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GOP Threatening Middle Class: Dems

by on November 30, 2011

Huffington Post…

WASHINGTON — Democrats and labor leaders went on the offensive against anti-union House Republicans Wednesday, accusing GOP members and business groups of threatening the country’s middle class through a raft of legislation that could weaken unions. At a forum hosted by the AFL-CIO, Sen. Tom Harkin (D-Iowa) argued that Republican efforts to strip power from the National Labor Relations Board, the federal agency that enforces labor law, were part of a broader attack on collective bargaining rights across the country. The fight, he added, was ultimately about “fairness and equity” in the economy. “We’ve got to quit being on the defensive,” Harkin said. “We have to take our case to the American people … attacking [Republicans] for what they’re trying to do. The American people are starting to understand how unfair the economic system is, how unfair it is for banks and the wealthy to get all the government largesse and for working people to get nothing.” The remarks from Harkin and others came just hours before the House passed one of several bills designed to limit the powers of the labor board, which Republicans have lambasted as overly sympathetic to unions and harmful to businesses during the Obama era. The GOP-sponsored Workforce Democracy and Fairness Act would scuttle a rule recently put forth by the labor board that would streamline the union election process and likely make it easier for workers to join unions. Bill co-sponsor Rep. John Kline (R-Minn.) has claimed the board’s rule would lead to “ambush elections” by unions, while supporters of the rule say it would merely remove red tape and give employers less time to pressure workers against unionization. The Republican measure enjoyed broad support from business heavyweights such as the U.S. Chamber of Commerce, the National Retail Federation, and the American Hotel & Lodging Association, though the legislation is unlikely to go far in the Democrat-controlled Senate. In addition to holding four congressional hearings this year on what they’ve described as NLRB overreach, House Republicans have gone so far as to propose legislation that would strip the board of its powers or defund it entirely. Many GOP members were hoping that Brian Hayes, currently the board’s lone Republican, would resign in order to kill the board’s quorum and essentially shut it down. Hayes said Wednesday that he did not intend to. At the AFL-CIO event, Rep. George Miller (D-Calif.) said that the attacks on the labor board coming from Republicans are unlike anything he’s seen “in all my time in public life.” “They have decided they don’t want the collective bargaining process to continue in this country,” Miller said. “This isn’t some tinkering … it’s about ending this agency. [Labor law] is the basic fundamental economic underpinning of the middle class in this country. It’s the wages and benefits of the working people.” In a reference to the Occupy Wall Street protests, Miller added, “That’s why you see tents around this city and this country asking for shared sacrifice.” The forum at the AFL-CIO coincided with the release of a report on Republicans and the NLRB from the Center for American Progress Action Fund, the lobbying arm of the well-known progressive think tank. Arguing that the American middle class has weakened as union ranks have thinned in recent decades, the report asserts that “House Republicans are using every tool available to them — including their budget, regulatory, and legislative-oversight powers — to wage a coordinated attack on workers’ rights by trying to eviscerate the National Labor Relations Board.” The GOP’s feud with the labor board started back in the spring, when the NLRB’s general counsel, Lafe Solomon, filed a complaint against the Boeing Company. The complaint alleged that the aerospace giant broke labor law when it established a production line for its 787 Dreamliner in South Carolina. Solomon claimed that the move amounted to retaliation against Boeing’s unionized workers in Washington state for having gone on strike in the past. The complaint put Boeing’s plans in South Carolina on hold, but on Wednesday Boeing and the union reached a contract agreement that could resolve the complaint. Although many labor experts say the complaint was not unusual, Republicans have portrayed it as an abuse of power, arguing that it will have a chilling effect on businesses. They said the same of the union election rules put forth by the labor board. In a discussion of the election rules on the House floor Wednesday, Rep. Tim Walberg (R-Mich.) said that the NLRB has “taken actions that directly oppose American job providers,” adding that “job creators are terrified of the NLRB’s actions.” The bill passed Wednesday would assure that no union election could take place within fewer than 35 days after a union has gathered enough signatures for a formal petition. Union backers argue that such a guarantee would give management more time to employ union-busting tactics, while Republicans said they simply want to give workers more time to get information. Kline said that workers “shouldn’t be deprived of the opportunity to make an informed decision. When the labor board announced the streamlined rules earlier this year, then-chairwoman Wilma Liebman said the board was merely hoping to resolve “representation questions quickly, fairly, and accurately.”

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GOP Threatening Middle Class: Dems

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Fiat 500 By Gucci: Jennifer Lopez Stars In Automaker’s New Campaign

by The Huffington Post on November 19, 2011

Huffington Post…

Jennifer Lopez is taking yet another spin in a Fiat 500, but this time she’s doing it with even more style. The new J.Lo commercial for the Italian automaker brings the movie and pop star downtown from her native Bronx to the ritzier streets of Manhattan to show off a new collaboration between Fiat and the storied Gucci fashion label. The Turin-based auto manufacturer, which is the parent company to Chrysler, says the Fiat 500 by Gucci represents an “important partnership between two brands that have always expressed Italian genius and creativity across the world.” The small car boasts “true Italian style” and is “brimming with fashion references,” the company says, including chrome accents, a Gucci-logoed Frau leather interior and a simulated velvet dashboard. Gucci and Fiat are also pushing the car’s connection to the 150th anniversary of Italy’s unification, though we don’t think we’d see Giuseppe Garibaldi riding shotgun around Manhattan with J.Lo. The car, which will be available in U.S. dealerships early next year , starts at $23,500. That’s less than a Gucci crocodile tote ($29,900). What do you think? Does a fashion partnership make sense for Fiat? Let us know in the comments. CORRECTION: An earlier version of this article stated Fiat is based in Florence. It is based in Turin.

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Fiat 500 By Gucci: Jennifer Lopez Stars In Automaker’s New Campaign

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WATCH: UC Davis Police Pepper-Spray Students

November 19, 2011

WASHINGTON — On Friday, a group of University of California, Davis students, part of the Occupy Wall Street movement on campus, became the latest victims of alleged police brutality to be captured on video. The videos show the students seated on the ground as a UC Davis police officer brandishes a red canister of pepper spray, showing it off for the crowd before dousing the seated students in a heavy, thick mist. This incident recalls the earlier infamous pepper spraying by a New York Police Department official of several women who were seated and penned in. The UC Davis images are further proof that police continue to resort to brutal tactics when confronting Occupy activists. One woman was transported to a hospital to be treated for chemical burns . “The UC Davis students were peacefully protesting on the quad,” wrote the student who took the videos in an email to The Huffington Post. The filmmaker, a senior, asked that his name not be used for fear of retribution by campus authorities. “The cop gave them 3 minutes to disperse before he said they would come and disturb the protest. The main objective for them was removing the tents. … The students did have a right to be on campus, they were assembling peacefully and the campus was open at the time.” In a longer version of the video, the students are shown seated across a stretch of walkway surrounded by more than a dozen UC Davis cops, dressed in riot gear and clutching batons. Many other students are standing along the sides of the scene, watching and protesting as the standoff unfolded. Some students shouted “Thugs on campus!” and “From Davis to Greece, fuck the police!” Those chants were tamped down quickly by others, who warned all to “Keep it peaceful” and “Keep it nonviolent.” So the students started up a new chant that would prove prophetic: “You use weapons! We use our voice!” At one point, one of the riot cops ambles over to the seated line and asks one of the students a question. The student replies, “We’re sitting here.” The police officer then returns to his position with the other officers. He also turns his back on the seated students, as does at least one other officer. They show no fear that the students might turn violent or threatening. The first cop talks on his radio for a while. After a few “mic checks” and few more chants, a cop goes back to the seated students. The student asks, “You’re gonna shoot me for sitting here? You’re shooting us for sitting here?” Roughly a minute later, the officer can be seen shaking the pepper spray canister as the gathered students start shouting, “Don’t shoot your children!” As the officer began spraying the group of students, onlookers screamed, “Don’t do it! Don’t you do it!” A news account captured the officer on camera spraying the students. The account names the officer as UC Davis Police Lt. John Pike. He did not return a voice mail message nor an email left Friday night. His voice-mail box eventually filled up to capacity as his name and phone number were posted on Twitter. The UC Davis Police Department did not return calls from The Huffington Post seeking comment. The UC Davis chancellor, Linda P.B. Katehi, released a statement Friday. It states, “We deeply regret that many of the protestors today chose not to work with our campus staff and police to remove the encampment as requested. We are even more saddened by the events that subsequently transpired to facilitate their removal.” Nathan Brown, an assistant English professor at the university, released an open letter to the chancellor, calling for her resignation. He wrote, “You are responsible for it because this is what happens when UC Chancellors order police onto our campuses to disperse peaceful protesters through the use of force: students get hurt.” The student filmmaker, who says he is not part of Occupy Davis, told HuffPost, “I couldn’t believe it. I didn’t think such a thing would ever happen on campus over a tent being on campus. It’s embarrassing on the part of the police to take such actions.” Another video shows officers body-slamming a student in what appears to be a confrontation earlier in the day. Ten students were arrested Friday on campus. After the pepper spraying, the crowd of students began marching down the quad. The UC Davis cops? They’re pushed back down the walkway and finally leave. The students start an old cheer that rang true again, “Whose quad? Our quad!” UC Davis Police Chief Annette Spicuzza defended her officers’ actions to KCRA. She argued that it just wasn’t safe for students to camp on the quad. “It’s not safe for multiple reasons,” Spicuzza said. In a report by the CBS Sacramento station Friday night, Spicuzza said the officers’ own safety was also a concern. “If you look at the video, you are going to see that there were 200 people in that quad,” she said. “Hindsight is 20-20, and based on the situation we were sitting in, ultimately that was the decision that was made.” Spicuzza also said authorities were reviewing the videos. UPDATE: Nov. 19, 11:55 a.m. — Claudia Morain, a UC Davis spokesperson, told The Huffington Post that there were 35 police officers on the scene, 50 occupiers and 200 bystanders. She said that UC Davis officials had warned the occupiers that they could not set up a tent city. They were given notice that they had to clear out their tents by 3 p.m. on Friday. Some complied. Others did not. “I can’t speak for the thought process for the officer,” Morain noted about the use of pepper spray. She said that the officers were essentially trapped (the videos suggest otherwise) and had to transport several of the arrested students. “The pepper spray was used because they needed to get out of there,” she said, emphasizing that the students were repeatedly warned before the spray was deployed. Morain admitted that she had not thoroughly studied the videos of the incident. But she said, “We are just not going to allow a tent city. Just period. In these budget times, we shouldn’t use resources that should be going to our core academic mission going to a tent city.” Nine students and one nonstudent were arrested. “The police tried to use the least force that they could,” Morain explained. WATCH a 15-minute video of events immediately surrounding the pepper-spraying: UPDATE: Nov. 19, 12:49 p.m. — In a statement, Bernie Goldsmith of the nearby Occupy Davis, a separate group from Occupy UC Davis, said: At Occupy Davis, relations with the democratically elected city council and local police forces have been genial and productive. The authorities have worked continuously to harmonize the occupation’s presence with the park and surrounding businesses and ensure that all aspects of the encampment remain non-violent. Those in charge of using force are aware that they are democratically elected officials that are directly accountable to the people. Occupy UC Davis, a mere three blocks away, is under the jurisdiction of an undemocratic, appointed regime of force over which its subjects have no meaningful democratic control. The authorities there attacked non-violent protesters with indifference, and, in some cases, a clear display of sadistic pleasure. There could be no better illustration of the differences between a democratic, accountable public safety effort and a fascist, totalitarian, unaccountable police state. The students of UC Davis have no meaningful voice, and that is reflected at the very top of the administration down to the officer on the ground who can spice up his day with a confident sense of utter, unassailable impunity. WATCH a 42-minute video of events at the University of California, Davis:

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David Berri: What Sports Illustrated Didn’t Tell You About Paying College Athletes

November 12, 2011

So far, the biggest game of the 2011 college football season was when the Alabama Crimson Tide hosted the LSU Tigers. The game featured the top two ranked college football teams and was played before a sold-out stadium. It was also watched by 11.5 percent of all households on national television . Without a doubt, such an event generates substantial revenues. But the people who everyone came to see — the college athletes on the field — were prohibited from receiving this revenue. This prohibition comes from the NCAA, which has decided that college athletes must not be paid for their work. It’s certainly seems okay for the NCAA to promote these athletes and generate as much revenue as they can from their efforts. But if these athletes try and take some of the revenue they generate — as Cam Newton’s father tried — then this is a huge scandal and clear evidence that the athlete doesn’t know right from wrong. Sports Illustrated , — in the November 7th issue — made an effort to correct what seems to be an obvious injustice. In “Pay for Play”, SI writer George Dohrmann presented a “feasibility model” designed to see if there is any money available to pay college athletes. Unfortunately, Dohrmann’s approach is flawed from the outset. Early in the article, Dohrmann makes the following two statements: The vast majority of athletic departments do not generate enough profit to pay athletes. The fact is the majority of schools would need to cut expenses significantly to pay athletes even a nominal amount. Thinking back on the LSU-Alabama game, one wonders how this is possible. It certainly looked like large numbers of people paid to watch the game. And certainly there was some sort of fee to broadcast the game on national television. Where did all this money go? To Find the Money, Look at the Sidelines One obvious place to look is the people walking the sideline. In 2009, Nick Saban signed an extension that increased his pay to more than $4 million per season until 2017. In January of 2011, Miles also signed an extension that maintained his average salary of $3.75 million across an additional three years. Economist Andrew Zimbalist — in an article published in 2010 at the Harvard Business Review — notes that it is not unusual to see football coaches in the Football Bowl Subdivision (FBS or formally Division I-A) paid extremely well. As Zimbalist notes, … virtually every head football coach in the FBS — including those of perennially losing teams — earns more than $1 million, plus lavish perks and the potential for significant outside income. One might argue that this level of pay reflects market forces. Zimbalist, though, finds this argument less than compelling. According to Zimbalist, there are five reasons — yes, five — why the salaries of coaches DO NOT reflect free market forces. As Zimbalist argues… … collegiate athletics market forces are artificially influenced by several factors: (a) no monetary compensation is paid to the workforce, the athletes; (b) intercollegiate sports benefit from substantial tax privileges; (c) there are no shareholders demanding dividend distributions or boards demanding higher profits; (d) athletic departments are nourished by university and state financial support; and (e) coaches’ salaries are negotiated by athletic directors whose own worth rises with the salaries of their employees. These forces result in a level of pay for coaches at the college level that cannot be explained by the level of revenues generated by the college teams. Again, we turn to the words of Zimbalist: The outsize pay packages defy one of the central principles of a competitive market. College football and basketball coaches earn, on average, almost the same amount as their NFL and NBA peers, although college programs generate a fraction of the revenue of professional teams. The top 32 college football programs bring in $40 million to $80 million, whereas NFL teams generate an average of about $230 million. The disparity is even greater in basketball, where the top 30 Division I teams average about $15 million in revenue, one-tenth the average NBA team revenue of approximately $150 million. Zimbalist’s work makes it clear that college coaches are paid beyond what one would expect from a reasonable examination of the revenue the coaches generate. And it is obvious why this is possible. In college sports, the workers — or the players on the field — are not paid. Of course, players do receive a scholarship. However, published research — from Robert Brown and R. Todd Jewell — makes it clear that at least some players are worth far more than the scholarship the players receive. These two economists estimated* the amount of revenue created by a premium college football player in 2004. This estimate – utilizing data from the mid-1990s — suggested that a college football player who is ultimately drafted into the NFL will create more than $400,000 each year he plays college football. And again, this is an estimate based on data from more than a decade in the past. Today it must be the case that elite athletes are worth much more. The NCAA, though, has passed a rule that every firm would love to pass. Workers cannot get paid! And that means the revenues the players generate are free to go someplace else. A Free Market Approach to the Pay of College Athletes Of course, Sports Illustrated claims there is no way to pay athletes what Brown’s research indicates they are worth. After all, college athletics doesn’t generate a profit. The problem with this approach is that decision-makers in college sports don’t have much of an incentive to generate profits. Any revenue that comes into these programs tend to be spent on enhanced living facilities for student-athletes, better weight rooms, expanded stadiums, and yes, salaries to coaches and athletic departments. Much of this spending doesn’t necessarily lead to better outcomes. And if the NCAA market was a free market — where economic losses led firms to go to out of business — much of this spending wouldn’t happen. And this leads one to wonder: What if the NCAA was a free market? Then the Cam Newton “scandal” would be the norm. Elite players would do what every worker does in the labor market. They would sell their labor on an open market and accept the offer they deem to be “best”. Should there be a limit on this compensation? Well, is there is a limit on your compensation? And is there a limit on the compensation received by the coaches? Of course not!! That’s not the nature of a free market. Now a free market approach doesn’t necessarily mean all players will be paid beyond a scholarship. Many athletes — especially those in sports other than football and basketball — do not generate much revenue. And those athletes in a free market would be treated in the same way universities treat music students or those receiving academic scholarships. But for the elite players — or those generating the wins and revenue that make the pay to coaches and others possible — a free market approach will lead to higher wages. And, of course, this approach means that coaches will ultimately get less (which tells you why coaches do not seem to spend much time advocating a completely free market approach to athlete compensation). Dohrmann does argue that if players were paid, the teams with the money would sign the best players and competitive balance would suffer. Again, the data tells a different story. A few years ago, economist Jim Peach looked** at competitive balance in college football and found that from 1950 to 2005, 50 percent of the top 8 finishes in the AP final poll were claimed by just 12 different schools. Similar stories were told in basketball, baseball, and women’s softball. In other words, the NCAA currently doesn’t have much competitive balance. And paying players is not going to change this reality. Paying the players that generate the revenue, though, is the right thing to do. When that happens, some of the problems associated with college football will go away. And when that happens, maybe fans of the game can spend a bit more time talking about the game; and less time wondering if the players they enjoy watching are really breaking a rule that the fans would never accept at their place of employment. *Brown, Robert W. and R. Todd Jewell. “Measuring Marginal Revenue Product of College Athletics: Updated Estimates,” in Economics of College Sports, edited by Rodney Fort and John Fizel (Westport, CT: Praeger Publishers, 2004). **Peach, Jim. “College athletics, universities, and the NCAA.” The Social Science Journal, 44, (2007): 11-22

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WATCH: BofA Branch Reportedly Refuses To Allow Protesters To Close Accounts

