unemployment

Scott Bittle: Are All Rich People Job Creators, or Does It Take Something More?

by Scott Bittle on February 3, 2012

Huffington Post…

You can’t get very far in watching the presidential primaries without hearing this line: “we’ve got to help the job creators.” Well, of course. We all need jobs. Just look at the unemployment numbers , the grim projections , or the people who aren’t even counted as unemployed any more because they’ve given up . Who wouldn’t want to help the job creators? But the way the debate is shaping up, “job creators” translates as “rich people.” We act as though income tax rates are the only factor in whether people get hired or not. And that’s not the right way to think about the jobs crisis. The fact is, we’re all job creators: the richest and the poorest of us. It’s just a matter of degree. The struggling worker buying bread at the bodega, the middle-class couple who hire a baby sitter for the evening so they can go out to dinner and a movie, and the banker bringing another gardener to shape interesting topiary are all putting money into the economy. That’s how the bodega clerk, the baby sitter and the gardener get their jobs. If the wealthier person hires a gardener, a housekeeper and private tutors for her children, then yes, she’s putting more money into the economy than the person at the bodega. If it comes to that, we’re all job destroyers, too. If you’ve switched from DVD rentals to streaming video, or from CDs to an iPod, you’ve helped put a video or music store clerk out of work. We’re all a part of ” creative destruction .” The corporate executive who lays off hundreds or thousands of workers has a bigger share of that, as well. But the real engine of job creation isn’t consumption; it’s creativity. It’s new businesses, new products, new ideas that really drive job creation. A study by the Ewing Marion Kauffman Foundation reported that two-thirds of new private sector jobs are coming from businesses that are between one and five years old. Federal statistics show there are 3.7 million firms with 10 employees or less. That’s a major reason why economists talk about the value of small business to the economy. New businesses start out as small businesses. If they’ve really got a good idea, good luck and good leadership, they grow into big businesses. This is where not all rich people are created equal, because they’re not all creating anything. Bill Gates and Kim Kardashian both create jobs by spending their money, but Bill Gates isn’t more valuable to the economy just because he spends more with quiet good taste. He’s more valuable because he built Microsoft, a company that does billions in business, employs thousands of people, and helps millions more work more effectively. If we’re talking about the rich as job creators, then we have to acknowledge that not every rich person is creative. Even the Kardashians are at the upper end of the creativity scale; after all, they do have a production company and assorted business ventures. But simply consuming more and spending more shouldn’t earn you a job-creation medal. The owners of the new restaurant on the corner or the startup in the downtown loft may be doing as much or more for the economy than a wealthy person who’s just a consumer of luxury goods. They may even be doing more than the CEO of an established company, if their business is growing and his isn’t. If everybody is a job creator, then almost any economic policy that encourages spending will create some jobs, whether it targets the rich, poor or the middle class. Not everyone is an innovator, however. From the personal computer to the single-handled faucet, it’s innovation that pays off big when it come to jobs. And innovators don’t always start off rich. To assume that rich people are creating products, opening markets or even building on what they have simply because they’re rich is laughable — and dangerous. The challenge for job creation is to craft policies that encourage the people who will take that encouragement and run with it. The debate we should be having is not where taxes should be high or low, or whether Wall Street is good or bad, but how do we craft tax policies and credit markets that reward those who are striving to come up with something new — and not those who are resting on someone else’s laurels.

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Scott Bittle: Are All Rich People Job Creators, or Does It Take Something More?

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Obama Calls For Job Training, Unemployment Insurance Reform

by Dave Jamieson on January 25, 2012

Huffington Post…

WASHINGTON — In a State of the Union speech focused tightly on jobs and the economy, President Barack Obama outlined his ideas for getting long-term unemployed workers back to work and closing the “skills gap” separating jobless Americans from employers who have positions to fill. In a speech setting his presidential agenda for 2012 — as well his burgeoning re-election campaign — Obama put forth policies that he said would “restore an economy where everyone gets a fair shot,” calling for more job training for young or unemployed workers as well as reforms to the unemployment insurance system. “We will not go back to an economy weakened by outsourcing, bad debt and phony financial profits,” the president said. “I want to speak about how we move forward and lay out a blueprint for an economy that’s built to last — an economy built on American manufacturing, American energy, skills for American workers and a renewal of American values.” To aid the unemployed, Obama proposed a new initiative to train and place 2 million workers in jobs through partnerships with businesses and community colleges, based on existing programs in cities like Charlotte, N.C., Chicago, Orlando and Louisville, Ky. Senior administration officials, speaking on condition of anonymity, told HuffPost that Steve Jobs, the legendary and recently deceased figurehead of Apple, urged Obama to put forth such proposals in a past meeting of the two men. Jobs’ widow, Laurene Powell Jobs, was a guest of First Lady Michelle Obama at the speech. In his speech, Obama cited the experience of Jackie Bray, a single mom in North Carolina who was laid off from her job as a mechanic. “Then Siemens opened a gas turbine factory in Charlotte and formed a partnership with Central Piedmont Community College,” Obama said. “The company helped the college design courses in laser and robotics training. It paid Jackie’s tuition, then hired her to help operate their plant. I want every American looking for work to have the same opportunity as Jackie did.” Additionally, Obama said he’d simplify government-sponsored training programs — something that Republican presidential candidate Mitt Romney has also proposed. “I want to cut through the maze of confusing training programs, so that from now on, people like Jackie have one program, one website and one place to go for all the information and help they need,” the president said. “It’s time to turn our unemployment system into a re-employment system that puts people to work.” The president also proposed “eligibility assessments” for long-jobless workers applying for emergency federal unemployment insurance. He did not mention the Bridge to Work program he had proposed during an address to a joint session of Congress last September. During the lasting jobs crisis, long-term unemployed workers have been hit particularly hard, with many still unable to find jobs even after exhausting their unemployment benefits. More than 13.1 million people were unemployed in December, according to the Labor Department, and an unprecedented 42.5 percent of them had been out of work for six months or longer. Nearly 2 million people have been unemployed longer than 99 weeks, beyond the reach of unemployment insurance. But the president pointed to more positive numbers. “In the last 22 months, businesses have created more than 3 million jobs,” Obama said. “Last year, they created the most jobs since 2005. American manufacturers are hiring again, creating jobs for the first time since the late 1990s.” Economists and worker advocates say people out of work for an extended period have a harder time landing new jobs, and they may ultimately wind up burdening another part of the safety net once their unemployment insurance runs out. “The long-term unemployed are concerned that they’re less employable because they’ve been out of the workplace a couple of years,” says Karen Nussbaum, executive director of Working America, an affiliate of the AFL-CIO union federation. “People do need to be trained, and we need to make sure that long-term unemployment doesn’t mean never being employed again.” The White House said in a December report that applications for Social Security disability payments increased among people older than 50 who would soon exhaust their unemployment insurance. Obama mentioned the anxiety of older workers who lose their jobs — while touting the renewable energy industry. “When Bryan Ritterby was laid off from his job making furniture, he said he worried that at 55, no one would give him a second chance,” Obama said. “But he found work at Energetx, a wind-turbine manufacturer in Michigan. Before the recession, the factory only made luxury yachts. Today, it’s hiring workers like Bryan, who said, ‘I’m proud to be working in the industry of the future.’” In recent years economists have been debating how best to address the American “skills gap,” discussing the idea that many Americans simply don’t have the advanced manufacturing and technological skills required for the better-paying working-class jobs that remain in the United States. Although not everyone agrees that this wide gap exists — economist and New York Times columnist Paul Krugman, notably, has deemed “structural unemployment” a “fake problem” — some employers and their allies have insisted that they have skilled positions they’d like to fill but simply can’t find the right American workers for them. Many of those same employers would surely like to see government step in and provide some of the necessary training. In his speech, the president said he hears “from many business leaders who want to hire in the United States but can’t find workers with the right skills. Growing industries in science and technology have twice as many openings as we have workers who can do the job. Think about that — openings at a time when millions of Americans are looking for work.” If nothing else, Obama’s speech Tuesday could help make job training part of the mainstream dialogue, says Andy Van Kleunen, executive director of the National Skills Coalition, a nonprofit group that advocates for publicly funded job training. “President Obama has tried several times over the past couple of years to increase our investments and training for workers,” says Van Kleunen. “Finally, we’re going to get a clear national debate about where the skills gap is, and how to deal with unemployment together with it.”

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Obama Calls For Job Training, Unemployment Insurance Reform

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WATCH: Postal Worker Caught With Truckloads Of Stolen Mail

January 25, 2012

On top of a financial crisis of devastating proportions, it looks like the U.S. Postal Service has yet another problem on its hands: an employee that’s hoarding stolen mail. Karen Samford, a 72-year-old postal worker in Texas, has been suspended from her job after admitting she stole and kept literally truckloads of bulk mail over the last decade, MyFoxHouston reports ( h/t The Consumerist ). Her boss reportedly became concerned with the excess mail in her office and asked if she had stashed any elsewhere, to which she admitted to renting entire storage units to hold the junk mail. “This is a hoarding problem,” she told MyFoxHouston. “People can have mental issues… it doesn’t make them insane. It makes them stupid.” Read the entire MyFoxHouston report here. Hoarding has been an especially popular topic of late, in part due to the success of TLC’s Hoarding: Buried Alive , a show profiling those who suffer through the practice. This week, for example, firefighters in Arizona struggled to extinguish a house fire after finding thousands of beer cans and ceiling-high stacks of newspapers upon entering the home. The owner said he was just “holding on to” the trash. But Samford’s episode is only the latest public relations disaster for the struggling agency. USPS also made headlines just last week after a security camera caught on tape a postal worker throwing a package over a fence . And it’s not just USPS that’s guilty of some bad deliveries. A similar event transpired last month when a FedEx employee delivered a package in much the same manner . USPS has bigger problems than bad deliveries anyway. The independent government agency is facing the possibility of default due to a monstrous budget shortfall, even as it desperately seeks ways to reduce costs and raise revenues — including cuts and raising the price of stamps . Last month USPS announced it would delay the closure of some 3,700 local post offices and hundreds of mail processing centers to allow Congress time to pass legislation that would stave off default. The closures are currently estimated to result in $6.5 billion worth in savings and some 100,000 layoffs. If USPS does reduce services, many small business owners fear the increased expenses of relying on more expensive private companies like FedEx will weigh on them, The Huffington Post reports .

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Romney Makes Startling Remark

January 25, 2012

WASHINGTON — Mitt Romney said corporations “are people too.” Now, he says not only that banks are people, but they “aren’t bad people.” The comment came Tuesday in Florida, which has the seventh-highest foreclosure rate in the country. “In this case, it’s because of the banks,” he said to a small group in front of a Fannie Mae-foreclosed home in the town of Lehigh Acres in the southwest part of the state. “Well, the banks aren’t bad people. They’re just overwhelmed right now.” The remarks echoed Romney’s previous response to a heckler last August two days before the Ames Straw poll. “Corporations are people, my friend…of course they are. Everything corporations earn ultimately goes to the people. Where do you think it goes? Whose pockets? Whose pockets? People’s pockets. Human beings my friend,” he said. It’s part of a pattern of Romney making offhand remarks that make him sound out of touch with the economic , which he says he can fix. “Don’t try and stop the foreclosure process. Let it run its course and hit the bottom,” he said in Las Vegas last October, which has the highest foreclosure rate of any metro area over 200,000 people according to RealtyTrac. Nevada leads the states among foreclosures. “I’m also unemployed,” he said to a group of unemployed people in June, also in Florida, which has jobless rates above the national average. “I like being able to fire people who provide services to me,” said Romney in New Hampshire earlier this month as part of an answer on why he favored competition among health insurers. “If someone doesn’t give me the good service I need, I want to say I am going to get somebody else to provide that service to me.” Romney later defended his remarks as being taken out of context; however, Romney himself took a quote of Obama out of context in an attack ad. The remarks came on the same day that the former Massachusetts governor — who has an estimated wealth between $190 million and $250 million — released his tax returns , which showed that he and his wife paid a 13.9 percent effective rate on $21.7 million in 2010–much lower than most middle-class taxpayers due to their income entirely deriving from investments.

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Protesters To Demonstrate Outside Courthouses

January 20, 2012

NEW YORK — Protesters plan to “occupy” courthouses in more than 100 cities across the U.S. on Friday to protest a landmark U.S. Supreme Court decision that removed most limits on corporate and labor spending in federal elections. The grassroots coalition, called Move to Amend, said the protest will kick off petition drives to gain support for a constitutional amendment that would overturn Citizens United v. FEC, a 2010 court ruling that allowed private groups to spend huge amounts on political campaigns with few restrictions. Occupy Wall Street activists are joining the protest. “The courts created the idea that the corporation is a person with constitutional rights,” said David Cobb, an Occupy the Courts organizer. “It’s the justification for the whole corporate takeover of our government.” A last-minute court dispute left the status of the protest in New York City unclear. A judge on Thursday ruled that demonstrators do not have a First Amendment right to protest in front of a Manhattan federal courthouse. Protesters had filed a lawsuit asking the judge to overturn the government’s rejection of their permit application. The permit had been denied on grounds that the courthouse poses unique security concerns. In light of the ruling, protesters did not announce whether the event would be moved to another location.

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Penny C. Sansevieri: The Myth About Being "Liked" (on Facebook)

January 20, 2012

These days it seems everyone is after “social proof,” that elusive number of Likes or Followers that will make you seem part of the “in crowd.” Unfortunately getting someone to like you is only half the battle, you must now get them to stay “in like” with you. Studies show that the expectation of content does vary by age, but the direction is still the same: it’s more than just getting someone to “Like” your page, you now must learn how to keep them. With all the social media options out there it’s critical to not just build numbers, but maintain them, too. In order to do this, it’s important to know what users want and when they want to see you post new content. As I pointed out earlier, content expectations vary by age. For example , Facebook users between the ages of 18-26 have the lowest expectations of receiving something in exchange for their “Like” endorsement. When you go up the next rung, ages 27 to 34, they are more likely to expect something solid delivered in a Facebook update. But the users with the highest expectations, and those you are likely serving, is the 35-51 age group. This is also the group most likely to unlike a brand if it fails to meet expectations. But it’s not only about having great content, it’s also about creating great engagement. A study done by Roost.com evaluated 10,000 Facebook fans across 50 industries and found that certain posts leverage more engagement than others. Here are some of their findings: Photo posts get 50% more impressions than any other type of post Quotes get 22 percent more interactions Questions generate almost twice as many comments Ask questions to spark dialog (questions often see twice as many comments) and consider fill in the blank posts which tend to receive 9 times more comments than other posts Now you have the content down, and you know about the types of posts that will get more play than others, but is there more to posting than just content and post-type? You bet. There are also time-specific posts that often do better than others. Here are some quick tips on how to improve your Facebook Wall posts: Posts delivered between 8PM and 7AM tend to receive 20% higher user engagement Best day for Fan engagement? Wednesday — up by 8% How many posts does it take to increase user engagement? If you’re thinking more frequent posts you are wrong. Posting one to two times per day produces 71% higher user engagement. When it comes to Facebook more is not better, sometimes it’s just more. Posting with 80 characters or less receives 66% higher engagement. Very concise posts, between one and 40 characters, generate the highest engagement. Finally, users do vary. How can you really know if your fans are engaged with your content? Understanding Facebook Content Interaction Fan Pages now have a fabulous feature called Facebook Insights. Head on over there for some really interesting information and insightful (hence the name) data. First, you can find Insights on the left side of your page. Once you’re there you can see all sorts of data on the information you post. Reach: This is the number of unique people who have seen the post for 28 days after publishing the post. Engaged Users: These are people who have engaged with your post in some way: i.e. clicked the link. Talking about this: This is an interesting number and you’ve no doubt seen this pop up right under your “Likes.” These actions are: liking the post, commenting, sharing the post, responding to a question, or RSVPing to an event. Virality: This is the number of people who have created a story from your page post. Watch these numbers for some great insight into what fires up your fans and what leaves them cold. It’s not just about getting “Liked,” it’s about staying “Liked.” Creating insightful, helpful, and engaging content is one piece to the puzzle, the other is timing and receptiveness of your fans. Though I’ve outlined ‘general’ user guidelines in this piece, be sure to check the Facebook Insights for key data that will help your fan base thrive!

