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Family Business Made It Big With Guardian Angel’s Help

by Lizzie Schiffman on January 19, 2012

Huffington Post…

CHICAGO — When Steve Koch moved to Chicago after graduating from the University of Nebraska’s design school, he had little more to his name than a r&eacutesum&eacute, a roll of quarters and a dream of running his own family business. He dove headfirst into the city’s bustling, albeit exclusive industry of furniture design and craftsmanship. Luckily for Koch, he also crossed paths with a wealthy philanthropist who was inspired by his work. Their friendship developed into a partnership that allowed Koch to build his company his way. Now a nationally recognized high-end design firm, one of the few with a team of artisans and specialists who handcraft their pieces, Tru Furniture represents a true Chicago success story. And Koch is working side by side with his son. How did you get started in this business? How long have you been making furniture? I’ve been in the business now for about 26 years. For 21 years we’ve been on our own. We got started thanks to the most wonderful, wonderful person, a philanthropist who prefers we not name her, but who’s a landmark herself as a Chicagoan. We were working on her home up in Winnetka, and just in passing she said, “If I could ever help you out someday, it’s been a pleasure working with you. Let’s get together, and I can help you out.” And you know, being 27 years old at the time, I said, “OK, thanks,” and went on my way. A couple of months after that, a light bulb went off over my head, and I thought I’d see if she remembered who I was and maybe take her up on her offer. So we made some prototypes, brought them over. We drove up to Winnetka in a van that had one window knocked out and no hubcaps. We were the epitome of a real start-up. We had absolutely no money at all. So we approached her; she liked our enthusiasm and loved the product that we had. She backed us 100 percent, with every penny that it took to get us going. So we had to learn how to run a business right from the start, hit the ground running, and she’s the one that gave us our start. Everything from there was built upon that. So after those three start-up years, how did the company grow? In our experience, it seems like there’s always one or two people who make a real huge difference. In addition to our donor, we were also really lucky for John Riccitiello and his wife. He had just moved to Chicago. At the time he was the youngest CEO of Wilson [Sporting Goods]. We were just getting by, and they came in the door and had us do their entire apartment up on Cedar Street. It was a wonderful place, and it gave us an opportunity to design about 15 to 20 pieces. That was probably one of the largest jobs we had at the time. That started putting us on the map. And after that project, we kind of never looked back. It just kept on growing from there. We always ran our company with the attitude that we wanted to do such a nice job for our clients and have everything be so perfect and wonderful for them that they’d be more than happy to pass our name along to their friends. And if we can’t help someone, we’re always more than happy to help connect them with someone who can, which is easy in Chicago. I think one of the things that isn’t known is that Chicago is probably one of the best places in the country where furniture is manufactured, and some of the best furniture in the entire country is all made here. Where can people see your work in place? Well, in Chicago, most of our work is in residences. We have products inside some of the hotels where we’ve done some lobby work. We did the spa at the Fairmont Hotel. But in Chicago we’re really known for our custom work, working directly with architects, clients and designers. That’s something that’s really exciting about our business. It’s not so much the really large projects that you would think, like the hotels, that are the interesting ones. It’s really the executive homes and some of the residences that you get to walk into that are unbelievably beautiful. To see our more notable projects … well, if you’re ever invited to the private owners level at the Dallas Cowboys Stadium, we did all the work for Jerry Jones’ wife. And the Playboy Casino in Las Vegas , we fabricated all the pieces there and the restaurant below it, Nove. That was probably my favorite project because there were a lot of things that were out of the ordinary. You know, seven-foot-tall wingback sofas, unusual fabrics like zebra, and a lot of alligator and rattlesnake. We also do a lot of work for Hyatt across the country, so there’s a lot of lobby work that you can see. Why is your business based in Chicago? Was it incidental, or did the industry draw you here? I first came to Chicago shortly after graduating from the University of Nebraska with a roll of quarters in my pocket and started making phone calls trying to kick off my career. My wife, Mary, and I had a young son, Drew, and Mary wanted to move closer to her family near here. So, with Chicago being the biggest city around, we decided this was the place to come to. All I had starting out was a r&eacutesum&eacute, a small portfolio of the work I’d done two years before that and a $25 roll of quarters, and [I] just started cold-calling designers, offering to work for them and asking them to take me on as an apprentice. I feel lucky that I landed here. Chicago is interesting for designers, specifically furniture designers, because I think it’s a well-kept secret what happens here. I don’t think anybody realizes how much is really made here. The building that we’re in right now houses different manufacturers and woodworkers. … The shop that we use is about 65,000 square feet right now, which has grown during the downturn in the economy, which is just amazing. What’s your team like? It’s all old-school, start to finish. It’s hand-tied springs. The frames are all cut by hand from handmade templates. It’s great that a lot of the guys come into our shop young, without experience in the business before, and we’re actually able to train them on what we consider to be the perfect way to fabricate a piece of furniture. Our manufacturing end is headed up by one of my best friends, Anees Jaber. Much like me, he kind of left his previous job with little more than a compressor and sawhorse and the same dream that we all had. Every person in the shop is like family. We know them all by name, and we have a great relationship. What’s your relationship like with your donor now? Does she still have a hand in the business? After about four years of working together, she kind of sent us on our way. We had a great working relationship together — we still do. She knew that she played an integral part in getting us up and going, and it came to a point where she was like, “All right, you boys are on your own.” It was kind of like leaving the nest. The help we got from her, there was no way to measure how you could pay it back. I mean, financially we paid her back, but mentally, how can you pay somebody back for giving you a chance at something that was your dream? It’s not too often that you get to fulfill something like that. There’s nothing I could ever do or say or make, anything, that could pay her back for what she did for us. We’ve done some work for her since; we built and donated all the furniture in the headquarters of a charity she’s actively involved in. She has so much going on that I’m sure in the big picture, in the big scope of her world, it was surely just one of many kind gestures. To me, it seems like the biggest thing that’s ever happened to me. It’s a relationship that’s hard to describe. When someone gives you a dream … it’s hard to describe.

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Family Business Made It Big With Guardian Angel’s Help

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David Isenberg: FAR 49.402-4(b) to the Rescue