October 16, 2011

Should people who are tired of paying extra fees be allowed to close their bank accounts in protest? One Bank of America official reportedly doesn’t think so. According to Addicting Info , two women involved with the Occupy Santa Cruz movement in California walked into a Bank of America branch earlier this week and attempted to close their bank accounts. In response, the bank manager threatened to lock the doors and call the police on them. Her reasoning? You can’t be a customer and a protester at the same time, the manager said. Central Coast News contacted Bank of America about the incident and received a response from the company: Central Coast News has contacted Bank of America to get their side of the story. In an email Colleen Haggerty with Bank of America released this statement to Central Coast News. “It is our responsibility to ensure a safe environment for customers to conduct financial transactions. So, due to the disruptive nature of protests lately and the potential for safety or security issues, we do not allow protestors inside of our banking centers. If a customer who is participating in a protest wishes to conduct bank business, including close an account, we ask them to come back when they are not protesting or they may also conduct their bank business at a nearby branch away from protest activities.” Haggerty also said that Bank of Ameica, “respect everyone’s ability to exercise their first amendment rights, however we also have to balance safety and business needs for all customers.” According to Central Coast News , “The women said that they would return to Bank of America the next day, sans signs, and close their accounts taking their ‘money away from the banking elite and into a local credit union.’” WATCH VIDEO OF THE ENCOUNTER ABOVE

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Jeff Sweat: Five Questions for Simon Mainwaring

September 26, 2011

We First author on how brands and agencies can create positive change Branding consultant author Simon Mainwaring was an agency star, but his work as worldwide creative director for Motorola at Ogilvy and other agencies didn’t exactly point to his latest venture — a book and social branding firm that aim to help create a more equitable world. Mainwaring’s book, We First: How Brands & Consumers Use Social Media to Build a Better World, lays out a new model for corporations and consumers to do good. I caught up with Mainwaring to find out more about such concepts as “contributory consumption” and how agencies can help brands re-invent themselves in a troubled world. Jeff Sweat : Why do you think a book like yours is necessary? Simon Mainwaring : A book like We First is necessary right now for three reasons. The first is the fact that we now live in an intimately connected global community. There are many individuals, companies and even countries operating in what I call a “me first” mentality, which is effectively a purely competitive approach to life, treating the planet as if it has infinite resources and pitting one country against another for supremacy. But, as we discovered on Wall Street, as we see through the internationalization of currency, as we see through the effects around the world of various disasters, we are intimately connected. As such, we need a book that reframes business and the role of companies. The second is that, as a function of the information provided by the Internet, consumers and business leaders are more aware than ever of the trouble that we are in, whether it’s poverty, disease, climate change or environmental degradation. And so there’s a greater need than ever to respond to these challenges with fresh thinking. And third, it’s because of the arrival of social technology and its transformative potential. I believe the true power of social media is its ability to scale and accelerate these connections. JS : In your book you say that there are changes that corporations need to make. What are some of those? Mainwaring : The challenges for corporations are three-fold, and they affect every tier of the hierarchy within the corporation. First, the C-level: Executives can no longer hide behind the corporate veil. They need to be accountable for what their companies do, because entities are responsible for socially irresponsible behavior. Second, companies are challenged to position themselves as places where people want to work. One of the most powerful ways they can do that is to align their social outreach around their core values and make a positive contribution to the marketplace. And third, in terms of organizational structure, it’s enormously challenging for companies that in the past have privately held a monopoly to realign themselves in a way to take advantage of the social business marketplace. Traditionally, companies are structured around a hierarchy. Now various people, including Charlene Li, who wrote a wonderful book called Open Leadership, have examined in detail what this reorganization might look like, whether it’s hub-and-spoke, whether it’s a dandelion, whether it’s some form of distributed organization that does away with the hierarchy but still allows for centralized control. JS : Why does social media make this change possible? Mainwaring : Consumers now have a voice. And the fact that consumers can be creators, producers and distributors means they can push back against brands to punish them for their socially irresponsible behavior or reward them for their responsible behavior. We already see consumer adoption of new technology moving faster than brand and agency adoption. In a sense, consumers are more sophisticated in their use of these tools than brands or agencies. And as consumers become more aware of the power they have, their sway over companies will increase. JS : You mentioned one concept in the book, “contributory consumption.” Tell us a little about that. Mainwaring : The engine of capitalism, like any engine, needs to be serviced. And the way that we’ve been running the engine of capitalism has been to think profit for profit’s sake and really damn the consequences, even to the point where Wall Street largely came unstuck in 2008. Contributory consumption at its broadest level is a way of servicing that engine, because brands, companies and institutions cannot survive in societies that fail, in which case we need to make a proportional contribution to the maintenance of the well-being of the entire business ecosystem on which all these companies depend. And if you look at the reality in the United States, where you have more than 40 million people below the poverty line and 42 million on food stamps, and then you look at poverty around the world, clearly the way we’re running the engine of capitalism is not serving us well. Contributory consumption builds on some amazing work done by other people, including the “(Product)Red” campaign and “1% for the Planet” [and others], all of which give consumers the opportunity to make a proportional contribution to something they care about. JS : What role do you think the advertising community plays in this new system or this new world? Mainwaring : The advertising industry is facing several challenges. One is that their traditional intermediary role is being challenged because consumers are talking directly to brands. And a lot of brands are therefore taking their social business units in-house, which robs an agency of its stewardship role. Even though social technology is powerful, it is not an end in itself. The marketplace is still driven by a timeless currency of emotion. And the way you leverage emotion is in your storytelling, and that’s where advertising agencies are completely relevant and essential to the future. JS : Your book talks about the idea that businesses need to recognize that working for the social good benefits them, too. Do you think that they’re capable of recognizing that? Mainwaring : I think companies are waking up. Any one of us at any given time is a parent, an investor, an employee, a shareholder. And as we’re becoming increasingly aware of the global crises that we all face, we’re realizing that each of us need to play a more contributory role in what we do.

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Adidas Ready To Go Barefoot

August 23, 2011

PORTLAND, Oregon — Adidas is going barefoot. The world’s second-largest athletic company unveiled its first “barefoot” training shoe Tuesday, which is designed to mimic the experience of exercising barefoot while providing the protection, traction and durability of a shoe. The Adipure Trainer, which is a cross between a glove for the feet and a traditional shoe, hits U.S. stores in November priced at $90. The barefoot shoe is part of a strategy by Adidas, which is based in Germany, to expand into the U.S. where rival Nike dominates. Adidas joins a list of athletic makers trying to tap into the small but burgeoning U.S. market of fanatical runners and gym-goers who swear by shoes designed with as little material between the wearer and the ground as possible. “People who believe barefoot is the way to go…are very emphatic about it,” said Matt Powell, an analyst with industry research organization SportsOneSource Group. “They want to spread the message. It sounds religious but some of them are evangelical about it.” The athletic shoe and clothing business has been fairly resilient during the U.S. economic downturn, but it is an industry that thrives almost entirely on new products. When it comes to shoes, the latest and greatest captures the U.S. customer. While barefoot shoes make up a tiny fraction of the $22 billion U.S. athletic shoe industry, it is one of the fast-growing categories. Sales have more than doubled in the past year to roughly $750 million, according to SportsOneSource. Nike, the world’s biggest athletic company, holds roughly 65 percent of the market and appeals to barefoot loyalists and mainstream exercise enthusiasts alike with the traditional running-shoe look of its “Free” line. Vibram has about 10 percent of the market with its Five-Finger shoe, which encases each toe separately and has come to define the style. Other big companies such as Merrell, Fila, Saucony, Asics and New Balance also have their own barefoot or so-called minimalist offerings. The design of the Adidas barefoot shoe strikes a balance between the two styles. The brightly-colored trainer, which features the trademark Adidas three stripes, covers the foot as a shoe would but with a sock-like fit and toe compartments to allow more natural movement. “The Adipure Trainer is a unique piece of equipment for elite level athletes that we’re bringing to our core consumer,” said Patrik Nilsson, president of Adidas North America. The growing U.S. barefoot market is an important one for Adidas. The company runs a close race with Nike globally, but the gap is much wider in North America. In their most recent fiscal years, Nike generated $7.58 billion in revenue in North America. Adidas, meanwhile, had roughly $4.05 billion in revenue when translated to U.S. dollars. Nike holds roughly 46 percent market share in U.S., while Adidas comes in at a distant second with about an 11 percent share. Adidas, which recently has seen its sales improve in North America, has implemented a growth strategy that relies heavily on gaining market share in the U.S. The company said it is trying to connect better to U.S. consumers through new products and marketing. The company, which has long relied on its strength as a soccer and lifestyle brand, has put a bigger push behind other sports that are big in the U.S. as well. In basketball, for example, it’s expanded its products in recent years and signed Chicago Bulls player Derek Rose, who was the NBA’s most valuable player this year. “To be successful is damn hard work day in and day out,” said Herbert Hainer, CEO of Adidas speaking from the company’s U.S. headquarters in Portland. “It’s not just basketball or having Derek Rose or Tiger Woods, or whatever. It’s a lot of different things all the time and connecting right with the consumer.” Now, Adidas is trying to connect with the barefoot movement. The theory behind the use of barefoot shoes is that the body is already optimally designed to move. Science backing up this theory suggests that traditional shoes inhibit that, which can sometimes cause the kinds of injuries that plague many runners. Fans of barefoot shoes say they allow them to better use the body’s natural motions and strengths. The barefoot culture has long had proponents, but it caught on widely in 2009 after publication of Christopher McDougall’s book “Born to Run,” which explored the history and benefits of barefoot running. The movement got further attention last year when Harvard biologist and runner Daniel Lieberman published a paper in the journal Nature that concluded that running barefoot seems to be better for the feet, producing far less impact stress compared to those in traditional running shoes. The practice of running in barefoot shoes has been a somewhat controversial topic, though. The odd appearance of the shoes sometimes causes heads to turn in parks. Some races across the country will not allow people to run in them. And some barefoot shoe wearers themselves have reported injuries after using them. Shoemakers and health professionals say many of the injuries are a result of people using the shoes too quickly. They suggest people trying to make the switch from traditional shoes to barefoot ones do so gradually — increasing distance over time — to let the body adjust to how the body was naturally meant to move. “A lot of engineering went into making your foot a high performance machine,” said Mark Verstegen, founder of Athletes’ Performance, a training and performance organization for elite athletes that works with Adidas. “Using your foot’s natural power and movement will help you strengthen muscles you never knew you had in your feet, lower legs and throughout your core.”

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Head Of S&P To Step Down

August 23, 2011

NEW YORK — The president of Standard & Poor’s is stepping down, a decision coming only weeks after the rating agency’s unprecedented move to strip the United States of its AAA credit rating, according to reports published Monday. The Financial Times and The Wall Street Journal reported that Deven Sharma will stay on as an adviser to S&P’s parent company, McGraw-Hill Cos., until the end of the year. They said S&P plans to make an official announcement Tuesday before the U.S. financial markets open. The newspapers cite people familiar with the matter who say Sharma’s move was in the works well before S&P downgraded its rating on the U.S. to AA-plus on Aug. 5. The Financial Times also said Sharma’s decision to leave S&P was not due to recent reports that the Justice Department was investigating whether the agency improperly rated dozens of mortgage securities in the years leading up to the financial crisis in 2008. It said the move is the result of S&P splitting its data, pricing and analytics business from its ratings business. Messages were left with S&P spokesmen seeking comment. S&P’s downgrade sent shock waves through global financial markets and was sharply criticized by the Obama administration, which said the agency’s analysis was fundamentally flawed. Other major rating agencies have not followed S&P’s lead. Sharma joined S&P in 2006 and was named president the following year. Before that, he was executive vice president, Global Strategy, at McGraw-Hill for five years.

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Marty Zwilling: Entrepreneurs Need to Think Globally at the Start

August 22, 2011

New entrepreneurs who want to survive, and optimize the growth of their startups, need to think globally, and act locally, from day one. This approach, popularly known as “glocalization,” means you have to design and deliver global solutions that have total relevance to every local market in which you operate. Recognizing this is as much about culture as about language, ensures an understanding of regional motivators, cultural taboos and local customs – so that your solutions are ideally designed and marketed to deliver value that has genuine local relevance. What all this doesn’t mean is that you should roll out your product in every country at the same time. But it does mean that you think about the global implications at every step of the process: Pick your company and product names carefully. Don’t pick a name for your company or product that has a negative or totally different meaning in another language. Remember when the Chevy Nova required a rename, once Chevrolet realized that Nova meant “no go” in the Spanish market (not a great name for a car). Anticipate greater growth outside of North America. Not every international market matters, but some are larger than life. The middle and above-middle class population of China will grow from 172 million in 2010 to 314 million in 2015. Just the middle class in India is equal in size to the entire population of the United States. And aging populations in Europe and Japan will join the retiring baby boomers in the U.S. with demands for new products and services. Be ready. Reinforce your brand in international markets. An international brand will command higher prices and additional customer demand. This is called brand goodwill, a hard-won value resulting from the trust that a strong name engenders among buyers and partners. As you begin to saturate the demand in domestic markets, let your brand take you international at low cost. Balance your business between geographies. When buyers in one region start to slow down, look for buyers in other geographies to take up the slack. Companies with diversified portfolios can focus their energy on other global markets that are doing well. Speak the customer’s language. People tell me that a multi-lingual website can double your local online business in many parts of the U.S. These days, customers begin their buying cycle online, where they can get answers to their frequently asked questions, product information, and transactions — all in a language they really understand. Find global sources now . This may not be politically correct these days, but smart startups are looking globally to source their products from the very beginning. Software can be developed “offshore” for a low cost, manufacturing volumes are quickly available from China, and European designs have increased opportunities in every country. Selectively protect your intellectual property worldwide . At present, no world patents or international patent process exists, so you need to apply in every relevant country. Trying to get patent protection worldwide at the beginning is prohibitively expensive, so pick your geographies and timing carefully and strategically. These days the world is a single market. It is both homogeneous and heterogeneous. The communication revolution and the advent of the Internet has brought about a new age of globalization. Easier access to international markets is creating limitless sales opportunities on a worldwide basis. The result is that every startup company now needs to consider every aspect of management, sales and service on a global basis. However, to gain a true competitive edge, you still need to implement effective solutions first at the local level. Don’t try to do it all at once.

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Boomer Retirement May Weigh Down Stock Market For Next Two Decades

August 22, 2011

By Michael S. Derby of the Wall Street Journal The next quarter century or so could be a tough one for the stock market, researchers at the Federal Reserve Bank of San Francisco warn. In a paper released by the institution Monday, two of its staffers said the retirement of the Baby Boom generation stands to strip away from equities a key source of support. The ongoing wave of retirees won’t crater the market, but they may well be “a factor holding down equity valuations over the next two decades,” writes Zheng Liu and Mark Spiegel write. As they see it, what the Baby Boomers have given to the market is something like what they will be taking away. Allowing for the “theoretical ambiguities,” the economists noted “U.S. equity values have been closely related to demographic trends in the past half century” across several key metrics. “In the context of the impending retirement of baby boomers over the next two decades, this correlation portends poorly for equity values,” Liu and Spiegel write. (Read more: Uniforms Inspire Attendance, Not Achievement) As much as it is a problem for the market over the long haul, as retirees sell stocks to try to maintain their lifestyles, the “well known” nature of the troubles is also a problem for markets now. Indeed, if current investors now start pricing in the coming Baby Boomer headwind, they may “depress” stock prices. “These demographic shifts may present headwinds today for the stock market’s recovery from the financial crisis,” the paper said. Liu and Siegel allow that considerable uncertainty surrounds their work. Other important influences on the outlook for stocks are the performance of the bond market, as well as the appetites of foreign buyers. They cited China as one potential wild card, saying that nation and other emerging economies “may relax capital controls, which would allow their nationals to invest in U.S. equity markets.” That could counter some of the drag generated by U.S. retirees. Read more: What Do Markets Expect From Bernanke at Jackson Hole? There are, of course, even more risks that surround the stock market beyond what the paper flags. Equity prices have undergone considerable volatility of late after enjoying a sharp Federal-Reserve-engineered rally starting nearly a year ago. Equity investors are confronting a protracted period of economic weakness, and a central bank that appears to have few good options to restart growth. Should weakness prove longer-lasting than some expect, that itself may influence Baby Boomers’ retirement plans, and thus change the outlook for the market. The the entire post here.

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Pamela Yellen: What’s Great for the American Consumer Is Bad for Our Nation’s Economy

August 22, 2011

Three cheers for the American consumer. While our leaders in Washington pay little more than lip service to the need to reduce our nation’s debt addiction, Americans by the millions are working harder than anytime in the past 40 years to live within their means. Far fewer consumers are carrying credit card balances these days and, better yet, those who still owe money on their cards owe less than they used to. According to TransUnion, the average consumer credit card balance as of March 31 st was just under $4,700, a ten-year low. That’s down 19% from 2009 levels. Overall, the sum of U.S. consumer debt — including home mortgages and home equity credit lines — fell almost 16% since the onset of the recent recession. This so-called “deleveraging,” most economists say, is either a reflexive response to the collapse of Wall Street and housing prices, or it’s a sea change in the spending habits of the American people. “Our analysis shows that consumers have made a concerted effort to pay down their credit cards during these uncertain economic times,” Ezra Becker, a TransUnion executive, recently told the ABA Banking Journal. This new discipline among consumers is forcing politicians, policymakers, economists, bankers, financial services executives and most Fortune 500 CEOs to sit up and take notice. Why? Put simply, when consumers borrow less they also spend less. And when they spend less, they consume less. Given that roughly 70% of the U.S. gross domestic product (GDP) relies on household consumption, when consumers reign in their borrowing, it spells near-term trouble for our economy, job creation, corporate profits and tax revenues. Think of the irony… American consumers — after years of excessive borrowing — finally buckle down, reduce their personal debt and improve their household balance sheets. Yet such responsible behavior turns out to be a serious drag on our nation’s economic engine. “Deleveraging is easier to say than do,” writes Alen Mattich, a senior reporter for Dow Jones Newswires. Much of what fueled economic growth in America and other developed countries over the past 20 years was consumer borrowing, he explains. So now, Mattich points out, not only have individuals ceased to lop on more and more debt, their priorities have shifted to paying off what they borrowed for yesterday’s consumption. Such behavior constitutes a praiseworthy fiscal fitness diet for consumers – but also places a serious damper on our economic growth. Take one example. In his 2010 book, The Age of Deleveraging , economist and Wall Street pundit A. Gary Shilling says many American companies — and hence their shareholders and employees — stand to pay the price of consumers’ newfound monetary pragmatism. “Leisure airline trips, ocean cruises, new household appliances and vehicles are expenditures consumers will postpone or avoid as the ongoing saving spree persists for years,” Shilling cautions. Dow Jones’s Mattich echoes Shilling’s foreboding. “It seems clear we’re only at the beginning of a very long, rocky road. Which investors will, like penitents, walk on their knees.” I genuinely wish there were an alternative for our country. But rebounding from any addiction and the excesses it fosters is never easy. Our economy may, indeed, be in for a painful period of deleveraging-driven restraint. But let there be no doubt that consumers have finally got it right It’s high time we pay down — and ideally pay off — our irresponsible debt, fortify our savings and re-inflate our retirement portfolios. Then, as proud owners of a pristine household balance sheet, we can once again purchase appliances, buy new cars and take luxury vacations. Only next time, we won’t be paying for these discretionary goods and services with someone else’s borrowed funds. Growth that is paid in full — rather than recklessly borrowed — will in time make our American economy infinitely stronger and far more durable. Next : In the second of three columns on the topic of consumer debt, I’ll discuss ways that credit card providers and retailers can lure back wary consumers and provide a fresh spark to America’s stagnant economy. And I’ll show you how you can become your own source of financing using a method that’s actually better than debt free. Update : Eliminating personal deficit spending is the first stage in my 5-step program that empowers each and every one of us to become effective citizen soldiers in the battle to fix our nation’s economic woes and political gridlock. To learn more, I recommend you read my August 2011 Bank On Yourself website Cover Story, “A Do-It-Yourself Fix For The Economy, Deficit, Social Security and Unemployment. ” New York Times bestselling author Pamela Yellen is the founder of www.BankOnYourselfNation.com , a website dedicated to helping people achieve lifetime financial security and self-reliance. As president of www.BankOnYourself.com , she’s helped hundreds of thousands grow their wealth safely and predictably.