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Sarah O’Leary: Paula Deen’s Preventable Marketing Disease

January 19, 2012

Paula Deen announcing she has Type II Diabetes after endorsing a drug company’s diabetic treatment product is like a man admitting he’s a sex addict after inking a deal with Viagra. Sadly, she could have avoided selling her filleted soul to the devil, changed the lives of countless diabetics and made millions more from her brand. No matter how hard marketers try, it’s hard to imagine a larger misstep for Paula Deen’s brand, franchise and image. Known as the culinary queen of down home cooking, she relished her fat-laden, high-sugar feasts through cooking shows, books and licensed products. Downplaying the significant role that her lifestyle played in her Type II Diabetes diagnosis puts her brand legacy and future profits in jeopardy. Three years ago, Ms. Deen was diagnosed with Type II Diabetes. For the next three years, she continued on her delicious, wildly unhealthy course without missing a single marketing beat. She evangelized her fat, fried and sugared recipes with the enthusiasm of a drug pusher, only to become one for drug company Novo Nordisk when there was money to be made. As marketers, we look for spokespersons to represent our products so that we sell more of them. We are, after all, in the business of selling products and services. Hopefully, we do that with ethos. Unfortunately, there are marketers willing and able to sugar coat truths to increase sales. Arguably Novo Nordisk, the manufacturer of Type II Diabetes drug Victoza, is doing just that. And Paula, using her celebrity to make money off of her disease and at the potential expense of those consumers who trust her, seems more than happy to participate. Provided you have enough insulin on hand, visit the Paula Deen hosted, Victoza sponsored site, diabetesinanewlight.com. Deen explains that one needs make only simple changes — in her case, the big sacrifices were giving up sweet tea and walking more with her husband and tweaking recipes — to manage that little nuisance, Type II Diabetes. The sell that brings you closer to hell, as we marketers know, never works in the long term. Victoza will, most definitely, reap the rewards of increased awareness and sales now. However, it will fail in the long term if the product alone, without substantive live style changes, doesn’t change the lives of its consumers for the better. I’d hazard to guess how much money Ms. Deen received to sell her branded soul. The truly sad part, other than giving misguided hope to those who have the disease and listen to her, is that she could have made more money as a true role model. Had she announced her malady and dedicated herself to change, both prescriptive (possibly with Victoza) and lifestyle, her marketing opportunities would have been endless. Unfortunately, Deen and the makers of Victoza took the easy way out and, in doing so, missed a huge opportunity to be the anchor and champion of a new movement. If they had taken a page out of Special K cereal’s successful campaign, “The Special K Challenge,” Novo Nordisk could have made Victoza the “hero” element of a bigger solution. The Special K Challenge establishes Special K, along with diet and exercise, as part of a healthy lifestyle. The product doesn’t claim or infer that cereal alone will solve weight issues, nor would that be necessary or prudent. At the end of the day, if the program suggested by Special K works, it will move more boxes. Victoza, positioned as part of a dedicated lifestyle change rather than an almost magic syringe, would sell more with Deen as the spokesperson than it’s poised to do now. Much like sports teams that change logos to sell more licensed merchandise, Paula could have opened an entirely new wing of her empire by changing her offerings. Realizing that there will always be a market for the cooking style that made her famous and thus not in any real danger of waning, Paula could have kept her legacy intact and added to her offerings by reinventing herself as someone committed to wellness. With a healthy life, healthy living cooking genre, Paula could have used her celebrity for good (and for a great deal of profit). Americans love those who struggle through adversity, and she could have reaped millions from such a movement. Paula is now suffering from the popular perception that money bought her new-found honesty. If money was her motivator, sadly, she missed what would have been a whole grain-fed cash cow. Millions could have been made from exercise apparel and equipment endorsements, over the counter vitamin and drug deals, wellness cook books and a wealth of other opportunities. By playing the wrong hand, Paula left untold millions on the table. Marketing mixes and Type II Diabetes can’t be fixed, much to Ms. Deen’s chagrin, with a sweet smile and pound of butter.

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The Perfect Gift For Valentine’s Day: JPG Goes For Gold?

January 19, 2012

Nothing quite says “I love you” like a bar of gold bullion with Jean Paul-Gaultier’s mark on it. After teaming up with Dallas-based bullion company Dillon Gage Metals , the flamboyant French designer has unveiled the 24 carat one ounce gold bars just in time for Valentine’s Day. With only 5,000 bars to be released, the limited edition “collector’s item” comes engraved with a heart, rays and Gaultier’s name , notes the Telegraph . As Forbes puts it, investing in the precious yellow metal allows for hedging against inflation, while diversifying your holdings and pleasing a loved one all at the same time. Priced at $1,826.33 (plus a $25 handling fee), the gold bar is 10 percent above gold’s current commodity price of $1,650 an ounce , according to the Wall Street Journal . “Never before has a fashion icon designed a gold ingot,” Terry Hanlon, president of Dillon Gage Metals, said in a press statement . “The Gaultier bar is a one-of-a-kind, limited-quantity collector’s piece that not only is a great investment but it will also become a piece of history.” The price of gold has risen more than fivefold in the last 10 years, outperforming almost every other investment available. Though stamping a designer logo on a bar of gold is far from an innovative business endeavor, it’s not often you see the world of financial commodities and fashion embrace one another.

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UK- Unemployment hits 17-year high

January 19, 2012

(MENAFN – Kuwait News Agency (KUNA)) Unemployment in the UK reached a 17-year high today after a 118,000 increase in the jobless total, which saw a record number of young people out of work, …

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Unemployed, Out Of School Youth A Huge Cost To Taxpayers

January 18, 2012

A sizable minority of America’s youth aren’t in school or attached to the labor force. And it’s costing taxpayers big. About 17 percent of America’s young people are “opportunity youth” — or people ages 16-24 who aren’t attached to the labor force — according to a report prepared by researchers for the Corporation for National and Community Service and the White House Council for Community Solutions (h/t Think Progress ). Each one of these 6.7 million young people is costing taxpayers $13,900 per year and it doesn’t stop there. After 25 years old, they’ll cost taxpayers $170,740 over their lifetime, the report found. That means that in total, those currently classified as so-called opportunity youth will cost taxpayers $1.56 trillion in present value terms over their whole lifetime. “Both taxpayers and society lose out when the potential of these youth is not realized,” the report said . With the unemployment rate at elevated levels for months , young people have been feeling the consequences. Mike Konczal, a fellow at the Roosevelt Institute, found in November that youth joblessness in America was in line with levels of youth unemployment during the Arab Spring. Teenage job-seekers are having an especially tough time as older, more experienced workers snap up part-time positions usually reserved for teens in a better economy. The unemployment rate for Americans ages 16-19 was 25 percent in 2011 — nearly three times the jobless rate of the overall labor force. During the summer, a time of typically high employment for youth, the unemployment rate for Americans aged 16 to 24 was twice as high as the national jobless rate . The high levels of out-of-work young people will likely have long-term implications , including a boost in poverty, increased reliance on social safety net programs and maybe even illegal activities, according to researchers at Rutgers University. But prospects for unemployed youth may be getting brighter. Nearly two-thirds of the jobs employers added between August and October went to Americans between the ages of 16 and 24.

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Overdraft Fees Reach A New High

January 18, 2012

The cost of not having enough money just got steeper. The median overdraft fee banks charge customers surged to $30 from $27.50 last year, according to a study released Tuesday by Moebs Services , an economic research firm that tracks pricing at financial services companies. The survey looked at overdraft fees from more than 2,500 banks and credit unions of all sizes across the country. Mike Moebs, an economist and CEO of Moebs Services , said the jump was the largest one he has seen in 30 years of collecting data. He said that banks are trying to make up for money lost due to regulatory changes. “We went to banks themselves, and first thing they told us was that the regulatory cost is so onerous they have to offset it with higher fees,” Moebs said. Credit unions had not increased their fees, he added. Until new regulations were put in place in July 2010, banks enrolled debit card users automatically into overdraft protection, which provides short-term loans when a bank account falls below zero. Often, bank customers were unaware their accounts were in negative territory and kept using their debit cards. Fees quickly piled up — in 2009 banks cleared an all-time high of $37.1 billion in overdraft fees, according to Moebs. A 2010 rule enacted by the Federal Reserve called Reg E requires customers to actively choose to enroll in overdraft protection. Those who do not opt into the program learn when they are over their limit on funds the old-fashioned way: Their card is declined. The regulation has cost banks billions . Last year, banks made “just” $30 billion from overdraft protection. Nearly half of the drop came from decreases at Bank of America, which lost an estimated $3.3 billion in the first year under the regulation, according to research from a Credit Suisse analyst published last month. Wells Fargo and JPMorgan Chase each lost more than $1 billion. Losses may get steeper. More recently, the Federal Deposit Insurance Corporation issued guidelines around what types of transactions can trigger overdraft fees and how the banks process transactions. The FDIC recommends, for example, that banks do not charge overdrafts on small-ticket items, so a card holder who overdrafts his or her checking account for a $4 latte won’t be on the hook for a $30 fee. Banks have also seen a drop-off in the amount of money they make from debit card swipe fees, which merchants pay every time a customer makes a purchase . The so-called Durbin Amendment, part of the Dodd-Frank financial overhaul, caps the amount banks can charge merchants for debit swipes. Banks have been scrambling to make up for the decline in revenue. In addition to raising overdraft protection fees, banks are also making a push to get customers using credit cards more often. And it’s worked, in the last week JPMorgan Chase and Citibank reported that credit cards are a growing area of business.

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Andrew Robertson: The Real Story at CES

January 18, 2012

A speaker at one of the panels I attended, quipped that CES should probably now stand for “Connecting Everything Seamlessly” not “Consumer Electronics Show.” And there is no question that the story from the floor was about just that. The vision of a connected world (and a connected “me”) that we have been talking about endlessly is now a reality. The hardware, operating systems and software are there to make it possible. And we can all live happily after… As long as — and this was the blinding “aha” for many of those I talked to — as long as we have fast, secure, mobile broadband. None of the breathtaking potential of all of those gadgets and gizmos, and none of the magic of all those happening apps, works without it. And as impressive as all the OLED, the 4K, the Crystal LED, the Ultra HD, what mesmerised me most was listening to Tom Hanks talking about storytelling. About the way he likes to ask something of the audience. About the element of surprise, the ending you never saw coming but which makes all the sense in the world, because it is rooted in a human truth. About the fact that every time you start to tell a story you are taking a big risk — for yourself, for the investors. Because you don’t know if it is going to work. You can’t. About how much more important great storytelling was becoming precisely because of all the ways, places, and times in which people can choose to be part of it. Or not. Economics is defined as the science of allocating scarce resources. We are not living in a technology economy, or an information economy, or a knowledge economy. Those are all abundant and becoming more so every day, as everything gets connected seamlessly. What’s scarce is attention. We are living in the attention economy. And the only way to survive, or better still to win in, it is with better storytelling. With more creativity. That’s the real story at CES. (And, if you have got this far…thanks for your attention.)

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Anna Cuevas: HAMP’s Second Lien Modification Saves Fewer Than 50% of Second Mortgages

January 18, 2012

In January 2011, one of the government’s largest mortgage lenders, Fannie Mae, implemented the U.S. Treasury’s Second Lien Modification Program. Also referred to as 2MP, slightly less than 50 percent of eligible Housing Affordable Modification Program (HAMP) second liens have been modified to date. Through the 2MP initiative, services of second mortgages have the option to modify the lien or to extinguish it — which is an admission that the mortgagor is not likely to be repaid for the second mortgage, and as a result, they clear their interest in the property by filing a lien waiver. To qualify for this HAMP modification directive, the borrower’s first lien must be in modification. In addition, the remaining balance of the principal of the second mortgage must be a minimum of $5,000 with an existing monthly payment of $100 or more. It should be noted that Second Lien Modification Program is voluntary, and not all banks have opted to participate. Of the major HAMP servicers, only six have chosen to do so. These services for these lenders are notified by the U.S. Treasury Department if a second lien is eligible for modification under the program. To date, over 115,000 second liens have been identified as eligible. Yet, less than half had begun the modification process. Almost 10,000 of those were extinguished. The HAMP loan modification program continues through 2012. Initial projections estimated that 3 to 4 million mortgages would benefit from the program; however, at its current rate of 25,000 to 30,000 a month, fewer than 1 million mortgages have been modified. If you are the holder of a second mortgage that meets the guidelines stated above, you should contact your lender to determine if they participate in HAMP’s 2MP program. Some of the voluntary participants as of this writing are Citigroup, Bank of America, Wells Fargo, JP Morgan Chase, and Ally Financial. Anna Cuevas, known as “America’s Loan Modification Guru,” has guided thousands of Americans in keeping their homes from foreclosure. A popular blogger (askaloanmodguru.com), Cuevas has been called a “superhero of the loan modification industry” and has been nominated for CNN’s Heroes. She is the #1 bestselling author of SAVE YOUR HOME Without Losing Your Mind or Money.

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John Friedman: Three Dimensions of Leadership

January 18, 2012

A lot has been said and written about what it means for a company (or organization) to be a leader. Certainly the area of sustainability and all the sub-categories under that umbrella offer a myriad of opportunities for organizations, companies, and individuals to carve out a niche as a leader in a specialty or sub-specialty. I continue to be amazed at groups and organizations that refer to themselves as “a” leader or “the” leader without being questioned by their stakeholders or the community. I once worked for a very intelligent person who decried those who declared leadership based on size alone: “Just because we’re the biggest, that does not make us the best.” In fact, he went on to point out that the larger the company or organization, the more important it was to be a leader lest it lose more money or destroy more of the environment based on its size alone. Wise words from a savvy leader who understood that while size matters, excellence matters more. Excellence is a constantly moving target. And there are different ways in which a person, an organization, or a business can seek to be one that sets, and then continually seeks to improve upon, the standard of behavior. True excellence can be achieved through leadership, or closely following the leaders in a given area or field. Remember Avis Car Rental’s theme, “We try harder”? It was based on being smaller than their largest competitor and therefore sought to position the company as more service-oriented (a leadership position). Leadership by Action The first way that organizations must establish their leadership is through their own actions — and this is the bare minimum. This can be hard for larger organizations that may have entrenched methods of doing things, because it requires that one’s actions continually evolve, but that the underlying basis for those actions — the values that define the organization — remain rock solid and consistent. Companies that lead by actions are not afraid to experiment with new ideas and are willing (if not eager) to challenge their existing perceptions on a regular basis. Leaders in sustainability are not looking for ways to hang on to existing practices; they are investing new programs and models that reduce the use of energy and natural resources. They are not only experimenting with technologies that reduce carbon output; some may be looking at ways to remove carbon from the atmosphere and capture it. And at the forefront are those organizations that are basing their business model on turning one industry’s waste into the raw ingredients needed for completely different industries. Examples of this include companies that are extracting the petroleum from discarded plastic bottles and using it to create the polyester fibers that they turn into sportswear, and those producing synthetic gypsum (roughly 20 percent of U.S. raw gypsum use) from the byproduct of manufacturing and energy-generating processes, primarily from desulfurization of exhaust gases from coal power plants. Leadership by Influence Leaders know that they need to look beyond their own actions and values, beyond those things over which they control, to those things over which they can exert influence, such as their supply chains. This includes holding suppliers to adhere to values relating to human rights, working and labor conditions, living waves, environmental stewardship, and governance issues. Leading companies recognize that they cannot outsource problems in an effort to distance themselves from their negative impacts — as BP discovered when it attempted to lay the blame for the Deepwater Horizon disaster at the feet of the companies it had selected to work on its behalf. Increasingly, companies are requiring suppliers to do more than guarantee a level of quality for the products that they supply; some are requiring that suppliers maintain a chain of custody to ensure that the products that they are using conform to environmental and social values, as well. Large power-purchasers have been exploring the extent of the influence that they can have on their suppliers’ behavior by implementing requirements beyond prices. Examples include Walmart’s efforts to reduce packaging and marketing materials and to sell sustainable seafood. In order to be a supplier to Walmart, the giant retailer must be convinced — using third-party validation — that the seafood products that they are selling to customers are, in fact, sourced from sustainable species. The new focus on a “sustainable” economy is creating opportunities for companies that offer products or services that help other companies reduce their environmental impacts, and even those that track information back to point, country, or company of origin. A great example is in the area of information technology, which can be used not only to help improve efficiencies in manufacturing but also to look at entire systems and provide vital information. In day-to-day application, measurement devices that monitor traffic flow could be used to automatically adjust traffic lights to facilitate safety and efficiency of transportation. Buildings that install monitors of electric power use help manage the peaks and valleys in consumption, reducing energy costs and helping utilities determine where electricity is needed and when. Devices that measure the depth and speed of rivers can be used to feed real-time data that can protect lives and property from natural disasters such as floods. Moving beyond the environmental pillar, on the social side, experts in issues like global development, fair trade, workers’ rights, and labor relations will also continue to be in demand, because companies are increasingly going to be asked (required) to measure and report on their footprints in these areas, as well. Leadership by Expertise The last way that people expect companies to demonstrate leadership is through their expertise. Beyond the niche consumer segment that will always seek out and is willing to pay more for goods and services that match their values, the vast majority of consumers must be driven to action through more traditional value drivers for those particular goods or services. For example, the ultimate success of electric vehicles will depend on other attributes as much as their reduced environmental impacts. By offering aesthetic appeal, performance, safety, reliability, and the waiver that allows such vehicles to use the express lanes in some jurisdictions, those vehicles will have mass appeal, because they will engage the value drivers for a much wider range of automotive purchasers. Programs such as charging and refunding deposits on glass and plastic bottles and aluminum cans to provide direct financial incentives for desired behaviors can be successful, but they often have limited impact when convenience and comfort needs are not met. When Home Depot creates a mechanism for people to bring back used compact fluorescent light bulbs (to prevent them from going into landfills), or when auto repair facilities take back worn-out car batteries, those are attempts to influence consumer behavior. In these cases there is little financial incentive — and in the latter case, sometimes companies charge to dispose of battery “cores” — that probably limit the programs’ effectiveness. But asking people to remove the burned-out bulbs, store them, and then remember to take them on their next trip to the store is less convenient than simply throwing them out in the regular trash collection (as bad as that is for the environment). But often, when there is not visible “return,” companies can do little more than “suggest” the way in which their products are used and ultimately disposed of (or recycled). Manufacturers of computers, cell phones, and a host of electronic devices offer power- (and energy-) saving tips for consumers, but over 90 percent of the electricity used today for computers is not in the “server” room but at individual desktop stations that are left on at night and monitors that are left on when laptops are disconnected. In homes, chargers that live their lives in the socket are drawing power even when the portable device is not attached. TV sets that have not been turned on in weeks are drawing current to diligently keep track of the date and time and which channels to remember.