by David Isenberg on January 10, 2012

Huffington Post…

From an oversight perspective, the situation in Iraq today where the bulk of private military and security contractors are now working for the State Department, and not the U.S. military, is certainly interesting, and more than a little ironic. I mean after all, how diligent can the client, the U.S. State Department, be in overseeing its contractors, when those very same contractors are responsible for preserving the security, indeed, the very lives of all the client’s staff in Iraq? Saying “do better or I’ll fire you and do it myself” isn’t a viable solution. This bring us to the article, “Private Military Contractor Liability Under the Worldwide Personal Protective Services II Contract” published in the Spring 2009 issue of Public Contract Law Journal by Samuel P. Cheadle, then a student at the George Washington University Law School. WPPS is the State Department’s effort to pre-plan, organize, set up, deploy and operate contractor protective service details around the world. It has also been the main cash cow for what was once Blackwater, now Academi . Its primary public contract was WPPS and WPPS II umbrella contracts, along with DynCorp International and Triple Canopy, Inc. for protective services in Iraq, Afghanistan, Bosnia and Israel. This is not a contract which will go down in contracting history for its transparency. In January 2010, the state’s inspector general office released its August 2009 Memorandum Report on the Preliminary Review of the Second Worldwide Personal Protective Services (WPPS II) Contract Task Orders . The memo informed various State offices of the audit cancellation of the WPPS II contracts due to “insufficient documentation.” The Department of State’s Bureau of Diplomatic Security contracts with Triple Canopy, the U.S. Training Center (formerly Blackwater), and DynCorp for personal protective services around the world, including Jerusalem, Iraq, and Afghanistan. OIG’s review of Triple Canopy, Blackwater, and Dyncorp contract TOs found insufficient documentation to meet the objectives of the audits. Federal Acquisition Regulation (FAR) 4.805 requires contract files listed in FAR 4.803 to be retained for a minimum of six years and three months after the disbursement of the final payment on the contract. OIG requested 34 contract and procurement documents for each TO. The table below depicts the number of documents provided for review and the number not available for review. Based on DIG’s receiving insufficient documentation during its preliminary review of the Office of Acquisition Management, DIG is cancelling the following previously announced audits immediately: …. Audit of Contract Administration of the DynCorp Second Worldwide Protective Services (WPPS II) Contract in Iraq, Task Order 009, under Contract Number S-AQM-PD-05-D1099; … Audit of Contract Administration of the Triple Canopy Second Worldwide Personal Protective Services Contract in Iraq, Task Order 007, under Contract Number S-AQM-PD05-D-1100. I’ve written before on the limitations of such laws and regulations as the Military Extraterritorial Jurisdiction Act and the Uniform Code of Military Justice and thus won’t rehash them here. But putting aside their specific problems what they have in common is that they focus on creating avenues of criminal liability for individual contractors, as opposed to ensuring corporate accountability to ensure long-term compliance with “use of force” policies. According to Cheadle, contract enforcement is a simple vehicle to achieve corporate accountability. Yet, little has been written on the actual terms of the contracts that PMCs hold with the U.S. government and the potential liability they could face for criminal actions that breach specific terms of those contracts. Just like PMC trade groups, Cheadle recognizes that PMCs are a necessary element of our armed forces abroad and that removal of PMCs from their responsibilities is an option the government cannot afford. Yet he believes that at the same time the U.S. government must find a means of punishing PMCs for criminal conduct while not hindering their essential roles in the war effort. His solutions is elegantly simple; especially so, given that he is not proposing a new law; remember that PMC trade groups always say that there are plenty of laws on the books to ensure proper PMC accountability. Cheadle agrees with this view. He thinks the government should resolve this dilemma by holding PMCs liable for breaches of contract under an alternative clause in FAR Part 49, termination for default. FAR 49.402-4(b) permits the performance of a contract to continue in lieu of a termination for default, but only under a third-party contract or subcontract. Termination for default is generally the exercise of the government’s contractual right to completely or partially terminate a contract because of the contractor’s actual or anticipated failure to perform its contractual obligations.” Specifically, the government can terminate a contract for default if the contractor fails to perform any provision of the contract. However, standard termination for default, however, is not a feasible solution to the problem of how best to enforce a violation of the WPPS II contract. PMCs cannot simply be uprooted from their roles abroad and replaced by military. PMCs cannot simply be uprooted from their roles abroad and replaced by military personnel because, to name one reason, there are not enough military personnel to replace them. Thus, part 49 of the FAR to the rescue. It provides several options for the government “in lieu of termination for default. Under one such alternative clause, FAR 49.402-4, the government may, when in its best interest, permit the contractor to continue performance under a revised delivery schedule 8 or continue performance “by means of a subcontract or other business arrangement with an acceptable third party.” This permits a contract to continue, benefiting the government, while effectively punishing the contractor by transferring the work to a third party. How would this work in real life? Think back to the killing of Iraqi civilians by Blackwater contractors in 2007. According to Cheadle the government may, “under FAR 49.402-4(b), let Blackwater’s duties under the WPPS II contract continue upon a finding of termination for default through a subcontract or third-party contract. Discussed below, this could be in the form of requiring Blackwater to hand some of its duties over to one of the other contractors under the WPPS II contract-DynCorp International or Triple Canopy-companies already familiar with the contract and fit to meet its demands.” Considering that PMC trade groups always say that it is free market competition which allows the private sector to produce “cost-effective” high performance solutions. Cheadle agrees, writing that “The key to this system is its focus on competition within the existing contract. The purpose of this competition would be to create incentives to comply with the “use of force” policy. Competition is the heart of the government contract system, the policy being to get the best price and product through competitive procedures.” Thus, trade groups can hardly complain when the laws of supply and demand are used to ensure contract compliance. This would be a great opportunity for trade groups like ISOA and PSC to match their corporate funding with their talking points. Cheadle recognizes that a “potential problem presented by applying FAR 49.402-4(b) is that it may cause the government to hire an entity unfamiliar with the dangers of operating in Iraq and Afghanistan to take over the contract, endangering the lives of the individuals the PMCs were hired to protect. Thus, he proposes that: The government should utilize this clause by establishing a system that requires the contract to continue through one of the two nonbreaching parties already under the WPPS II contract. Creating a system of competition among the parties already under the WPPS II contract is the best option to attain the necessary balance between a policy that ensures the safety of the con tractors and the officials they are hired to protect and a policy that ensures compliance with the “use of force” terms of the contract. This remedy would allow smooth transitions between contractors because all parties involved would already be familiar with the contract and the terrain, and would have the experience to negotiate the dangers inherent in providing security services in Iraq. Essentially, if a contractor screws up by, say, shooting someone it shouldn’t have, the company will pay the price by see its work go to another company working on the same WPPS contract. But perhaps the greatest benefit would be this: The greatest asset of this system would be its ability to achieve the delicate balance between the best protection of U.S. and foreign officials and compliance with the “use of force” policy of the contract, which ensures the safety of Iraqi civilians. All three of the contractors already at work under the WPPS II contract know the territory and know what they have to do to keep their subjects and their own employees safe. They would, over time, learn what steps are necessary to ensure compliance with the “use of force” policy while maintaining maximum levels of safety for their security subjects. No contractor would go so far as to sacrifice safety by not firing when there is a clear and present threat of danger. Competition among the three contractors would force them to find the balance between an effective defensive policy and maximum safety for the officials who are at the heart of the contract. The competition also likely would induce greater oversight of contractor actions within the contracting companies themselves. PMCs would likely monitor each other for potential violations, creating another layer of oversight on top of the Regional Security Officers and the Diplomatic Security High Threat Protection Program Office.

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David Isenberg: FAR 49.402-4(b) to the Rescue

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Medication Shortages Surge To Record In 2011

January 3, 2012

TRENTON, N.J. — The number of new prescription drug shortages in 2011 shot up to 267, well above the prior record and about four times the number of medication shortages in the middle of the last decade. Figures just released by the University of Utah Drug Information Service, which tracks national drug shortages, show there were 56 more newly reported drug shortages in the U.S. last year than in 2010, when there were 211. By contrast, there were only 58 drug shortages reported in 2004. As the drug shortages worsen, so does their impact on patient care, particularly in hospitals. The inability to get crucial medicines has disrupted chemotherapy, surgery and care for patients with infections and pain. At least 15 deaths since 2010 have been blamed on the shortages, which have set a record high in each of the last five years. “At the beginning of the year, we were on a pace of about a shortage every day,” Erin R. Fox, manager of the service, told The Associated Press. “Luckily, that pace has definitely diminished.” She noted the Food and Drug Administration has said it has prevented more than 100 new shortages in 2011. That’s partly because of an executive order President Obama issued on Oct. 31 to address the shortages, with provisions requiring more manufacturers to report potential shortages in advance to the FDA. But Fox is still worried because many of the current shortages won’t be resolved anytime soon, based on reports from several key manufacturers that have had to shut down production because of contamination or other quality problems. For some medicines, there may be only one other manufacturer, which doesn’t have the capacity to fill the gap immediately or completely. In addition, Fox said some of the more recently reported shortages are very difficult for hospital pharmacists and other staff to manage. She noted new shortages of sedatives widely used in surgery, including Valium, Versed and lorazepam. Another big problem is the recent shortage of the opioid painkiller fentanyl. “It is used like water in hospitals, for everything from moms giving birth and ICU patients to the ER,” Fox said. Her service provides hospitals with lists of alternative drugs to those in short supply, but for some medicines the alternatives also are hard to find, and switching to an unfamiliar drug can result in dosage errors. Most of the drugs in short supply are sterile injected drugs that are the workhorses of hospitals and are normally inexpensive because they’ve long been available as generics. The FDA says the main reason for the shortages is manufacturing deficiencies leading to production shutdowns. Other reasons include companies ending production of some drugs with tiny profit margins, consolidation in the generic drug industry and limited supplies of some ingredients. Besides disrupting patient care, the shortages have delayed clinical trials comparing experimental drugs to older ones and have led to unprecedented price gouging, with hospitals sometimes having to pay outrageous markups for scarce drugs. In one case that’s among those under investigation by Congress, a vendor outside the normal supply chain offered to sell a hospital a vial of a cancer drug that normally costs about $12 for more than $990. The FDA and several members of Congress have been holding hearings since September to identify reasons for and possible solutions to the shortages. “I hope that we won’t have another record-breaking year” in 2012, Fox said. “But I’m not optimistic.”