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Lydia Fisher: Wow, What a Week!

August 6, 2011

After the failure of rating agencies to rate securities properly as to risk preceding the subprime meltdown (bundled securities rated AAA with near worthless underlying loans), don’t know what to make of S&P’s downgrade of U.S. debt from AAA to AA+ Friday evening. Is it a beginning? Read on. : The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenge,” the company said in a statement. It appears that the American public did some of their own analysis, underscored this week by the headline, “Disapproval Rate for Congress at Record 82 Percent After Debt Talks.” The AA+ rating, by definition, still implies good credit-worthiness. Moody’s and Fitch still hold U.S. debt as AAA. Regardless, with a new 16 trillion “credit card” limit, fiscal challenges remain. Here’s why. Simply put, the bigger the debt, the bigger the interest rate risk exposure to service the debt. The U.S. debt downgrade potentially has higher borrowing cost implications for consumers, businesses and the U.S. government, which impacts economic growth. It remains to be seen how the markets will adjust to the S&P downgrade, whether a shift upwards in rates in the Treasury yield curve occurs — whether our creditors will demand higher rates. For now, matters “across the pond” in the eurozone appear worse. European money markets seized up this week, with Italy and Spain in sharp focus. The ECB announced intentions to buy back debt of Italy and Spain. This, after the European Union has already bailed out Greece, Ireland and Portugal. Seems to me sovereign debt default issues will be with us for some time, based on the absolute levels of debt relative to GDPs within developed nations and the question of how to now grow the economies going forward to sustain the debt and meet obligations. Some astute investors note that there are two ways to default on debt — an actual default or through devaluation of the currency. It’s no secret to any of us, that the dollar has suffered devaluation in the last decade. Just this last Thursday, the Swiss Franc hit another high against the dollar (another marker for the week). If we keep raising the debt ceiling (to avoid actual default), then we’re monetizing debt (financing government spending) to meet our obligations. Unless, of course, we can grow the economy to keep up with the pace of deficit spending. But, here’s the deal. This week’s debt ceiling increase (which may turn out to be yet another temporary fix) came in at 2.1-2.4 trillion to a jaw-dropping 16 trillion . We’ve raised U.S. debt ceilings before. What makes this one uncomfortable is that it puts the U.S. that much closer to the 100 percent threshold of debt to GDP, and that’s a drag on the economy. Historically, this ” shaves about one percentage point off GDP, which was just 1.3 percent for the second quarter and 0.4 percents for the first quarter. ” With the weight of big debt, the “heavy lifting” to grow the economy, to create jobs, becomes all the more arduous. As if back-to-back days of U.S. stock market declines weren’t enough this week ( culminating in a 500 point Dow plunge on Thursday), the jobs picture remains murky. This week, the unemployment rate showed a slight improvement to 9.1 percent from 9.2 percent. But, if one looks beyond to the increase — in the discouraged no longer searching — the unemployment picture looks dismal. What’s this all saying? We can’t expect quick fixes to problems formed over decades. Tempting as they may be, within an age of instantaneity. I keep coming back to structural changes needed. Note that the financial crisis (and the most recent explosion in debt it created) came on the heels of already multi-decade long trends that chiseled away at jobs — conglomeration, globalization and technological automation. Running an economy, in part, on financial bubbles, particularly in the last decade, masked the underlying reality of the job market. Yes, we need growth and jobs. How do we do this within the economy we’ve created over decades? Where on the horizon is the sustainable revenue bedrock, the growth that will move us forward? Amidst the brouhaha , the numbers, let’s not forget the very human. Is there a point at which debt and debt service crowds out life and living? Or, is life about growing and working to achieve happiness, fulfillment and harmony as a society?

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U.S. Credit Downgrade Darkens Economic Outlook

August 6, 2011

NEW YORK — With the United States government now shorn of its top credit rating by Standard & Poor’s, experts are increasingly worried that the American economy is headed back into recession, while Europe appears vulnerable to another shock. The announcement that the rating agency had reduced the U.S. government’s AAA rating for the first time in history came after days of punishing declines in the stock market, and has now cast a shadow over economic prospects in the months ahead. A recent stream of indicators has provoked concern that the economy could be headed for another recession, with the growth rate slowing considerably, unemployment stubbornly elevated and the stock market swooning. Some experts say the downgrade could be the final trigger, making credit more expensive and sowing broad unease. “People will be pulling money out of equity markets, out of commodity markets, and putting it into cash — essentially, stuffing money in your mattress,” said Andrew Lo, a professor of finance at the MIT Sloan School of Management, in an interview Saturday. “This is the worst thing to have happened, given the weak economy we already have.” “Some straw has to break the camel’s back,” he added. “This may be the straw.” The psychological impact of the downgrade might cause stocks to fall Monday and could exacerbate the sovereign debt crisis in Europe, experts say. Over time, it could raise the interest rates on 10-year and 30-year Treasury debt, making it more expensive for the federal government to borrow money, further worsening the deficit. The downgrade could also push up the cost of loans that are tied to the Treasury rate, making it more expensive for Americans to get funds to buy a car or a house. The effects could reach Europe, where nations that share the euro currency are contending with a debt crisis that seems to deepen by the week. While S&P didn’t announce plans to reduce the ratings of European countries following its U.S. Treasury downgrade, experts said European downgrades might be inevitable, to maintain consistency in the rating system. That in turn could spark a new round of panic. S&P’s decision comes at a time of critical economic weakness, as the American economy seems increasingly vulnerable to another contraction just two years after the official end of the recession that began in December 2007. Gross domestic product grew at an annual rate of just 0.85 percent in the first half of the year, the government announced in July. Seen in relation to population growth, GDP actually shrank in the first three months of the year. After other data releases showed the manufacturing sector weakening and consumer spending drying up, the Dow Jones Industrial Average lost 513 points on Thursday, in the biggest one-day drop since the depths of the financial crisis. It remains unclear what the precise effects of S&P’s downgrade will be, or when they might materialize. Some experts believe the global economy will be able to absorb the downgrade without much turmoil. But others, like Lo, take a more pessimistic view. S&P laid blame for its decision to assign the AA+ rating directly on the political process in Washington. Even though lawmakers reached a decision on Aug. 2 to raise the government’s debt ceiling and avoid a potentially disastrous default, the deficit-reduction package that accompanied the deal won’t sufficiently improve the government’s fiscal health in the coming years, S&P said in a release Friday . A factor in that projection, S&P said, is that Republicans seem unwilling to allow the Bush-era tax cuts to expire. “The majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act,” S&P said. The ratings agency said political dysfunction provoked the downgrade, noting that Congress seems to lack the ability to aid the weakening economy. And now, as S&P acknowledged, the downgrade might introduce a new source of strain. “The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed,” the company said. “The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.” Although interest rates on long-term U.S. Treasury debt might rise as a result of the downgrade, rates on short-term debt could fall, as investors throw money at safe-haven assets. The yields on Treasury bills, which have the shortest lifespans of the government’s debt securities, could fall below zero, if investors turn to U.S. debt that is keeping its rating intact. Interest rate movement in bond markets, moreover, might be minimal at first. Investors’ attitudes about the economy influence their demand for Treasury debt; with the outlook grim, investors have been fleeing from risk, eager to lend money to the U.S. government and happy to accept low compensation. Yields on 10-year Treasury notes neared 2.4 percent, a low not seen since last fall, as the Federal Reserve was beginning a second massive economic stimulus. But over the next few years, yields on a variety of investments that are influenced by the Treasury rate might rise, implying that a whole range of assets would be treated as riskier. “When there’s more demand for credit, that’s when we’re likely to see a re-pricing of risk,” Mark Vitner, a senior economist at Wells Fargo, said Saturday. “In the very near term, our borrowing costs are going down, due entirely to economic weakness.” In the coming week, the downgrade could cause a period of selling, as investors shun risk. Stocks, commodities and the U.S. dollar might all take hits in the coming days, experts said. Over time, a downgrade could increase the federal government’s cost of borrowing by $100 billion a year, said Terry Belton, global head of fixed income strategy at JPMorgan Chase, in a conference call last week . As the federal government reduces spending, the fiscal health of states and localities could suffer. Many cities depend on states for aid, and some states in turn depend on the federal government. If those governments face increased strain over the coming years, their credit ratings could also be vulnerable. In a July report, S&P said there are certain ratings that “move in lockstep” with the U.S. sovereign rating. Those include home loans backed the federal government and the debt of government-related entities. The mortgage giants Fannie Mae and Freddie Mac might see their ratings docked. And more sovereign downgrades could follow, experts said. “If the U.S. Treasury is not AAA, it’s hard to justify anyone else being AAA,” said Matt Fabian, managing director of the Concord, Mass.-based Municipal Market Advisors, in an interview Saturday. “France, or Microsoft, or some of the muni issuers like Utah or North Carolina — it’s hard to see them as AAAs if the feds aren’t.” With a crisis building in Europe, sovereign downgrades on the continent could push markets to a breaking point, said Lo, of MIT. Borrowing costs for the economically weaker nations that share the euro have skyrocketed in recent weeks, with jittery investors fearful of widespread panic. On Thursday, a subtle implication in an announcement from the European Central Bank was enough to spark a temporary sell-off of Italian debt , and cause a plunge in the Italian stock market. If S&P does not downgrade other governments, the logic of its rating system might fall apart, Fabian said. “They would just be accelerating the demise of ratings,” he said in an interview late last month. “They are reducing the utility of their own product.”

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Countries With Higher Credit Ratings Than The U.S.

August 6, 2011

On Friday, Standard and Poor’s downgraded the credit of the United States for the first time in history, leaving only thirteen countries in the world with a true top-level AAA rating, according to 24/7 Wall St. (Read more 24/7 Wall St. ) Not all credit rating agencies agree with S&P’s downgrade. Indeed, in the days before the S&P downgrade, other rating agencies confirmed their confidence in the ability of the U.S. government to repay their debt. Moody’s has already affirmed the U.S. government’s Aaa rating, but with a negative outlook. Fitch also affirmed its AAA rating for the U.S., but warned that the rising debt profile to over 100% of GDP (after 2012) is not consistent with retaining the crucial AAA sovereign rating. In light of the weakening economy, and following the ratings agency actions, 24/7 Wall St. has decided to reassess the entire global triple-A landscape. Our previous take was that some nations already seemed to be far less deserving of the triple-A rating category than others. The key assumption here is that the U.S. is no longer a true triple-A- rated nation. This implies that other nations with similar conditions are also at risk of losing their triple-A rating, and that there are really far fewer than 17 true nations in the triple-A club now. Our review includes updated figures from Standard & Poor’s and Moody’s along with revised statistics from the CIA World Factbook. We’ve sourced also from the Economist Intelligence Unit, Fitch, Egan Jones, and elsewhere. S&P still has a triple-A rating on Australia, Austria, Canada, Denmark, Finland, France, Germany, Netherlands, Norway, Singapore, Sweden, Switzerland, and the United Kingdom. Other triple-A nations like Guernsey, Isle of Man, Liechtenstein, and Luxembourg we left out due to their small size and dependence upon other nations. Moody’s ratings were also used to make sure that the discrepancies are not overlooked. Read more at 24/7 Wall St. Below are the world’s remaining AAA countries:

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Country Moving Toward ‘Rentership Society’: Is The American Dream In Trouble?

July 21, 2011

Home ownership, long a central pillar of the American dream, seems increasingly unattainable for growing numbers of households. Yet old views died hard, and nine out of 10 Americans still consider home ownership “ an important part of the American dream ,” according to a June poll by The New York Times /CBS News. Indeed, there are signs of slight improvement in the housing market. In June, work started on 629,000 new houses, a five-month high that beat economists’ expectations saw an uptick in construction in every region in the country. But that doesn’t necessarily indicate the housing market is in recovery — because, as real estate analyst Mike Larson recently told The Washington Post , “[p]eople who don’t have jobs don’t buy houses.” And many, many people don’t have jobs. Unemployment rose to 9.2 percent in June, a figure that would actually be higher than 11 percent if there were still as many people actively looking for work as there were at the start of the recession, according to the Wall Street Journal . Among those who have jobs, wages are falling and many people can only find part-time work rather than full-time. The grim employment situation is reflected in home ownership statistics. On Wednesday, Morgan Stanley released a report showing that if delinquent borrowers are excluded, the U.S. home ownership rate is only 59.7 percent, which would be an all-time low. Leaving in the country’s roughly 7.5 million delinquent borrowers, home ownership is at 66.4 percent. Morgan Stanley housing strategist Oliver Chang told Bloomberg that given runaway foreclosures and tight credit for borrowers, America is moving “away from being an ownership society” — President George W. Bush’s vision of a country with high home ownership — and “towards becoming a rentership society.” Those unexpectedly high June housing starts might actually bear out Chang’s prediction. As recently pointed out by the WSJ , construction of single-family homes grew by 9.4 percent in June — but construction of multi-family homes with at least two units increased three times as much, by 30.4 percent. In other words, there were a lot more apartments than houses. A report from the investment management company PIMCO recently offered a number of reasons why housing demand is likely to stay depressed. A 20 percent down payment on a mortgage is becoming standard, the PIMCO report notes. For someone making $48,000 a year, it would take 16 years to save enough for that size of downpayment on a median-priced home. Meanwhile, college graduates are entering the workforce with high debt and low wages — the average salary for recent grads was $27,000 in 2010, down from $30,000 in 2007, PIMCO notes. These factors in combination “could serve to limit college graduate home purchasing power for the foreseeable future.” And current homeowners are more likely to save for retirement than try to make ambitious changes to their living situation. For retiring Americans, the PIMCO report predicts “one home instead of two, rent rather than own, smaller place rather than large.” A Reuters survey of economists found widespread skepticism at the idea that June’s housing starts indicated a substantive market recovery. Indeed, the National Association of Realtors reported Wednesday that existing home sales were down 0.8 percent in June , to a relatively anemic rate of 4.77 million. That’s 9 percent less than the rates a year ago, The Washington Post points out.

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WATCH: Media Matters Toasts Final Glenn Beck Show With Silly Party

June 28, 2011

Glenn Beck’s tenure at Fox News will come to an end on Thursday, and no organization seems happier about his impending signoff than Media Matters, the progressive news watchdog group that has spent months pressuring advertisers and network executives to pull Beck out of his hourlong 5 p.m. slot. On Monday, Media Matters threw a party to celebrate Beck’s departure, drawing hundreds of activists, journalists and political strategists from the nation’s capital. The Huffington Post’s Zach Carter was there. WATCH:

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Companies Moving Jobs To U.S. From China To Avoid Inflation

June 28, 2011

MILWAUKEE (Scott Malone) – On a recent morning at Master Lock’s 90-year-old factory in Milwaukee, a cluster of machinery was whirring, every 2 seconds spitting out one of the combination locks used by American high schoolers as the company readied for the back-to-school rush. The seven-day-a-week, three-shift-per-day whirlwind of activity marked a change from two years ago, when the machine normally ran for just a few hours a day because the unit of Fortune Brands Inc was ordering more padlocks from suppliers in China instead of making them. Why move production from the world’s low-cost workshop back to a unionized U.S. factory where wages are six times higher than in China? Efficiency: The machine in Milwaukee is about 30 times as fast as the Chinese factories the company had been buying from, more than making up for the difference in wages. “I can manufacture combination locks in Milwaukee for less of a cost than I can in China,” said Bob Rice, a senior vice president at the largest U.S. padlock manufacturer. The factory has added about 78 workers over the past two years, boosting its workforce to 440. That is a small bit of good news for the long-suffering U.S. manufacturing sector, which shed about 2 million jobs, or some 14.6 percent of its employees, in the last recession. It has not recovered since and now employs 11.7 million people, down 34,000 from the recession’s official end in June 2009. Master Lock is not alone. General Electric Co and Boeing Co are also part of the small group of U.S. companies that are boosting production at their U.S. factories. A variety of factors are driving the shift, including rising wages in parts of Asia, surging fuel prices and the complexity of transporting goods across the Pacific. (Reuters Insider show: “Made in USA” Making Comeback as U.S. Manufacturers Expand: link.reuters.com/nuf42s ) ECONOMIC IRONY “What you’re starting to see is the economics shifting more into the United States’ favor regarding sourcing from the United States versus sourcing from a low-cost country,” said Daniel Meckstroth, chief economist at the Manufacturers Alliance/MAPI, a Washington trade group. There is an element of irony here. The United States’ sluggish economic recovery, coming at a time when emerging economies including China and India are enjoying brisk growth, is helping its manufacturers to close the cost gap on their foreign rivals. China’s inflation rate hit 5.5 percent in May, well ahead of the United States’ 3.6 percent headline rate. With Chinese wages rising at 15 to 20 percent per year, the labor costs of manufacturing in the two countries could pull even by 2015, a Boston Consulting Group study predicted in May. Rising oil prices, which drive up the cost of shipping goods by boat or plane, are also eating in to China’s edge. Automation also helps tilt the balance toward the United States. Bruce Crass, the Master Lock plant’s general manager, estimated that his plant — where the average worker oversees the operation of six high-speed machines — produces 24,000 locks a day with about one-sixth the number of workers needed by the company’s Chinese suppliers and rivals. Master Lock today makes about 55 percent of its padlocks in North America — in Milwaukee and at a satellite location in Nogales, Mexico — with the rest made in China. That is down from a 50-50 split two years ago. To be sure, these companies are the exception in the U.S. economy, where businesses from Apple Inc to Nike Inc focus on design and marketing, leaving production to independent contractors. Copyright 2011 Thomson Reuters. Click for Restrictions .