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Jeffrey Sachs: How the Wall Street Journal Misleads About Federal Jobs

January 14, 2012

The editorial board of Rupert Murdoch’s Wall Street Journal has a simple game. They want to cut taxes for the rich and government services for the rest, and end regulations of banks and the environment. They support taxpayer-financed bailouts of Wall Street when needed. They will twist any facts in the service of these goals. Today’s lead editorial, with its graph of “Obama’s Growing Payroll,” is a perfect example of how the WSJ misleads rather than informs. The gist of the editorial is that Obama is presiding over a massive increase of government, exemplified by the surge of civilian employees. The graph shows a striking rise of federal employment from around 1.875 million in 2008 to 2.1 million in 2011. (I reproduce this as Figure 1 below). The Journal neglects the fact that today’s 2.1 million workers is actually identical to the number of Federal employees in 1981 at the start of the Reagan Administration, 1989 at the end of the Reagan Administration, and 1993 at the end of the Bush Sr. Administration. The numbers went down slightly after that (by around 200,000-300,000 workers as of the late 1990s) with a decline in Defense Department civilian employees, a decline that was probably offset by the rise of private defense contractors (not included in the OMB tables). There is no long-term trend at all. (I show this as Figure 2 below). The Journal endlessly tries to portray the “growth of government” as a social welfare system run amok. The editorial implies that President Obama is repeating LBJ’s Great Society by building up giant welfare and regulatory programs reflected in the “boom” of federal employment. But where did this so-called “boom” (actually a tiny boomlet) actually appear? In Great Society programs? In entitlements? No, the increase in employment is mainly in national-security-related employment : the military, homeland security, and justice (including prisons, FBI, drug enforcement, and the like). Welfare and entitlements programs little to do with. If we parse the increase of 225,000 federal jobs between 2008 and 2011, three-fourths came in the Defense Department (+84,000), Homeland Security (+28,000), Justice (+13,000), and Veteran’s Affairs (+45,000). Of course the Journal’s entire argument is absurd, a red herring, since the increase of 225,000 jobs represents all of 0.0017 of U.S. non-farm employment of 131 million workers. The entire federal civilian workforce is a mere 1.6 percent of the total non-farm employment. The Journal is taking tiny fluctuations and making them into a federal case, so to speak, for its propagandistic purposes. The actual fact of relevance is that the federal government has been declining as a share of national non-farm employment, from 2.3 percent in 1981 to 1.6 percent in 2011. (I show this in Figure 3 below). Partly this is because services that government should be providing have instead been outsourced to political cronies (especially among defense and security contractors). Partly its because of the true shrinkage, not expansion, of the federal government’s programs relative to GDP in non-security activities such as the environment, job training, community development — the matters that benefit poor and working class households, who don’t, incidentally, read the Wall Street Journal . The big lie of our time is that the federal government is expanding out of control. Yes, there is undoubted waste, especially in military outlays and in outlays for over-priced private health services. The Journal is a promoter of that variety of waste, the kind that benefits the 1 percent represented by powerful lobbyists, and that hurts the rest of society. For government services that count for the 99 percent, the federal government is shrinking, alas, no matter which phony figures the Wall Street Journal throws our way. Figure 1. Federal Employment 2001-2012, Source: OMB Figure 2. Federal Employment, 1981 to 2011, Source: OMB Figure 3. Federal Employment as a Percent of Non-Farm Employment, Source: OMB and Bureau of Labor Statistics

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Marty Zwilling: Texting Is Killing Real Business Communication

January 13, 2012

Whether it’s a business or personal interaction, multiple studies show that as much as 50-65 percent of the communication is nonverbal. That means that people who are addicted to text messaging and email may be sending only half the message, and receivers often misinterpret even that half. Yet the use of text messaging for business purposes continues to grow, in concert with more of Gen-Y entering the workplace, and a continuing increase in the global rate of texting by everyone. This total rate for 2011 has been estimated at 7 trillion, or nearly 225,000 text messages sent every second, according to the Quora statistics website. But are these text messages an efficient and appropriate business tool? Where body language is part of the message, it definitely is not. Let’s look at the most commonly recognized forms of body language, and see how they apply to business: Eye contact. The eyes are the most powerful part of our body language, and can express everything from happiness, annoyance, interest, to pain. Frequent eye contact is interpreted as honesty and forthrightness. Staring is interpreted as too aggressive. These are obvious in person, but lost in a text message. Posture. If you are trying to appear dominant or authoritative, stand erect with shoulders back. A slumped position usually indicates insecurity, guilt, or weakness. A dominant sounding text message, on the other hand, generates anger rather than acceptance. Mirroring. Most people feel more comfortable and open with people in a similar position to themselves. An example would be sitting down to meet with a key vendor, rather than standing to deliver demands. Good managers practice this one for personnel issues. Handshake. This, of course, comes into play to signal openness or goodwill at the beginning of an interaction, and agreement at the end. Palm-to-palm contact is important for sincerity. This cultural icon is totally missing from text messages and emails. Hand-to-face. Even when the words sound good, hand-to-face movements such as holding the chin or scratching the face shows concern or lack of conviction. If a person is covering his mouth while telling you something, he may be lying. Facial expression. A critical message delivered with a smiling face will have a totally different impact than one delivered with an angry face. ‘Smiley face emoticons’ were invented to simulate this in text messages, but they don’t always work, because the sincerity is lost. Arms and legs position. Folded arms or crossed legs, perhaps turning away slightly, indicates a lack of interest and detachment. Later uncrossed arms and legs may be a sign of acceptance of your position or terms. An extrovert will have toes pointed out, introvert will keep them pointed in. None of these come through in texting. Space occupied. Some people stand up and move around to be more dominant, maybe even threatening. Even sitting, you can stretch your legs to occupy more space. Standing while talking on the phone will make your voice sound more urgent. Maybe all CAPS will satisfy this one. Sure, there are many cases where a 10-word text message, or 140 character tweet will communicate a simple message more efficiently than a face-to-face discussion. But most business processes, like negotiating a contract, closing a sale, customer support, or managing employees, are much more complicated than just words. Overall, the most successful people in business learn to use the right tool for the right job. I’m supportive of using text messaging for agreeing on a time and place for a customer visit, but when I read that text messages are the new pink slips for layoffs, that’s just wrong!

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Republican Primary’s Next Stop: Foreclosureville

January 12, 2012

The battle for the Republican presidential nomination has so far been waged in states relatively untouched by the Great Recession. Now it heads to three states with some of the country’s highest rates of unemployment and foreclosures. In South Carolina, where primary voters hit the polls on Jan. 21, unemployment’s flying high at 9.9 percent. After that, elections will be in Florida, with a 10 percent unemployment rate, and Nevada, where it’s 13 percent. The jobless rates in Iowa and New Hampshire are 5.7 percent and 5.2 percent, respectively. Nevada leads the nation in both joblessness and foreclosures. One out of every 16 homes in the state was subject to some type of foreclosure filing in 2011, according to Irvine, Calif.-based RealtyTrac , an online marketplace and foreclosure data firm. It’s the fifth consecutive year the Silver State has topped RealtyTrac’s list. Florida’s seventh, with filings on more than 2 percent of homes. Frontrunner Mitt Romney hasn’t pandered to struggling Nevada homeowners. He told the Las Vegas Review-Journal in October he supports the government stepping aside: “Don’t try to stop the foreclosure process. Let it run its course and hit the bottom.” It’s not likely Romney will have much more to say on his next visit. The candidates didn’t talk foreclosure policy in Iowa, even though the state attorney general is leading national foreclosure settlement negotiations with the country’s biggest banks. Only Jon Huntsman, who didn’t bother to campaign in the Iowa, has taken a position on the settlement. While the candidates have spoken in broad terms about hard times and recovery, they’ve offered few specifics on unemployment policy. Could that change in South Carolina? For the past year lawmakers there have pushed controversial reforms to the unemployment insurance system. State Republican lawmakers succeeded last year in reducing the duration of state-funded jobless aid from 26 to 20 weeks. Now they’re pushing to require drug testing and to force the long-term jobless to perform part-time volunteer work. The South Carolina state senators leading the effort said they don’t expect the GOP primary to bring their cause extra national attention (though Newt Gingrich and Rick Perry have said in passing that they support drug testing the jobless, so maybe that proposal will get more scrutiny). “The unemployment issues and that sort of thing haven’t been anything anybody’s talked about with any of the candidates that I’m aware of,” state Sen. Kevin Bryant (R), a leading unemployment reformer, said in an interview. “I think for your average voter, that’s probably too specific to campaign on.” The economy was already a top concern in New Hampshire, despite the state’s relatively strong economy. Six out of 10 New Hampshire voters told exit pollsters the economy was their top concern, and 94 percent said they were worried about it.

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Too Many Young Veterans Can’t Find Jobs

January 10, 2012

Young military veterans saw little to celebrate in last week’s much cheered unemployment report. Data released the same day by the Department of Labor revealed that one in three young veterans was out of a job in the last quarter of 2011 — an employment picture even worse than a year earlier, when one in five couldn’t find work. This rate is more double that of their civilian peers; the unemployment rate for all Americans age 18-24 actually decreased over the same time period. “I definitely think it’s getting worse out there,” said Daniel Hutchison, 29, who started a one-man transition assistance group, Ohio Combat Veterans, last May. “Part of that has to do with the economy across the board. The unemployment rate is still high, and with veterans, it’s even more complicated.” Veterans don’t always know how to translate their skills in the battlefield for employers back home. And while they look for work, they’re often battling post-traumatic stress disorder, which can be compounded, Hutchison said, by not finding a job. “Veterans will sell themselves short. On their r&eacutesum&eacutes, they’ll just say, ‘I was field artillery in Iraq for 16 months.’” Hutchison continued. “So I’ll say, ‘But you have leadership skills. How much training did you do? How many people did you manage?’ These are all attributes that these veterans have, but they can’t really see it.” After five years in the U.S. Army, Hutchison returned home in 2007 expecting to pick up his previous construction job or something like it in the industry. But when he came back from Iraq, the housing bubble had popped. “In today’s economy you can’t give away a house, so I was taking pretty much any little thing I could get,” he recalled. He had worked as a medic in the Army and thought that offered employment skills, but he didn’t hold any civilian certifications. Hutchison now runs Ohio Combat Veterans by himself, with some donations and his own Army benefits. Since last May, he’s helped about 100 veterans — and they’ve helped him, too. “Just running this program was real therapeutic for me,” he said. While organizations like Hutchison’s can be critical for catching veterans who have slipped through the cracks, some who focus on unemployment issues and veterans think the problem goes beyond PTSD and the difficulty of translating military skills for civilian employers. Ted Daywalt, who runs VetJobs.com in Georgia, observes that most young unemployed veterans are part of the National Guard or the Reserves, and employers hesitate to hire them not because of weak r&eacutesum&eacutes, but because of the increase in Pentagon calls for Reserve and Guard members to return to service. A new policy on call-ups implemented in 2007, combined with a law that requires companies to restore reservists to their jobs after they come home, means that employers are more reluctant than ever to hire veterans. “An employer cannot run their business if their most critical asset, human capital, is being taken away for 12 to 24 months,” Daywalt said. Some 180,000 people visit VetJobs.com every month, and they receive dozens of calls a day, Daywalt said. The most common plea, he continued, comes from a veteran in the Reserves or Guard who has just been called up and then suddenly finds himself laid off, with his employer blaming the pressures of the weak economy. According to Daywalt, who is a Vietnam-era veteran and a reservist for 21 years, some 65 to 70 percent of employers won’t hire from the National Guard or the Reserves, even though this type of discrimination is illegal. “Employers would prefer to hire someone out of the military, but they’re called up so frequently, no one wants to hire them,” he said. “As a reservist, I get real upset. But when I put on my CEO hat, I totally understand why they’re doing it.” Daywalt has testified before Congress multiple times on the subject and is firm on this point: Veterans who are not part of the Reserves or the National Guard typically find work, he said. But unless there is a change in the call-up policy, he expects unemployment for young veterans to keep rising. “In 2007 in a hearing at Congress, I said the unemployment rate is going to go up to 20 percent, and people scoffed,” Daywalt recalled. “This year you’re going to see it go up to 50 or more percent.”

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Report: Fannie Mae CEO Out

January 10, 2012

WASHINGTON — The executive who was appointed to lead mortgage giant Fannie Mae in 2009 after the federal government seized the company plans to step down as its CEO. Michael J. Williams announced Tuesday he will continue as CEO and as a director until a successor is found. “I decided the time is right to turn over the reins to a new leader,” he said in a statement. Williams, 53, has been a Fannie employee since 1991. The government rescued Fannie Mae and Freddie Mac in September 2008 after the two mortgage firms absorbed huge losses on risky loans that threatened to topple them. Since then, a government regulator has controlled the two firms’ financial decisions. Pressure has been building for the government to eliminate or transform the two companies and reduce taxpayers’ exposure to further losses. So far, Fannie and Freddie have cost taxpayers more than $150 billion – the largest bailout of the financial crisis. They could end up costing up to $259 billion, according to their government regulator, the Federal Housing Finance Administration, or FHFA. Williams oversaw the restructuring of Fannie’s foreclosure-prevention efforts and managed the troubled firm’s reorganization and transition to conservatorship. Freddie’s CEO, Charles E. “Ed” Haldeman Jr., announced in October that he would resign within the next year. The departures amount to the biggest leadership shake-up for the agencies since their takeover. Williams, Haldeman and other Fannie and Freddie executives faced intense questioning on Capitol Hill in November over tens of millions of bonuses and compensation they received since 2009. Twelve executives at the firms received roughly $35.4 million in total salary and bonuses in 2009 and 2010. Williams earned about $9.3 million for the two years. Members of Congress are seeking to end those bonuses and align salaries with other federal employees who earn much less. In December, the Securities and Exchange Commission brought civil fraud charges against six former executives at the two firms, including former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron. The executives were accused of understating the volume of high-risk subprime mortgages Fannie and Freddie held just before the housing bubble burst. No current Fannie or Freddie employees were charged or implicated. Williams’ resignation might also intensify calls for the naming of a new director of FHFA. Edward DeMarco has served as the oversight agency’s acting director since September 2009. But some lawmakers complain that DeMarco hasn’t done enough to address rising foreclosures or to ease industry lending standards that critics call too restrictive. The Obama administration nominated Joseph Smith, a North Carolina banking commissioner, to succeed DeMarco in November 2010. But Smith’s confirmation was stalled by Senate Republicans, and he withdrew from consideration a year ago. Washington-based Fannie and McLean, Va.-based Freddie buy loans from lenders, package them into bonds with a guarantee against default and sell those bonds to investors. Together, the companies own or guarantee about half of all U.S. home mortgages – about 31 million home loans – and nearly all new mortgages. Fannie was created in 1938 in the aftermath of the Great Depression. It was privatized 30 years later to limit budget deficits during the Vietnam War. In 1970, the government formed Freddie.