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‘Occupy’ Makes Annual List Of Most Overused Words

January 1, 2012

By Ros Krasny BOSTON, Dec 31 (Reuters) – Occupy this: the trash bin. At least, so say students at Michigan’s Lake Superior State University who released an annual list of words they deem so misused, overused and cliched they should be banished in the year ahead. “Occupy,” the term associated with the months-long protest movement in New York and across the United States against income inequality and a variety of other social ills, was among the 12 nominees after just a few months of overexposure. “It has been overused and abused, even to promote Black Friday shopping,” said Grant Barnett of Palmdale, California, who was among those to nominate the word. “We are headed to Grandma’s house – Occupy Thanksgiving is under way,” said Bill Drewes of Rochester Hills, Michigan, giving another example of how the word has been overused. At the head of the class, though, was the word “amazing,” which garnered nominations from around the United States and from as far away as Israel and the United Kingdom for inclusion on the list by the school in remote Sault Ste. Marie. Many nominators mentioned overuse on television, specifically by personalities such as Martha Stewart and Anderson Cooper, and on reality TV. “Every talk show uses this word at least two times every five minutes. Hair is not ‘amazing.’ Shoes are not ‘amazing,’” said Martha Waszak of Lansing, Michigan. Although one critic suggested that the act of giving birth was amazing enough to be termed, well, amazing, the term “baby bump,” often attached to pregnant celebrities such as Beyonce or Gwyneth Paltrow, drew scorn. “This is a phrase we need to finally give birth to, then send on its way,” offered Mary Sturgeon of Vancouver, British Columbia. The school began its list of words proposed for banishment in 1976, when it named “at this point in time” a linguistic dud, as substituted for the concise and elegant “now.” The college now receives well over 1,000 nominations each year through its website, lssu.edu/banished/. Previous winners and nominees include the terms “shovel ready” for 2010, “battleground states” for 2005, “24/7″ for 2000 and “family values” for 1995. Also on this year’s list were “shared sacrifice,” “blowback,” which is sometimes exchanged with “pushback” to mean resistance, and “mancave,” now a favorite with advertising copywriters. “Not every man wants a recliner the size of a 1941 Packard that has a cooler in each arm and a holster for the remote,” said David Hollis of Hubbardsville, New York. Heading into the 2012 election year, votes were cast to ban the term “win the future,” a phrase that has been claimed by both the left (President Barack Obama) and the right (Republican White House hopeful Newt Gingrich). Other vote-getters included “the new normal,” “ginormous,” a mash-up of gigantic and enormous, and “thank you in advance.” (Reporting by Ros Krasny; Editing by Cynthia Johnston)

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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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CU-Boulder Buys Up .xxx Domain Names

December 21, 2011

BOULDER, Colo. — The University of Colorado has snapped up 27 .xxx domain names in an effort to prevent pornographers from exploiting the school’s name and brands, but it failed in acquiring the Colorado.xxx name. The newly created .xxx suffix is the Internet’s adults-only variation on .com. Colorado.xxx, which is a variation of the school’s Colorado.edu domain, was acquired by Las Vegas brothel owner Edward Yeager. Yeager told the Camera that he would offer the name to the University of Colorado for $1,000. University spokesman Ken McConnellogue says he’s unsure whether the school will buy the domain from Yeager. The school spent about $200 on acquiring each domain. Other universities and schools across the country have done the same.

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‘We Are The 99 Percent’ Chosen As Year’s Top Quote

December 20, 2011

By JOHN CHRISTOFFERSON, Associated Press NEW HAVEN, Conn. — A Yale University librarian says the slogan “We are the 99 percent” by Occupy Wall Street protesters is the year’s most notable quote. Fred Shapiro has released his sixth annual list of the most memorable quotations of the year. (CLICK HERE FOR THE LATEST OCCUPY UPDATES) Shapiro picks quotes that are famous, important or revealing of the spirit of the times. The quotes aren’t necessarily the most eloquent or admirable. The “99 percent” slogan stems from a movement against economic disparity and perceived corporate greed. Protests began with Occupy Wall Street in Manhattan in September and spread around the country. Billionaire investor Warren Buffett made the list for his complaint that he and his rich “have been coddled long enough” by Congress. Politicians, including former Rep. Anthony Weiner, made their usual strong showing as well. The list: 1. “We are the 99 percent.” – slogan of Occupy movement. 2. “There is nobody in this country who got rich on his own. Nobody. You built a factory out there – good for you! But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for.” – U.S. Sen. candidate Elizabeth Warren, speaking in Andover, Mass., in August. 3. “My friends and I have been coddled long enough by a billionaire-friendly Congress.” – Billionaire Warren Buffett, in a New York Times op-ed on Aug. 15. 4. “I believe in evolution and trust scientists on global warming. Call me crazy.” – Presidential candidate Jon Huntsman in an Aug. 18 tweet. 5. “Oops.” – Presidential candidate Rick Perry after unsuccessfully attempting to remember the third federal agency he would eliminate during a Nov. 9 debate. 6. “When they ask me, `Who is the president of Ubeki-beki-beki-beki-stan-stan?’ I’m going to say, `You know, I don’t know. Do you know?’” – Then-presidential candidate Herman Cain in an interview by Christian Broadcasting Network on Oct. 7. 7. “I am on a drug. It’s called `Charlie Sheen.’ It’s not available because if you try it once, you will die. Your face will melt off and your children will weep over your exploded body.” – Actor Charlie Sheen in a February interview with ABC News. 8. “Oh wow. Oh wow. Oh wow.” – Apple co-founder Steve Jobs’ last words on Oct. 5, as reported by his sister Mona Simpson in her eulogy. 9. “I can’t say with certitude.” – Then-U.S. Rep. Anthony Weiner on June 1 when he was asked whether a lewd photograph was in fact him. 10. “Instead of receiving the help that she had hoped for, Mr. Cain instead decided to provide her with his idea of a stimulus package.” – Lawyer Gloria Allred on Nov. 7 discussing Herman Cain’s alleged sexual harassment of her client.

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Paul Krugman: It’s Time To Admit We’re In A Depression

December 12, 2011

It’s time to start calling the current situation what it is: a depression. True, it’s not a full replay of the Great Depression, but that’s cold comfort. Unemployment in both America and Europe remains disastrously high. Leaders and institutions are increasingly discredited. And democratic values are under siege.

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What Do Employees Think Of Corporate Sustainability?

December 8, 2011

Do employees support and engage with corporate sustainability strategies? According to a new report, it depends. Brighter Planet, an organization which uses “hard numbers and raw data” to explore opportunities and trends in sustainability , has released the results of its second biennial survey on employee engagement with sustainability, and discovered several important trends. Brighter Planet states that since 2009, they have found that corporate sustainability programs are ” becoming less effective as they spread .” Their results suggest that “employee weariness at ineffective sustainability initiatives could undermine promising progress.” Additionally, they found that the most effective companies are those that promote a breadth of sustainability programs, especially in “emerging green issues like procurement, water use, and business travel,” and companies that make a point of collecting data on “their footprint, the impact of staff travel and commuting, and employee sustainability efforts.” The organization writes that its survey includes responses from almost 1,000 individuals in 47 states and 51 countries , including employees from “WalMart, Visa, UPS, Coca-Cola, Exxon, McDonalds, the U.S. Government, and many other leading organizations.” If you’re weary of companies that may be “greenwashing,” check out HuffPost blogger Candice Batista’s list of resources for sifting through companies’ environmental claims. Click here to view advertisements from companies that may have less than sustainable intentions. To read Brighter Planet’s full report on employee sustainability engagement, click here .

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Coaches Rout Professors In Salary Game

December 2, 2011

Newly hired Urban Meyer will earn $4 million a year as Ohio State’s football coach. The average college professor earns $81,491. Higher learning isn’t required to know that’s a big difference. Too big perhaps? The argument comes up whenever a coach secures a giant contract, as outrage mounts at education’s priorities. The deals play worse in bad times. The Kenan Institute for Ethics’ student arm at Duke University pointed out earlier that Texas Tech University froze $3 million in faculty salary while giving football coach Tommy Tuberville a $500,000 raise to $2 million a year. And what did the school get for its money? Texas Tech finished 5-7, its first losing record since 1992. Tuberville has never won a national championship. Meyer has won two of them at the University of Florida. But neither has made advances in the study of autism, schizophrenia, dementia and fetal alcohol disorder. Joseph Steinmetz has. Steinmetz is a psychology professor and executive dean and vice provost of arts and sciences at Ohio State. He gets paid pretty well at $325,008 a year, according to a public database . But is Steinmetz just 8 percent as valuable to the university as Meyer is? Xiaodong Zhang is an engineering professor and the chair of Ohio State’s Department of Computer Science and Engineering. He helped innovate microprocessors so we can get our information faster, according to his university bio. Zhang makes $217,692. Is Zhang worth just 5 percent of Meyer? Zhang and Steinmetz presumably do not get use of a private jet and millions in bonuses either, as Meyer does. Meyer and the two professors did not respond to requests for comment. Of course, coaches run programs that generate millions for their schools. Meyer is taking over a scandal-plagued team that still turns an $18.2 million profit annually, according to Bloomberg . The university is hoping his presence will perhaps mean Texas-size increases in revenue, as in the University of Texas. The Longhorns go about $70 million in the black every year and pay their coach, Mack Brown, more than $5 million a year. That’s a long look up for Hugh Freeze, the coach at Arkansas State. He occupies the salaried rear of Football Bowl Subdivision coaches, earning a paltry $151,660 a year. Maybe he ought to get into the neuroscience business.