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Greece Denied Loans, For Now

June 20, 2011

LUXEMBOURG — Hours of talks between eurozone finance ministers on the imploding finances of Greece broke up early Monday morning without the ministers signing off on a vital installment of rescue loans needed to avoid bankruptcy next month. Greece will get the next euro12 billion of its existing euro110 billion bailout package in early July, but only if it manages to pass euro28 billion in new spending cuts and economic reforms by the end of the month, said Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the regular meetings of the 17 eurozone finance ministers. “We have to, of course, await this vote” by the Greek parliament, Juncker said as he left the meeting. However, Juncker said that as long as the parliament supported the new measures, he was certain that Greece would also get a second bailout – on top of the existing one – that will keep it afloat over the coming years as it works to restore its struggling economy. Greek Prime Minister George Papandreou said Sunday that his country was in talks for a new bailout similar in size to the first one. In a statement, the ministers said that the private sector would contribute to the new package of rescue loans on a voluntary basis. Banks and other private creditors will be asked to buy up new Greek bonds as old ones mature, thereby reducing the amount of money other eurozone countries and the International Monetary Fund will have to provide. “No pressure may be exerted on the private sector,” Juncker stressed, since any sign of coercion could force rating agencies to consider the bond-rollover as a partial default. Such a negative rating could take down Greek banks and further shake other struggling euro countries like Ireland and Portugal, economists have warned. Juncker said he planned to convene a special finance ministers meeting in the first days of July, where the remaining questions would be finalized. He said that because of the voluntary nature of the roll-over, it was too early to put a number on the contribution of the private sector. The meeting of the 17 eurozone nations came after a tumultuous week that saw rioting on the streets of Athens, a Greek Cabinet reshuffle and days of market turmoil that sent borrowing costs spiking. A default by Greece could cause ripples around the world, disrupting the global economy similarly to the collapse of investment bank Lehman Brothers in 2008. Just before the meeting broke up, the finance chiefs of the United States, Canada, Japan and the U.K. were updated on the discussions taking place in Luxembourg in a conference call limited to the Group of Seven rich nations, underlining the heightened level of concern over the small euro nation. A little over a year after its first bailout, Greece is trailing its financial goals. Without passing the new austerity measures, its budget deficit will remain above 10 percent of economic output this year – far from the promised 7.5 percent. The country’s debt is expected to reach 160 percent of gross domestic product by the end of 2011, while its economy continues to shrink. The harsh austerity measures and the bleak outlook for the depressed Greek economy and the resulting street protests are increasingly challenging the survival of Papandreou’s government. Opening a three-day parliamentary debate that will culminate in a confidence vote Tuesday, Papandreou blamed Greece’s bloated and inefficient state sector for bringing the country to its knees. He vowed deep changes with a fall referendum on the constitution that would make it easier to get rid of inept officials or workers.

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Bevis Longstreth: Greek Debt, And Coming To Terms With Reality

June 20, 2011

The crisis over Greece’s sovereign debt deepens daily as the reality gap grows between the politically driven views of EU leadership and the market-place views reflected in such things as interest yields on 2-year Greek notes and premiums payable on CDS covering Greek debt, both of which have soared in recent weeks to astronomical heights. Market professionals the world around know Greece suffers from a condition of bankruptcy rather than a crisis of liquidity, and therefore cannot survive without very significant debt relief and restructuring combined with a complete overhaul of civil society, particularly the deeply conflicted and corrupt ways in which its Government collects and expends tax proceeds and regulates economic affairs. Despite heroic efforts by the ECB and IMF, it remains highly unlikely that Greece can achieve the necessary reforms without the Greek people becoming convinced that those reforms will work and, therefore, be worth the pain that individuals and families would have to endure to achieve them. There is no reason, now, to suppose that Greek’s own leaders are capable of either inspiring the necessary confidence in their people or actually achieving the necessary reforms. Therefore, to undertake this project with any prospect for success, the EU should offer a receivership to manage all matters affected by the public interest in Greece until a turnaround is achieved. The receivership would consist of a committee of highly respected Europeans whose professional qualifications and experience make them demonstrably well suited to the task. Obviously, such a move would run large political risks. However, the market-place is broadcasting through financial instruments the levels of risk it sees in the status quo and those levels are so frightening and unsustainable as to warrant taking on the political risks. Short of action along these lines, which proved successful in the handling of New York City’s financial crisis of the early 1980s, the EU should invite Greece out of the union, where it can try through the use of a deflated currency and other reforms to achieve solvency. Doing so in orderly fashion would contribute importantly to the avoidance of a very disorderly default down the road and the danger of contagion.

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The Biggest Cities Running Out Of Government Workers

June 19, 2011

The drumbeat of negative economic news has continued at an alarming rate. For residents of some regions in the U.S., the noise is even louder. These are the areas where the already tottering recovery is faltering even more than most. Many, such as Detroit, were caught in the downturn of the auto industry. Others, including Miami, were decimated by the decline in the real estate market. These are weaknesses that are difficult though not impossible to overcome.

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Michael J. Critelli: My Highly Improbable Journey From CEO to Contemporary Urban Film Producer

January 28, 2011

Growing up, my family felt unusual empathy with black people. Because my mother worked as a public health nurse’s aide, we got to know her black professional nursing friends. I also grew watching incomprehensible brutality against well-behaved black people in the South on TV. My parents had been direct victims of discrimination when they were younger. Even in my generation, attending schools dominated by members of other ethnic groups, I experienced more subtle forms of discrimination, including degrading ethnic jokes from some classmates. I spent 30 years at Pitney Bowes, 11 as CEO, because Pitney Bowes welcomed all kinds of people. Walter Wheeler, its longest serving CEO, had been a National Urban League board member, because, like Pitney Bowes, the NUL invited everyone, black, white, young, old, male, female, Democrat or Republican, to aspire to the American dream. I accepted the NUL’s invitation to join its Board in 1997, became its chairman for five years, and served for 13 years. Both organizations created and celebrated success stories for women and people of color. In 2004, I discovered such a story. My younger son’s white Swedish chess coach told me he had secured a golf scholarship to Tennessee State University, a historically black college. The coach was a black woman, Dr. Catana Starks. When she began coaching in 1988, she fielded a black golf team, but she was forced to recruit mostly or all white non-U.S. golfers after the mid-1990′s. Two insights came together to make me passionate, even obsessive, about making a film about her story: Golf had evolved from a relatively inexpensive sport open for elite competitive access to most young people of most income levels to an extremely expensive sport which required a great deal of wealth. Young black people did not have access to private country clubs, although I encountered some of them on the public course on which I played, but they found a way to excel at golf. Becoming a caddy was how young black people got access to golf instruction, equipment and facilities to achieve elite performance levels. Country clubs phased out caddies, because they saw more profit potential renting golf carts. Coach Starks recruited abroad, because middle-income young people were more likely to learn golf through caddying or government-subsidized golf academies. Although Title IX had opened up big opportunities for girl athletes, the financial and competitive pressures of coaching had shrunk the number of women coaches. Coach Starks, who had grown up in the Jim Crow era in Alabama, and whom I met in 2006, reminded me of my late mother: short and soft-spoken, but very tenacious, inspirational, caring, competitive and visionary woman. She coached golf successfully for 18 years, although the financial wear and tear of coaching and travel caused her to retire from coaching at age 60 in 2006. Her most famous golfer was Sean Foley, who has recently coached Tiger Woods, but she developed other golfers, like San Puryear, Michigan State University’s golf coach, and Robert Dunwiddie, who is a European tour player. I was determined to make a film about her life to prove that women like my mother and Coach Starks deserved to prove their ability to succeed in a man’s world. Why a film? Entertainment is the most powerful medium for changing minds. After all, I was inspired to be a lawyer because I watched Perry Mason when growing up. In November, 2009, I asked my son Mike, who had graduated from the University of Southern California in 2008, to write a screenplay about the Coach Starks story. In March, 2010, I contacted Pierre Bagley, an African-American filmmaker, whom I met when serving as the Chairman of the National Urban League Board of Trustees. We decided to form Gyre Entertainment, a firm with a mission to create film and other entertainment content of strong interest to contemporary urban audiences, with the Coach Starks film as our first project. The film, called From the Rough , stars Taraji P. Henson, an Academy Award nominee for The Curious Case of Benjamin Button , as Coach Starks. Tom Felton, from the Harry Potter series, Michael Clarke Duncan, an Academy Award for The Green Mile , are other members of an outstanding cast. We are targeting a Fall 2011, theatrical release. Our Gyre team is attending the PGA of America merchandise show in Orlando, Florida. We share an interest in expanding access to golf for African Americans with the PGA and the merchandisers attending the show. However, I will also think about my mother, Coach Starks, and countless other heroic women.

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Rich Nadworny: The Creativity Conundrum

September 16, 2010

For most of us who work in marketing, we consider ourselves to work in a “creative” industry. That is: we’re charged with coming up with creative solutions to marketing problems and, usually, the ones with the best creative ideas win. If you work in an agency, you’ve probably heard, ad naseum (Latin for: until it makes you sick) that creative is king. The bigger question for me is: where does this creativity come from? Or maybe a better question is: how do you foster a creative environment? A number of recent articles make some interesting points and seriously call into question the practices of so-called “creative workplaces.” The first article by Timothy Williamson of Oxford University, talks about imagination. He posits that rather than fictional flights of fancy, early humans developed imaginative skills built on real experiences. It was the evaluation of alternative “realities” that gave imagination its evolutionary power. Imagining different ways a saber-toothed tiger might eat you increased your chances of survival. Imagination is the critical ingredient for creativity. But you have to have lots of real-life experience to have a really good one. In a similar vein, Jonah Lehrer, author of How We Decide penned an article that shot down one of Malcolm Gladwell’s a-ha points of outliers. He jumped on the idea that practicing something singularly for 10,000 hours will increase your chances of becoming a superstar. Instead, a recent study of professional athletes showed that those who group up in small towns and played a variety of sports growing up were most likely to become professionals. It flew in the face of the Tiger Woods theory that focusing on one sport, intensely, was the best path to stardom. Variety of experience, and lack of success in many of those experiences, actually makes us perform better. The same is true of study habits. In our schools today we think that immersing ourselves in specific topics and studying them intensely will increase our knowledge and test scores. Actually, studies show the exact opposite to be true. Varying the types of materials studied, or even varying the content studied, yielded better results. Here’s the money quote from Nate Kornell, a psychologist at Williams College, “The finding undermines the common assumption that intensive immersion is the best way to really master a particular genre, or type of creative work.” Finally, once you have all of these experiences and have gathered knowledge in different ways, what do you need most? Time off, actually. In studies about our “always on society,” research shows that what our brains need most is time to process all of the different inputs we receive during the day. Always on is stimulating, but it doesn’t make us smarter. Here’s why from Loren Fran, an assistant professor of physiology at UCSF who specializes in learning and memory: “Almost certainly, downtime lets the brain go over experiences it’s had, solidify them and turn them into permanent long-term memories.” He said he believes that when the brain was constantly stimulated, “you prevent this learning process.” So you’d think that business that specialize in creativity would: Encourage people to experience many different things Allow people to work on a variety of projects and clients to increase their reality-based experiences Provide an array of research and creative materials, across disciplines, to make people smarter Make sure people don’t do the same thing all the time, every day Ensure that people have enough down time, either at work or at home, to process everything In short, companies would be in the business of developing more renaissance, or hybrid, people ( See more here, in an older blog post ). It’s those people who should have the greatest chance of creative thinking and doing, which in turn should drive business results. Right? Unfortunately, today’s creative workplaces are nothing like this. People toil long hours focusing on the same types of work and projects day in and day out. Companies talk the talk about interdisciplinary thinking and collaboration but they walk the walk of siloization and isolation. And time? We’re expected to work longer, and more intensely, with every passing year. It would be one thing if creative companies provided down time, or thinking time, at work, for everyone, another if they provided sabbaticals or longer vacations to do the same. But if they’re doing that, I haven’t heard much about them. To paraphrase Shakespeare: Some are born creative, some achieve creativity, and some have creativity thrust upon them. As creative business people, we should help our people achieve creativity. But we won’t succeed unless we radically alter the way we’ve built up our business and employee practices.

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Video: Deutsche Bank’s Waugh Says M&A Is Starting to `Heat Up’: Video

September 2, 2010

Sept. 2 (Bloomberg) — Seth Waugh, chief executive officer of Deutsche Bank AG’s Americas division, talks with Bloomberg’s Melissa Long about investor confidence and merger and acquisition activity. Waugh speaks at Deutsche Bank’s Labor Day golf championship in Norton, Massachusetts, which is co-sponsored by the Tiger Woods Foundation. (Source: Bloomberg)

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Video: Horrow Discusses Tiger Woods’s Divorce from Nordegren: Video

August 23, 2010

Aug. 23 (Bloomberg) — Rick Horrow, founder of Horrow Sports Ventures Inc. and a Bloomberg Television contributing editor, talks about Tiger Woods’s divorce from wife Elin Nordegren. The judgment was entered today in a court in Bay County, Florida, dissolving the union, almost nine months after a single-car accident led to the world’s top-ranked golfer’s admission of marital infidelity. (Source: Bloomberg)

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Video: Horrow Says Tiger Woods `Needs to Find His Game Fast’: Video

August 12, 2010

Aug. 12 (Bloomberg) — Rick Horrow, founder of Horrow Sports Ventures Inc. and a Bloomberg Television contributing editor, reports on the first round of the U.S. PGA Championship and the impact of Tiger Woods’s recent performance on his endorsements and the PGA Tour. (Source: Bloomberg)

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Dan Dorfman: Wait Till 2012, Or maybe 2013

August 11, 2010

It’s the time-worn battle cry of the sports losers: Wait till next year! That, in fact, is the wail we may soon be hearing from two athletic greats–Tiger Woods and Roger Federer. Look for a similar cry, one from Wall Street, at least as far as economic forecasters go, but with a very significant variation: Wait till 2012! Worse, that may have to be qualified with a maybe. Call it a long overdue date with the harshness of economic reality. Or as one former Federal Reserve governor recently told a money management giant in Boston: “Up from here right now is fantasy. It’s down or if we’re lucky, sideways.” His remark zeroes in on a growing and painful recognition, notably that the widely projected spirited recovery at this stage is largely a function of hope than reality. In other words, the economic bulls were touting their buoyancy from a mythical place called kookoo-land. But the real world is that we now face the prospects, at best, of slowing growth. Or more likely, as some others see it, another year and-a-half of economic anemia, a renewed economic downturn or maybe that dreaded double-dip recession. The numbers tell the sad story. In recent months, expectations were widespread that the economy would exhibit more pep, in turn enabling GDP growth to run slightly above 3% in both 2010 and 2011. No more. Those predictions are rapidly going the way of the hula hoop. Now, the forecast is increasingly under 3% growth, if not under 2% or even 1%. Why the downgrades? Because Wall Street’s economic fraternity has been confronted by a rising number of unpleasant surprises–the latest and most worrisome being disappointing second quarter GDP growth of 2.4% (which may well be lowered to around 2%) and a shortfall in new private job creations in July. As a result, they’re addressing a growing number of economic soft spots by cutting their forecasts in increasing numbers. In effect, they’re reversing the unfounded outburst of optimism we’ve seen in recent years. In mid-2008, for example, amid a rapidly deteriorating economy, the battle cry among economists was wait till next year. But by year-end 2008, it was obvious that was nonsense and the new cry became wait till the second half of 2009. That, too, turned out to be a pipe dream. Now, though, with the second half of 2010 increasingly suspect as is a 2011 recovery, given the failure of government stimulus to revitalize the sagging housing and jobs markets and encourage Americans to spend more, the growing message now is wait till 2012. One fella sounding that battle cry is Scott Brown, chief economist at Raymond James Financial, who has just chopped his economic projections for the next couple of quarters to 1.5%-2% from 2%-2.5%. And for all of 2011, he has cut his GDP forecast to 2.3% from 2.5%. As Brown sees it, the economy will continue to suffer from a number of headwinds, such as the ratcheting down of the federal stimulus, a slowdown in consumer spending, strains in state and local budgets, lingering problems in residential and commercial real estate and expiration of the Bush tax cuts. “The economic outlook won’t be clear for some time,” he says, which suggests to him choppy, sideways market action for the rest of the year. Making matters worse, Brown indicates his outlook for a 2012 economic rebound may be overly sunny, given his belief that it could take another six to seven years before the unemployment rate gets back down to a more respectable 5%-6%. Further, he thinks it may take another five to six years before housing bottoms out. In other words, his wait till 2012 battle cry is accompanied by a distinct maybe. Or given the uncertainty, perhaps a more appropriate cry might be: Wait till 2013 or later! Peter Morici, an economics professor at the University of Maryland, has also lowered his economic forecasts, knocking down his current quarter’s GDP growth rate to 2.8% from 3.2% and full year growth in 2010 and 2011 to 2.6% from 2.8%. “I don’t see any economic growth until after the mid-term elections,” says Morici, who describes President Obama as “a one-man economic wrecking crew whose policies scare the bejesus out of business.” One astute economist who has been razor sharp in her crystal-ball gazing is Madeline Schnapp, economics chief of West Coast liquidity tracker TrimTabs Research. Citing among other factors the end of the inventory- rebuilding cycle, sluggish consumer demand and waning government stimulus, she, too, has slashed her GDP growth numbers. They now stand at 2.2% in the current quarter, 2% in the fourth quarter “if we’re lucky,” she says, and 2% for all of 2011 if the Bush tax cuts expire. Such an expiration, she points out, would be equivalent to a $500 billion overnight tax increase. Another big worry, according to Schnapp, is the estimated retirement over the next 10 years of 78 million baby boomers, or roughly 25% of the population. These are savers, not spenders, she says. Further, she notes, it’s frightening that they’ll retire with an estimated average of just $50,000, and some as little as $10,000. What does all of this worrisome stuff you’ve just read mean? In simple terms, the economy will continue to reel. And if so, the most propitious market strategy, as some see it, might well be: Don’t wait for a fire to head for the exits. What do you think? E-mail me at Dandordan@aol.com

