy. Payrolls climbed more than forecast to 151,000, Labor Department figures showed today in Washington. Solis speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)(Source: Bloomberg)

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Video: Solis Says U.S. Jobless Report a Sign of `Better Growth’

November 5, 2010

Nov. 5 (Bloomberg) — U.S. Labor Secretary Hilda Solis talks about the U.S. employment report for October and the outlook for the economy. Payrolls climbed more than forecast to 151,000, Labor Department figures showed today in Washington. Solis speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)(Source: Bloomberg)

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Fred Whelan and Gladys Stone: Condoleezza Rice – What a Procrastinator!

November 5, 2010

Former Secretary of State Condoleezza Rice reveals in her new book, “A Memoir of My Extraordinary, Ordinary Family and Me” that she has battled with procrastination for most of her life. She says in her book, “Procrastination remains a problem for me to this day.” The obvious question is: How can someone so successful be a procrastinator? Successful people aren’t perfect; they almost always have some part of their makeup that needs work. Some people are charismatic in front of a live audience, yet struggle with speech writing. Others are amazingly productive despite their lack of organization. What many of these people do is find ways to compensate for the areas where they are weakest. For example, CEO’s who are habitually late and who counteract this by setting their watches ahead. Procrastination is another area that plagues a lot of accomplished people, yet they are able to pull the proverbial rabbit out of a hat and complete the project every time. They do this by building in an adequate buffer to meet the deadline. Similar to “cramming” the night before a big exam, except they don’t cut it that close. There’s the “should due-date” and the “gotta due-date” and they don’t go beyond the latter. Their crunch time doesn’t ever put them in jeopardy of missing the deadline. Charles Schwab , John Chambers and Richard Branson all have dyslexia. None of them have let this hold them back evidenced by the fact that each has been a CEO of a Fortune 500 Company. Prominent attorney, David Boies , known for being a star litigator (represented the Government in Microsoft anti-trust case) also has dyslexia. Because of this, he has to commit more to memory than most lawyers because his dyslexia hinders him for glancing at note cards in the courtroom. The comedian and star of “Deal or No Deal,” Howie Mandel , has obsessive compulsive disorder and avoids at all costs shaking hands for fear of picking up germs. On his TV show he compensates for this by doing a fist bump with the contestants. David Neeleman , founder of JetBlue Airways, has Attention Deficit Hyperactivity Disorder (ADHD). Unfortunately, ADHD prevents him from being detail-oriented and completing daily tasks, “I have an easier time planning a 20-aircraft fleet than I do paying the light bill.” Neeleman looks at the glass as “half-full”, saying that with his disorder comes greater creativity and he credits the success of his airline with his ability to think outside the box. Whatever you are personally struggling with in your life and career, there are ways to overcome it by working around it. Some people make the mistake of using these issues as a crutch, “I’ve never been a good writer” or “My organizational skills are bad,” or “I have don’t have the ability to focus,” and give themselves permission to be held back. Successful people have a mindset geared towards getting the results they want despite the obstacles. We look up to them and appreciate what they have achieved without realizing what they have to overcome on a daily basis. These people can give us the motivation to deal with whatever is currently holding us back and unleash our full potential. Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

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Video: Chertoff Calls Planes `Major Threat Vector’ for Al-Qaeda

October 29, 2010

Oct. 29 (Bloomberg) — Former Department of Homeland Security Secretary Michael Chertoff talks about security measures for passenger and cargo aircraft, and the interception of two packages containing explosives that were shipped from Yemen and directed to Jewish institutions in Chicago. President Barack Obama said the packages represent a “credible terrorist threat” against the U.S. The discovery, made by authorities in the U.K. and Dubai, triggered an examination of air-cargo flights in the U.S. today. Chertoff speaks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

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Video: Snow Says U.S. Economy Performing `Way Below’ Potential

October 29, 2010

Oct. 29 (Bloomberg) — Former U.S. Treasury Secretary John Snow discusses monetary policy and the performance of the U.S. economy. Snow, speaking from New York with Betty Liu on Bloomberg Television’s “In the Loop,” said the economy is performing “way, way, way below” its potential. Snow is chairman of Cerberus Capital Management LP. (Source: Bloomberg)

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Lanny Davis: Let’s Stick to the Facts on For-Profit Colleges Regulations