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The Sunlight Foundation: Six Banks That Benefited Most From Fed’s Sweetheart Lending Were Big Political Players

November 29, 2011

This post was written by Lee Drutman , data fellow at the Sunlight Foundation. He is also an adjunct professor of political science at Johns Hopkins University, the University of California, and Smith College. On Sunday, Bloomberg News reported on an estimated $13 billion worth of income that banks gained by taking advantage of the Federal Reserve’s below-market interest rates, which were sometimes as low as 0.01 percent. The six banks that benefited the most from this “subsidy” – Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, and Wells Fargo – reaped a combined $4.8 billion of estimated extra income from the below-market loans. It’s worth pointing out that all six of these banks were major political players. All six have also averaged at least $2.7 billion in lobbying a year for the period 2008-2010. And all six have averaged at least $2 million in campaign contributions for the last two electoral cycles. Four of the six banks rank among the top 100 political contributor organizations for the last two cycles. Two of the six were in the top 100 political lobbying organizations for the period 2008-2010. (We focus on 2008-2010 because although the bulk of the lending took place in late 2008 and early 2009, continued lobbying by the banks may have contributed to keeping these deals undisclosed until now.) Bank Contributions 2007-008 & 2009-2010 (Average Per Cycle) Lobbying 2008-2010 (Average Per Year) In-house lobbyists 2008-2010 (Average Per Year) Firms hired 2008-2010 (Average Per Year) Bank of America $3,233,745 (rank: 57) $4,085,333 (rank: 160) 5.0 7.7 Citigroup $3,746,536 (rank: 70) $5,846,666 (rank:37) 9.0 13.7 Goldman Sachs $5,315,836 (rank: 51) $3,584,333 (rank: 179) 7.7 14.0 JP Morgan $4,274,232 (rank: 56) $6,323,333 (rank: 70) 9.3 12 Morgan Stanley $3,072,767 (rank: 108) $2,710,000 (rank: 237) 4.0 4.3 Wells Fargo $2,000,573 (rank: 126) $3,518,580 (rank: 197) 3.7 3.3 While it’s difficult to infer causality from these numbers, it is fair to say that these companies were no strangers to Washington. And this probably didn’t hurt them when it came to negotiating bail-out deals with the Federal Reserve and keeping these deals undisclosed.

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Margaret Heffernan: Put Shorts on the Board

November 21, 2011

For the first time in my life, I got to teach a law school class last month. I was the guest of Frank Partnoy one of the best business writers I know. What’s great about Partnoy is that he’s worked on Wall Street, knows the law, understands economics — he even explained (or tried to explain) derivatives to Senators — and pulls no punches when it comes to criticizing the lax oversight of our financial institutions by Washington and by corporate boards. Partnoy’s a fierce and independent thinker , unconstrained by deference or ignorance. The first hour of his University of San Diego class was devoted to reviewing the law around corporate governance. What is required of a board director? What are directors indemnified against? What is their responsibility? The second hour was mine and I spent it discussing how what the law proposes is not what, in fact, occurs. Boards are biased, too like-minded, made up of friends who are typically cronies uncomfortable with conflict. Worse still, in most of our leading corporations today, the positions of Chairman and CEO are held by the same person. This breaks all the basic rules of corporate governance, reduces the power of directors and is the single greatest cause of a lack of debate, challenge and constructive conflict within a board. And yet vast companies — Exxon, Chevron, Procter & Gamble, GE, General Motors , in fact more than half of the Fortune 24 — persist in this most obvious abuse. All of these companies whine endlessly and publicly about the onus of Sarbanes-Oxley and now Dodd-Frank but they don’t take even the simplest step towards better governance. If you’re hoping your investments will fund your old age, you should care mightily that they’re so poorly overseen. Our students seemed to relish this clash of theory and practice but afterwards Partnoy and I worried about how bad governance can be improved. That the law and reality scarcely meet may be entertaining but for investors, large and small, it can be devastating. Give the Small Shareholder a Seat “There are two things you could do,” Partnoy proposed. “First: reserve one board seat for a small shareholder. This would need to be someone pretty tough, prepared to ask questions, hold their ground and not be easily swayed or impressed.” A strong-minded private shareholder should ask hard questions, unconcerned to be part of the club and unwilling to be blindsided by jargon and ideology. Asking blunt common sense questions should generate clear, jargon-free answers. If it doesn’t, everyone will know there’s a problem. At least, that would be the intention. Seat the Shorts His second proposal was even more startling: “Put a short seller on the board.” Shorts make their money looking for flaws. They’re forensic ferrets, skilled at probing strategies and numbers to find risk and exposure. It was, of course, short sellers who spotted Enron’s implausibility and short sellers who saw that the banks were taking on too much risk. More shocking than Partnoy’s suggestions, though, is the response he’s had to this one. Nobody will countenance having a short seller on the board. Why? Because, they say, board members shouldn’t be exposed to deep scrutiny and challenge of a kind that shorts do so well (and so profitably.) It might scare them too much. Corporate leaders are afraid of the questions they might be asked and lack confidence in their ability to provide competent or satisfactory answers. That’s a pretty troubling admission. My argument in Partnoy’s class was that much corporate governance is feeble, ritualistic and can’t work because it flies against everything we know about individual neuroscience and group psychology. The only meaningful counterpoise to that has to be a culture of challenge, debate and healthy conflict done well in the interest of shareholders. But if the leaders of organizations can’t or won’t countenance this, we’re in bigger trouble than I thought.

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WATCH: Why Are Tents So Important To Occupy Denver?

November 21, 2011

In cities all over the world, Occupy movements have started tent cities in their local parks causing many of which to be evicted or arrested. Whenever even a handful of tents appear in a park, Denver authorities have lately been responding with extreme force . And despite the opposition, protesters continually come back to their local parks in hopes of being able to erect tents again. Ever wonder why the tent so important to the occupiers? Occupy Denver has put together a video that explains the protesters position on why the tents are crucial to the movement, both symbolically and practically. One unnamed protester in the video says, “Denver is now going to spend over a million dollars because of tents, for a fine that was probably less than 100 dollars. If [the city] would instead invest that money into the local community they could house all of the Denver homeless population for a year. But instead, they decide on this: riot police, they’re going tear gas us, they’re going to hit us with batons.” Last week, it was reported that the city of Denver has already spent $360,000 for two weeks of police action against Occupy Denver. DPD then asked for an additional $200,000 to help cover more costs. Fox31 reported . Another anonymous protester says, “If you’re not allowed to have tents in the middle of a housing crisis — for a lot of us that shows you’re not allowed to have anything unless you have considerable amounts of resources — then you’re just going to be left out in the cold, literally.”

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Does Oakland’s Police Chief Think Occupy Activists Are Anarchists?

November 21, 2011

WASHINGTON — Last week, civil rights attorneys in Oakland filed a motion for a temporary restraining order and a civil suit against the Oakland Police Department, alleging officers had used excessive force against Occupy Oakland activists. With the recent pepper spray incidents at UC Davis , Seattle and Portland , and the continued police clashes in New York City and elsewhere, civil litigation is inevitable. And the Oakland Police Department has exhibited some of the most brutal responses to Occupy activists. At issue is the decision by the Oakland Police Department — and its various support agencies — to use rubber bullets, bean bag pellets and tear gas on the Occupy Oakland encampment in late October and the subsequent protest march. Their responses have produced images of a wheelchair-bound protester caught in a fog of tear gas and critical injuries to two military veterans. Interim Oakland Police Department Chief Howard Jordan has promised to investigate any allegations of excessive force. Mayor Jean Quan has vowed to monitor the investigations closely. But is there an explanation for the Oakland cops’ dramatic display of force? Did Jordan look out at that sea of activism and see anarchy? He shared such sentiments in a April 2005 deposition in which he stated that he considered anti-war groups to be anarchists. The deposition was taken as part of an excessive force case in which the police department had fired non-lethal weapons on activists at the Oakland port in April 2003. Plaintiff attorney James Chanin asked Jordan about his views, noting that the police official had labeled three anti-war groups — Not In Our Name, International ANSWER and Direct Action To Stop the War — as anarchist groups in a report. As Chanin began interrogating Jordan, it became clear that the officer had done little research on the subject. “What led you to conclude that these groups were anarchist groups?” Chanin asked. “From some of the stuff I saw on the Internet and watching TV,” Jordan answered. “There had been a number of demonstrations in San Francisco where I’d seen those slogans portrayed on TV.” After a little back and forth, Chanin asked: “What did you see on the Internet that made you think that these groups were anarchist groups?” Jordan answered: “Some of the things that they were saying. Stop the war, and the government slogans, some of the things that they had — anti-government things they had spoke about doing at port, which was to shut down the port.” Chanin asked what Jordan meant by “anarchist group.” Jordan responded by stating, “To me, an anarchist is someone who is opposed to any kind of government action, someone that takes action against things being done by the government. For example, paying taxes.” Chanin followed up by asking if he noticed whether the anti-war groups called for non-violent demonstrations. Jordan admitted he did not notice. Jordan later highlighted one of the goals of the group Direct Action to Stop the War as proof that they were anti-government. The group had wanted to “to transform our cities and towns from profits, oil and war, to resistance and life.” Jordan explained: “I think this is a statement against the government, against the government entity. That’s my interpretation of it.” But there was more of Direct Action’s rhetoric that set off Jordan’s alarm bells. He answered that he believed the following statement was that of an anarchist group: “Uproot the system behind the war (and behind the war at home; racism, poverty, corporate globalization); help catalyze mass movements to challenge corporate and government power and create socially just, directly democratic ecological, peaceful alternatives.” “It’s a statement against the government,” Jordan stated. “It’s something that would promote anti-government behavior.”