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Video: Horrow Says Winds Hamper 2nd-Round Play at British Open: Video

July 16, 2010

July 16 (Bloomberg) — Rick Horrow, founder of Horrow Sports Ventures Inc. and a Bloomberg Television contributing editor, reports on the second round of the British Open at St. Andrews in Scotland. Louis Oosthuizen leads by five strokes over Mark Calcavecchia in the second round, which was suspended by darkness. Tiger Woods is eight shots behind. Horrow talks with Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

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Ellen Brown: How Brokers Became Bookies: The Insidious Transformation of Markets Into Casinos

July 15, 2010

“You all are the house, you’re the bookie. [Your clients] are booking their bets with you. I don’t know why we need to dress it up. It’s a bet.” — Senator Claire McCaskill, Senate Subcommittee investigating Goldman Sachs ( Washington Post , April 27, 2010) Ever since December 2008, the Federal Reserve has held short-term interest rates near zero. This was not only to try to stimulate the housing and credit markets but also to allow the federal government to increase its debt levels without increasing the interest tab picked up by the taxpayers. The total public U.S. debt increased by nearly 50% from 2006 to the end of 2009 (from about $8.5 trillion to $12.3 trillion), but the interest bill on the debt actually dropped (from $406 billion to $383 billion), because of this reduction in interest rates. One of the dire unintended consequences of that maneuver, however, was that municipal governments across the country have been saddled with very costly bad derivatives bets . They were persuaded by their Wall Street advisers to buy municipal swaps to protect their loans against interest rates shooting up. Instead, rates proceeded to drop through the floor, a wholly unforeseeable and unnatural market condition caused by rate manipulations by the Fed. Instead of the banks bearing the losses in return for premiums paid by municipal governments, the governments have had to pay massive sums to the banks — to the point of pushing at least one county to the brink of bankruptcy (Jefferson County, Alabama). Another unintended consequence of the plunge in interest rates has been that “savers” have been forced to become “speculators” or gamblers. When interest rates on safe corporate bonds were around 8%, a couple could aim for saving half a million dollars in their working careers and count on reaping $40,000 yearly in investment income, a sum that, along with social security, could make for a comfortable retirement. But very low interest rates on bonds have forced these once-prudent savers into the riskier and less predictable stock market, and the collapse of the stock market has forced them into even more speculative ventures in the form of derivatives, a glorified form of gambling. Pension funds , which have binding pension contracts entered into when interest was at much higher levels, need an 8% investment return to meet their commitments. In today’s market, they cannot make that sort of return without taking on higher risk, which means taking major losses when the risks materialize. Derivatives are basically just bets. Like at a racetrack, you don’t need to own the thing you’re betting on in order to play. Derivative casinos have opened up on virtually anything that can go up or down or have a variable future outcome. You can bet on the price of tea in China, the success or failure of a movie, whether a country will default on its debt, or whether a particular piece of legislation will pass. The global market in derivative trades is now well over a quadrillion dollars — that’s a thousand trillion — and it is eating up resources that were at one time invested in productive enterprises. Why risk lending money to a corporation or buying its stock, when you can reap a better return betting on whether the stock will rise or fall? The shift from investing to gambling means that not only are investors making very little of their money available to companies to produce goods and services, but also that the parties on one side of every speculative trade now have an interest in seeing the object of the bet fail , whether a company, a movie, a politician, or a country. Worse, high-speed program traders can actually manipulate the market so that the thing bet on is more likely to fail. Not only has the market become a casino, but the casino is also rigged. High frequency traders — a field led by Goldman Sachs — use computer algorithms to automatically bet huge sums of money on minor shifts in price. These bets send signals to the market that can themselves cause the price of assets to shoot up or tumble down. By placing high-volume trades, the largest speculative traders can thus intentionally “fix” prices in any direction they want. “Prediction” Markets Casinos for betting on what something will do in the future have been elevated to the status of “prediction” markets, and they can cover a broad range of issues. MIT’s Technology Review launched a futures market for technological innovations, in order to bet on upcoming developments. The NewsFutures and TradeSports Exchanges enable people to wager on matters such as whether Tiger Woods will take another lover, or whether Bin Laden will be found in Afghanistan. A 2008 conference of sports leaders in Auckland, New Zealand, featured Mark Davies, head of a sport betting exchange called Betfair. Davies observed that these betting exchanges, while clearly gambling forums, are little different from the trading done by financial firms such as JPMorgan. He said: I used to trade bonds at JPMorgan, and I can tell you that what our customers do is exactly the same as what I used to do in my previous life, with the single exception that where I had to pour over balance sheets and income statements, they pour over form and team-sheets. The online news outlet Slate monitors various prediction markets to provide readers with up-to-date information on the potential outcomes of political races. Two of the markets covered are the Iowa Electronic Markets and Intrade . Slate claims that these political casinos are consistently better at forecasting winners than pre-election polls. Participants bet real money 24 hours a day on the outcomes of a range of issues, including political races. Newsfutures and Casualobserver are similar, smaller exchanges. Besides shifting the emphasis to gambling (“Why Vote When You Can Bet?” says Slate ‘s “Guide to All Political Markets”), prediction markets, like the stock market, can be rigged so that they actually affect outcomes. This became evident, for example, in 2008, when the John McCain campaign used the InTrade market to shift perception of his chances of winning. A supporter was able to single-handedly manipulate the price of McCain’s contract, causing it to move up in the market and prompting some mainstream media to report it as evidence that McCain was gaining in popularity. Betting on Terrorism The destructive potential of prediction markets became particularly apparent in one sponsored by the Pentagon, called the “policy analysis market” (PAM) or “terror futures market.” PAM was an attempt to use the predictive power of markets to forecast political events tied to the Middle East, including terrorist attacks. According to the New York Times , the PAM would have allowed trading of futures on political developments including terrorist attacks, coups d’état, and assassinations. The exchange was shut down a day after it launched, after commentators pointed out that the system made it far too easy to make money with terror attacks. At a July 28, 2003 press conference, Senators Byron L. Dorgan (D-ND) and Ron Wyden (D-OR) spoke out against the exchange. Wyden stated, “The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it’s grotesque,” while Dorgan called it “useless, offensive and unbelievably stupid.” “This appears to encourage terrorists to participate, either to profit from their terrorist activities or to bet against them in order to mislead U.S. intelligence authorities,” they said in a letter to Admiral John Poindexter, the director of the Terrorism Information Awareness Office, which developed the idea. A week after the exchange closed, Poindexter offered his resignation. Carbon Credit Trading A massive new derivatives market that could be highly destructive economically is the trading platform called Carbon Credit Trading, which is on its way to dwarfing world oil trade. The program would allow trading in “carbon allowances” (permitting companies to emit greenhouse gases) and in “carbon offsets” (allowing companies to emit beyond their allowance if they invest in emission-reducing projects elsewhere). It would also allow trading in carbon derivatives ; for example, futures contracts to deliver a certain number of allowances at an agreed price and time. Robert Shapiro, former undersecretary of commerce in the Clinton administration and a cofounder of the U.S. Climate Task Force, has warned, “We are on the verge of creating a new trillion-dollar market in financial assets that will be securitized, derivatized, and speculated by Wall Street like the mortgage-backed securities market.” Eoin O’Carroll cautioned in the Christian Science Monitor : Many critics are pointing out that this new market for carbon derivatives could, without effective oversight, usher in another Wall Street free-for-all just like the one that precipitated the implosion of the global economy… Just as the inability of homeowners to make good on their subprime mortgages ended up pulling the rug out from under the credit market, carbon offsets that are based on shaky greenhouse-gas mitigation projects could cause the carbon market to tank, with implications for the broader economy. The proposed form of cap and trade has not yet been passed in the U.S., but a new market in which traders can speculate on the future of allowances and offsets has already been launched. The largest players in the carbon credit trading market include firms such as Morgan Stanley, Barclays Capital, Fortis, Deutsche Bank, Rabobank, BNP Paribas, Sumitomo, Kommunalkredit, Credit Suisse, Merrill Lynch and Cantor Fitzgerald. Last year, the financial services industry had 130 lobbyists working on climate issues, compared to almost none in 2003. The lobbyists represented companies such as Goldman Sachs and JPMorgan Chase. Billionaire financier George Soros says cap-and-trade will be easy for speculators to rig. “The system can be gamed,” he said last July at a London School of Economics seminar. “That’s why financial types like me like it — because there are financial opportunities.” Time to Board Up the Casinos and Rethink Our Social Safety Net? Our forebears considered gambling to be immoral and made it a crime. As the Industrial Revolution and the ascendance of capital changed religious mores, gambling gradually gained acceptance, but even within that permissive paradigm, derivative trading was originally considered an illegal form of gambling. Perhaps it is time to reinstate the gambling laws, board up the derivatives casinos, and return the stock market to what it was designed to be: a means of funneling the capital of investors into productive businesses. Short of banning derivatives altogether, the derivatives business could be slowed up considerably by imposing a Tobin tax , a small tax on every financial trade. “Financial products” are virtually the only products left on the planet that are not currently subject to a sales tax; and at over a quadrillion dollars in trades annually, the market is huge. A larger issue is how to ensure adequate retirement income for the population without forcing people into gambling with their life savings to supplement their meager social security checks. It may be time to rethink not only our banking and financial structure but the entire social umbrella that our Founding Fathers called the Common Wealth. The genius of Social Security was its recognition of the basic economic truth that real “security” rests on the ability of a society to provide for and take care of those who, because of age, health or economic conditions, cannot take care of themselves. Deficit hawks cry that we cannot afford more spending; but according to Richard Cook, a former U.S. Treasury Department official, the government could print and spend several trillion new dollars into the money supply without causing price inflation. Writing in Global Research in April 2007, he noted that the U.S. Gross Domestic Product in 2006 came to $12.98 trillion, while the total national income came to only $10.23 trillion; and at least 10 percent of that income was reinvested rather than spent on goods and services. Total available purchasing power was thus only about $9.21 trillion, or $3.77 trillion less than the collective price of goods and services sold. Where did consumers get the extra $3.77 trillion? They had to borrow it , and they borrowed it from banks that created it with accounting entries on their books. If the government had replaced this bank-created money with debt-free government-created money, the total money supply would have remained unchanged. That means a whopping $3.77 trillion in new government-issued money could have been fed into the economy in 2006 without inflating prices. Different proposals have been made concerning how this money should be distributed, but at least some of it could be used to provide adequate social security checks, relieving the pressure to gamble with our savings. The Federal Reserve has funneled $4.6 trillion to Wall Street in bailout money, most of it generated via “quantitative easing” (in effect, printing money); yet hyperinflation has not resulted. To the contrary, what we have today is Depression-style deflation . The M3 money supply shrank in the last year by 5.5 percent, and the rate at which it is shrinking is accelerating . The explanation for this anomaly is that the Fed’s $4.6 trillion added by quantitative easing fell far short of the estimated $10 trillion needed to “reflate” the money supply after the ” shadow lenders ” disappeared. When these investors discovered that the “triple-A” mortgage-backed securities they had been purchasing from Wall Street were actually very risky investments, they exited the market, credit dried up, and the money supply (which today consists almost entirely of credit or debt) collapsed. The only viable way to reflate a collapsed money supply is to put more money into it; and creating the national money supply is the sovereign right of governments, not of banks. If the government wants to remain sovereign, it needs to reassert that right. Niko Kyriakou contributed to this article.

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Bill Barol: It’s official: Tiger Woods has absolutely no shame

April 7, 2010

Mediaite gets it just about right in its post on the new Tiger Woods Nike ad, calling it “strange, uncomfortable, sad, painful and creepy.” I can think of a couple of words to add: “Reprehensible” would be one. “Execrable” would be another. Why on earth would Woods involve his father in the latest step of his carefully stage-managed public mea culpa — his dead father, not to put too fine a point on it? It may be that Earl Woods would have chosen to lend his voice to the campaign had he been, you know, alive enough to be asked. But to borrow his voice post-mortem is to unilaterally appropriate his endorsement in what seems sure to be a long, meticulous, and desperately cynical campaign of rehabilitation. My father died ten years ago this month. He was a private man, and like a lot of fathers to a lot of sons, he was in many respects a mystery to me. But he taught me a few things, and one of them was to take responsibility for my own actions. I couldn’t care less about what Woods did to get himself in trouble with his wife. But it’s absolutely awful that he’s trying to dig himself out of it — and save a rich endorsement deal — by stealing words from the lifeless mouth of his own father.

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Woods Wants to Prove He’s a `Worthy Investment’

April 5, 2010

By Michael Buteau April 5 (Bloomberg) — Tiger Woods said today he wants to prove to his corporate sponsors that he’s a “worthy investment,” and that he understands why some companies dropped him after he admitted marital infidelities with several women. Woods spoke three days before he ends an almost five-month break from competitive golf at the Masters Tournament, the season’s first major event. The absence began routinely in November after a tournament victory by Woods halfway around the world and turned into a sex scandal that cost the world’s No. 1-ranked golfer endorsements with Accenture Plc and AT&T Inc ., as well as his closely guarded image as a father and husband. “Do I understand why they dropped me? Of course,” Woods, 34, said at a news conference at the Augusta National Golf Club in Augusta, Georgia. “I’ve made a lot of mistakes in my life. Hopefully, I can prove to the other companies that I’m a worthy investment.” Woods, at his first news conference since a car accident outside his Florida home ignited tabloid headlines around the world, said his wife, Elin, won’t attend the Masters, a break from her past practice. “Elin is not coming this week,” he said. He also again denied using performance enhancing drugs and said a Canadian doctor under investigation for giving banned substances to athletes, Anthony Galea , never injected him with human growth hormone or other strength builders. He said he would cooperate fully with investigators who have contact his agent, Mark Steinberg , and that he hadn’t been asked to be interviewed by authorities. Practice Round Woods played a practice round today, his first golf in front of a gallery since the Australian Masters in November. He was greeted primarily with silence. There was more gawking than cheering as Woods strolled the fairways of Augusta National for his first official Masters Tournament practice, a much different reception than the one he had grown accustomed to while winning 14 major titles since capturing his first of four Masters victories in Georgia in 1997. He apologized to his fellow golfers about the distractions he caused and said he welcomed the response of the crowds today. “I was blown away,” he said. Woods chose to make his comeback at Augusta National, a private club with an elite membership that runs the Masters by its own strict rules. Those holding tickets are known as patrons, not fans, and are among the most knowledgeable — and closely monitored — in sports. Running is prohibited on the grounds and anyone violating the club’s rules of behavior risks being evicted and possibly losing tickets that families pass down from generation to generation. First Questions Today was the first time Woods answered questions from a media group. He conducted two five-minute interviews with the Golf Channel and ESPN on March 21. After playing nine holes yesterday with longtime friend and 1998 Masters winner Mark O’Meara , Woods took to the course again today for his first full 18-hole practice round. He was joined today by 1992 Masters winner Fred Couples . Both O’Meara, 53, and Couples, 50, play full time on the senior Champions Tour. While on the course, Woods could be seen interacting with the crowds and occasionally offered a “thank you” to fans who wished him well. Woods will make his competitive return to the sport with the tournament’s first round on April 8. He is four wins shy of tying Jack Nicklaus ’s record of 18 titles in the four professional majors. The last time Woods hit a shot in competition, 144 days ago, he won the Australian Masters in Melbourne. Car Crash Twelve days later, Woods crashed his car outside his Florida home, leading to worldwide scrutiny of his personal life. He later admitted to marital infidelity and took a break from golf while undergoing therapy for an undisclosed condition. Woods has declined to discuss the specifics of his treatment. TMZ.com has reported that Woods was enrolled in sex-addiction treatment at a clinic in Hattiesburg, Mississippi. Woods said in the interview with ESPN last month that he was “nervous” about what kind of reception he would receive around the Augusta National course. For today’s news conference, Augusta National officials for the first time banned cell phones and cameras from the interview room, which also required a special ticket for admission. While some sponsors dropped Woods after details of his private life became public, other companies, including Nike Inc ., have stuck by Woods. Woods in December won his 10th PGA Tour Player of the Year award even though he went winless in the majors for the first time in five years. Woods has 71 career U.S. PGA Tour wins, trailing only Sam Snead and Nicklaus. To contact the reporter on this story: Michael Buteau in Augusta, Georgia at mbuteau@bloomberg.net

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Tiger Woods to Play at Masters Golf Tournament, Ending Self-Imposed Break

March 16, 2010

March 16 (Bloomberg) — Tiger Woods will return to professional golf on April 8 at the Masters Tournament, four months after stepping away from the sport and admitting marital infidelity. The world’s No. 1-ranked golfer, Woods hasn’t played in a tournament since November. His return was announced today in a statement, three weeks after he spoke publicly for the first time about the Nov. 27 single-car accident outside his Florida home that spawned worldwide scrutiny of his personal life. “The Masters is where I won my first major and I view this tournament with great respect,” Woods said in the e-mailed statement. “After a long and necessary time away from the game, I feel like I’m ready to start my season at Augusta.” For Related News and Information: Sports news: USPO Golf news: GOLF Tiger Woods news: NSE “Tiger Woods”

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Video: Tiger Woods May End Exile From Golf at April’s Masters: Video

March 12, 2010

March 12 (Bloomberg) — Tiger Woods will probably end his self-imposed exile from competitive golf at next month’s Masters Tournament, the Associated Press reported. Bloomberg’s Cali Carlin reports. (Source: Bloomberg)

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CEOs Say Sorry and Thanks for All the Dough: Susan Antilla