October 25, 2010

As I wrote on September 23 in this space, the Department of Education’s (DOE) attempt to put more stringent regulations on for-profit colleges is an example of good intentions gone awry. Rather than expanding college opportunities and fighting fraud, the proposed new “gainful employment” (“GE”) rules would instead limit college access especially for minority students, raise taxpayer costs, and create new obstacles for employers eager to hire qualified workers. The new rules target only for-profit institutions, a relatively small section of higher education. And for reasons not explained by the DOE, it has made no effort at all to hold public and private non-profit colleges to any similar standard for student debt and repayment limitations and job placement outcomes — particularly puzzling since these schools are subsidized by tens of billions of dollars of direct federal and state grants and are the beneficiaries of the largest share of federally-backed student loans. Even so, there remains a problem in the debate on this important issue that is fundamental — and that is respect for the difference between ideology and facts. To put it bluntly and to paraphrase a well-known pundit, those who criticize for-profit schools are “entitled to their own opinions, but not their own facts.” In this spirit, I challenge three important “assertions of fact” by proponents of these regulations, including leaders at the DOE as well as some Democrats in the U.S. Senate, that are false or misleading, or both. First: Repayment Rates — Asserted fact: that the regulations are needed because the “profit” in the for-profit colleges yields lower repayment rates than at non-profit and public colleges. Actual fact: Repayment rates are a result of the demographic and socio-economic status of the students who take out the loans, not the tax status of the colleges they attend. See, e.g., independent study by Mark Kantrowitz, an independent financial aid professional (found here) and Professor Jonathan Guryan, Ph.D, a professor in economics at Northwestern University, whose comments to this effect regarding the proposed gainful employment regulations were submitted to the DOE (found here). Mr. Kantrowitz’s data leads to especially troubling conclusions for those who are concerned about low-income and minority students: that the more minority students are in a college, the more they are likely to fail one or both of the two tests in the GE regulations — debt-to earnings and repayment rates. No wonder so many members of the Democratic Congressional Black Caucus have written letters of concern to DOE Secretary Arne Duncan, as well as many other leaders of minority communities who have expressed the same concerns, such as Rev. Jesse Jackson, and Rev. Al Sharpton, regarding these regulations as currently drafted and support serious changes before final issuance. Isn’t it troubling (at least to fellow liberal Democrats, such as myself) that a progressive Democratic administration seems indifferent or determined to go full steam ahead and ignore a disparate racial and economic effect of these regulations on a core Democratic Party base — minorities and lower income people who comprise most of the for-profit colleges students adversely affected by these proposed regulations? And just before an election day when the president and Democratic Party leaders are seeking a large turnout from that base? Second: Cost to Taxpayers — Asserted facts: Critics assert that regulations are needed because for-profits cost federal tax payers too much money each year. DOE uses the number26.5 billion as the latest total annual “federal aid.” Senator Harkin repeatedly uses the number24 billion. Both are false and misleading. Actual fact: The data proves that public colleges and private not-for-profit colleges cost taxpayers substantially more money per student at four-year colleges than for-profit colleges. (See recent analysis by noted economists Dr. Robert Shapiro and Dr. Nam Pham, available here.) A recent analysis by Charles River Associates concluded that career colleges cost the taxpayers25,000 less per graduate than community colleges or other public two-year institutions. With $20 billion in annual student loans to students attending for-profit colleges, the DOE’s own data calculates that the projected cost of student loan defaults at these for-profit colleges — net of recoveries after defaults – is about one percent to be written off as entirely non-collectible, or less than $200 million – not the $26.5 billion or $24 billion misleadingly cited by the DOE and Senator Harkin, respectively. Third: Inferior Job Placement – Critics assert that for-profit schools have dismal graduation and job placement rates, leaving students with large debts and bleak earnings potential, as compared to private not-for-profits and public colleges. Actual fact – For-profit college graduation rates at two year institutions exceed 55 percent, significantly higher than those at community colleges. Yet no mention was made of that fact during the much-touted White House meeting focusing just on community colleges, which totally omitted any reference to for-profit colleges and the predominantly low-income and minority students they serve. For-profit schools have produced millions of success stories, helping students prepare for and find new jobs, advance their careers and earn higher pay. Graduates find jobs in a wide range of high-demand professions as nurses and health care aides, computer professionals and programmers, chefs and retail managers, solar and wind energy technicians. If Senator Harkin wanted to hold 10 hearings, he could fill the HELP Committee panels with real people telling those real success stories. Instead, not one single career college student was allowed to appear to tell a single success story at a single HELP Committee hearing on this issue. As I wrote in this space several weeks ago, there is a vague and uneasy aroma of elitist double standards going on here. The Harvard or Stanford students majoring in ancient history or anthropology, with difficulty finding jobs in those fields, would be unaffected by these proposed regulations. Yet a minority or low-income student training to be a health care assistant or computer technician or chef would face two new debt and repayment rate tests that could have adverse effect on the institutions under the Department’s rules. Why is there such a distinction? Am I wrong in seeing a double standard here? Why can’t Secretary Duncan fix the rule to eliminate its unintended but clearly discriminatory impacts? And why not apply any final rule to all schools — even, if necessary, by seeking additional congressional authority to do so to ensure evenhandedness? Why not treat the low-income, full-time working parent studying at night at a for-profit college in a two-year program to be a medical assistant the same as a full-time Yale student majoring in philosophy? By relying on problematic facts, the Department of Education has created a problematic policy. Before finalizing any new rules, it should first finalize its facts. The proposed rules need to be fixed to mitigate their effect on low income and minority students and to apply them across the board — to for-profit colleges as well as non-profit and public colleges. Certainly there should be no last minute rush to put into effect by November 1 even a portion of the gainful employment regulations, such as those applicable to new programs, without full review. To do so would be contrary to the spirit if not the letter of the commitment the Secretary made to take into account the more than 90,000 comments made about the gainful employment regulations. It would smack of a rush-to-regulate not becoming and not justified. One thing we should all agree on — it’s time for Secretary Duncan to put the amber light on and be sure, no matter what, to base such far-reaching regulations on the facts, and only the facts. Mr. Davis, a former special counsel to President Clinton in 1996-98, is a Washington D.C. principal at the firm of Lanny J. Davis & Associates and is a public spokesperson and registered paid lobbyist on behalf of the “Coalition for Educational Success,” a group of 72 for-profit colleges in 37 states with more than 200,000 students. He is the author of “Scandal: How ‘Gotcha’ Politics Is Destroying America” (Palgrave MacMillan, 2006).

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Video: Geithner Says China to `Continue To Move’ on Yuan Rises

October 25, 2010

Oct. 25 (Bloomberg) — U.S. Treasury Secretary Timothy F. Geithner talks with Bloomberg’s Peter Cook about China’s policy on yuan appreciation and the outcomes from meetings of the Group of 20 finance ministers. They spoke yesterday in Gyeongju, South Korea.

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