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Richard Attias: A New Role for China?

November 21, 2011

It’s no secret that China’s future looks brighter than that of other nations. Green energy, innovation, and a more prominent role in world politics will all be part of the picture, said President Hu Jintao at the APEC CEO summit last week. In a wide-ranging speech he surveyed the global landscape, touching on the environment, the world’s economy, and the internal problems that China faces. Right now the most pressing concern for world leaders is to foster growth and stability. Mr. Hu noted that the financial crisis has changed the balance of power, which mechanisms of governance do not yet reflect. A more equal partnership is required than the one we have had till now, Mr. Hu said: “The emerging markets and developing countries are carrying greater weight in a global economy and playing a bigger role in global economic governance.” Mr. Hu stressed his country’s commitment to free trade. China will resist protectionism, and it supports the development of a free-trade area in the APEC region. In its newly prominent role, China aims to deepen cooperation between and among emerging markets and developing countries. Environmental concerns are becoming increasingly important, and the scientific and industrial developments that will fuel growth must also be green. The twelfth five-year plan stresses sustainability, and between 2011 and 2015 investment in the environmental sector will be double that of the five years previous. This will also present opportunities for business. “The strong green demand and China’s sound investment environment will provide a vast market and great investment opportunities to businesses in all countries,” Mr. Hu said. When it comes to innovation, Mr. Hu wants China to shift its position from that of follower to that of leader. To this end the country is doing its best to improve intellectual property rights and legislation. “China will work hard to make itself an innovation driven country and to achieve the transition from ‘Made in China’ to ‘Created by China.’” While noting the rich potential that his country currently enjoys, the president was not reticent about its problems. As in other nations, there is a risk that growth that is too swift could be destabilizing. There are vast disparities between rural and urban areas and sometimes a lack of coordination in policy. The changes in the country are putting acute pressures on the environment and the economy. “Unbalanced and unsustainable development still poses a major challenge to China,” Mr. Hu said. “There are many hurdles.” Yet all in all, the Chinese president was optimistic about the future. He spoke of its huge economic potential and indicated that China is open for business. If properly managed and if its challenges are overcome, China may well be able to fuel the recovery of the world’s economy at the same time as bettering the lives of its citizens. Mr. Hu’s vision of the future was hopeful. “We will deepen reform, ensure we are improving people’s livelihoods, and enhance social harmony and stability.” That would be good news not just for China, but for everyone.

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Eileen Appelbaum: No Happy Ending for Friendly’s

November 21, 2011

Three years after being taken private by an affiliate of private equity firm Sun Capital Partners, Friendly’s — the family restaurant and ice cream chain known for its Happy Ending sundaes — filed for Chapter 11 bankruptcy protection. According to the filing, Friendly’s proposes to use the bankruptcy to jettison the pensions of nearly 6,000 employees and retirees. Outrageous as this seems, Friendly’s also proposes to sell itself out of bankruptcy to another affiliate of its current Sun Capital owners in an auction to be held in early December. While other bidders may enter the auction for Friendly’s assets and frustrate these plans, the conditions proposed for the auction heavily favor Sun Capital’s ‘stalking horse’ bidder. A key part of Sun Capital’s restructuring plan is to shift liability for the pension plan to the federal government’s Pension Benefit Guaranty Corporation (PBGC). According to PBGC’s exposure report , released earlier this week, assuming that plans are not terminated by healthy companies, the program can meet its obligations through the next 10 years although it faces a long-term deficit of $24 billion. Generally, businesses are able to shed pension liabilities in asset sales, and PBGC does not require companies to make good on pension plans they can no longer afford. But in an unusual move, PBGC announced that it will fight Sun Capital’s attempt to stick US taxpayers with the bill. PBGC objects to what appears to be a transparent effort by Sun Capital to take advantage of the bankruptcy process to abandon pension obligations while continuing to keep its ownership of Friendly’s. If Sun Capital gets away with this, PBGC will be on the hook for the pension payments, the program’s finances will worsen, and Friendly’s workers may not get the full pension benefit they are owed. Sun Capital’s disregard for Friendly’s workers extends beyond this effort to dump its pension obligations. The company could have provided advance notice of the impending shutdown to workers at the 63 restaurants slated to close as part of the bankruptcy filing since the bankruptcy was clearly planned well in advance. Instead, workers at these stores were told one evening that the next day would be their last. About 1,260 employees, well over 10 percent of the company’s workforce of 10,300, were laid off. The WARN Act requires 90-days advance notice of a mass layoff, but only if the company has 50 or more full-time employees at a particular site. Most Friendly’s stores have about 20 employees. New York has its own state WARN Act which applies to firms with 25 or more workers at a single location. It is possible that some of the six closed Friendly’s restaurants in New York are vulnerable to a WARN Act violation. Even if Sun Capital is not legally prohibited from laying these workers off without 90 days’ notice, common decency suggests they deserved more than the 24 hours’ notice they got. Friendly’s blames its financial woes on the recession and the rising price of cream. These are real issues, but according to Restaurant Finance Monitor , “Friendly’s problems are largely of its own making.” The leveraged buyout left Friendly’s with $297 million in debt, most of it taken out in 2008. In addition, after acquiring Friendly’s, Sun Capital sold its corporate headquarters property and the buildings housing160 of its restaurants in a sale-leaseback arrangement in which the restaurants paid above market rents to stay in the same buildings that the chain used to own. Under these circumstances, Friendly’s could not make the investments and operational changes to make the turn around that Sun Capital had promised. As for the private equity firm’s claim to improve governance, Friendly’s had 2 CEO’s in its 3 years as a Sun Capital portfolio firm. This is not the first time a Sun Capital portfolio firm was burdened with debt, saddled with above market rents in a sale-leaseback agreement for its facilities, and refused an injection of cash from the private equity firm that could have helped it survive. The bankruptcy of the west coast department store chain, Mervyn’s, while in Sun Capital’s hands not only cost the jobs of 30,000 workers, but stiffed the vendors for merchandise valued at $102 million. Private equity firms argue that restructuring may be painful, but the improved financial, governance, and business operations at affiliated portfolio companies creates economic value. Sun Capital might have a hard time making this case. SSI Group, which operates Grandy’s and Souper Salad restaurants, and Real Mex, which operates El Torito Restaurant and Chevys Fresh Mex — all Sun Capital portfolio companies — also entered bankruptcy in the past two months.

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Ian Fletcher: Obama’s Trans-Pacific Partnership Disaster

November 21, 2011

Will America ever learn? No, I guess not. After the failed promises of NAFTA, a job-destroying trade deficit that has burgeoned despite a long series of free-trade agreements, and ever-more-aggressive foreign mercantilism, we’re plowing ahead with even more of these agreements. Fresh from passing the Colombia, Korea, and Panama free trade agreements, Obama now wants to move forward to the long-bruited but dormant proposal for a Trans-Pacific Partnership. Not the man we voted for in 2008, is he? The proposed agreement would embrace Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam to start. Eventually, its advocates hope, it will include every nation on the Pacific rim, including Indonesia, the Philippines, Japan, Mexico, Russia, and China. Yes, you read that right. China . Goes without saying that it’s a terrible idea, and I’ve made a video discussing why. See below: Don’t look for any hope from the other side, by the way. The only Republican that I believe wouldn’t do such things is self-confessed long-shot Buddy Roemer . Mitt Romney has been sounding of late like he’d get tough on China if elected (I don’t know if he’s sincere), but he’s also committed himself to passing more trade agreements (and I must assume he means it).

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WATCH: Fox News Host Spars With Guest Over Occupy Wall Street

November 20, 2011

Fox News Sunday host Chris Wallace sparred with Fox News analyst Juan Williams over Occupy Wall street. After Williams charged that Wall Street protesters made the Republican presidential candidates look like “protectors of the super rich”, Wallace dismissed the movement. “I don’t think we should talk about Occupy Wall Street as a plus anymore,” he said, adding that “most people are…getting fed up with it.” Williams then began to explain the message Occupy Wall Street, including anger about banks’ greed and income equality. Wallace cut him off, saying “there’s a limit.” “You’re not playing fair,” Williams retorted. WATCH (h/t, video courtesy of Think Progress ):

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A Poet’s Beating At Occupy Berkeley

November 20, 2011

LIFE, I found myself thinking as a line of Alameda County deputy sheriffs in Darth Vader riot gear formed a cordon in front of me on a recent night on the campus of the University of California, Berkeley, is full of strange contingencies.