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Arianna Sits Down With Deepak Chopra And Dylan Ratigan

January 10, 2012

Arianna Huffington is joining spiritual thinker Deepak Chopra and author and television host Dylan Ratigan on Tuesday night for a conversation about money in politics — and you can watch it live. On the eve of the 2012 New Hampshire primary, the American political system finds itself in a peculiar place. While the unemployment rate sits at 8.5%, campaign finance laws allow Super PACs to take in unlimited funds from wealthy donors and large corporations. In a timely discussion, Chopra, Huffington and MSNBC host Ratigan — whose book “Greedy Bastards: How We Can Stop Corporate Communists, Banksters, and Other Vampires from Sucking America Dry” has just been published — will talk about corporate greed and American politics. The event, which is part of Chopra’s “The Conversation” series , begins at 7 PM ET, and you can watch a live stream of the conversation right here. Watch the live stream below: deepakhomebase on livestream.com. Broadcast Live Free

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Don Tapscott: 20 Big Ideas for 2012, Part Two

January 10, 2012

What will happen in 2012? In the spirit of the aphorism “The future is not something to be predicted, it’s something to be achieved,” let me suggest 20 transformations (which The Huffington Post will publish in four groups of five; read the first one here ). We need to make progress on these issues now to prevent next year from being a complete disaster. These ideas are based on the research I did with Anthony D. Williams to write our recent book which comes out in early 2012 as a new edition entitled Macrowikinomics: New Solutions for a Connected Planet . All 20 are based on the idea that the industrial age has finally run out of gas and we need to rebuild most of our institutions for a new age of networked intelligence and a new set of principles — collaboration, openness, sharing, interdependence and integrity. These big ideas will be the focus of much of my writing next year. 6. The Arab seasons: Getting beyond wiki revolutions to democratic, secular governments In Egypt and Tunisia we saw a revolution in how to foment revolutions. Now we need to reinvent how to build democracies. Enabled by social media, anti-government leadership in these two countries came from the people themselves rather than a traditional vanguard. Tools such as Facebook, YouTube and Twitter radically lowered the cost and effort of collaboration and undermined state censorship. Now leaders are beginning to use the same tools to help build functional democracies. “Social networks, Twitter and texting were critical to the revolution,” said Yassine Brahim, Tunisia’s new minister of infrastructure and transport, last year at Davos. “We are going to leverage social media to build a horizontal democracy rather than a vertical democracy.” We must ensure that the wiki revolutions result in just societies, and not be taken over by the old regime or other regressive forces. 7. As the Old Media collapse, improve how we inform ourselves as societies Traditional media such as newspapers and magazines continue to decline, in turn eroding the traditional ways we inform ourselves. Meanwhile, there is an information explosion being caused by new media: Between the beginning of history and the year 2003, five exabytes of information were recorded. Today five exabytes of information are recorded every 24 hours. There are new dangers of information overload, balkanization, and the fragmentation and credibility of online content. Yet with the explosion of “the third screen” — mobile devices — there are vast new opportunities to inform people in the farthest reaches of the developing world. There are new emerging models for societies to be informed. How can we avoid a world where people only receive the information they agree with — isolating us into self-reinforcing echo chambers of content? How do we ensure quality, good judgment, investigative reporting, and balance? New thinking suggests each of us can become a media citizen where we manage our media diet to be appropriately informed. What can business, government and the media industry do to develop media citizenry? 8. Ending the government debt crisis: New models for cheaper, better government The concept of “Reinventing Government” has been around for two decades. But its time has come. The sovereign debt crisis in Europe and the spiraling debt in America and other Western countries call for more than tinkering. Coupled with citizen resistance to increased taxes, there is an emerging crisis where the basic funding for government operations is threatened globally. There is now a new medium of communications that only changes the way we innovate and create goods and services — it can change the way societies create public value. Governments can become a stronger part of the social ecosystem that binds individuals, communities, and businesses — not by absorbing new responsibilities or building additional layers of bureaucracy, but through willingness to open up formerly closed processes and data to broader input and innovation. Governments can become a platform for the creation of services and for social innovation. It provides resources, sets rules and mediates disputes, but allows citizens, non-profits and the private sector to share in the heavy lifting. This is leading to a change in the division of labor in society about how public value is created, and holds the promise of solving the debt crisis. 9. New models of regulation: The citizen regulator The financial meltdown illustrated how the speed, interdependency and complexity of the new realities make traditional centralized rule-making and enforcement increasingly ineffective. There are too many innovations, products, relationships and activities to effectively oversee and regulate. After years of chronic underfunding many regulatory agencies are ill-equipped to pick up the slack of the past, let alone confront novel challenges for which they have neither the resources nor the expertise. If the traditional approach is inadequate, what can supplement it? Effective regulation is more likely to stem from efforts that increase transparency and public participation. Rather than simply regulating, governments can drive transparency and civic engagement in industries from financial services to energy — not as a substitute for better regulation but as a complement to traditional command and control systems. But do individuals and civil society organizations have the capacity to help regulatory bodies develop more effective systems of monitoring and enforcement? Do connected citizen regulators really have the power to change behavior of corporations and other institutions? What needs to change to make this a reality? What are the implications for traditional regulatory approaches? 10. Kick-start job creation through entrepreneurship The “jobless recovery” is an oxymoron. There is no recovery unless it is inclusive. Unemployment levels around the world are brutally high, particularly for young people. We urgently need to create more jobs, and we know that 80 percent of new jobs come from companies that are less than five years old. The good news: every day it’s increasingly easy to start a business. The internet provides young companies with unprecedented access to the resources and promotional tools once associated only with larger and older corporations. And start-ups have the advantage of not being saddled with bureaucracy and other legacy costs. To create jobs governments should adopt fresh policies to encourage entrepreneurship. Entrepreneurs also need more than just money — they need encouragement in the form of a supportive environment, access to resources, talent, innovations, and customers. We need to break the entrepreneurship logjam. This article originally appeared on Reuters.com Don Tapscott is the author of14 books, including (with Anthony D.Williams) MacroWikinomics: New Solutions for a connected Planet. He is an Adjunct Professor at the Rotman School of Management, University of Toronto.

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Bruce Judson: The Foreclosure Crisis: A Nation in Denial

January 9, 2012

As we start the New Year, the executive branch and Congress continue to pretend the gravest risk to our economy and social stability does not exist: the ongoing foreclosure crisis. The financial crisis began with the housing crisis and it will not end until we resolve housing. Government policymakers who seemingly ignore this basic fact are leading the nation to another potential catastrophe. Last week, a number of important events occurred in Washington, including important recess appointments by President Obama. However, the most noteworthy event did not make front page news: the Federal Reserve’s (apparently) unsolicited memo to the committees of Congress that oversee financial services warning of the dangers the current housing market poses for the economy. This represents an extraordinary action and underscores both the seriousness of the continuing crisis and the absence of meaningful discussion of the problem in Washington. Bernanke’s memo reviewed federal actions to date and effectively concluded that they were unlikely to solve this national tragedy. The memo concluded , in part: The challenges faced by the U.S. housing market today reflect, in part…a persistent excess supply of homes on the market; and losses arising from an often costly and inefficient foreclosure process (and from problems in the current servicing model more generally)… Absent any policies to help bridge this gap, the adjustment process will take longer…pushing house prices lower and thereby prolonging the downward pressure on the wealth of current homeowners and the resultant drag on the economy at large. This memo is notable for several reasons. First, it’s important to remember that when the Fed speaks, it does so in sober, limited terms. So an unprompted Fed warning suggesting “a persistent excess of supply” and a “resultant drag on the economy” is comparable to the Secretary of Homeland Security holding a press conference to warn of the risk of an imminent national emergency. Second, an unprompted memo from Bernanke to the House means that he is so deeply worried he felt the need to speak out in as strong a voice as his position permits. Third, the Fed rarely speaks on issues unrelated to its direct activities. Indeed, The Wall Street Journal subsequently wrote that, “

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Larry Summers: It’s ‘Right To Wonder’ Why We’re Rolling Back Safety Nets

January 9, 2012

By Lawrence Summers CAMBRIDGE, Mass., Jan 8 (Reuters) – Americans have traditionally been the most enthusiastic champions of capitalism. Yet a recent American public opinion survey found that just 50 percent of people had a positive opinion of capitalism while 40 percent did not. The disillusionment was particularly marked among young people 18-29, African Americans and Hispanics, those with incomes under $30,000 and self-described Democrats. Three elections in a row in the U.S. have been bloodbaths by recent standards for incumbents, with the left side doing well in 2006 and 2008 and the right winning comprehensively in 2010. With the rise of the Tea Party on the right, and the Occupy movement on the left, this suggests far more is up for grabs than usual in this election year. So how justified is disillusionment with market capitalism? This depends on the answer to two critical questions. Do today’s problems inhere in today’s form of market capitalism or are they subject to more direct solution? Are there imaginable better alternatives? The spread of stagnation and abnormal unemployment from Japan to the rest of the industrialized world does raise doubts about capitalism’s efficacy as a promoter of employment and rising living standards for a broad middle class. This problem is genuine. Few would confidently bet that the U.S. or Europe will see a return to full employment as previously defined within the next five years. The economies of both are likely to be constrained by demand for a long time. But does this reflect an inherent flaw in capitalism or, as Keynes suggested, a “magneto” problem (like the failure of a car alternator) that can be addressed with proper fiscal and monetary policies, and which will not benefit from large scale structural measures? I believe the evidence overwhelmingly supports the latter. Efforts to reform capitalism are more likely to divert from the steps needed to promote demand than to contribute to putting people back to work. I suspect that if and when macroeconomic policies are appropriately adjusted, much of the contemporary concern will fade away. That said, sharp increases in unemployment beyond the business cycle – one in six American men between 25 and 54 are likely to be out of work even after the U.S. economy recovers – along with dramatic rises in the share of income going to the top 1 and even the top .01 percent of the population and declining social mobility do raise serious questions about the fairness of capitalism. The problem is real and profound and seems very unlikely to correct itself untended. Unlike cyclical concerns there is no obvious solution at hand. Indeed the observation that even Chinese manufacturing employment appears well below the level of 15 years ago suggests that the problem’s roots lie deep with the evolution of technology. (http://www.nytimes.com/2012/01/05/us/harder-for-americans-to-rise-from-lower-rungs.html?_r=1 ) The agricultural economy gave way to the industrial economy because progress enabled demands for food to be met by only a small fraction of the population, freeing large numbers of people to work outside agriculture. The same process is underway today with respect to manufacturing and a substantial range of services reducing employment prospects for most citizens. At the same time, just as in the early days of the industrial era, the combination of substantial dislocations and greater ability to produce at scale is enabling a lucky few to acquire great fortunes. The nature of the transformation is highlighted by the 50-fold change in the relative price of a television set of a constant quality and a day in a hospital over the last generation. While it is often observed that wages for median workers have stagnated, this obscures an important aspect of what is occurring. Measured via items such as appliances or clothing or telephone service where productivity growth has been rapid, wages have actually risen rapidly over the last generation. The problem is that they have stagnated or fallen measured relative to the price of housing, health care, food and energy or education. As fewer and fewer people are needed to meet the population’s demand for goods like appliances and clothing, it is natural that more and more people work in producing goods like health care and education where outcomes are manifestly unsatisfactory. Indeed as the economist Michael Spence has documented, a process of this kind is underway; essentially all employment growth in the U.S. over the last generation has come in non-traded goods. The difficulty is that in many of these areas the traditional case for market capitalism is weaker. It is surely not an accident that in almost every society the production of health care and education is much more involved with the public sector than the production of manufactured goods. There is an imperative to move workers from activities like producing steel to activities like taking care of the aged. At the same time there is the imperative of shrinking or least slowing the growth of the public sector. This brings us to the charge that the governments of industrial market capitalist societies are bankrupt. Even as market outcomes seem increasingly unsatisfactory, budget pressures have constrained the ability of the public sector to respond. How and when – and not whether – basic programs of social protection will be cut back, is now back on the table. The basic solvency of too many capitalist states seems in question. Again the problems are very real. While I believe more than most that the U.S. government will be able to borrow on very attractive terms for a long time, if as I fear private borrowing remains depressed, there is no denying that the current path of planned spending and planned revenue collection are inconsistent. And Europe is teaching us that markets can take significant fiscal problems and make them catastrophic by becoming too alarmed too rapidly. At one level the answer here is simply to insist on more political will and courage. But at a deeper level, citizens of the industrial world who believe that they live in progressive societies are right to wonder why increasingly affluent societies need to roll back levels of social protection. Paradoxically, the answer lies in the very success of capitalism which has made the opportunity-cost of an individual teaching or nursing or administering that much more expensive. When outcomes are unsatisfactory, as they surely are at present, there is always a debate between those who believe that the current course needs to pursued with increased vigor and those who argue for a radical change in direction. That debate is somewhat beside the point in the case of market capitalism. Where it has been applied it has been an enormous success. The challenge for the next generation is that while that success will increasingly be taken for granted and indeed will become an increasing source of frustration in these pinched times, its success cannot be matched outside the market’s natural domain. It is not so much the most capitalist parts of the contemporary economy but the least – those concerned with health, education and social protection – that are in most need of reinvention.

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How Obama Might Be Able To Survive Despite High Unemployment

January 8, 2012

WASHINGTON — Unemployment is higher than it’s been going into any election year since World War II. But history shows that won’t necessarily stop President Barack Obama from reclaiming the White House. In a presidential election year, the unemployment trend can be more important to an incumbent’s chances than the unemployment rate. Going back to 1956 no incumbent president has lost when unemployment fell over the two years leading up to the election. And none has won when it rose. The picture is similar in the 12 months before presidential elections: Only one of nine incumbent presidents (Gerald Ford in 1976) lost when unemployment fell over that year, and only one (Dwight Eisenhower in 1956) was re-elected when it rose. Those precedents bode well for Obama. Unemployment was 9.8 percent in November 2010, two years before voters decide whether Obama gets to stay in the White House. It was down to 8.7 percent in November 2011, a year before the vote. It fell to 8.5 percent in December and is expected to fall further by Election Day. Even so, the unemployment rate is still at recession levels. And former Massachusetts Gov. Mitt Romney, who is contending with other Republican candidates to challenge Obama in November, has made the weak economy the centerpiece of his campaign. In a statement Friday, Romney said Obama’s policies “have slowed the recovery and created misery for 24 million Americans who are unemployed, or stuck in part-time jobs when what they really want is full-time work.” An Associated Press-GfK poll of American adults last month found that 60 percent of American adults disapprove of Obama’s performance on economic issues. Obama can take comfort in President Ronald Reagan’s experience. In November 1982, the economy was in the last month of a deep recession, and unemployment was 10.8 percent, the highest since the Great Depression. A year later, unemployment was down to 8.5 percent. By November 1984, it was still a relatively high 7.2 percent, but the downward trend was unmistakable. Reagan was re-elected that month in a 59-41 percent landslide. “A sense that things are on the mend is really important to people,” says Andrew Kohut, president of the Pew Research Center. Three examples: _ President Richard Nixon got a boost from falling unemployment, which dropped from 5.9 percent in November 1970 to 5.3 percent when voters went to the polls in November 1972. _ President Jimmy Carter was hurt by rising unemployment – from 5.9 percent in November 1978 to 7.5 percent in November 1980. _ President George H.W. Bush, who seemed invincible after the U.S. drove Saddam Hussein’s Iraqi forces out of Kuwait in early 1991, wound up losing in November 1992. The unemployment rate was 7.4 percent that month, up from 6.2 percent two years earlier. The trend holds up even when the changes in unemployment are slight. President Bill Clinton was re-elected handily even though the unemployment rate was only 0.2 percentage points lower in November 1996 than it had been two years earlier and was the same as it had been a year before. Under Obama, unemployment peaked at 10 percent in October 2009, nine months into his presidency, before it began coming down in fits and starts. Along the way it stayed above 9 percent for 21 straight months. But unemployment has now dropped four months in a row. And the economy added 1.6 million jobs in 2011, the most since 2006. Of course, unemployment isn’t everything. Obama’s prospects could be changed by the strengths or weaknesses of whoever emerges as his Republican opponent or by a triumph or setback in foreign policy, perhaps in Afghanistan or the Middle East. Eisenhower no doubt benefited from having an opponent, the high-brow former Illinois Gov. Adlai Stevenson, who had trouble connecting with ordinary voters. Ford may have been sunk by his unpopular decision to pardon former President Nixon. President Jimmy Carter’s prospects were surely dimmed by the lengthy hostage crisis in Iran – and a failed attempt to end it with a military rescue. The third-party candidacy of billionaire Ross Perot – not just an increase in unemployment – may have torpedoed President George H.W. Bush’s re-election campaign in 1992 by dividing his supporters and giving an edge to challenger Clinton. And there’s no guarantee that unemployment will continue to slide through Election Day. “We’ve seen this before … periods when it seemed like things were getting better only to see them grind to a halt,” says John Challenger, CEO of the staffing company Challenger, Gray & Christmas. “I’m not yet convinced.” Americans who have given up looking for work don’t count as unemployed in the official tally. But if they get more optimistic, they might re-enter the job market and join the ranks of the officially unemployed, pushing the rate back up, says Republican strategist Rich Galen. Galen says what matters is how the economy looks in late summer when undecided voters start making up their minds. “What people perceive in August is what they take to the polls with them.” Three dozen economists surveyed by The Associated Press in December see an 18 percent chance that Europe’s debt crisis will cause the U.S. economy to slip back into recession. If 2012 brings a recession, Obama would surely lose, writes Yale University’s Ray Fair, who feeds economic forecasts into a computer model to predict elections. Pew’s Kohut also warns that voters are wary after seeing the economy fail to achieve liftoff two and a half years after the Great Recession officially ended in June 2009. “The public is going to be in a show-me mood,” he says. Still, the online betting market Intrade on Friday put the chances of an Obama victory in November at 52.5 percent.