March 9, 2010

Commentary by Susan Antilla March 9 (Bloomberg) — Everywhere you look, there’s a CEO apologizing for something. Toyota boss Akio Toyoda is apologizing about the big, fat problem with his mysteriously accelerating cars. Morgan Stanley’s John Mack says he regrets his firm’s role in the credit crisis, and is “especially sorry for what’s happened to shareholders.” Lloyd Blankfein of Goldman Sachs is remorseful, and John Reed , former co-chief executive officer of Citigroup is contrite because “people I love and care about” have been affected by the financial meltdown. Domineering, control-freak executives don’t have a long history of offering penance or much else — save greed — for that matter. These days, though, executives are throwing caution to the wind, expressing emotion and even offering gratitude to shell-shocked taxpayers for their coerced largesse in providing bailout funds. Vikram Pandit , head of Citigroup, thanked taxpayers last week and Brian Moynihan , who runs Bank of America, did the same in January. You’re welcome, Mr. Pandit and Mr. Moynihan. Now does this mean you’ll stop sending us those credit-card nasty-grams with the sneaky little nuisance-fee provisions? It’s great public relations to show a little humility at a time when taxpayers are gunning to storm the gates. I wonder, though, if the showing of corporate remorse is a spin-inspired flash in the pan that will go the way of the balanced budget as soon as the economy is humming and people are feeling flush and greedy again. Or is there some new sort of pressure on institutions that will give the Big Shot apology legs? Tsunami of Trouble One reason we’re seeing so many executive apologies is the tsunami of crises from Wall Street to Hollywood to Tokyo. The story about the VIP reduced to groveling “has become an art form on ‘Entertainment Tonight,’” says Stephen A. Greyser , professor of business administration at Harvard Business School . It’s an art form in which words often are carefully parsed. Watch for the scripted non-apology where the CEO delivers some version of “If you feel you’ve been hurt, we are sorry for that.” Or the guarded apology like this one from Blankfein: “We participated in things that were clearly wrong and have reason to regret.” What things? Things done by whom? And what have you done to be sure it doesn’t happen again? With a cell-phone camera in every pocket and an Internet audience instantly riveted to postings of fresh scandal, it’s harder than ever for executives to deny, cover up and get back to the golf course. The text or video about your blunder can make its way around the virtual world before you can get the lawyers and PR guys on the phone to cook up an artful version of “No comment.” No Hiding “You can’t hide the mistakes like you used to,” says John Kador , author of “Effective Apology: Mending Fences, Building Bridges and Restoring Trust.” OK, so it’s easier to get caught, but you have to wonder whether the Apologetic CEO Phenomenon is destined to abruptly disappear once the economy limps its way out of Hades. If nothing else, executives accustomed to bossing people around and getting the best table at San Pietro hate having to grovel and are only going to do it when their backs are to the wall. That goes double for the older coots — I mean men of a certain age – - who don’t know enough to fly commercial when they’re off to tell Washington that their car companies need a little bailout money. They may not like it, but top execs had better get used to the idea of owning up to mistakes, says Daniel Diermeier , business professor at Kellogg School of Management at Northwestern University. Customers — particularly more socially conscious younger ones — have higher expectations of the companies they do business with, and aren’t letting CEOs get away with self-serving arguments about how business is done. Levin’s Mea Culpa Consider the old notion that bankers are socially useful in spite of their excessive pay and often-egregious conduct because they supply the lubricant that keeps the economy chugging along. Economy? What economy? The public has written bankers off. The Edelman PR firm asked 4,875 college-educated Americans last fall if they trusted bankers to do the right thing. Only 29 percent said yes. That’s down from 68 percent in 2007. So they apologize and thank us and even expound on their transgressions on cable television. Gerald Levin , former head of Time Warner, gave one of the more believable apologies I’ve seen during an interview on CNBC in January. Levin said that as the guy in charge at the time, the disastrous merger of Time Warner and AOL was his fault — not his board, bankers or lawyers. The mea culpa would have been perfect except for one unfortunate word. “I presided over the worst deal of the century, apparently,” he said. Apparently? Nah, I think we can all agree that you presided over the worst deal of the century, period. Tiger Halts Traffic Another famous extended apology was the one so high-profile that it actually slowed New York Stock Exchange trading for a few minutes. Commerce came to a halt to hear Tiger Woods , the man in charge of his own billion-dollar brand, on Feb. 19. But so far, it hasn’t worked. A poll to measure the popularity of corporate spokespeople by Onmicom Inc., taken several weeks later, showed the golfer’s appeal as a corporate spokesman had reached a new low. Some mea culpas will work, some won’t. While the remorse movement continues on, it’s getting like a ‘70s-style love-fest with all the expressions of sorrow, gratitude and love. You sensitive guys are getting me all choked up. ( Susan Antilla is a Bloomberg News columnist. The opinions expressed are her own.) Click on “Send Comment” in the sidebar display to send a letter to the editor. For Related News and Information: More Antilla columns: NI ANTILLA More Bloomberg columns: OPED or NI COLUMNS BN Top financial stories: FTOP

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Europe’s Deficits: Week in Review

February 26, 2010

Feb. 26 (Bloomberg) — Europe’s budget deficits lead a review of the week’s top stories as the region’s economy risks decoupling from the global recovery. The most-read story of the week was Harvard University Professor Kenneth Rogoff’s prediction of sovereign defaults and “painful” austerity. Click here for more stories on Europe’s deficits and Greece’s debt crisis. Warren Buffett is the cover story of Bloomberg BusinessWeek, which reports on what it’s like to have America’s greatest investor as your shareholder . Following is a selection of other top stories from the past week, selected by senior editors at Bloomberg News. AIG Death Spiral Ends as Rescue Brings Stable Revenue Feb. 22 (Bloomberg) — American International Group Inc., the troubled financial firm that threatened to bring down the U.S. economy, is showing stable revenue for its insurance units and improving its ability to repay taxpayers 17 months after a bailout that swelled to $182.3 billion. Republicans Voting Against Stimulus Then Asked Obama for Money Feb. 22 (Bloomberg) — Alabama Republicans Jo Bonner and Robert Aderholt took to the U.S. House floor in July, denouncing the Obama administration’s stimulus plan for failing to boost employment. “Where are the jobs?” each of them asked. Thermo Fisher May Increase Millipore Takeover Bid Feb. 25 (Bloomberg) — Thermo Fisher Scientific Inc. may increase its unsolicited takeover offer for Millipore Corp. in order to reach a deal and expand in the biotechnology business, according to a person close to the situation. Hong Kong Police Said to Begin Investigation of PCCW Buyout Bid Feb. 22 (Bloomberg) — PCCW Ltd. shares fell as much as 2.4 percent in Hong Kong trading after people familiar with the matter said police began probing Chairman Richard Li’s failed bid last year to buy out the city’s biggest phone company. Cohen Trades Secrecy for Golf With Investors Lured by 30% Gains Feb. 26 (Bloomberg) — In late January, billionaire Steven A. Cohen hosted a golf outing for two dozen people at the Bear Lakes Country Club in West Palm Beach, Florida. Venezuela Has $5 Billion to Boost Unregulated Bolivar Feb. 23 (Bloomberg) — Venezuela’s central bank may inject more than $5 billion of dollar-denominated securities into the financial system this year to strengthen the bolivar in the unregulated foreign-exchange market, a government official said. A $500 Million Eco-Cube Will House U.S. London Embassy in 2017 Feb. 24 (Bloomberg) — Having outgrown its 1960 embassy, a Kennedy-era modernist design by Eero Saarinen, the U.S. State Department has decided that London is too important to build one of its conventional insults to local sensibilities. The most-read opinion columns of the past week: 1. Tiger Woods 101 Grads Send Beautiful Woman Home: Scott Soshnick 2. Banker Bonus Anger Is Shifting to Government Workers: Joe Mysak 3. Stimulus Tab of $41,800 Waits for Wall Streeters: Kevin Hassett 4. ‘Next Greece’ Search Is on as Hedge Funds Circle: William Pesek 5. Goldman Sachs Is Innocent of Greece’s Swap Crimes: Mark Gilbert Following are the most-read stories on Bloomberg.com from the past week, excluding daily market coverage: 1. Harvard’s Rogoff Sees Sovereign Defaults, ‘Painful’ Austerity 2. Secret AIG Document Shows Goldman Sachs Minted Most Toxic CDOs 3. Euro Worst to Come as Greece Hammerlocks ECB on Rates 4. Obama May Prohibit Home-Loan Foreclosures Without HAMP Review 5. U.S. Economy: Confidence Falls to Lowest Since April 6. Rogoff Says China Crisis May Trigger Regional Slump 7. China New Village Makes Chanos See Dubai 1,000 Times 8. U.S. May Give Regulators Room to Apply Volcker Rule 9. Goldman Sachs Says Greek Swaps Not ‘Inappropriate’ 10. Nokia CEO Stung by IPhone Aims to Outdo Jobs With Apps and Maps # # -0- Feb/26/2010 18:01 GMT

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Nine Irons Breaking Windows Beats Party of No: Margaret Carlson

February 23, 2010

Commentary by Margaret Carlson Feb. 23 (Bloomberg) — In living color and surround sound, straight from the ballroom of the Marriott in Washington, a production that portends either the coming world domination of the Republican Party or its crack-up. At the largest Conservative Political Action Conference ever this past weekend, where attendance was up 20 percent (more than half were young people paying $25 instead of the standard $175 registration fee), you could see the pragmatists and purists in full flower. There’s a guy wearing a plastic sheet with an AK-47 (or Uzi, I can’t tell the difference) on the back and too many “Don’t Tread on Me” hats and T-shirts to count. Paraphernalia aplenty for whatever your beef against government might be. You have folks in the exhibition hall pushing guns, abstinence, secession, tax protests and militias. The John Birchers, who labeled Dwight Eisenhower a communist, had a big booth. On the agenda are all the stars of the political right — Dick Armey , Newt Gingrich , Ann Coulter and Glenn Beck , joined by conservatives from Congress, like Representative Michele Bachmann . Most of the Republican presidential hopefuls for 2012 also were there. They need the energy of the whooping crowd, but they also want to win. For Republicans, the path back to power requires that the coalition be enlarged. They may be the Party of No but they aren’t nihilists. Elections are won by putting the poles of your tent as far out as possible, even if it sags in the middle. But for the CPAC crowd, ideological purity is the road to recovery. They’d like to limit membership to those willing to submit a strand of hair to prove their DNA is 100 percent conservative. Rubio’s Star Inside the hall, a candidate for the Senate like Marco Rubio got a rousing but at times muted reception when he talked policy. A rising star, he appeals to insiders as a former speaker of the Florida House. Yet he also attracts outsiders who like his anti-government rhetoric and up-from-the-bootstraps origins as a Cuban-American. He made his moderate opponent, former Governor Charlie Crist , a laughing stock for man-hugging Barack Obama when the president came to Fort Myers to push the stimulus bill. He also — unlike Massachusetts Senator Scott Brown — warmly and publicly embraced the tea partiers. When Rubio was throwing red meat, the crowd went wild. When he wasn’t and touched on governing, the room grew quiet and restive. The crowd wanted tax cuts and nothing but tax cuts. He’s still leading in the primary against Crist but the ardor cooled when he said in a recent interview that he would have taken the stimulus money for his struggling state. Strange Bedfellows Looking at the agenda, you have to wonder what prime-time speakers like Fox News star Beck and presidential aspirant Mitt Romney have in common. The latter’s hair never moves, the former’s mouth never stops. Beck refrained from barking during his speech, the most popular of the event. His trademark chalkboard got a standing ovation. He did make chomping sounds as he attacked the very thought of letting infidels into the fold. Beck’s idea, the prevailing one at the gathering, brooks no compromise or fair-weather friends like Romney, who tries to pass himself off as one of them by disavowing the beliefs he held as governor of Massachusetts. To that point, Romney, considered by many pundits to be the leading contender in 2012, lost the convention’s straw poll. It doesn’t mean much as Romney, who won it last year, can tell you. This year, Texas Republican Representative Ron Paul , who ran in 2008 and is a hero of campus conservatives, won with 31 percent. If the movement could put together a candidate limb by limb, Paul would be it all the way down to abolishing the Federal Reserve. Romney did come in second with 22 percent, while Sarah Palin was a distant third with 7 percent. Take the Money That paltry showing has to be a case of be-there-or-be- square for the reigning queen of the conservative movement. Palin turned down the invitation of CPAC, which doesn’t pay its speakers, in favor of the National Tea Party Convention, which did. Minnesota Governor Tim Pawlenty , one of the more viable hopefuls for 2012, embodied the dilemma of trying to govern and be angry enough to appeal to the base of the party. The diminutive Pawlenty urged his audience to emulate Tiger Woods ’s wife: “We should take a page out of her playbook and take a nine iron and smash the window out of big government in this country.” ‘We’re in Trouble’ The comment came up later on “Meet the Press.” “With that kind of rallying cry,” host David Gregory asked, “do you really expect people to take you seriously?” Pawlenty deflected his out-of-character moment, saying, “If we’ve gotten to the point where you can’t make a joke, I think we’re in trouble.” Beck whose hour-long speech ended the conference demonstrated the difference between this year and last when headliner Rush Limbaugh , in Johnny Cash garb, bounced his way through a speech devoted to jibes at the common enemy, Obama. The common attack against Obama this year was about his teleprompter usage — by speakers using teleprompters. In his speech, Beck’s enemy wasn’t Obama but the GOP, which he likened to a newbie at Alcoholics Anonymous taking the first of the 12 steps. “Hello, my name is the Republican Party, and I got a problem. I’m addicted to spending and big government.” We know what happened in 2000 when Green Party candidate Ralph Nader , at heart a Democrat, saw no differences where there were many. Purity tests are for losers. ( Margaret Carlson , author of “Anyone Can Grow Up: How George Bush and I Made It to the White House” and former White House correspondent for Time magazine, is a Bloomberg News columnist. The opinions expressed are her own.) Click on “Send Comment” in the sidebar display to send a letter to the editor. To contact the writer of this column: Margaret Carlson in Washington at mcarlson3@bloomberg.net

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Tiger Woods’s Televised Apology Freezes Wall Street Trading: Chart of Day

February 19, 2010

By Michael Patterson and Eric Martin Feb. 19 (Bloomberg) — For a few minutes, Tiger Woods was bigger than Ben S. Bernanke. The CHART OF THE DAY shows that a day after the Federal Reserve chairman and his colleagues raised the rate charged to banks for direct loans, investors took time out from trading to watch Woods apologize for his marital infidelity and “repeated irresponsible behavior.” New York Stock Exchange volume fell to about 1 million shares, the lowest level of the day at the time, in the minute Woods began a televised speech from Ponte Vedra Beach, Florida, headquarters of the U.S. PGA Tour. Trading shot to about 6 million when the speech ended, the highest for any period except just after exchanges opened, data compiled by Bloomberg show. Trading on all U.S. bourses declined during the press conference, falling to 456 million shares from an average of 576.8 million during the five previous 15-minute segments, Bloomberg data show. “You couldn’t escape it,” said Michael Nasto , the senior trader at U.S. Global Investors Inc., which manages about $2.5 billion in San Antonio. “It was everywhere. You have one of the best athletes of our time involved in something like this. Every channel you were on had the press conference.” The top player in the World Golf Rankings, the 34-year-old Woods said he would return to the sport that has made him a billionaire but had no timetable. Woods had been on an indefinite break from golf since saying in December that he had been unfaithful to his wife. He hadn’t spoken publicly since a single-vehicle traffic accident outside his home on Nov. 27, which was followed by often lurid media reports detailing extramarital affairs. To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net ;m Eric Martin in New York at emartin21@bloomberg.net .

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Greece’s Debt and Goldman Sachs: Week in Review

February 19, 2010

Feb. 19 (Bloomberg) — “ Goldman Sachs, Greece Didn’t Disclose Swap Contract ” leads a selection of top stories from Bloomberg News in the past week. Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit. German Chancellor Angela Merkel said it would be a “scandal” if banks helped Greece massage its budget. Click here for more stories on Greece’s debt crisis. Bloomberg BusinessWeek’s cover story focuses on Merkel, the head of Europe’s biggest economy, who has emerged as the key player in the drive to save Greece from default. For the latest news from the Winter Olympic Games in Vancouver, click here . Following is a selection of other top stories from the past week, chosen by senior editors at Bloomberg News. Carney Says Investors Signal Stimulus ‘Limits’ as Deficits Grow Feb. 15 (Bloomberg) — Bank of Canada Governor Mark Carney said investors are beginning to warn governments that there are “limits to stimulus” and adding pressure that may force policy makers to keep budget deficits in check. Billionaire Blavatnik Takes On JPMorgan Over $98 Million Loss Feb. 17 (Bloomberg) — Billionaire Len Blavatnik said JPMorgan Chase & Co., his bank for 15 years, lost a tenth of the $1 billion he had it manage and, for redress, he did something he never did before: He sued. Gundlach’s Clash With TCW May Cost ’The Godfather’ $500 Million Feb. 17 (Bloomberg) — Jeffrey Gundlach has a black eye and a cut on the bridge of his nose, and he winces as he rubs his side. Goldman Tennessee Mall Loan Shows CMBS Stirring: Credit Markets Feb. 17 (Bloomberg) — A mortgage on a Tennessee shopping mall coming due in June may show Wall Street is ready to resume bundling real estate loans into bonds, part of a $700 billion debt market shuttered for almost two years. Mongolian Harvard Elites Aim for Wealth Without ‘Dutch Disease’ Feb. 16 (Bloomberg) — Mongolia’s billions of dollars worth of copper, gold, uranium and coal reserves promise the greatest influx of wealth for the country since Genghis Khan conquered much of the known world in the 13th century. Birthday Flower May Be Part of Kim Jong Il Succession Feb. 16 (Bloomberg) — North Korea celebrated Kim Jong Il’s birthday today with tens of thousands of flowers. The most intriguing blossom is a new variety of begonia sent on his son’s birthday that may signify preparations for a succession. Citadel’s DePietro Uses Hedge-Fund Skills to Direct First Movie Feb. 18 (Bloomberg) — After graduating from Harvard University in 1993, Julio DePietro got a job with Citadel Investment Group, then a small, obscure financial firm in Chicago. He planned to stay just long enough to pay off his student loans. The five most-read opinion columns from the past week: 1. Tiger Woods Can’t Face His Need to Come Clean: Scott Soshnick 2. Currency Trading Is Place to Make Your Fortune: Matthew Lynn 3. Olympic Luger’s Death Shouldn’t Be a Surprise: Scott Soshnick 4. Libido Control Is How to Get Ahead at the Office: Susan Antilla 5. Four Bargains Emerge Amid Knocked-Down Stocks: John Dorfman The top 10 most-read stories on Bloomberg.com for the past week (excluding daily market coverage): 1. Goldman Sachs, Greece Didn’t Disclose Swap Contract 2. Fed Raises Discount Rate by Quarter-Point to 0.75% 3. Goldman’s O’Neill Says ‘Something Brewing’ in China on Currency 4. Europe Economy Chief Calls for More Steps by Greece 5. Rich Getting Richer Rewards as Credit-Card Law Refutes Bankers 6. EU Seeks Greek Swaps Disclosure After Ministry Probe 7. Citigroup Stock Proving Irresistible to Hedge Funds 8. Merkel Slams Greek ‘Scandal’ as Goldman Role Examined 9. Goldman Sachs’s Spilker, Overseer of $871 Billion, Exits Firm 10. Soros More Than Doubled Gold ETF Stake in 4th Quarter # # -0- Feb/19/2010 20:37 GMT