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Eric Alterman: Think Again: It’s All Connected (and That’s the Problem)

November 12, 2011

Jon Stewart went to town on fellow New Jersey-born-and-bred, ex-senator/governor/ex-Goldman Sachs CEO Jon Corzine on “The Daily Show” Tuesday night, describing him as “the living, breathing avatar of “the corporate-industrial-government complex.” He had a point. Corzine famously argued on behalf of tough financial regulations in office, only to return to the world of finance as the exact kind of high-flying gambler (with other people’s money) who needed to be regulated but preferred not to be. And because rich financiers tend to get what they want from this government, the now-former head of MF Global got what he wanted and proceeded to prove why he had been right in the first place — not that it matters. Stewart summed up the situation thusly: “Politician Jon Corzine saw Lehman Brothers as a cautionary tale; financial firm honcho Corzine saw it as a dare.” The Corzine tale demonstrates the impossibly intertwined nature of big money and politics. It can hardly be considered a coincidence that the ex-CEO of Goldman Sachs would become not only a senator and a governor but also the head of the party’s senatorial campaign committee, in charge of raising cash. But the complications go much deeper than just money and politics. The problem is not simply that moneyed interests can buy what they want and make the connections with one another necessary to see that their interests are properly overseen. What makes the impossible tangle of money and politics even more difficult to unravel is the fact that the various interests who hire lobbyists to ensure legislation serves private, rather than public interests, work together to ensure if one lobbyist wins, every lobbyist wins. And if a legislator is indebted to one of them for campaign cash, or access to a private plane, he is indebted to all of them. A pioneer of this tactic, unsurprisingly, is the conservative activist Grover Norquist. The man Politico aptly terms “America’s No. 1 anti-tax activist” has built a “sprawling lobbying empire that leverages his iconic status to influence politicians on issues completely unrelated to those about which he professes to care. What, for instance, does the State Department’s decision regarding the controversial Keystone XL Pipeline have to do with taxes? Why does Norquist lobby on Pentagon spending, get involved in postal issues, or care about payments to the people of Guam for injuries suffered during World War II? Why do lawmakers, according to Politico , “from both parties contend Norquist is the chief obstacle to a $1.2 trillion deficit-reduction deal?” That sure is a great deal of back-scratching, and none of it is good for the smooth legislative operations of a representative democracy. Norquist is particularly powerful with conservatives. But the syndrome is evident everywhere in Washington. Take a look at the so-called pro-Israel lobby, The American Israel Public Affairs Committee, or AIPAC. Allegedly concerned exclusively with issues related to Israel, AIPAC’s lobbying reaches far and wide. During the 1980s it would punish liberal legislators who did not support Ronald Reagan’s wars in Central America because those nations’ U.S.-supported dictators would, as a favor, vote with Israel in the United Nations. (They would also invite Israeli mlitary advisers to train their forces in counterinsurgency.) AIPAC lobbied lately to get the United States to, in the words of one former AIPAC staffer, “stick it to Turkey.” AIPAC, it will surprise no one, also appears to be behind the demand that the United States punish itself and its interests by withdrawing from the U.N. Education, Scientific, and Cultural Organization as a piece of misguided retaliation for the organization’s admittance of Palestine into its membership role. To continue reading, please go here .

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Americans Favor Protesters Over Wall Street, Washington

November 7, 2011

LOWELL, Mass. — A new national poll released Sunday shows neither Wall Street nor Occupy Wall Street conjuring up strong favorable impressions among the American public. But protesters fared better than their wealthy corporate targets in the poll conducted for the University of Massachusetts at Lowell and the Boston Herald. Among 1,005 adults surveyed, 35 percent had a favorable impression of the protest movement that began in New York City and gained support worldwide. Only 16 percent could say the same for Wall Street and large corporations. Twenty-nine percent had a favorable impression of the tea party movement and 21 percent of government in Washington. Knowledge Networks conducted the survey, asking participants their impressions of the four groups. Wall Street and large corporations tied with Washington government in unpopularity, with 71 percent of those polled saying they had an unfavorable impression of big business and Washington. The tea party got a 50 percent unfavorable response and Occupy Wall Street 40 percent. The group surveyed was selected randomly and the poll conducted online from Oct. 28 through Nov. 1. It had a margin of error of 3.8 percentage points, meaning the results could go up or down by that amount. Last month, an Associated Press-GfK poll showed some 37 percent supported the Wall Street protesters. Fifty-eight percent said they were furious about America’s politics, up from 49 percent in January.

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Amazon Stock Tumble On Earnings Report

October 25, 2011

SAN FRANCISCO — Online retailer Amazon is spending a lot to grow its business, and while this will eventually help its bottom line it’s currently costing the company on Wall Street. The Seattle-based company’s earnings fell short of analyst expectations Tuesday, sinking 73 percent despite revenue growth as Amazon built sales fulfillment centers at a rapid clip this year. And its revenue outlook for the current quarter failed to impress investors. Its stock fell nearly 18 percent in after-hours trading. Amazon.com Inc. earned $63 million, or 14 cents per share, in the third quarter. This compares with $231 million, or 51 cents per share, a year earlier. Analysts polled by FactSet had hoped for much more: 24 cents per share in net income. Revenue climbed 44 percent to $10.9 billion, in line with the nearly $11 billion analyst were looking for. The company’s media business, which includes products like books, CDs and DVDs, saw revenue rise 24 percent to $4.2 billion. Amazon’s revenue from electronics and other general merchandise rose 59 percent to $6.3 billion. But Amazon’s operating expenses also climbed, rising 48 percent to $10.8 billion. The increase came mainly from a higher cost of sales. This is the third consecutive quarter in which Amazon’s expenses have cut into its bottom line. To support its growing business, Amazon has built more than a dozen fulfillment centers this year. This ensures that the company can keep up as more people order everything from stuffed animals and power tools from the online retailer. “You have to go back to year 2000 to see those kind of growth rates,” Chief Financial Officer Tom Szkutak said during a conference call with reporters. Amazon CEO Jeff Bezos also gave some details about the health of the company’s family of Kindle e-readers. In Amazon’s earnings release, Bezos said that Sept. 28 was the Kindle’s “biggest order day ever.” That day, Amazon trotted out several new Kindle models, including its first-ever tablet computer, the $199 Kindle Fire. Amazon began selling a $79 model and took advance orders for others. The Fire, which will begin shipping in November, is Amazon’s answer to Apple’s popular iPad. Amazon sees the Kindles as a way to catalyze even more sales of the digital content it sells. Bezos said advance orders for the Fire are so high that Amazon is making “millions more” than it had intended, and orders for other models since Sept. 28 have been double what it was for the company’s last launch of a Kindle device. As in the past, Amazon did not give any specific details about its Kindle sales. For the holiday quarter – a period that is usually the best for retailers – Amazon expects revenue of $16.5 billion to $18.7 billion. Analysts are looking for $18.1 billion in revenue. Amazon’s stock sank $42.31, or 17.8 percent, to $195.30 in after-hours trading. The stock had fallen $10.46, or 4.4 percent, to finish regular trading at $227.15.

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Google Weighs Huge Acquisition

October 22, 2011

Google is exploring the possibility of helping to finance a possible deal by others to acquire Internet search company Yahoo, according to a report published report by the Wall Street Journal on Saturday. Google Inc. has talked to at least two-private equity firms about potentially assisting them to finance a deal to buy Yahoo Inc.’s core business, according to the story, which cited a person familiar with the matter, and did not identify the source. The Journal said Google and prospective partners have held early-stage discussions, but haven’t assembled a formal proposal. The source said Google may not end up pursuing a bid. A spokeswoman for Mountain View, Calif.-based Google declined to comment to The Associated Press. A spokeswoman for Sunnyvale, Calif.-based Yahoo said the company doesn’t comment “on rumor or speculation.” Any involvement by Google in a Yahoo acquisition would likely draw antitrust scrutiny from regulators, because of both companies’ shares in the Internet search business. The report came as investors have recently driven up Yahoo’s stock price, betting that the company will sell itself, either in whole or in part. Closing Friday at $16.12 apiece, the shares have gained nearly 25 percent since Sept. 6, when CEO Carol Bartz was fired. They are up 45 percent from the stock’s 52-week low reached in early August. There has been repeated speculation that the company might be sold to an assortment of buyout firms that prey upon troubled companies. Alibaba Group, a Chinese Internet company of which Yahoo owns a 43 percent stake, has expressed interest if it can line up the financing for a deal that would likely require a bid of more than $20 billion, the current market value of Yahoo’s shares. Microsoft Corp., which offered to buy Yahoo for $47.5 billion in 2008 before withdrawing the bid, also has been mentioned as a possible suitor. Since Bartz’ firing, Tim Morse has been filling in as Yahoo’s interim CEO while also working as chief financial officer. After the company’s third-quarter earnings announcement on Tuesday, Morse told analysts that he couldn’t discuss what the company’s next step might be or when it might take it. Yahoo is under pressure because its revenue has been falling at a time when the Internet advertising market has been growing as rivals such as Google and Facebook gain market share. Although it’s still recognized around the world, Yahoo’s brand has been losing its luster as people increasingly embrace social networks such as Facebook and short-messaging service Twitter to keep track of what’s going on instead of relying on a media hub like Yahoo’s website.