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The U.S. Cities With The Highest And Lowest Unemployment Rates

January 7, 2012

Unemployment rates fell in three-quarters of large U.S. cities in November. The second straight month of declines for most major markets suggests the modest improvement in the job market is widespread. The Labor Department said Wednesday that unemployment rates fell in 277 metro areas. They rose in 71 and were unchanged in 29. In October, 281 cities reported having lower unemployment rates, the most in seven months. The metro area unemployment data can be volatile because they aren’t adjusted for seasonal variations, such as hiring for the winter holiday. Nationwide, the unemployment rate fell to 8.6 percent in November, the lowest level in 2 ½ years. Employers added about 120,000 net jobs. Still, a big reason the unemployment rate fell was because more people said they have given up on their job searches and dropped out of the work force. Below are the cities with the highest and lowest rates:

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PayPal Testing Out New In-Store Payment System

January 7, 2012

By Alistair Barr (Reuters) – EBay Inc’s PayPal unit is testing in-store payments with Home Depot, one of the largest retailers in the United States, as the online payments provider moves to expand into the physical world of brick and mortar. A pilot program for PayPal’s new point-of-sale, or POS, technologies is being run in five Home Depot stores and involves a “small number” of PayPal employees, PayPal spokesman Anuj Nayar said. PayPal is a dominant player in online payments, with over 100 million users. But the business is trying to expand into offline payments, a much larger market. The move pits the eBay unit against payments giants, including Visa Inc, MasterCard Inc and American Express Co. In September, PayPal pitched its new in-store payments system to about 120 retailers, including Sports Authority, at an event in Los Angeles. EBay Chief Executive John Donahoe spoke about the initiative several times last year, but the company had not disclosed which retailers agreed to test it first. While the Home Depot trial is small, Wall Street analysts are excited about the potential. “We believe a full Home Depot roll out would increase PayPal’s addressable market by more than 35 percent overnight,” Gil Luria, an analyst at Wedbush, wrote in a note to investors on Friday. “Although penetration would start at zero, we believe that by adding value to consumers and merchants, PayPal may eventually approach penetration rates comparable to its online presence.” (Reporting by Alistair Barr; editing by Carol Bishopric and Andre Grenon)

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The Next Big Franchise Opportunity?

January 6, 2012

Dunkin’ Donuts has kicked off 2012 with big plans for an aggressive expansion — and that includes a range of new opportunities and incentives for potential franchisees. The quick-service coffee and doughnut chain seeks to double its U.S. locations over the next 20 years, providing exponentially more opportunities for franchisees, job seekers and doughnut consumers alike. Currently, the company has about 9,500 locations, 7,000 of which are in the U.S. and predominantly franchisee-operated. Why the big push now? “The opportunity is there,” said Grant Benson, vice president of franchise and market planning for Dunkin’ Brands, the Canton, Mass.-based parent company of Dunkin’ Donuts, noting that the first part of the expansion plan will be in the Southeast and Midwest states, as well as in other regions where the company is already seeing strong growth opportunities, including western Pennsylvania, Texas, Denver, Nebraska and Mississippi. “We will ramp up growth,” he said. “There’s an embracing of our opportunities by existing franchisees looking to grow and add to their networks and by new franchisees seeking business opportunities.” According to Benson, the company’s key criteria for potential franchisees includes previous business experience, primarily restaurant and/or quick-service restaurant experience, and background in building teams and managing P&Ls. To serve as incentive for franchisees in these new markets, Dunkin’ plans to provide fee reductions, such as a “material reduction” in royalties, for the first few years of operation to “help reduce some of the early pressures” of buying a franchise. The availability and specifics of the incentives vary on a market by market basis. As far as helping franchisees get the rest of the capital they need to start, Benson said Dunkin’ doesn’t guarantee financing, but works “very closely with certain national lenders to help bring them together with franchisees.” He added, “The best sources of capital tend to be local sources in the areas franchisees are locating their businesses. We help franchisees make presentations to those banks and get information to the banks to help them understand the company.” Besides adding locations, Dunkin’ plans to add jobs. According to Dunkin’, each new store adds an average of 20 to 25 new full-time and part-time employees. “In some of the smaller or rural communities, the effect will be noticeable if even three or four more stores open,” Benson says. “It doesn’t take a lot of units opening to create a lot of jobs and increase the tax bases in these communities.” While Dunkin’ claims each new store adds an average of 20 to 25 new full-time and part-time jobs, aggressive expansion is often accompanied by potential problems, such as encroachment, in which franchisees’ locations open so closely together, they end up competing with each other. But with Dunkin’s expansion, Benson said he expects “just the opposite. Growth is moving away from markets that are already heavily penetrated. We’re going into markets where there’s a lot of room, and even in markets we have heavily penetrated, we have a good performance of not impacting existing stores.” One of Dunkin’s biggest competitors, Starbucks, with about 11,000 U.S. locations, also expanded aggressively before the recession, doubling its number of company-owned stores from 2005 to 2007 before having to close hundreds of stores and laying off thousands of employees. Benson said he isn’t concerned about the Starbucks precedent. “It gives you reason to learn and be careful. But it’s about taking a look at the proximity and the impact of putting stores too close together, and analyzing and planning that very carefully. We’re not experiencing that [issue] even in markets more heavily penetrated than Starbucks. And we continue to be cognizant of it and to look at each and every site.”

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Maureen Ryan: ‘House of Lies’ Cast Can’t Save The Business Comedy

January 6, 2012

When it comes to corporate shenanigans, it’s safe to say that the American public is not exactly in a forgiving mood. So it would take an especially deft TV program to make us enjoy the antics of sharklike business consultants whose sole goal is to make millions by offering worthless advice to hapless or arrogant Fortune 500 clients. To make those engaged in such cynical transactions appealing, or merely interesting, a show’s writing would have to be very, very smart and its characters would have to be extraordinarily charismatic indeed. Despite an insanely talented cast, ” House of Lies ” (Sundays at 10 p.m. EST on Showtime) fails on those counts. In the cable realm, “dark comedy” can often mean “depressing comedy,” and that’s not necessarily a bad thing; challenging programs are practically duty-bound to spend time on the less savory aspects of human behavior. But “House of Lies” does nothing but confirm our worst fears about the shadiest aspects of business culture; its overall grimness overpowers its ham-fisted attempts at complexity. You may have always wondered what management consultants actually do, so lead character Marty Kaan (Don Cheadle) turns to the camera regularly to explain that they don’t really do anything except find ways to bamboozle corporate types into signing multi-year contracts that will keep the more-or-less useless advice flowing. “The only thing that we need to figure out is what makes them think they can’t live without us for the next three years, while we infect the host and bleed them dry,” Kaan tells his hot-shot team, which travels the country with him, picking off new fat-cat targets each week. With its snappy pace, its driven characters and its many airport scenes, “House of Lies” superficially resembles Jason Reitman’s 2009 feature “Up in the Air”; but Marty and his crew are far less interesting than the characters in that film, which ended up telling a rather hopeful and aspirational story, despite being set in clinical first-class lounges and business-traveler hotels. “House of Lies” not only doesn’t possess those shreds of optimism, it festoons Marty’s life with a bunch of baggage that feels like it came from a book entitled, “How to Build a Conflicted Cable Character in Five Easy Steps.” Marty’s got a standard-issue crazy ex-wife, a disapproving father, a painful secret about his past and a son with gender identity issues. I’d give “House of Lies” more credit for being courageous about including that last character if he didn’t seem like a direct rip-off of a very similar character from “The Riches.” As for the ex-wife, well, she’s crazy, slutty and hot. Isn’t that all we expect of female characters on cable TV? (Yes, that was a rhetorical question. And yes, Showtime gave us a fantastically complex female character in the first season of ” Homeland ,” which is what makes the women of “Lies” all the more disappointing). The biggest problem with “House of Lies” is that it gives all of its actors so little to do with their many talents. The wonderful Cheadle is never less than 100 percent committed to the role, but Marty is too shallow and predictable to give the actor much to work with. As his second-in-command, Jeannie Van Der Hooven, Kristen Bell rarely gets a chance to show off her astounding range, which is a disappointment to this hardcore “Veronica Mars” fan. Ben Schwartz (best known as Jean-Ralphio on ” Parks and Recreation “) is very good as well, but each of these actors could anchor their own series. Here, they’re cramped by obvious, unsubtle writing and a show that doesn’t seem to have much of an idea of where to take these sardonic characters. This fine cast (which includes the great Glynn Turman as Marty’s dad) deserves better than the perfunctory problems and challenges they’re saddled with here. ” Mad Men ” has taught us that sad, lonely, ambitious people who frequently drink in the middle of the day can be wonderful company, and that business people can be thoughtful and kind as well as tough and ruthless. Perhaps it’s just best to wait for Don Draper and company to come back to our screens (and their return can’t come soon enough). My HuffPost TV colleague Chris Harnick talked to Kristen Bell about her new role. You can check out the full “House of Lies” pilot here . Also, Ryan McGee and I talk about “House of Lies,” as well as PBS’ “Downton Abbey” and IFC’s “Portlandia” on this week’s Talking TV With Ryan and Ryan podcast , which you can find here and on iTunes here . The RSS feed for the podcast is here .

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Kona Farmers Request More Explicit Coffee Labeling

January 6, 2012

HONOLULU — Kona coffee growers want Hawaii’s labeling law modified to provide more details on packages of coffee blends that contain Hawaii-grown beans. Currently, coffee blends sold in the state that contain Hawaii-grown coffee must disclose what percentage is grown in the islands, and it must be at least 10 percent. The Kona Coffee Farmers Association said Thursday that it wants the state Legislature to consider a bill it has drafted that would also identify where the remainder of the blend is grown. If the association is successful an example of a package label would read, “90 percent Panamanian coffee, 10 percent Kona coffee.” The state senator from Kona said Thursday he plans to introduce the bill at the end of the month. “I respect the local community and Kona coffee is a big issue for us,” state Sen. Josh Green, D-Milolii-Waimea, said. For the farmers, it’s about truth-in-labeling and protecting the integrity of a world-famous Hawaii product. Hawaii is the only place in the United States where coffee is grown. Coffee aficionados pay a premium for coffee grown in farms in the Kona district, known for its rich volcanic soil and tropical climate. “The state of Hawaii needs to be with the Kona coffee farmers,” said Colehour Bondera, the association’s president. “We’re the most lucrative agricultural commodity in the state.” A pound of pure Kona coffee can sell for about $25 – more if it’s organic. Not giving consumers all the information about where coffee is grown dilutes the perception of Kona’s quality, Bondera said. When the 10 percent blend law was introduced in 1991, there was a provision mandating disclosing the origin of all coffee in the blend, he said, but pressure from Honolulu coffee blenders resulted in making it voluntary, which none of the major blenders have opted to do. But modifying the law to restore mandatory disclosure would just be a small step for the farmers, he said. Several years ago there was a failed effort to increase the minimum percentage of Hawaii-grown coffee in blends to at least 75 percent. The farmers would prefer only blends that are mostly Kona bear that name. “The name Kona should not be used on any products that’s not mostly Kona,” Bondera said. “When people talk about wines, you can’t a buy a Napa wine when it’s only 10 percent Napa.” Hawaii’s coffee blend labeling law is an offshoot of regulations put in place after a scandal in the 1990s when inexpensive coffee beans grown in Latin America were being passed off and sold as pure Kona coffee. It only applies to blends sold in Hawaii. In August, Safeway agreed to change the label on packages of Kona coffee blend sold in mainland stores in response to concerns from the Kona farmers that it didn’t provide information about what percentage of the famous bean it contains. The company also agreed to begin selling 100 percent Kona coffee in northern and southern California starting this year.

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Nicolás Eyzaguirre: Latin America: What’s Ahead in 2012?

January 6, 2012

A few days after the first sunrise of 2012 kissed the shores of Latin America, it is natural to ask: What does the New Year hold for the region’s economies, especially with Europe still under stress? For sure, a dimmer economic environment, here and abroad. Growth has softened in the larger countries of the region. Looking North, the United States is growing a bit more, but elsewhere activity is softening, including in China — an increasingly important customer for the region’s commodities. Perhaps more importantly, global financial markets are still strained, because many questions about advanced economies remain unanswered: The future course of the European crisis remains the biggest risk. Progress so far toward a comprehensive solution has not yet calmed financial markets. The United States has yet to strike the right fiscal policy balance, with both near-term support for growth and long-term sustainability. Reasons for caution How do we at the IMF add this up to arrive at a new outlook for the Americas in 2012? While our official forecasts won’t be public for a few weeks, we can say that the outlook for the year ahead will not be better than what we thought in October, when our last forecasts were published (we publish new ones on January 24, in the World Economic Outlook Update ; look for our blog update around then). To be sure, we don’t see a recession coming in Latin America if the European crisis remains contained, but weaker growth is clearly in the cards, not least because confidence and commodity prices have been falling. Financial risks continue to dominate the outlook. These days, all eyes are on Europe. While deteriorating conditions there have not yet spilled over to Latin America, we will not be immune if the risks move to the foreground. Eurozone banks account for one-quarter of banking assets in the larger Latin American countries, on average, and many of those banks are not lending or rolling over existing lines in an effort to shore up their balance sheets. But if the simmering crisis in Europe comes to a boil, that process could speed up, especially if euro zone banks are starved for short-term dollar funds (though these banks have prudently funded their Latin American activities largely through local-currency deposits, reducing their vulnerability to a dollar funding squeeze). Fewer external credit lines available to banks could trigger a credit crunch in Latin America, coming on top of a decline in confidence and slower investment and, if the malaise spreads to Asia, falling commodity prices: a toxic mix for growth and stability. Maintaining stability What should countries do in the face of this risky outlook? A lot depends on their current macroeconomic situation. On the monetary policy front, some countries are already taking preemptive steps, moving to neutral or easing, because they have inflation under control and activity is ebbing. (Easing may not be an option in countries with higher inflation or heavy dollarization.) On the fiscal front, the major lesson from Europe today — and from Latin America’s past — is that sound public finances are crucial. In countries where fiscal room permits, there may become a time to spend public money to fight a downturn as was done in 2009. But that time is later, if the risks appear; not now. The European crisis shows how countries with wide fiscal deficits can suffer a sudden loss of credibility that triggers capital flight, even when public debt is at manageable levels. Meanwhile, financial systems should be under extra scrutiny for signs of stress, with a particularly watchful eye for liquidity strains. The good news is that many countries in the region are entering 2012 from a position of strength . These countries have managed their economies and markets skillfully since the 2008 crisis. In particular, the 2008 crisis taught Latin America the importance of maintaining healthy liquidity conditions to avoid a credit crunch, which is very difficult to combat with macroeconomic policies. Moreover, for the most part, banks are sound, monetary policy frameworks are increasingly credible, international reserve coverage is adequate, and public finances are strong. The key will be to hold that position. Overall, as 2012 kicks off, our advice is to hope for good news, but prepare for the bad. From iMFdirect blog and Diálogo a Fondo

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The Latest European Nation To Be Downgraded By Fitch

January 6, 2012

BUDAPEST, Hungary — Fitch downgraded Hungary’s credit rating to junk status on Friday, citing a standoff between the government and international lenders like the IMF and the European Union over possible rescue loans. Fitch kept a negative outlook on Hungary, indicating a more than a 50 percent chance for another downgrade on the Central European nation of 10 million people within the next two years. The move followed similar action from Moody’s and Standards & Poor’s. Hungary’s shaky finances have been battered this entire week. Its currency, the forint, fell to all-time lows during two consecutive days and the government suffered through a rough bond auction Thursday in which the interest rates it had to paid to borrow jumped more than 2 percentage points in just a few weeks. Investors are deeply unsure about the government’s economic policies and whether it can agree upon a rescue loan with the International Monetary Fund. Fitch Ratings’ decision to cut Hungary’s credit rating one notch, to BB+ from BBB-, was triggered partly “by further unorthodox economic policies which are undermining investor confidence and complicating the agreement of a new IMF-EU deal,” said Matteo Napolitano, Director in Fitch’s Sovereign Group. Hungary late last year requested financial aid from the EU and the IMF. But the two institutions broke off preliminary negotiations in December amid concerns over new laws that hurt the independence of Hungary’s central bank. “Even if a (loan) agreement were to be reached, doubts would remain over whether the Hungarian government could submit to its strict conditionality, given its track record of policy unpredictability,” Fitch said. Government spokesman Andras Giro-Szasz said the downgrade was “surprising” considering statements from Prime Minister Viktor Orban and Tamas Fellegi, Hungary’s chief financial negotiator, confirming the country’s intention to soon reach an agreement with international creditors and affirming its support for the independence of the central bank. Earlier Friday, Orban met with National Bank of Hungary President Andras Simor and the government’s top economic officials. Orban dismissed market speculation that his conservative government was planning to raid central bank reserves to prop up the state budget and said it would do everything it can to support the central bank’s efforts to stabilize the economy. On Friday, the forint strengthened to around 215 per euro after falling as low as 224 per euro on Thursday. Despite government pledges, investors are wary of government policies that boost budget revenues without unpopular austerity measures – such as windfall taxes on banks, telecommunications firms and others. They are also unnerved by Hungary’s new constitution and new laws that have centralized political power and eroded democratic checks and balances. Hungary has also been deeply affected by the eurozone’s debt crisis – nearly 80 percent of its exports go to EU countries. Its domestic consumption has been weakened by high levels of household debt, including many mortgages held in soaring Swiss francs. Many experts see the country falling back into a recession this year, though not as deeply as the 6.7 percent contraction in 2009. Hungary was given a bailout of euro20 billion ($26 billion) in 2008 after the collapse of U.S. investment bank Lehman Brothers. Yet Orban, whose Fidesz party gained a two-thirds majority in parliament in April 2010 elections, chose to end the deal so IMF would not oversee Hungary’s economic policy.