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Video: Gorant Says Tiger Woods’s Apology a `Good First Step’: Video

February 19, 2010

Feb. 19 (Bloomberg) — Sports Illustrated senior editor Jim Gorant talks with Bloomberg’s Matt Miller and Carol Massar about the world No. 1 golfer Tiger Woods’s apology for his marital infidelity.¶ In his first public appearance since a one-car accident outside his home on Nov. 27, golf’s 14-time major-tournament winner said he would return to therapy tomorrow. He did not specify when he might return to competitive golf. (Source: Bloomberg)

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Stocks in U.S. Gain as Price Report Eases Concern Over Fed Rate Increases

February 19, 2010

By Elizabeth Stanton Feb. 19 (Bloomberg) — U.S. stocks rose, erasing an earlier drop, as a lower-than-projected increase in the cost of living eased concern that the Federal Reserve will raise its benchmark interest rate to fight inflation. Boeing Co., United Technologies Corp. and Chevron Corp. led gains in the Dow Jones Industrial Average. Nine of the 10 industry groups in the Standard & Poor’s 500 Index advanced, led by banks and industrial companies. Schlumberger Ltd. declined 3 percent on a report it may buy Smith International Inc. “There’s no inflation for the Fed to fight,” Dan Greenhaus , chief economic strategist at Miller Tabak & Co. in New York. “If easy monetary policy and supportive fiscal policy have helped boost equities thus far, data such as today’s CPI argues for a continuation of supportive policies.” The Standard & Poor’s 500 Index increased 0.4 percent to 1,111.36 at 12:33 p.m. in New York. The Dow Jones Industrial Average climbed 32.88 points, or 0.3 percent, to 10,425.78, trimming its decline for 2010 to less than 0.1 percent. The Nasdaq Composite Index gained 0.3 percent to 2,248.14. Stock-index futures fell in pre-market trading after the Fed raised the discount rate it charges on loans to banks, a decision announced after exchanges closed yesterday. Futures pared their losses today after the consumer price index, a gauge of consumer inflation, rose less than forecast. Excluding food and fuel, the CPI fell 0.1 percent, its first drop since 1982. The CPI rose 0.2 percent overall. Tiger Volume Trading on all U.S. exchanges slowed at 11 a.m., when Tiger Woods , the winner of 14 major golf tournaments, apologized for his marital infidelity in a televised news conference. Volume fell to 456 million shares during the conference from an average of 576.8 million during the day’s five previous 15-minute segments, data compiled by Bloomberg shows. The S&P 500 is up 3.3 percent on the week , its biggest advance since October. The main benchmark for American equities, while still up 64 percent from a 12-year low last March, is down 3.4 percent since Jan. 19 amid concern that widening budget gaps in Greece, Portugal and Spain threaten the European economy. The Fed raised the discount rate by a quarter point to 0.75 percent, signaling a retreat from its unprecedented actions to halt the deepest financial crisis since the Great Depression. The central bank, which has provided hundreds of billions of dollars in credit to banks, bond dealers, commercial paper borrowers and troubled financial institutions, said the increase will encourage financial institutions to rely more on money markets for short-term loans. ‘On the Sidelines’ “As you go through a tightening cycle it constricts growth,” said Burt White , chief investment officer at LPL Financial in Boston, which oversees $246 billion. “That impacts future earnings, future profits, future margins. What the market’s doing now is trying to evaluate how quickly and strongly will the tightening be.” The inflation reading “lets the market know the Fed is going to be on the sidelines for a while,” he said. Boeing, the world’s second-largest commercial-plane maker, rose 2 percent to $64.17 for the biggest gain in the Dow average. United Technologies, the maker of Pratt & Whitney jet engines and Otis elevators, gained 0.9 percent to $68.73. Chevron, the second-biggest U.S. energy company, increased 0.8 percent to $74.20. Schlumberger fell 3 percent to $63.84. The Wall Street Journal on its Web site reported that the world’s largest oilfield services provider is in advanced talks to buy Smith International, one of the largest drilling-fluids providers. Smith International rose 12 percent to $37.30. Intuit, J.C. Penney Intuit Inc. rallied 8.5 percent to $32.91. The world’s biggest maker of tax-preparation software reported second- quarter profit that beat analysts’ estimates as U.S. taxpayers began filing returns and more small companies bought finance software. J.C. Penney Co. rose 7.2 percent to $27.83. The third- largest U.S. department-store chain posted profit that fell less than analysts predicted. The combined per-share earnings for the S&P 500 are $17.43 based on fourth-quarter reports by 423 companies, according to Bloomberg data, compared with a per-share loss of 9 cents in the year-earlier period, according to Standard & Poor’s. Per-share profit declined from the year-earlier figure in each of the past nine quarters, a record slump. Dell Inc. tumbled 6.7 percent to $13.46 after the personal- computer maker said holiday sales of low-priced PCs and higher component costs crimped earnings. Gross margin, the percentage of sales that remain after deducting production costs, was 17.4 percent, below the 18 percent projected on average by analysts. Apollo Group Inc. fell 6.7 percent to $57.31. The operator of the for-profit University of Phoenix forecast second-quarter earnings excluding some items of 79 cents to 84 cents a share, compared with an average estimate of 93 cents in a Bloomberg survey of 20 analysts. First Solar Inc. dropped 7 percent to $117.50, the most in the S&P 500, after the world’s largest maker of thin-film solar power modules reiterated its prior 2010 sales and profit forecasts, disappointing investors who had expected an increase. To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net .

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Tiger Woods Doesn’t Know When He Will Return to Golf

February 19, 2010

By Michael Buteau and Mason Levinson Feb. 19 (Bloomberg) — Tiger Woods said he had no idea when he would return to golf as he apologized for his marital infidelity and “my repeated irresponsible behavior.” Golf’s 14-time major-tournament winner spoke at the TPC Sawgrass clubhouse in Ponte Vedra Beach, Florida, the headquarters of the U.S. PGA Tour. He didn’t take questions from media members who were among those present, and hugged his mother, Kultida, after the 13 1/2-minute address, Woods’s first public appearance since a one-car accident outside his home on Nov. 27. Woods said he would return to therapy tomorrow. There was no sign of Woods’s wife, Elin. PGA Commissioner Tim Finchem and Executive Vice President Ty Votaw ; and Tiger Woods Foundation President Greg McLaughlin were among about 30 people in the room. “Every one of you has good reason to be critical of me,” Woods, wearing a blue blazer and an open-collared blue shirt, told the group. “I have let you down. I have let down my fans.” Reporters from Bloomberg News, the Associated Press and Reuters were invited. The Golf Writers Association of America boycotted the event. The top player in the World Golf Rankings, the 34-year-old Woods said he would return to the sport that has made him a billionaire but had no timetable. “I will return to golf one day,” Woods said. “I just don’t know when that will be.” Woods said his plan to return to therapy tomorrow was the reason for the timing of today’s announcement. Media reports, including TMZ.com, have said that Woods was enrolled in sex-addiction treatment at a clinic in Hattiesburg, Mississippi. Break From Golf Woods had said in a statement in December that he had been unfaithful to his wife, announcing then that he was taking an indefinite break from golf. “The issue involved here was my repeated irresponsible behavior,” he said today. “I was unfaithful, I had affairs, I cheated. What I did was not acceptable, and I am the only person to blame. I stopped living by the core values that I was taught to believe in. I knew my actions were wrong, but I convinced myself that normal rules didn’t apply. I never thought about who I was hurting, instead I thought only about myself. I ran straight through the boundaries that a married couple should live by. I thought that I could get away with whatever I wanted to.” Woods’s announcement came amid tight security. Everyone in the clubhouse room had to turn off cell phones 15 minutes before Woods was scheduled to speak. Last Tournament Woods hasn’t played a tournament since announcing on Dec. 11 that he’d take an indefinite break from the game to focus his attention on his family. His decision followed the accident outside of his home near Orlando, Florida, that was quickly followed by the publication of often lurid details about his private life. Two days ago, Woods’s agent, Mark Steinberg , announced his client’s intention to apologize for his behavior and address his past and future. Woods previously asked for privacy to deal with his marital issues, while some of his corporate sponsors ended or modified their relationships with him. Accenture Plc , the consulting company that once hailed Woods as the centerpiece of its marketing campaign, and AT&T Inc . dropped the golfer. TAG Heuer, the Swiss watchmaker owned by LVMH Moet Hennessy Louis Vuitton SA , said it would scale back its use of Woods, who has earned $1 billion in tournament winnings and sponsorships in his career, according to Forbes magazine. Procter & Gamble Co. , based in Cincinnati, said it was phasing him out of its Gillette razor advertising. Woods’s absence has also hit television coverage of U.S. PGA Tour events. Ratings Down Ratings for the first two tournaments of the season, the SBS Championship and Sony Open in Hawaii, fell an average of 27 percent, according to figures provided by the Golf Channel. Television advertising may also have dropped by as much as 40 percent, said Aaron Cohen , chief media negotiating officer at New York-based ad agency Horizon Media Inc. There have been eight PGA Tour events this year without Woods, whose 71 wins on the world’s richest golf circuit rank second to Sam Snead’s 82. Woods won his last tournament, the Australian Masters, on Nov. 15, his first victory in that country. Year-End Awards In December, he was named the PGA Tour’s Player of the Year for the 10th time, after going winless in golf’s four major tournaments for the first time in five years. Two days earlier, he was named Athlete of the Decade by the AP. While Woods failed to capture the Masters Tournament, U.S. Open, British Open or PGA Championship in 2009, he had six victories in 17 PGA Tour events. He also won the season-long FedEx Cup title, which carried a $10 million bonus. Woods is four wins shy of tying Jack Nicklaus’s mark of 18 titles in the four professional majors. He hasn’t missed the Masters, scheduled for April 8-11 in Augusta, Georgia, since 1995, when he was an amateur. This year’s U.S. Open will be played at California’s Pebble Beach Golf Links, where Woods won the 2000 edition by 15 shots. To contact the reporter on this story: Michael Buteau in Ponte Vedra Beach, Florida, at mbuteau@bloomberg.net ; Mason Levinson in New York at mlevinson@bloomberg.net .

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Video: Cirillo Says Woods Should Have Spoken `A Long Time Ago’: Video

February 19, 2010

Feb. 19 (Bloomberg) — John Cirillo, founder of sports and entertainment firm Cirillo World, talks with Bloomberg’s Margaret Brennan about World No. 1 golfer Tiger Woods’s apology today for his marital infidelity and “repeated irresponsible behavior.” In his first public appearance since a one-car accident outside his home on Nov. 27, golf’s 14-time major-tournament winner said he would return to therapy tomorrow. He did not specify when he might return to competitive golf. Woods didn’t take questions from media members who were among those present. (Source: Bloomberg)

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Toyota Sales Freeze in U.S. May Have Driven Car Buyers to GM, Ford, Honda

February 1, 2010

By Mike Ramsey and Katie Merx Feb. 1 (Bloomberg) — Toyota Motor Corp. probably ceded U.S. market share in January as a sales freeze on eight models and a widening global recall kept the world’s largest automaker from taking advantage of improving demand. General Motors Co. , Ford Motor Co. and Chrysler Group LLC all may report gains tomorrow, according to estimates from five analysts surveyed by Bloomberg. Toyota’s deliveries fell 4.6 percent, dragging its share of U.S. deliveries to the lowest since March 2006, researcher Edmunds.com projected. Toyota’s sales suspension while fixing an accelerator-pedal flaw put popular sedans such as the Camry and Corolla off limits for the last five days of January. The Toyota City, Japan-based automaker said it will provide details this week on how it will fix the defect, which spurred a recall of 2.3 million vehicles. “It’s a little bit like Tiger Woods not playing in the PGA. It opens up the field,” said Rebecca Lindland , an analyst at IHS Global Insight in Lexington, Massachusetts, referring to the pro golfer taking a break from his sport. “Suddenly your No. 1 player is not able to sell 70 percent of their lineup.” Industrywide deliveries may have run at a seasonally adjusted annual rate of 10.5 million cars and light trucks, based on the average estimate of eight analysts. That would mark a third straight month of faster sales from a year earlier for the first time since 2005. Faster Pace The pace in January 2009 was 9.6 million vehicles as the U.S. industry began its worst sales year since 1982. Manufacturers, dealers and investors use the rate to compare monthly totals by taking into account seasonal buying patterns. GM, the biggest U.S. automaker, and No. 2 Ford both said last week that industry sales rose at least 10 percent, without giving a figure. Driving that advance was a jump in purchases by business customers of as much as 50 percent, helping offset a drop of 1 percent to 2 percent among individual consumers, said George Pipas , the sales analyst for Dearborn, Michigan-based Ford. “There’s no question the worst is behind us and we are in a period of expansion,” Pipas told reporters last week. “But it is not likely to be linear.” The automakers’ estimates and those of the analysts would still mean a U.S. market less than two-thirds of its size from 2000 through 2007, when annual deliveries averaged 16.8 million. ‘Encouraging Sign’ “January is typically a weak month,” said Jeff Schuster , executive director of global forecasting at J.D. Power & Associates in Troy, Michigan. “The sales pace has been improving as January continues, which is an encouraging sign for the recovering industry.” Last month’s gains were 16 percent for GM, 34 percent for Ford and 3.3 percent for Auburn Hills, Michigan-based Chrysler, based on the five analysts’ estimates. Honda Motor Co. and Yokohama, Japan-based Nissan Motor Co. may say deliveries rose 11 percent and 23 percent, according to Santa Monica, California-based Edmunds.com, while sales at Seoul-based Hyundai Motor Co. probably climbed 7.4 percent. The analysts’ estimates are based on daily selling rates. January had 24 sales days, 2 fewer than in 2009. Without the adjustment, the sales results reported by some automakers will be about 8 percent lower. Toyota’s American depositary receipts slid 67 cents to $77 on Jan. 29 in New York Stock Exchange composite trading for a sixth straight decline, the longest streak since October. Ford fell 57 cents, or 5 percent, to $10.84. The ADRs are down 15 percent since Toyota announced the recall of the eight models on Jan. 21, compared with Ford’s 3 percent drop. Market Share The Japanese automaker ranked second in U.S. market share for all of 2009, with 17 percent, according to industry researcher Autodata Corp. of Woodcliff Lake, New Jersey. That trailed GM’s 19.9 percent and led Ford’s 16.1 percent. Toyota’s sales cutoff covers the Avalon and Matrix cars; Highlander, RAV4 and Sequoia sport-utility vehicles; and Tundra pickup in addition to the Camry and Corolla, which were the two top-selling cars in the U.S. last year. Collectively, the eight models made up 56 percent of Toyota’s 2009 U.S. deliveries , according to Autodata. Vehicles still on sale include the Prius hybrid, Sienna minivan and Yaris subcompact. Consumers’ initial reaction to the Jan. 26 sales suspension suggested some Toyota customers might be having second thoughts, Edmunds.com said, citing an analysis of Web-site visits by people who described themselves as poised to buy a car. Toyota’s share of so-called purchase intenders on Jan. 27 fell to 10 percent from 13 percent a day earlier, while GM and Tokyo-based Honda each rose 1 percentage point to 15 percent and 12 percent, according to Edmunds.com. The same day, Detroit-based GM and Ford disclosed incentive programs to attract Toyota owners concerned that their vehicles be unsafe, with $1,000 cash rebates. The following table shows estimates for car and light-truck sales in the U.S. Estimates for companies are a percentage change from January 2009. Forecasts for the seasonally adjusted annual rate, or SAAR, are in millions of vehicles. The estimates are based on daily selling rates. January had 24 selling days, 2 fewer than in 2009. To contact the reporters on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net ; Katie Merx in Southfield, Michigan, at kmerx@bloomberg.net

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Tiger Woods-Nike Update: Golf Club Line Ditches Woods

January 18, 2010

Nike Inc. will launch new golf clubs this month without the promotional muscle of golfing great Tiger Woods. That will be a challenge for the sporting-goods giant, which was largely a nonentity in golf before it built a sizable business around the superstar’s image.