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Yale Profs Stress Need For Government Spending

October 15, 2011

As Yale University economists gathered on Thursday evening to discuss job growth strategies, many warned that a failure to act aggressively risks the increasing possibility of many years of economic stagnation, elevated joblessness and declining living standards. Some suggested that the government must act quickly to put millions of Americans back to work with large-scale public projects, while warning that an inadequate response risks a U.S. fate similar to Japan’s so-called lost decade. After a collapse in housing prices and the stock market, Japan in the 1990s suffered from a deflationary spiral that the government and central bank enabled by not substantially increasing spending or lowering borrowing costs. Unemployment remained elevated as consumer spending declined, and both people’s debt and goods and services became more expensive. “Think about Japan in 1989. It was a global powerhouse which many people thought would be number one and dominate the world economy, and 20 years after … it is off the economic map,” said economist Aleh Tsyvinski. “I am afraid that we are on the verge of something much greater and much more problematic with the U.S. economy.” Economist John Geanakoplos said the current predicament must be viewed as a long-term problem that requires long-term solutions. He proposed that government officials set up expert committees to investigate how to remake American infrastructure for the next 10 to 20 years, building airports, trains and roads for the future rather than patching up old models. In the long run, Geanakoplos said, infrastructure investment raises money for the government because those employed in construction and those using the new infrastructure spend more and pay higher taxes. Both the government’s budget and the economy benefit, he said. Economist Robert Shiller agreed with Geanakoplos’ prescription for more infrastructure investment. “When we go through a crisis like this, it’s a time for us to improve everything,” Shiller said. He suggested that the government create a Federal Employment Reserve Authority — inspired by Yale economist Martin Shubik’s 2009 proposal — which would identify shovel-ready projects around the country that the government could invest in during recessions. Just as people cannot get over colds all at once, Shiller said, the government cannot bring the unemployment rate “rapidly down” if it does not prepare for the disease beforehand. If the U.S. pinpoints shovel-ready projects before the next recession, Shiller said, “We’d have some medicine in the medicine cabinet ready to use, rather than having to make a long trip to the drugstore late at night, which you don’t do. You’ll just go to bed and suffer.” Some economists said that the U.S. is in danger of rising social unrest and a prolonged period of economic decline if the government does not act now. Continued economic stagnation would undermine prospects for future growth and be “really damaging in the long run,” warned economist William D. Nordhaus. Since businesses are not investing enough in new goods, he said, there’ll be fewer resources in the future to spur growth. This could translate into a cycle of less production, less research and development, and the “atrophying of jobs skills” of the long-term unemployed, he said. The economy needs “the jobs bill times three,” said Nordhaus, and perhaps even a large enough stimulus to rival government spending during World War II, which lifted the U.S. economy out of the Great Depression. He added that in the long run, the U.S. needs to pay for the stimulus “in ways that reduce inequality.” He recommended implementing a carbon tax and letting the Bush tax cuts expire as ways to pay for that stimulus, which would help the U.S. become a “livable” place for the 99 percent of people who have become “disenfranchised from making decisions” that could improve their well-being. The central problem weighing on the economy is a lack of business and consumer confidence, stemming from alarm about the gridlock in Congress and the European sovereign debt crisis, Shiller said. “We have a sense of inability to solve problems,” he added. The decline in unemployment that would result from a fiscal stimulus could boost confidence, said Shiller, and create a “strong” self-reinforcing cycle of more spending and hiring. Economist Richard C. Levin, who is also president of Yale University, suggested that since Congress hasn’t been able to take action to combat unemployment, a standby independent commission, similar to the Federal Reserve, should be created to make some fiscal policy decisions when the unemployment rate reaches a certain level. He said that during that 5 percent of the time when the Federal Reserve lacks the tools necessary to improve the economy, an independent commission probably would be a more effective arbiter of fiscal policy than Congress. “You have to put a very large fraction of the blame on Congress for not acting,” Levin told The Huffington Post before the panel discussion. Some of the economists said that if economic growth does not improve, the Occupy Wall Street protests could transform into social unrest on a scale similar to that of the 1960s and 1970s. Geanakoplos argued that mortgage service companies need to start forgiving some portions of loan principal before 8 million more people are thrown out of their homes, and “that’s when the riots are going to start.” He said local bankers should be writing down debt so that lenders can make as much money as possible from underwater home loans, since defaults are ultimately not the best solution for either homeowners or lenders. If mortgage principals are not written down, Geanakoplos said, the next best solution might be to boost inflation by a certain amount over the next few years, possibly as much as a 20 percent increase in prices, in order to inflate away people’s debt. “I’m not sure this idea is that good,” Geanakoplos acknowledged, “but it’s a radical idea that we haven’t really considered seriously.” He added that the Federal Reserve should focus on eliminating debt rather than encouraging borrowing with lower interest rates, since debt is the central issue preventing renewed spending. “The heart of the problem is people borrowed too much with too little collateral,” he said. In the meantime, allowing the Bush tax cuts to expire in order to raise government revenue probably would not place much stress on higher-income people, said economist Judith Chevalier. She explained that the “upward march” in incomes for the well-off has not been sensitive to changes in the tax rate over the past few decades. But she cautioned that an inordinate focus on the wealth of the top 1 percent, including populist demands for pay limits on chief executives, probably would not help the other 99 percent. If CEO pay was cut, profits might rise, said Chevalier, “but that doesn’t really have a logical connection to raising pay for everybody else or creating jobs for everybody else.”

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Ohioans To Vote On Collective Bargaining And Health Care

October 14, 2011

While Ohio’s upcoming referendum on the state’s controversial collective bargaining law has become the marquee issue on November’s statewide ballot, two other state issues could impact voter turnout in what has been considered a low-key year. In addition to the referendum to repeal the new collective bargaining law — known as Issue 2 — voters are being asked to approve a law raising the maximum age for judicial candidate appointment and an amendment to the state’s constitution that bans laws requiring residents to buy health insurance . While not connected to Issue 2, which would repeal Senate Bill 5, one Ohio political observer believes the health care vote could impact the collective bargaining vote known as Issue 3. “There were estimates in the summer that this would increase turnout by five percent,” said John Green, director of the Bliss Institute of Applied Politics at the University of Akron, of the health care vote. Ohio has no statewide offices on the ballot in 2011, with only municipal offices being contested. Beyond those, the ballot is dominated by municipal and county referendums, including those seeking to raise school tax levies, amend local charters and grant liquor licenses to specific restaurants. At the same time, Green noted that there is no definitive connection between the two issues and both were planned separately. He did note that the two issues cross over in terms of voters, with supporters of the collective bargaining law likely the same as for the health care amendment. “These issues could be linked at the ballot box,” Green said. S.B. 5 was passed by the state legislature and Gov. John Kasich (R) earlier this year and calls for an overhaul of the state’s collective bargaining laws for public employees, including the elimination of the right to bargain over benefits. Using a state constitutional amendment allowing for referendum to overturn state laws, labor groups sucessfully petitioned over the summer to place Issue 2 on the ballot. While some have speculated that Issue 3 — which was certified for the statewide ballot after Issue 2 — was written by conservatives in order to drive up voter turnout to defend the collective bargaining law, proponents of Issue 3 and Green say that is not the case. Maurice Thompson, the executive director of the 1851 Center for Constitutional Law , said the planning started in 2010. Proponents of Issue 3 first presented the Ohio secretary of state’s office with preliminary plans for the amendment in the spring of 2010, and then fought a battle in the state courts after the state’s ballot board rejected proposed language for the amendment. The state Supreme Court ruled in September 2010 that the proposed language could be used. The final signatures for the amendment were completed this July . “It is unfortunate that this is being argued to help Issue 2,” Thompson said to The Huffington Post. While observers expected Issue 3 to be the top issue in this year’s statewide election, Green noted that the heavy campaigning on both sides of Issue 2 and the case pending before the U.S. Supreme Court to overturn the federal individual mandate law have placed it behind the collective bargaining campaign. There have been no statewide commercials on Issue 3 according to Green, while Issue 2 been the subject of multiple commercials from pro-labor groups against the law and a series of commercials from groups in favor. Green noted that the judicial age referendum — Issue 1 — has gained little notice statewide. Melissa Fazekas, a spokeswoman for We Are Ohio, the group leading the charge to overturn the collective bargaining law, said they have not been focused on Issue 3, and Brian Rothenberg, the executive director of Progress Ohio , part of the anti-Issue 3 coalition, said his group has been focused on health care. He said that while there has been some shared campaign literature, there have been no discussions on sharing get out the vote efforts. Thompson said the pro-Issue 3 group has been focused on health care and other than both issues receiving support from the state Republican Party there has been no connection. Thompson also noted the state GOP donated less to Issue 3 than Issue 2. Green said the collective bargaining law becoming the top issue does not surprise him given the scope of S.B. 5 compared to the proposed amendment. “Issue 2 was always more controversial,” he said. “Public unions and their allies were very disturbed by S.B. 5. The labor law covers a lot of different issues, while Issue 3 covers just one mandate.”