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Major Oil Producers Look For New Way To Exploit Natural Gas In Alaska

January 6, 2012

(Adds background on overland pipeline plans) By Yereth Rosen ANCHORAGE, Alaska, Jan 5 (Reuters) – The chief executives of BP and ConocoPhillips, two of Alaska’s three major oil producers, said on Thursday that the only profitable way to exploit a vast but stranded quantity of Alaska’s North Slope natural gas is to export it to Asian Pacific markets. In a dramatic change from decades-old plans to send North Slope natural gas to domestic U.S. markets by overland pipeline through Canada, the BP and ConocoPhillips CEOs said they will work with Exxon Mobil, the third major North Slope oil producer, to develop an LNG project that would export to Asia. North American producers and LNG shippers are scrambling to develop export plans after a sudden surge in domestic natural gas production, thanks to shale gas, that swamped the market and pushed gas prices way below global levels. BP CEO Bob Dudley and ConocoPhillips CEO Jim Mulva made the comments to reporters after an unprecedented meeting in Anchorage of the chief executives of all three major North Slope oil producers. Exxon, whose CEO Rex Tillerson also attended the meeting, said the parties are in early discussions on an export plan, but added that the pipeline plan through Canada is still under consideration. Once expected to be a major importer, the United States now has up to a century’s worth of supply, prompting plans to ship the cheap fuel to thirsty markets in Europe and Asia where prices are up to five times higher. Five projects across the United States and two in western Canada have applied for construction and export licenses, seeking long-term deals predominantly with buyers in Asia However, critics say that exporting gas may drive prices higher at home and discourage use of a homegrown resource. TransCanada Corp and partner Exxon Mobil have been unable to win customers for the 1,700-mile (2,735 km) natural gas pipeline they proposed building from Alaska’s North Slope to Alberta, at a cost of up to $41 billion. BP and ConocoPhillips in May abandoned a rival natural-gas proposal for a similar route and similar delivery volumes after they also failed to attract shipping commitments. TransCanada has also floated the concept of a line to the port of Valdez, which would move 3 billion cubic feet of gas a day and cost up to $26 billion. (Writing by Bill Rigby, additional reporting by Edward McAllister in New York; Editing by Steve Orlofsky and Bob Burgdorfer)

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South American Nation Sees Huge Inflation

January 5, 2012

CARACAS, Venezuela — Venezuela’s Central Bank says the country finished the year with 27.6 percent inflation, the highest in Latin America. The oil-producing nation has had the highest inflation in the Americas for six years running. Inflation in 2010 was similar at 27.2 percent. Venezuela had the second-highest official inflation rate in the world as of November, surpassed only by Ethiopia’s 31.5 percent. President Hugo Chavez’s government and the Central Bank both predict inflation of between 20 percent and 22 percent this year. But analysts say inflation could rise above 30 percent, influenced by an expanding money supply and heavy government spending.

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Government Accounted For Nearly A Third Of All Layoffs In 2011: Report

January 5, 2012

For government workers and financial sector employees, last year was a particularly bad one — and 2012 likely won’t be much better. More jobs were lost in the government sector than any other industry in 2011, according to a report released Thursday from outplacement company Challenger, Gray & Christmas. The financial industry came in second place, followed by the retail sector. All in all, job cuts rose 14 percent in 2011, topping more than 600,000 by year’s end. It’s perhaps the last piece of bad news to come out of a year in which unemployment remained high , poverty grew more widespread and the economy came close to sliding back into a full-fledged recession. Government alone cut 183,064 jobs in 2011, the most in nine years, according to the Challenger report. Those layoffs accounted for 30 percent of the year’s 606,082 total job cuts. Meanwhile, the financial industry laid off 63,624 people for the year, or about 10.4 percent of the overall number. Together, job cuts in government and finance represented almost 41 percent of all layoffs in 2011. For anyone paying attention to Washington or Wall Street in recent months, these numbers likely won’t come as a surprise. As tax revenues dwindle and deficits continue to swell, state and local governments are in full cost-cutting mode , letting workers go at every opportunity in an attempt to bring public debts under control. Slashed government budgets have also resulted in a wave of layoffs in associated industries, like aerospace and energy. Wall Street, meanwhile, has had a rocky year, with financial companies jettisoning employees — often by the thousands , and often very young ones — against a backdrop of eurozone anxiety and worldwide populist resentment . Layoffs were also high in the retail sector, which shed 50,946 jobs for the year. With millions of Americans out of work and millions more earning just enough to cover basic expenses — and often not even that — the retail industry is in a position of unique vulnerability at the moment. Job cuts were up 14 percent between 2011 and 2010, according to the Challenger report, though it notes that when compared to some other years of the past decade — such as 2001, when the Sept. 11 attacks hastened a contraction that was already in progress, or 2008, when the financial system stumbled and credit markets abruptly seized up — both 2010 and 2011 actually saw relatively few layoffs took place. Challenger Gray analysts have previously said that no part of the federal government can expect immunity from layoffs in 2012, even traditionally safe sectors like intelligence and defense. Indeed, President Obama is expected to address the Pentagon Thursday to discuss the logistics of paring back the Pentagon budget. Also of particular concern is the U.S. Postal Service, which could lose as many as 120,000 workers in the coming year, according to Challenger.

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Is Obama Creating More Summer Jobs For Teens?

January 5, 2012

WASHINGTON — President Barack Obama is looking to boost summer job prospects for kids. The White House says that with help from the private sector it’s gotten commitments for nearly 180,000 youth employment opportunities for next summer and is aiming for tens of thousands more. Obama says that with young people facing record unemployment the government must do everything it can to make sure they have opportunities to learn skills and a work ethic. The summer jobs plan is to be announced Thursday. It’s the administration’s latest “We Can’t Wait” initiative to go around Congress. Many of the positions would be unpaid training opportunities. Republicans charged that the White House is taking credit for positions at places like CVS and Bank of America that were going to be created anyway.

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Bill Gross Gives A ‘Paranormal’ Prediction

January 4, 2012

NEW YORK (Katya Wachtel) – Bill Gross, the manager of the world’s largest bond fund, is sounding like a Wall Street ghost-hunter in his latest investment letter. Calling the current market environment “paranormal,” Gross said this year will be characterized by “credit and zero-bound interest rate risk” and less incentives for lenders to extend credit. Gross, who managers PIMCO’s $244 billion Total Return bond fund, said the financial markets this year will continue to delever but sees a gloomy future ahead. “It’s as if the Earth now has two moons instead of one and both are growing in size like a cancerous tumor that may threaten the financial tides, oceans and economic life as we have known it for the past half century,” Gross said in an investment letter released on PIMCO’s website on Wednesday. “Welcome to 2012.” Last year was a humbling one for the PIMCO chief, as a bad bet against U.S. Treasuries led to an unusual “mea culpa” letter to investors. Treasuries were the best-performing bond class in 2011. His fund saw redemptions of $5 billion in 2011, one of the first times investors pulled money from Gross’s portfolio. In the letter, Gross said “paranormal” was a more fitting description for the current economic environment than the phrase “New Normal,” coined several years ago by his chief co-investment officer Mohamed El-Erian to describe a world of low-growth and high unemployment. This year, Gross argues that process will get messier. “We are left with zero-bound yields and creditors that trust no one and very few countries. The financial markets are slowly imploding – delevering – because there’s too much paper and too little trust,” he said. Those factors may lead financial markets to experience “the fat-left-tailed possibility of unforeseen – delevering – or the fat-right-tailed possibility of central bank inflationary expansion.” Gross told investors they should lower their return expectations for 2012, predicting 2 percent to 5 percent returns on investments in stocks, bonds and commodities. (Reporting By Katya Wachtel; editing by Jeffrey Benkoe) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Gary S. Rich: Is Your Company a Soul Sink?

January 2, 2012

Restaurateurs know a lot about ambiance. They understand that the way it feels to be in their restaurant is in many ways as important as the food they serve. The better managers know that they can’t judge their establishment’s ambiance as well as someone walking through the door for the first time. Kind of the way people that live in smelly houses never know they do. Savvy business owners hire professionals or ask friends to stop in and report on the experience they have. Great leaders also know how important ambiance is for employees as well as customers. Buried away in a corporate environment, it’s easy to forget that, in fact, there is a level and quality of energy in every company. Seldom neutral, atmosphere either enhances performance or erodes it. Yesterday I was in an agency that had gigantic positive energy. People were happy, smiling, seeking each other out and working together. I walked out feeling charged. Then I ventured into a PE firm. People were making a lot of money, but they were stressed and treating one another badly. The energy was soul-sucking and I left feeling down and looking for a pistol. And if that’s how I felt after an hour, imagine how employees feel at the end of a day? A company can be as clinically depressed as a person — and such a feeling pervades everyone and seeps into the company’s product. It’s a leader’s job to set the atmosphere for their organization. Determine what it feels like to work in your organization and then decide if it suits your purpose… If it doesn’t, change it. And don’t let anyone trick you into Pizza Tuesdays or half-day Fridays or corporate Pin the Tail on the Donkey. Changes like these happen at a much more fundamental level. So find your own secret shopper: ask a friend to come by the office some morning at 9:30 and then again at 4:00. Ask them what it feels like in your company and then listen to what they say.

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Jeffrey Hayzlett: Marketing Predictions for 2012

January 2, 2012

Business leaders and employees know when their old ways of doing business must change or their business will die; they need to step out of their old ways of marketing and start to act like an agent of change. For 2012, here are my predictions of what will change in the marketing world. You can either choose to adapt, or die. 1. Mobile, Mobile, Mobile Throughout 2011, you heard me saying “mobile, mobile, mobile”. In 2012, I predict the mobile wallet will be the next big thing. With more and more online companies like eBay, Amazon, PayPal, using the mobile device as a platform to make instant online purchases, we’re now seeing technology built into smartphones that allows customers to swipe their phones rather than their credit cards at retail outlets. Banks are really taking advantage of this technology and offering their customers a new level of service. This is a space marketers need to not only be aware of, but be involved in. 2. Social – Crowdsourcing vs. Friendsourcing Crowdsourcing is a cool tool for spot surveys, quick answers, and general engagement, but friendsourcing is about trust: reaching out your most valued advisers — the people you really know — and finding out what they think. These people can be your close friends, colleagues, or mentors. However, they can also be your brand ambassadors–the social media friends and followers you’ve built those relationships of trust with over your social media network. 3. On-Line Qualitative Market Research 2012 will be an exciting year for the research industry. It is clear that the shift to on-line qualitative research has begun and likely to accelerate in the coming year. The need for deeper and richer insights to support making better marketing and business decisions is critical. Companies must be prepared to act fast. This category is rapidly growing and the corporate researchers that make the move will be best positioned to be the winners in this new game. It is a business imperative in my opinion. Jeffrey Hayzlett is a Bestselling Author, Maverick Marketer and Sometime Cowboy. Purchase his new book, Running the Gauntlet , here .

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Eurozone Factory Sector Will Likely Cut Back In Early 2012

January 2, 2012

* Euro zone factory sector shrinks for 5th month in Dec * Manufacturing PMI rises slightly from November * Output, orders fall in all euro zone countries, PMIs show By Andy Bruce LONDON, Jan 2 (Reuters) – Euro zone manufacturing activity declined for a fifth consecutive month in December, although at a slightly slower rate than November’s 28-month record low, a survey showed on Monday, suggesting the decline would continue in the early months of 2012. Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) rose slightly in December to 46.9 from November’s 46.4, but marked its fifth month below the 50 mark that divides growth from contraction. It was unchanged from an earlier preliminary reading. Survey compiler Markit said levels of production and new orders fell in all of the euro zone countries covered by the survey for the second month running. “Despite the rate of decline easing slightly in December, production appears to have been collapsing across the single currency area at a quarterly rate of approximately 1.5 percent in the final quarter of 2011,” said Chris Williamson, chief economist at Markit. “The survey also points to a strong likelihood of further declines in the first quarter of the new year, with producers cutting back headcounts, inventories and purchasing.” The euro zone economy is already stuck in a recession that will last until the second quarter of 2012, Reuters polls of economists suggested last month. They forecast the economy will proably see no growth this year. Business and consumer confidence in the currency bloc has been eroded by a weakening global economy and by euro zone policymakers’ failure to make progress on resolving the euro zone debt crisis. Austerity measures imposed to try and cut high debt levels in the currency bloc risk further undermining euro zone economies this year, analysts say. The new orders component of the December PMI survey also picked up slightly, to 43.5 in December from 42.4 the previous month, but it remained weak and Markit warned of a persistent and worrying divergence in order levels and output. “Worryingly, new orders are falling at a far faster rate than manufacturers have been cutting output, meaning firms have been reliant on orders placed earlier in the year to sustain current production levels,” said Williamson. “This is particularly evident in Germany, and suggests that operating capacity will be slashed in coming months unless demand revives.” The manufacturing jobs market was virtually stagnant in December compared with November. The euro zone unemployment rate edged up to 10.3 percent in October, a figure that encompasses very high levels of joblessness in peripheral countries such as Spain and Greece with relatively firm labour markets in France and Germany. (Editing by Susan Fenton)

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Kaitlyn Kochany: The Beginner’s Guide to Job Hunting

January 2, 2012

I know some of you are heading into the new year with a steely resolution that this is the absolute last year you’re going to be working that job you hate. I feel for you guys. New Year’s resolutions often revolve around how much better our lives are going to be once we magically develop willpower sometime between Christmas Day (so full!) and New Year’s Day (so hungover!). Job satisfaction often plays a major part in fantasizing about your new, perfect next year. Some of you are heading back to jobs you like, but due to economic circumstances at an inaccessible corporate level, cronyism between the boss and his newly-graduated, unemployed nephew, or some other extenuating circumstance that’s going to make your awesome job a crummy job, you’re going to find yourself looking for work. First of all, congratulations on your new opportunity! I have some advice for you. I feel especially beholden to you if you quit after some girl on the Internet gave you unsolicited advice, but many people end up jobless for lots of reasons, so I hope I can help y’all out. This is coming from my perspective as a 20-something professional late bloomer, so it may not feel especially relevant if you’re an accomplished/later-life type, but maybe you’ll find something in here that makes unemployment smart a little less. Don’t panic . Like The Hitchhiker’s Guide to the Galaxy says , just don’t. Panic for one afternoon — maybe the afternoon you give your notice or get your pink slip. Knock off work an hour early, call your friends, and make them join you for pre-dinner drinks. Complain loudly about your workplace and rehash the story at least three times. That will make it easier to tell your parents, partner, or roommate the next day. If you’re quitting, have a game plan . Smart kids know that having three months’ worth of living expenses in the bank is a savvy move and in this economy it might be wise to have an extra three socked away. I’m saying rent, food, and travel for six months — if you’re accustomed to purchasing lavish handbags on a regular basis, you are going to be sad when you first step foot inside the discount grocery store where you now shop. If at all possible, have another gig lined up, but don’t be too hard on yourself if that’s not possible, either because you needed to leave suddenly or because you’re being asked to go. Once you’re out, take time to regroup . People think they need to go directly from one job to the next, but in my experience we all need a little decompression. Have a staycation, go to the movies in the afternoon, sleep in, and get over the fact that you left or lost your job. Grieve a little. It’s natural. All right, so you’ve got your money in the bank, you’ve taken a week to feel your feelings and now you’re back out there, ready to conquer the world (or at least your electoral district). Here are a few helpful things to remember: Network like crazy . When I got hired for my current job, my boss told me that she had gotten more than 400 responses for the position. Internet postings and want ads have high response rates. Don’t count on being able to cold-call companies or getting calls back regarding resumes you send out. Look at who you know, especially people who are doing things you’re interested in. Take them out for coffee. Pick their brains. Put it out there that you’re looking. Ask your friend who works in HR to look at your resume, or take it to an employment centre and have it professionally critiqued. Short-term work will likely surface first. Take it. You’ll enjoy the money, and it will give you an answer when your new potential boss asks you what you’ve been doing since you left your last job. Make a schedule . I checked a dozen different online job boards throughout the week and sent plenty of inquiries. This was overwhelming, so I broke it out into two different tasks: Finding jobs and applying for jobs. First, flag everything you might be qualified for or interested in. Click on all possible jobs. Then — and this is the important part — take a break. Go for a walk, bake some muffins, call your other unemployed friends and see if they’re free to go buy discount groceries. Close your laptop and clear your mind. When you come back, you return with a fresh set of eyes. Maybe, on second thought, you’re not qualified, or you think it might be boring, or you hate that company. That’s cool. Set a minimum number of jobs you want to apply for in a day or week and make those count. Get out of the house . Being between jobs can be isolating — your friends are working and you’re broke so you can’t go out anyway. Job hunting is hard and kitties on YouTube are enticing… The next thing you know, you’ve fallen asleep with your computer on your chest and you’ve slept until you wake up hungry. Let’s just agree that’s not the goal here. Getting out of the house has many names: Working out, meeting friends, running errands, volunteering, going to church, getting creative, and so on. Staying in touch with the rest of the world is imperative to staying sane. It emphasizes the same sleep patterns, job tasks and to-do lists as those who are gainfully employed and it keeps you in good practice for when you land something. Like networking, tell your friends and family that getting out of the house is one of your priorities and use the buddy system to make sure you’re seeing people regularly. If you’ve got unemployed friends, check in with them and make sure they’re getting out. Use resources like the library, university or college job training, employment centres, and more. Most municipalities have some kind of system in place for those who are looking for jobs and they can help you. Some offer free courses, job placements or help defray costs. It can feel a little demoralizing to ask for that kind of help, but the feedback you get can be very supportive. Take every interview . If you send resumes and cover letters into the void every week, you might hear back from one or two a month. Use those interviews to practice your skills. Are you punctual? Dressed professionally? Did you bring your references? Have you Googled yourself lately to see what kind of incriminating stuff pops up? You might think this is basic, but nailing it on the little things helps solidify you as a good potential employee. Use each interview as a chance to showcase your talents, to practice talking about your skills, and to be immersed in the working world. However, don’t feel obligated to take every job that’s offered to you: Wait for something good . Right before I got my current position, I interviewed at a cafe. I could have done it in my sleep and they offered me the job on the spot. I turned them down, even though I was hungry. Working in a cafe like I had done for years made me feel like I was going backwards — I couldn’t do it and I knew that if I took it, I would quit. If you take a job you know you’re not going to enjoy, that’s fine — just understand that you’ll eventually quit, or become bored enough that you get fired, so you’ll be looking all over again. Maybe not now, as Bogie says , but soon. Invest in your future by taking jobs that you can enjoy for the long haul. Don’t forget to breathe. It’s scary out there, but something will come. If you’re not getting any bites, refresh your contacts and cast your net a little wider. Take short-term jobs. Ask for help. Stay positive, but feel free to express frustration. Get more training. Pray, if it helps. Volunteer — sometimes unpaid jobs can turn into a paycheque. Always believe that you’re worth hiring — fake it, if you need to. Get plenty of sleep and plenty of fresh air. And never, never, never give up. You will find something.