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C. Clinton Sidle: Purpose-Driven Work: Advice for Jobs, Careers, and Success in Challenging Times

January 13, 2010

In the news recently, there has been much said about the importance of creating jobs. While unemployment is ravaging every part of the workforce, perhaps hardest hit are fresh college graduates who can’t get started. For these young people the damage can be deep and long-lasting and create what Peter Coy from Business Week calls a “lost generation.” So how do we advise them, or any career oriented professional looking for job success and satisfaction? My simple answer is “You just need one job.” It may not be in your field and it may be a rung down the ladder from where you belong, but all you need is just one. Then, follow your bliss . My field is leadership and I am concerned with not only how to track people in successful and satisfying careers but also to stir them to make a positive contribution to the world. My question is how can we inspire young professionals and future business leaders “to do well while doing good,” in ways that stick? My answer seems like common sense, but may be elusive because of its simplicity: Craft the work you have to you until you find work that you love (or come close). The amazing thing is that when you do, you will not only be more likely to succeed and create more opportunities, but also feel better about yourself and serve in positive, responsible ways. How does this work? It’s been nearly a half a century since mythologist Joseph Campbell first coined the phrase follow your bliss to show the profound wisdom of tapping into the energy that makes you tick. “There are many things in life that will catch your eye, he said, “but only a few will catch your heart–pursue those.” Why? Your odds of success and satisfaction increase greatly when you put your time and energy into things that matter most to you. Here is a simple process. Play to your strengths. This now familiar success strategy was made famous by Mihaly Csikszentmihaly, Marcus Buckingham, and others. Csikszentmihaly introduced his concept Flow as total immersion in highly rewarding activity that closely matches our natural talents. When you are in your Flow , you are so immersed in exercising your natural talents that the sense of “work” disappears. Finding opportunities to apply them is a powerful source of self-worth, and in turn of happiness and success. So the message is to know your talents and then shape your job around them. Many of us, however, default our life choices to our learned ambitions rather than our innate abilities. In that bargain, we expend a great deal of energy going against our own grain. No matter how hard you try, however, it’s unlikely you will be more than average in areas where you have no aptitude. How different might it be to follow your bliss instead? One effective principle is the simple rule of play to your strengths, and manage around your weaknesses. Baseball players, for instance, use their dominant hand to throw (play to strength), and use the other hand to catch (manage around weakness) with the help of a glove, a tool. Tiger Woods, Bruce Springsteen, and Warren Buffet did not become great by working on their weaknesses. Working with your natural talents brings success, confidence and enjoyment. Assessing natural talents is not always easy, but there are plenty of tools available. I introduce The Leadership Wheel as one in my book, This Hungry Spirit: Your Need for Basic Goodness , which is based on the Native American Medicine Wheel and Tibetan Mandala-models of human effectiveness, growth, and change that withstood the test of time for thousands of years. Each direction represents a particular intelligence – intellectual, emotional, intuitive, action, and spiritual – among our potential range of talents. An HR manager who is a more of a data person (intellectual) than a people person (emotional) can be successful by providing the information to serve others on the front line who have those skills effectively. So these talents, then, do not necessarily channel into specific careers. People with the same or similar talents can be successful in different fields. A career choice is first about knowing strengths, and then about playing to them through the opportunities that life presents. As Aristotle said, “Where your talents cross with the needs of the world, there lies your vocation.” Serve your purpose. Do you want a job (a teacher who thinks they just teach history), a career (a teacher who thinks they’re in the business of education) or a calling (a teacher who thinks they’re teaching young minds how they can make history)? Once you begin to discover your talents, ask how you can use them in ways that give you meaning. What is your purpose in applying them? Purpose guides you to make conscious choices, instead of simply defaulting to the script. It also motivates and inspires you–especially in tough times. It taps into who you are deep inside–your beliefs, values, and passions for living – and is your source of power, magic, and influence. Finding a real purpose is not easy because it must be heartfelt and based on a personal truth. As Victor Frankl said, “We do not invent our missions in life, we detect them.” Try answering this question for yourself. Ask, “What is my true purpose in life or, who am I?” Either will do. Write down every response that pops into your head, a phrase is fine, and keep at it until one tugs at your heart. You may write a hundred that don’t stick; when one pulls on your heart, you are onto something. That’s your purpose for now. Repeat this process periodically, and as you grow your purpose will grow. This step is key. I have helped thousands of students and professionals through this process and almost without fail, people want to do good in the world. As I have shared before, in his purpose statement one of my students wrote, “I will work for the success and betterment of myself, my family, my community, my nation, and my world. I will wake up every day wondering how I can do this. I will work hard to learn as much as I can, because with knowledge and understanding comes influence and strength. I will stay true to my beliefs. If I have achieved this, I have achieved success.” Imagine what our world would be like if all our business and political leaders had such a purpose! So are you a banker or a servant to community development, a hairdresser or a counselor, or a pharmaceutical sales person or a purveyor of public health? It makes a difference. Craft the work you do to you until you find work you love (or come close). So the final step is to craft your work to you by playing to your talents and purpose in your job until you find work you love more. It’s a journey. As Peter Drucker said, “The chances that the first career choice you make is the right one for you is roughly one in a million. If you decide the first one is right for you, then the chances are you are just plain lazy.” It’s not likely that you will know your calling early. However, if you play to your talents and your purpose, you will likely do well, and that will create new opportunities for you. Then you just continue to follow your bliss until you are led to it, or come close. Most career progressions only make sense in retrospect. The key is to shape your job to you and not the other way around. Even in the most routine things, you can exert some control over the essence of your work. When you do, it’s like Confucius said, “Find work you love and you will never work another day in your life.” When in doubt, return to your purpose . Finally, when you face a tough situation or difficult decision, go back to your purpose. You will always have bumps along the road. When in doubt, ask, “How do I serve my purpose in this situation?” How is this situation an opportunity to do that? This purpose, of course, is an expression of what is right, virtuous, and compassionate about being a human being. Serving it, you serve yourself and your growth. In career choices and the business world in general, you constantly face opportunities and decisions with no clear answers. When you face new opportunity and the road is not clear, draw on your purpose for guidance. If you face an ethical dilemma–a sticky problem with another person, or at odds with your boss and uncertain what to do–ask, “How do I serve my purpose?” The answer typically becomes clear, and you can act with confidence, authenticity, and courage.

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Dick Heller: Leadership is Needed Now for America to Have a Viable Economic Future

January 11, 2010

This week, the media seems more concerned with the futures of Jay Leno and Tiger Woods, two millionaires with some short-term problems, than with the millions of Americans watching the financial and spiritual foundations of their lives and livelihoods slip-sliding away. As a society, we seem content to reward a defensive end with a salary that could pay nearly three hundred public school teachers for a year. Every day there seems to be another reason to wish for stronger leadership to drive constructive dialogue about our shared values at all levels of the nation and our economy. David Gergen, citing Bill George of the Harvard Business School, wrote, “We have come to realize that the economic crisis was less a matter of subprime mortgages than subprime leadership.” Sad but true. As a consultant and teacher of leadership, I have often wondered how it is that a human being can sit at his or her desk and work diligently to support a decision that will profit their bosses, but at great cost to their fellow citizens. The financial machinations and ‘creativity’ of the last few years definitely qualify. And remember the Enron traders, caught on audiotape gleefully gloating over the gouging of “Grandma Millie?” They are classic examples of this kind of greed. “Subprime leadership” is all about maximizing profits, right now, whatever the price. Very short term. Where is the view to the future of the organization or our society as a whole? That’s the real crime here. Our system has gotten so perverse that “greed is good” seems to have trumped any understanding of the very principles of our democracy and the capitalist system we so cherish. I’m sure the definitive film about credit default swaps will be coming soon to a theatre near you. In the meantime, watching Enron: The Smartest Guys in the Room , Alex Gibney’s excellent 2005 documentary, clearly shows how the values and attitudes at the top of a company make their way through the entire system. How else can a lower level employee find it legitimate to make huge profits by creating a power shortage and declare that the abused customers should “use candles.” As a nation, we seem to keep ignoring history and repeating it. Enron was just a few years ago, but when do we apply the financial lessons of the 1930′s? In flusher times, I used to lead a lot of leadership training workshops for middle managers in some of our major financial organizations. When the subject turned to values-based leadership there was a common reaction. You could watch the eyes roll back in some of the heads, as people felt that such chatter was irrelevant to their business. “There’s really only one value around here,” some would say. Of course, they meant profit, at any cost. Folks who react that way are managers, at best, not leaders, concerned more with their own gains and advancement up the corporate ladder than with common values. How do I get ahead here? That’s the only question they’re asking. Unfortunately this thinking is still being rewarded across the industry by huge bonuses. Other folks in the room would realize that in order to be a leader, in order to bring out the best in their employees and their organization, they needed to focus on values. They were asking different questions. Why do we do what we do? How do we best serve our customers, and thus preserve the long-range viability of our company and the society we serve? As a consequence of the current economic crisis, organizations of all sizes have stopped organizational education and development efforts. My colleagues in management and leadership consulting are among the uncounted under-employed, with our revenues much diminished over the last year or so. The bailout process made it difficult for financial institutions to spend money on training, but where is the leadership crisis more evident? Leadership development is personal development. Almost all leadership research and teaching leads to the conclusion that leaders must be clear about their own values, live those values, and model the values through their own behavior, policies, and communication. Essentially, this a choice between “I win/you lose” and “we all win.” Our national dialogue, in our organizations, in the media, and in Congress, seems to be leaning towards the former. This needs to change if the USA is going to have a viable economic future. Our organizations and our government need to be investing in developing values-based leaders for the future, individuals with a vision incorporating our true “common wealth.” Only by doing so can we sustain ourselves in this very global, very complex twenty-first century.

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Tiger Woods’s Sponsors Should Forgive and Forget: Matthew Lynn

January 4, 2010

Commentary by Matthew Lynn Jan. 5 (Bloomberg) — There are few sights as ridiculous as a big corporation wrestling with a moral dilemma. In the weeks since golfer Tiger Woods was embroiled in a marital-infidelity scandal, his sponsors have been hitting him into the rough. Last week, AT&T Inc. decided he is no longer the kind of clean-cut, family-friendly corporate ambassador for its products. Accenture Plc had already made the same decision. And yet, the companies dropping Woods, 34, are guilty of two sins, both of them worse than anything he might have to put down on his scorecard when he finally checks in with St. Peter. Stupidity, most obviously. Woods will come back from this major setback, just as celebrities from Kate Moss to the Rolling Stones have done, and probably stronger than ever. And, more seriously, the sponsors have misunderstood why they wanted celebrity endorsements in the first place. They need authenticity, not bland corporate perfection. If corporations aren’t willing to accept that their “ambassadors” are real people, with all the flaws and fallibilities that come with that package, there is no point in having them on the payroll. You have to be amused by the priggishness and hypocrisy of the corporate honchos who have decided that Woods is about as socially acceptable as a Sunday afternoon golfer hacking divots into the fairways at St. Andrews . Lost Contracts Procter & Gamble Co. has said it will start phasing out Woods from promotions for its Gillette razors and shaving foams. AT&T said it was cutting all its ties with Woods. Accenture, the Dublin-based technology-consulting firm, built its marketing around his personality, but decided to drop him last month. And for what? Murder? Terrorism? No. Just infidelity, which he has owned up to, and apologized for. On his Web site, Woods issued a statement admitting he had hurt his family and saying he needed to focus on being a “better husband, father and person,” an ambition that many of us could add to our list of New Year’s resolutions. To further that aim, he said he was leaving competitive golf “indefinitely” — even though the implication that playing golf is somehow incompatible with becoming a better husband and father is more than a little troubling for the sport. What exactly do these companies think they are doing? Porn and Cocktails In fairness, they thought they were getting a squeaky- clean, family-first sportsman, not someone who can’t order a pizza without hitting on the waitress. And we can concede that there are some ways in which Woods isn’t quite living up to the image his sponsors might want to create. The porn stars and cocktail waitresses who claim to have had affairs with Woods didn’t appear to be “the best a man can get,” particularly when the man in question is a billionaire sports star. If Gillette was “ limiting his role ” in its marketing campaigns for not setting his romantic ambitions a little higher — perhaps an Oscar-winning actress or a European princess — that would be understandable. But for infidelity by itself? Why does Gillette think men buy those expensive multi-blade razors and top-of-the-line shaving gels, when they could just buy a no- name version for half the price? Could it have something to do with making themselves more attractive to women? And isn’t it the case that some of those men won’t be in happy relationships and are looking for something that may not be so long-term and mutually supportive with those other women? As for AT&T, what does it imagine most people use phones for? The entire mobile-phone industry is designed to either get people into or out of some form of romantic entanglement. What else are text messages for? And why else would you want to hide the caller ID? So your wife doesn’t know the plumber just rang? Out of Touch When corporations attempt to set themselves up as moral arbiters, they just end up making themselves look out of touch. First, no one really cares. Moss, one of the world’s most well-known models, found herself in trouble in 2005 after pictures were published allegedly showing her using cocaine. Companies such as Hennes & Mauritz AB and Chanel SA promptly canceled her contracts. Five years later, Moss is still a big brand. Likewise, the Rolling Stones packed more bad behavior into a single tour date than Tiger Woods could chalk up in a year. Yet corporations still line up to sponsor their concerts. Second, companies want to associate themselves with stars who have personality. The average Joe doesn’t identify with Accenture’s corporate-mission statements . Sponsors have to put a golfer on the brochure to get anyone to take a look because the sportsman has character and an inspiring life story. Those qualities are what people find most interesting. Appealing Foibles But don’t expect those “personalities” to be perfect. If they were, they would be as dull as the products they are promoting. And then what would be the point hiring them? It is precisely their human foibles we find appealing. Nike Inc. and Upper Deck Co. have decided to stand by Woods. Other companies should just shrug and say, “Hey, Tiger is human: He has his good points, and his bad points, just like everyone else. We wish him well despite his troubles, and hope he finds a way of working things out with his wife. And if not, we hope they remain friends. We’ll stick by him, even in difficult times, just as we hope people would stick by us if we got into trouble.” Sponsors would emerge with more respect. Instead they have made themselves look disloyal and overly judgmental. It is hard to see how that can help their brand. ( Matthew Lynn is a Bloomberg News columnist. The opinions expressed are his own.) Click on “Send Comment” in the sidebar display to send a letter to the editor. To contact the writer of this column: Matthew Lynn in London at matthewlynn@bloomberg.net .

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Tiger Woods’ EA Sports Online Game Moving Forward

January 4, 2010

EA is expected to confirm today that it’s moving forward with this month’s scheduled rollout of Tiger Woods PGA TOUR Online, a browser-based golf game that’s been in development for the last year. The online game, envisioned as one of EA’s first forays into the expanding market of online gaming, is supposed to offer a console-like gaming experience for a subscription fee.

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AT&T Drops Tiger Woods Sponsorship

December 31, 2009

The Wall Street Journal reports that AT&T is ending its sponsorship of Tiger Woods. According to the article, “AT&T’s logo appeared on Mr. Woods’ golf bag, and has been the title sponsor of a PGA event in July with Mr. Woods as the host.” AT&T is not alone in reevaluating its relationship with Woods. Accenture is another company to drop Woods as a sponsor in light of his long list of alleged mistresses . Meanwhile, one study estimated that Woods has caused $12 billion worth of damage . Among other companies that have apparently shied away from Woods are Gatorade, which discontinued its Tiger Focus drink (although it claims the decision had been made prior to the golfer’s scandal) and Gillette, which said it will limit Woods’ role in the company’s marketing . Tag Heuer, on the other hand, has prominently backed Woods , featuring a graphic on its web site saying the company “stands with” the golfer. Women linked to Tiger Woods: Playboy model Loredana Jolie. 40-something “cougar” Theresa Rogers : picture. NSFW pictures of porn star Joslyn James. NSFW pictures of porn star Holly Sampson. Mindy Lawton , who claims Woods is “very well endowed.” Pictures of Jamie Jungers , alleged Tiger Woods mistress. The latest Jaimee Grubbs pictures . Photo and video of another alleged mistress, Kalika Moquin. More pictures of Jaimee Grubbs . Pictures of Rachel Uchitel . Additional pictures of Uchitel. Cori Rist , Woods’ sixth alleged mistress. Pictures of Woods’ ex-girlfriend , Joanna Jagoda. Pictures of Woods’ wife , Elin Nordegren. Text messages Tiger Woods allegedly sent Jaimee Grubbs. The voicemail Woods allegedly left Grubbs. Photographs of the storied clients that Rachel Uchitel’s attorney has represented over the years. Get HuffPost Sports on Facebook and Twitter!

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Readers Say “Good Riddance!” to 2009

December 29, 2009

after month of staggering job losses. Hearing about Tiger Woods, Michael Jackson, John and Kate whoever… The commercial real estate tenant-in-common industry. Blend and extend opportunities for tenants and lease restructurings. Bad partners. The large

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Lisa Earle McLeod: Emotions Count: Five Tough Leaderhip Lessons For 2010

December 28, 2009

We’ve all been told not to bring our emotions to the work. But the idea that feelings don’t belong in the office is one of the biggest myths in business today. If you want passionate customers, excited employees and motivated managers, how are you going create them if you don’t engage with people on an emotional basis? Like it or not, feelings count. The way people feel affects everything that they do. As we wrap up what Time Magazine referred to as “The Decade from Hell,” here are a few tough lessons we need to take into 2010. 1. Face Fear Fear is a paralyzing emotion. But you can’t make it go away by ignoring it or stuffing it down. It’s time to get the fear on the table and deal with it. Leaders have to acknowledge the angst in the air if we’re going to move past it. Speaking the truth about fear doesn’t make it worse; it enables people to deal with it. 2. Make Peace with Ambiguity The reality is, you can’t promise bonuses next year. You don’t know how the market may turn. We don’t even know what’s going to be invented in the next decade. You’ve got to be able to function in the face of uncertainty, and you’ve got to teach your people the discipline of doing the same. People still need goals, but the organizations that succeed in 2010 and beyond will be ones that are nimble, flexible and can turn on a dime. 3. No Secrets It’s a transparent world. You can no longer hide information about your compensation plan, a bad product or even a single bad customer or employee experience. Thanks to the Internet, the Sarasota grandma who thinks your CEO makes too much money and that your customer service people are rude is now empowered to create a YouTube video about her grievances and tweet it out to all her peeps. Lest you think your texts or e-mails are safe, ask Tiger Woods how much losing Gatorade cost him. Save yourself a scandal; don’t do anything you’ll need to cover up later. 4. Connectivity Is Key You’ve got to communicate authentically (and kindly) with everyone in your organization and outside it. Customers now know your product or company, warts and all, thanks to technology, so you need to learn to use it to your benefit. The Internet didn’t de-personalize the world; in many ways, it personalized it more. Companies can no longer treat the general public like one big, slobbering uber-consuming mass. You’ve got to make interpersonal connections with people if you want them to buy into you or your organization. 5. The “L” Word In the end, it all comes down to love. If you want your customers to love your product, your employees to love their jobs and the market to love your organization, you’ve got to be the one putting the love in before you can expect to get any back out. The situation we’re living with today is a direct result of the emotional climate we’ve created over the last 10 years. Choose greed, you get this. Choose love, and you’ll start creating something much better. Lisa Earle McLeod is an author, syndicated columnist and inspirational thought-leader. Her newest book is The Triangle of Truth: The Surprisingly Simple Secret to Resolving Conflicts Large and Small. (WATCH VIDEO) A popular keynote speaker, Lisa is principal of McLeod & More, Inc., a training and consulting firm specializing in sales, leadership and conflict management. www.TriangleofTruth.com

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