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Jared Bernstein: Happy New Year! Now, Here Are a Few Things to Worry About

January 1, 2012

Look, I don’t want to raise your anxiety level, especially as you’re nursing that headache from last night’s revelry. But I figure you’d want me to give it to you straight, starting out the new year by cataloging a few of the risk factors in play, economically speaking. Europe: As the countries of the Eurozone continue to slowly and bumbly work through their debt problems, contagion remains on everyone’s list of things to worry about. The contagion channel is mostly through financial markets, though the fact that the EU is the recipient of about 20 percent of our exports means that an export-dampening recession will hurt too. How much hurt? The researchers at Goldman-Sachs provide the figure below. Europe could subtract around a point from real GDP growth next year. That’s half-a-point higher unemployment, hundreds of thousand fewer jobs, etc… and those are some headwinds we really don’t need right about now. But what’s noticeable in the figure below is the wide-and-getting-wider error margin around their best guess. So, which way might this bounce? I wouldn’t be surprised if the right answer is the less-bad part of the shaded area in the figure. One key to the resolution here has been the ECB accepting their role as lender of last resort, ramping up the loans to member banks, who can then buy sovereign debt, leading to lower yields, and ultimately, the ability of the troubled countries to service and rollover their debts without cracking up. What changed? That summit a few weeks back, which many said didn’t deliver much, actually appears to have moved the ECB. By agreeing to put restrictive fiscal measures in their individual constitutions, as opposed to the over-arching — and ignorable — rules of the Maastricht Treaty (fiscal rules that Eurozone members were supposed to adhere to, though virtually none did so), the central bank appears to have been mollified. I’m not saying that’s good policy — such rules can lead to damaging, austere macroeconomics, though of course it’s not clear the new rules will work any better than Maastricht. But what matters now is that they’ve helped get the ECB back in the game, so mark this one down as a real risk factor, for sure, but one with perhaps less downside risk than the conventional wisdom would suggest. Oil: On the other hand, you don’t hear enough about this one. Global supplies are tightening, and under those conditions, it doesn’t take much at all to generate a price spike. The GS folks have a figure on that too, showing global production catching up to global capacity. My gut is that there’s downside risk here. Most people’s paychecks are already lagging inflation — i.e., falling in real terms (see penultimate graph here ) — and faster inflation due to a spike in oil won’t help. Labor Force Participation: This one’s a sleeper and much less discussed. It’s a mixed bag, but here’s the concern. One reason the unemployment rate has fallen as much as it has — and it hasn’t fallen enough — is because fewer people are in the job market looking for work (remember, you’re not counted as unemployed if you’re not actively looking). If the pace of job growth begins to improve, that’s likely to draw these sideliners back into the game, and that puts upward pressure of the unemployment rate. Like I said, it’s mixed, because the scenario I’m describing includes faster job growth (good) but higher unemployment (bad). I’ve crunched some numbers on this — I’ll post the analysis later, maybe — and I found that if the pace of recent job growth continues, around 130K per month over past six months, the rate of labor force participation might stop falling, but would probably remain flat. But if we start hittin’ it in the 230K range, it should start to grow, making it tougher, even with extra job growth, to bring down the unemployment rate. I’ve left off the biggest threat of all — irresponsible policy makers ignoring all of the above, and failing to do their jobs on the economy, either because they’d rather hurt the President than help working families, or because they simply don’t get the need for more temporary stimulus…or because they do get it, but irrationally fear budget deficits. As I’ve said ad nauseam, it’s not the temporary stuff that hurts you on the deficit. Of course, there’s the possibility that during the holiday break, the scales have fallen from their eyes and they now understand the Keynesian imperative of the moment. For odds on that possibility, see here .

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Bill George: Five Resolutions for Aspiring Leaders

December 31, 2011

As the New Year approaches, people will be making resolutions to eat better, exercise more, get that promotion at work or spend more time with their families. While these are worthwhile goals, we have a more important challenge for young people: Think seriously about your development as a leader. These are tough times. Many leaders of the baby boomer generation have failed in their responsibilities by placing their self-interest ahead of their organizations. In so doing, they have failed to serve society’s best interests. As a result, more young leaders from Gen X and the Millennials are being asked to take on major leadership responsibilities. To be prepared for the challenges you will face, we propose the following resolutions this New Year’s: Find a trustworthy mentor: Mentorship is a critical component of your development as a leader. A 2004 study showed that young leaders with mentors were more likely succeed professionally and experience career satisfaction. The essence of effective mentoring is developing a trusting relationship between the mentor and mentee. Identify someone with whom you have a genuine chemistry and who is committed to your development. Although many mentees do not realize it, a sound relationship is a two-way street that benefits both parties — not just the mentee. We suggest looking for mentors whom you admire for their values and character more than their success. Form a leadership development group : Most of us have little time to reflect on the values and characteristics we want to define us as leaders, the difficulties we’re facing, or the long-term impact we hope to have. Forming a leadership development group can give you the space you need to think deeply about these subjects. Leadership development groups are groups of six to eight people who meet to share their personal challenges and discuss the most important questions in their lives. Find people you can trust, and make a commitment to be one another’s confidential counselors. Meet regularly, and share openly your life stories, crucibles, passions and fears, while offering each other honest feedback. Volunteer in a civic or service organization: Have you served your community this year? In the Facebook era it’s easy to lose touch with our real-world neighbors. Long hours often cause us to avoid volunteer opportunities. Participating in local organizations — from religious organizations to civic groups — can give you early leadership experiences, provide real connection to your neighbors, and offer opportunities to serve others. It adds a dimension to your life that work can’t, and helps you develop and solidify your character while giving back to the community. You will find your time serving a community organization is highly rewarding while broadening your outlook on people and life. Work in or travel to one new country: “The world is flat,” as Tom Friedman puts it, so it has never been more important to get global experience. In the future cultural sensitivity will be a more important characteristic for leaders than pure intellectual ability. John’s survey of more than 500 top MBAs found that on average they had worked in four countries prior to entering graduate school and expect to work in five more in the next 10 years. Having a global mindset and the ability to collaborate effectively across cultures are essential qualities for aspiring leaders of global organizations. Finally, ask more questions than you answer: With the high velocity of change in the world, it is impossible to have answers to all the important questions. Much more important is a deep curiosity about the world and the ability to frame the right questions in profound ways. The world’s toughest problems cannot be solved by you or any one organization. Your role will be to bring the right people together to address the challenging issues you raise. Our research demonstrates that the biggest mistakes result from decisions made by people without deep consideration of thoughtful questions. Young leaders will soon be asked to take on major leadership responsibilities in their organizations and their communities. We believe it is essential that they take steps like these in order to be prepared for the difficult leadership challenges they will face. There’s no better time to get started than the coming year. Co-written by Bill George and John Coleman.

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Jeanne Kelly: It’s the Start of Your Journey Toward Better Credit

December 30, 2011

I love the new year because I love new beginnings: The slate is clean, the path is untouched, the opportunities seem endless! The new year is the start of a year long journey and you’re at the part of the trip where you decide where you want to go, how you’ll get there, and what you’ll take with you. A little planning before any trip will ensure that you arrive at your destination as quickly as possible. If part of your journey this year includes traveling toward better credit, take a moment now to decide how to make it a successful trip for you. Where do you want to go? Deciding to achieve “better credit” is vague. You need to know exactly what your credit score is right now and what you want it to be. Make sure your goal is achievable this year. If your goal seems too daunting, break it up into smaller quarterly goals. It also helps to remember why you’re doing it — perhaps so you can qualify for a mortgage or renegotiate a loan at a lower rate or be able to get your spending under control or allow you to save for the future. How will you get there? There are a number of paths you can take on your journey toward better credit. Some steps will be easier to do on your own — like cutting up your credit cards, setting up a budget, subscribing to http://MYFICO.com to monitor your credit, and working with a credit consultant. Some of the steps will be harder to do — like cutting back on impulse spending or admitting to a friend or relative that you’d like them to hold you accountable as you manage your debt. The longer your journey from your current score to your preferred score, the harder and more drastic the route will be. (But as you already know, anything worth doing is worth the hard work!) What will you take with you? This is probably most overlooked part of “better credit trip planning.” When you decide what to take with you on your trip this year, you need to consider two things: What habits do you want to adopt or preserve to help you achieve better credit? (Here are my suggestions: Check your credit score regularly; dispute errors on your credit report; set a budget and stick to it). What habits do you want to leave behind? (Here are my suggestions: Stop paying your bills late; avoid impulse buying; don’t use your credit cards to make certain purchases). You’re just about ready to start your journey toward better credit … But here is one last piece of trip-planning encouragement I’d like to share: It’s so easy to be weighed down by the burden of anxiety and (even guilt) when reflecting on how you got to where you are today. Maybe it was bad habits or maybe it was events beyond your control that led to a bad credit score. Your past doesn’t have to define your future! Don’t let those burdens weigh you down! You’re at the beginning of a journey toward better credit and your journey will be far more successful when you leave behind the unnecessary baggage. The year is still fresh and clean and ready for you to make your mark! Take those first few exciting steps toward better credit in 2012. I’ll be with you in the journey. Feel free to email me your credit goals for 2012 Jeanne.Kelly@TheCreditOwl.com

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Don McNay: The Anthem Robo Call: The First Place Health Care Needs Reforming

December 30, 2011

-I hope this letter finds it way to you. -R. Dean Taylor (Indiana Wants Me ) I had a health scare over the past several weeks, which included a couple of trips to the emergency room and finally winding up in the hospital for surgery. I’m starting to feel better but the biggest impediment is Anthem, my health insurance company. I don’t know if they are going to jerk me around on payments as the bills have not come in yet. What I can’t handle is the non-stop robo calls from their office. You would think someone is running for Sheriff or Congress. The calls come non-stop. And I can’t figure out how to stop them. I’ve been home ill, sleeping at odd hours, and the calls manage to find me the second I fall asleep. I’ve tried several times to respond but there is never a human on the other end. They give me a number to call but when you get there, it continues with a series of questions and prompts about my hospital stay. I try like crazy to talk to a human but have never figured out a way to make that happen. When I go to an alternative number, all I get is more prompts. If I ever speak to a human, my first request is LEAVE ME ALONE. I am trying to get well and talking to a health insurance company is not going to help. Secondly, I signed up every “do not call” list that my state and the United States have to offer. I don’t want human beings to call me, let alone a robot. I thought it was illegal for companies to harass me day and night but Anthem either found a loophole or is just ignoring the law. I suspect if you are huge, billion-dollar health insurance carrier, no one is going to rap your knuckles if you are out doing data mining. This brings me to a central problem with the entire health insurance system. Human beings, who may possibly care about other human beings, are in no part of the process. Since Anthem didn’t make it possible for its supposedly ill clients to talk to another person, it is counting on its computers and data gatherers to “let them know what people think.” If I ever speak to an actual human being, they are definitely going to hear what I think. And probably not like what I am hearing. If Anthem had bothered to send me an old-fashioned letter, or better yet, a get well card, I might have told them what they wanted to know. Instead I wonder if they are trying to drum up more business, by waking me up so much that I wind up back in the hospital. I can’t be the only person they are robo calling. I just can’t figure out how it is legal for them to do so. Even more so, I can’t figure out how it makes good business sense. If these are the “great minds” running our health insurance companies I can see why so many people favor a single payor system.

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John Fox: 2012: Your Marketing Department’s New Look

December 30, 2011

No doubt, 2011 was the tipping point for the marketing department. Marketing automation, content marketing and analytics entered boardroom conversations. Even at the smallest of companies (for which I consult), marketing directors and channel managers find themselves in the spotlight for the very first time. So how should the CMO, marketing director and CEO respond? I think that’s the real question McKinsey & Co. attempted to answer in their July 2011 report, ” We’re all marketers now .” (FYI: this report was the #3 most read in 2011, falling in just behind articles on strategy and brainstorming. And in typical McKinsey fashion, their research involved more than 20,000 customers… talk about comprehensive research!) Here are the highlights (you may also grab my personal, marked-up version of the report here ): “Customers no longer separate marketing from the product — it is the product.” “In the era of engagement, marketing is the company.” Customers are on the hunt for a solution waaaay before you can even think about reaching out to them in traditional direct/push marketing fashion. Translation: the conversation has morphed from “a monologue to a dialogue.” “Customers thirst for objective advice” and in response, “some have built publishing divisions to feed the ever-increasing demand for content required by company.” (aka, content marketing) “The marketing organization itself needs to become the customer-engagement engine, responsible for establishing priorities and stimulating dialogue throughout the enterprise.” The firm will “require a new kind of marketing organization… that orchestrates the delivery of the end-to-end customer experience.” What’s more, “‘Marketing is going to become a much more science-driven activity,’ says Duncan Watts of Yahoo! Research.” “A premium will be placed on problem-solving and strategic-marketing skills.” How will you respond? What are your plans for your marketing department in 2012? © 2011 John M. Fox. All Rights Reserved. John Fox is the Founder and President of Venture Marketing, a B2B consulting firm that helps business owners get their sales and marketing un-stuck. For more, follow John on LinkedIn .

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All Eyes On German Renewable Energy Efforts

December 29, 2011

FELDHEIM, Germany — This tiny village of 37 gray homes and farm buildings clustered along the main road in a wind-swept corner of rural eastern Germany seems an unlikely place for a revolution. Yet environmentalists, experts and politicians from El Salvador to Japan to South Africa have flocked here in the past year to learn how Feldheim, a village of just 145 people, is already putting into practice Germany’s vision of a future powered entirely by renewable energy. Chancellor Angela Merkel’s government passed legislation in June setting the country on course to generate a third of its power through renewable sources – such as wind, solar, geothermal and bioenergy – within a decade, reaching 80 percent by 2050, while creating jobs, increasing energy security and reducing harmful emissions. The goals are among the world’s most ambitious, and expensive, and other industrialized nations from the U.S. to Japan are watching to see whether transforming into a nation powered by renewable energy sources can really work. “Germany can’t afford to fail, because the whole world is looking at the German model and asking, can Germany move us to new business models, new infrastructure?,” said Jeremy Rifkin, a U.S. economist who has advised the European Union and Merkel. In June, the nation passed the 20 percent mark for drawing electric power from a mix of wind, solar and other renewables. That compares with about 9 percent in the United States or Japan – both of which rely heavily on hydroelectric power, an energy source that has long been used. Expanding renewables depends on the right mix of resources, as well as government subsidies and investment incentive – and a willingness by taxpayers to shoulder their share of the burden. Germans currently pay a 3.5 euro cent per kilowatt-hour tax, roughly euro157 ($205) per year for a typical family of four, to support research and investment in and subsidize the production and consumption of energy from renewable sources. That allows for homeowners who install solar panels on their rooftops, or communities like Feldheim that build their own biogas plants, to be paid above-market prices for selling back to the grid, to ensure that their investment at least breaks even. Critics, like the Institute for Energy Research, based in Washington, D.C., maintain such tariffs put an unfair burden of expanding renewables squarely on the taxpayer. At the same time, to make renewable energy work on the larger scale, Germany will have to pour billions into infrastructure, including updating its grid. Key to success of the transformation will be getting the nation’s powerful industries on board, to drive innovation in technology and create jobs. According to the Environment Ministry, overall investment in renewable energy production equipment more than doubled to euro29.4 billion ($38.44 billion) in 2011. Solid growth in the sector is projected through the next decade. Some 370,000 people in Germany now have jobs in the renewable sector, more than double the number in 2004, a point used as proof that tax payers’ investment is paying off. Feldheim has zero unemployment – despite its tiny size – compared with roughly 30 percent in other villages in the economically depressed state of Brandenburg, which views investments in renewables as a ticket for a brighter future. Most residents work in the plant that produces biogas – fuel made by the breakdown of organic material such as plants or food waste – or maintain the wind and solar parks that provide the village’s electricity. “The energy revolution is already taking place right here,” says Werner Frohwitter, spokesman for the Energiequelle company that helped set up and run Feldheim’s energy concept. But it’s not only in the country. Earlier this month in Berlin, officials unveiled a prototype of a self-sustaining, energy-efficient home, built from recycled materials and complete with electric vehicles that can be charged in its garage. The aim of the prototype home is to produce twice as much energy as is used by a family of four – chosen from a willing pool of volunteers who will be selected to live in the home for 15 months – through a combination of solar photovoltaics and energy management technology, in order to show the technology already exists to allow people to be energy self-sufficient. “We want to show people that already today it is possible to live completely from renewable energy,” said German Transport Minister Peter Ramsauer as the project, dubbed “Efficiency House Plus,” was unveiled. The house is part of a wider euro1.2 million ($1.57 million) project investing in energy-efficient buildings. “The Efficiency House Plus will set standards that can be adopted by the majority in the short term,” Ramsauer told The Associated Press. “The basic principle is that the house produces more energy than needed to live. The extra energy is then used to charge electric-powered cars and bicycles or sold back to the public grid.” Germany’s four leading car makers are also participating in the project with BMW AG, Daimler AG, Volkswagen AG and Opel, which is part of Buick’s parent company, General Motors Co., each making an E-car for use by in the home. Such strong cooperation between Germany’s industrial sector coupled with a political landscape that emphasizes stability and a heightened public ecological sensibility makes Germany fertile ground to lead the way in the transformation from a post-carbon economy to one run on renewable energy. “Germany has the most robust industrial economy per capita. When you talk about industrial revolution, that’s Germany. It’s German technology, it’s German IT, it’s German commutation,” said Rifkin, who outlines what he calls the “The Third Industrial Revolution,” in a newly released book of the same title that explains how the economies in the future could swap fossil fuels for renewable energies and still maintain growth. Robert Pottmann, an asset manager with Munich Re, one of the world’s biggest reinsurers, says the company seeks to invest about euro2.5 billion ($3.27 billion) in the next few years in renewable energy assets such as “wind farms, solar projects or maybe new electricity grids.” Alan Simpson, an independent energy and climate adviser from Britain who visited Feldheim as part of a wider tour of Germany last month to see what the renewable revolution looks like up close said it was inspiring to view what is being accomplished on the ground. “It’s great to think about Germany delivering on everything that we are being told in Great Britain is impossible,” Simpson said. Amid the excitement, there is also an awareness of the real need for the German experiment to succeed. “If Germany can’t pull this off,” said Rifkin. “We don’t have a plan B.” ___ Associated Press writer Juergen Baetz contributed to this story from Berlin. ___ On the Internet:

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Tom Gerdy: Is Our Destiny Pottersville or Bedford Falls?

December 28, 2011

Yearly, I take time before Christmas to watch It’s a Wonderful Life . This year was no different. As George Bailey’s brother, Harry, raises a glass to toast his brother, saying, “A toast to my big brother George, the richest man in town,” I again had to wipe away some tears. It gets me every time because I still believe that living as George makes you rich. I saw one thing in a different light this year as my wife and I watched Frank Capra’s classic tale. It centered on the scene in which George Bailey, played by Jimmy Stewart, gave the rich, greedy, old miser, Mr. Potter, a piece of his mind. Potter was trying to take over the Building and Loan, one of the few businesses he didn’t already own. Potter was talking trash about the people the Building and Loan helped buy homes. The passage is long but worth including. George said, Just remember this, Mr. Potter, that this rabble you’re talking about… they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn’t think so. People were human beings to him. But to you, a warped, frustrated old man, they’re cattle. Well, in my book, my father died a much richer man than you’ll ever be! I have spent the working hours of my life as a carpenter and a building contractor in the blue-collar world. I have always loved creating with my hands and helping people build their homes. I have been very fortunate to earn a living for more than thirty-five years in the building trades. However, the last several years, it has been a serious struggle. I have watched tradespeople around me fall by the wayside, as the economy and the lending environment became less and less conducive to running small businesses. Many potential construction projects have been crushed, as the lending pendulum has swung from too liberal to the extreme conservative end of the spectrum, making it almost impossible to borrow money. Small businesses are now paying for the greed and dollar-worshiping of the lending and investment institutions. Sadly, those who created the problem still are awarded ridiculous bonuses, but we will address that sin another time. Small businesses have always been the backbone of the economy in America. During much of our country’s life, our leaders recognized the magnitude of small-business contributions to our growth and stability. They created a business friendly environment because our economy thrives when small business thrives. The current leaders seem to have forgotten this piece of our economic puzzle. Whenever our leaders face a revenue shortfall, small businesses seem to have a bull’s eye painted on their front doors. We are constantly the target of additional fees and taxes, making it tougher and tougher to remain afloat. At the same time small businesses are taxed out of business, huge retailers are given unimaginable tax breaks and incentives to help them set up shop. The playing field is no longer level, and the big-dollar players have taken control. As I heard George Bailey take a stand against Mr. Potter, for some reason it made me reflect on the growing chasm between the classes in our country. Recent history has made me feel like “the rabble,” or one of the cattle to which George Bailey refers. I also cannot help connecting the current Washington leadership and Mr. Potter. As greed and money controlled Mr. Potter, we are witnessing the same problem with our elected officials. The people running our country seem to have no interest in hearing what happens where we are doing our working and paying and living and dying daily. Their money and positions have made them blind and deaf to what most of us face daily. Out of touch is an understatement. It is a sad truth, but when the dollar becomes the master, the heart often files bankruptcy. I want to make one last connection between the 1946 movie and the status of our current government. At one point in the movie, George is shown what would have happened to the beautiful town of Bedford Falls if he wasn’t around to stand up to the power and greed of Mr. Potter. He takes a tour through the town that was renamed Pottersville and it isn’t a pretty sight. So now, I must ask, are you willing to stand up to protect our “Bedford Falls” or are we destined to become Pottersville?

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David Isenberg: When to Contract, Not How to Contract: That Is the Question

December 28, 2011

Typically, discussion of private military and security contracting focuses on what people actually do when they are fulfilling their contracts. But just as important is the process by which such contracts were approved in the first place. One of the oldest fears about modern Private Military Security Companies (PMSC) is that they, just like traditional arms sales, could be used to enhance the capabilities of corrupt and repressive police and military forces in authoritarian countries across the world. Fortunately, to date this has not happened. But it is not in because of an abundance of legislation specifying the criteria on which such contracts should be approved or disapproved. Note that most PMSC advocates will always talk about the supposed reams of laws and regulations on the books supposedly governing PMSC. But they rarely note some glaring loopholes, such as the fact that the “Montreux Document,” that outlines existing international laws relating to private military and security companies, is not legally binding. Or that the “Leahy Law,” which could investigate private contractors for human rights abuses, does not apply to training purchased with the procuring country’s own money or third-county nationals hired by the contracting firm. But the truth is that most of this governs how PMSC are supposed to operate in the field, not whether a contract is a good idea to begin with. To go into the weeds on this let’s look at a 2009 paper, ” Outsourcing Authoritarianism? Commercialization of the U.S. Defense Industry and its Implications for Developing Country Security Sectors ” by Shana Marshall of the University of Maryland-College Park. Remember that the continued deregulation and commercialization of the traditional arms trade, which includes PMSC activities, exacerbates problems of oversight and monitoring in conflict zones. This is illustrated by a number of trends including an increase in licenses issued for exports to “controlled countries,” the increasing use of Direct Commercial Sales or DCS (which entail little or no U.S. Government supervision as opposed to Foreign Military Sales or FMS, which does). Also bear in mind that any private security contract that involves people using weapons as a part of their work is, from an export control view, an arms contract. Marshall writes that in the 1990s the Defense Technology Security Administration, a department within the Pentagon charged with evaluating the security of arms export deals, was moved from the policy division to Acquisition, Technology and Logistics, a department whose express purpose is to reduce the costs of U.S. arms procurement. The State Department appointed a semiofficial Defense Trade Advisory Group composed of defense industry officials and trade group representatives to advise the department on arms exports. The Secretary of Defense also established the intra-agency process and “champion” exports, “which DoD and U.S. defense industry support,” and facilitate the ability of industry to contribute to the review process early on. I have been a member of the DTAG twice and while I can say it took its work quite seriously and did excellent work, it never looked at PMSC issues during the time I was there. Or consider this point. The concentration of expertise within private industry rather than government poses an additional conflict of interest. Individuals in arms and defense service industries are often called upon as expert witnesses and advisers during the policy planning process, and in the particular case of PMSCs and arms exporters, these individuals can recommend that the U.S. government include contracts for personnel in arms deals, or conversely for defense material to be included in contracts for personnel services. According to Marshall: For example, in 2000 USAID funded a major initiative to improve civilian control over the military in the newly-democratic state of Nigeria. MPRI was given the contract, named Operation Focus Relief (OFR). OFR was notable for its inclusion of extensive lethal material in addition to the standard training and education programs. Previous programs by the U.S. (and coordinating efforts by the UK and France) had included significantly less material, typically only ammunition for marksmanship training. Although it is impossible to infer whether the decision to add weapons to the African conflict resolution plan was made at the behest of MPRI or interested parties — MPRI is a subsidiary of a corporation (L3 Communications Corporation) that also has a weapons producing arm (Titan Inc.). Furthermore, … the consolidation of arms production and personnel provision departments may also assist defense conglomerates in evading reporting requirements and other monitoring mechanisms. For example, Congressional notification is required for contracts valued at $50 million or more, however contracts can be subcontracted to many different entities within the same company to avoid reaching the minimum thresholds.

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Kent Smetters: Risk Less and Prosper

December 27, 2011

The new investor book, Risk Less and Prosper , by famed Boston University finance professor Zvi Bodie and leading financial advisor Rachelle Taqqu, is a good read for those of you who are skeptical of investing in today’s stock market. But it is a must-read for those of you who actually think that you know what you are doing. Nobel prize winner Robert Merton wrote the book’s forward. Bodie and Taqqu challenge much of the conventional wisdom about investment advice. The biggest myth they explore is that stocks are less risky the longer that you hold them. While very few economists really ever believed this idea, it is widely practiced by financial advisors. That’s unfortunate. In fact, recent research by my colleague Robert Stambaugh at Wharton and Lubos Pastor at Chicago demonstrates that the expected return to stocks is so uncertain that longer-horizon investors should maybe hold fewer stocks. Besides challenging “what” to invest in, Bodie and Taqqu also challenge “how” to think about investing altogether. Most investment advice pitched by financial advisors is terribly naïve, even if supposedly based on “modern portfolio theory.” In essence, most financial advisors construct investments based on a client’s “risk tolerance” that is judged by asking them a series of hypothetical questions. Once created, this same portfolio is then applied across almost every potential goal of the client including, for example, a wedding next year, a house down payment, college, cars, vacations, and even retirement. This simpleton procedure is the basis of calculations by almost all popular software packages being used today by financial advisors. Instead, Bodie and Taqqu argue for a more real goal-based approach. Each goal should be matched with its own appropriate investment. Basic living expenses during retirement should be financed by low-risk investments, for example, Treasury inflation protected securities held in tax deferred retirement accounts. Only less important goals should be financed by taking on more risk. Of course, the Bodie and Taqqu approach would require additional saving and sacrifice today since the expected returns to safe investments are lower than risky equities. But don’t let appearances deceive you: the larger expected return to equities is simply a reward for taking on more risk. Any advisor who tells you otherwise is selling you fool’s gold. As a professor, I like Risk Less and Prosper because it forces academics to think more critically about the variety of different risks and priorities that exist in the real world. As an actual practitioner — I closely advise Veritat Advisors — the book is consistent with how we generally think about risk management. (Disclosure: Zvi Bodie serves on Veritat’s board of advisors.) For you as the reader, this book will give you the confidence to start taking control of your financial life again by avoiding a lot of dumb risks and marketing pitches along the way.

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Major Retailer To Close At Least 100 Stores

December 27, 2011

NEW YORK — Sears Holdings Corp. plans to close between 100 and 120 Sears and Kmart stores after poor sales during the holidays, the most crucial time of year for retailers. The closings are the latest and most visible in a long series of moves to try to fix a retailer that has struggled with falling sales and shabby stores. In an internal memo Tuesday to employees, CEO and President Lou D’Ambrosio said that the retailer had not “generated the results we were seeking during the holiday.” The company has more than 4,000 stores in the U.S. and Canada. Its stock fell $7.88, or 17 percent, to $37.97 in premarket trading. The company’s revenue at stores open at least a year fell 5.2 percent to date for the quarter at both Sears and Kmart, the company said Tuesday. That includes the critical holiday shopping period. Sears Holdings said the declining sales, ongoing pressure on profit margins and rising expenses pulled its adjusted earnings lower. The company predicts fourth-quarter adjusted earnings will be less than half the $933 million it reporter for the same quarter last year. Sears Holdings also anticipates a non-cash charge of $1.6 billion to $1.8 billion in the quarter to write off the value of carried-over tax deductions it now doesn’t expect to be profitable enough to use. Sears said it will no longer prop up “marginally performing” stores in hopes of improving their performance and will now concentrate on cash-generating stores. “These actions will better enable us to focus our investments on serving our customers,” D’Ambrosio said. The weaker-than-expected performance reflect what analysts say is a deteriorating outlook for the retailer. The results point to “deepening problems at this struggling chain and renewed worries about Sears survivability,” said Gary Balter, an analyst at Credit Suisse. “The extent of the weakness may be larger than expected but the reasons behind it are not. It begins and some would argue ends with Sears’ reluctance to invest in stores and service.” The company has seen rival department stores like Macy’s Inc. and discounters like Target Corp. continue to steal customers. It’s also contending with a stronger Wal-Mart Stores Inc., the world’s largest retailer, which has hammered hard its low-price message and brought back services like layaway, which allows financially stressed shoppers to finance their holiday purchases by paying a little at a time. The tough economy hasn’t helped, either. Middle-income shoppers, the company’s core customers, have seen their wages fail to keep up with higher costs for household basics like food. But the big problem, analysts say, is Sears hasn’t invested in remodeling, leaving its stores uninviting. “There’s no reason to go to Sears,” said New York-based independent retail analyst Brian Sozzi, “It offers a depressing shopping experience and uncompetitive prices.” Sears Holdings Corp., based in Hoffman Estates, Ill., said that the store closings will generate $140 to $170 million in cash from inventory sales. The retailer expects the sale or sublease of real estate holdings to add more cash. Sears Holdings appeared to stumble early in the holiday season, as it opened its Sears, Roebuck and Co. stores at 4 a.m. on Black Friday, the day after Thanksgiving. Rivals including Best Buy Co., Wal-Mart Stores Inc. and Toys R Us opened as early as Thanksgiving night. Sears stores had opened on Thanksgiving Day in 2010. Kmart has been opening on Thanksgiving for years. A hint that trouble might be brewing came in mid-December when Sears Holdings unexpectedly announced that 260 of its Sears, Roebuck and Co. locations would stay open until midnight through Dec. 23. Kmart’s 4.4 percent decline in revenue at stores open at least a year was blamed on diminished layaways and a drop in clothing and consumer electronics sales. Part of Kmart’s layaway softness likely stemmed from competitive pressure. Wal-Mart had said that its holiday layaway business had been popular. Toys R Us expanded its layaway services to include more items. Kmart’s grocery sales climbed during the period. Sears cited lackluster consumer electronics and home appliance sales for its 6 percent dropoff. Sears’ clothing sales were flat. Sales of Lands’ End products at Sears stores rose in the mid-single digits. Sears Holdings said it also plans to lower its fixed costs by $100 million to $200 million and trim its 2012 peak domestic inventory by $300 million from 2011′s $10.2 billion at the third quarter’s end. D’Ambrosio acknowledged in his internal memo that criticism over Sears Holdings’ performance was likely to come, but that the company was prepared for the days ahead. “We will bounce back and become stronger than ever,” he said.

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