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Identity Theft Bust Exposes Need For ‘Smart’ Credit Cards

October 10, 2011

When authorities announced Friday that they had charged more than 100 people in a massive identity fraud operation , they did not just blame the alleged thieves. They also blamed the credit card companies. At a press conference, Queens district attorney, Richard A. Brown, accused U.S. credit card companies of “putting too much money into marketing and not enough into security” and claimed they “would rather take the losses” than invest in proven security measures, according to The New York Times . Deputy Inspector Gregory T. Antonsen, the commander of the New York Police Department’s Identity Theft Squad, told reporters the bust showed the need for computer chips implanted in credit cards to deter fraud. Experts say the United States is far behind Europe in adopting smart cards, which require cardholders to enter a personal identification number on a keypad, similar to a debit card transaction. Smart cards deter fraud because they contain computer chips that encrypt transaction information and require thieves to not only steal card data but also know the cardholder’s PIN, experts say. The card’s computer chip also has the potential to generate one-time-only passwords for more secure online commerce, experts say. “It makes it much harder to commit fraud,” said David Robertson, publisher of The Nilson Report, an industry trade publication. While European banks have issued millions of smart cards to consumers, U.S. banks still rely largely on credit cards with magnetic stripes, which are more vulnerable to thieves, experts say. That partly explains why fraud in the United States accounted for a growing proportion of global fraud losses last year, according to a study issued by The Nilson Report last week. The U.S. loses 9 cents to fraud for every $100 worth of credit and debit card transactions, while the global average is 4.5 cents, according to Robertson. U.S. banks have been reluctant to issue smart cards because it would require retailers to make expensive upgrades to their payment systems, which they have been reluctant to do, said John Hall, a spokesman for the American Bankers Association. “The chip technology is certainly more secure but if you can’t use your chip card anywhere it doesn’t do anyone any good,” Hall said. But that may start to change as credit card companies try to compel retailers to accept the new technology. In August, Visa announced that retailers who do not support smart cards by 2015 would be liable for fraudulent transactions. Meanwhile, MasterCard has said ATM owners must accept smart cards by 2013 or they will be liable for fraud stemming from their machines. For retailers, smart cards are one of several new forms of payment that require expensive upgrades to their terminals, including payment systems that allow consumers to wave their mobile phones over a card reader, according to Joe LaRocca, senior asset protection adviser for the National Retail Federation. The cost of transitioning about 15 million retail terminals to accept chip-based cards is between $12 billion and $15 billion, Robertson said. Retailers believe banks should help fund the conversion, LaRocca said. The effort to compel retailers to accept chip-based credit cards represents a significant shift in the attitude of the credit card industry, Robertson said. Historically, card issuers have made such large profits that fraud was viewed as a cost of doing business, he said. But now, the credit card industry is becoming less profitable and fraud is becoming less accepted, he said. The push also reflects a concern that thieves will increasingly focus on exposing vulnerabilities in magnetic-stripe credit cards in the United States as the rest of the world adopts the more secure smart cards, Robertson said. Smart cards might have deterred the widespread fraud operation detailed Friday by authorities in New York, Robertson said. The crime ring, dubbed “Operation Swiper,” involved thieves who posed as retail workers and used skimming devices to steal credit card data, then programmed that data into the magnetic stripes of blank credit cards, authorities said. The scheme netted an estimated $13 million in fraudulent purchases. New York police called it the largest identity theft bust in U.S. history. However, smart cards may not be immune to hackers, either. Last year, researchers at Cambridge University found they could make a payment using a smart card without knowing the card’s PIN by using a device to intercept communications between the card and the terminal. The researchers concluded that smart card technology “is seriously flawed” and “should be considered broken.”

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Kanye West Visits Occupy Wall Street

October 10, 2011

Kanye West has become the latest celebrity visitor to the Occupy Wall Street protests. The hip hop artist/fashion designer/all around impresario showed up at the rallies in downtown Manhattan on Monday. Russell Simmons, who has been involved with the protests for some time, tweeted a picture of West on his way down. West, of course, became known for his unscripted televised moment in 2005, when he said , “George Bush doesn’t care about black people” during an appeal for aid to the victims of Hurricane Katrina. PHOTO :

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NASA Looking For New Astronauts: Do You Have The Right Stuff?

October 5, 2011

Ever dreamed of being an astronaut? If the answer is yes, then NASA just might have space for you.

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Robert Kuttner: Wall Street: From Protest to Politics

October 3, 2011

“There go my people. I must find out where they are going so I can lead them.” –Alexandre Auguste Ledru-Rollin, French politician (1807-1874). When elected leaders largely ignore a disgrace like the financial collapse of 2008, sooner or later popular protest fills the vacuum. The Wall Street protests are heartening — but also a measure of the utter failure of the usual machinery of democracy to remedy the worst pillaging of regular Americans by financial elites since the 1920s. For three years, we have been wondering, where is the outrage? For a time, it was co-opted by the Tea Parties — a faux populism, attacking government, financed by billionaires, delivering nothing to the 99 percent of Americans not represented by Wall Street. Now authentic protest directed against the real villains is finally here. The ingenuity of occupywallst.org, its spread to other cities, its blending of internet-organizing with on-the-ground protest, is inspiring. The New York protests, in which more than 700 people were arrested over the weekend, are likely to draw more activists, especially if police keep bungling the choreography of peaceful protest and deliberately leading demonstrators into traps. But sooner or later, protest will need to turn to politics. And God knows, we missed the rendezvous we were supposed to have with democratic politics in January 2009. With a newly-elected president who inspired great hope for change, politics failed us in that first phase of the crisis. Barack Obama installed a Wall Street-friendly team that resisted fundamental changes in the financial model that caused the collapse and the deep recession that followed. The 2010 Dodd-Frank Act, despite heroic efforts by progressives, stopped just short of separating financial speculation from ordinary banking. Most of its pro-consumer measures were added by relatively junior legislators over the objection of the Federal Reserve and the Treasury. The law’s strong provisions are being relentlessly gutted by a combination of industry lobbying, Republican obstruction, and lack of enthusiasm for tough regulation from Tim Geithner’s Treasury Department. The depth of the continuing recession can be traced back to the failure to radically reform the banks in the spring of 2009. Interest rates today are at record lows, but Wall Street banks still make their money from merger deals, complex securitization packages, and trading for their own accounts, while community banks are too traumatized to make loans to any but blue-chip customers. Meanwhile, nobody has gone to prison for the systematic frauds that brought down the economy, consumers are getting gouged by new fees that the banks dream up to compensate for their own losses. And the mortgage foreclosure crisis continues to fester and drag down the rest of the economy. So the Wall Street protestors have plenty to be angry about. But what kind of reform will the system deliver? In many ways, these demonstrations have a lot in common with events around the globe, from the protests that toppled dictators in Egypt and Libya to the spontaneous street protests in Tel Aviv, Madrid, and Athens. In every case, protest was organized outside regular political channels, because politics as usual wasn’t delivering. New people were drawn in, rightly skeptical of the system’s capacity to deliver real change. As a sixties kid, I can’t help comparing today’s situation with the two great causes of that tumultuous decade — ending the Vietnam War and delivering civil rights. In that era, reform was also blocked by mainstream politics. In the case of the antiwar protests, radicals led, liberals came later, and Congress came even later (with the exception of a few early heroes like Senators Wayne Morse of Oregon and Ernest Gruening of Alaska). In the civil rights movement, freedom rides, sit-ins, civil disobedience, the deaths of voter-registration workers — all these acts of heroism only bore fruit when protest achieved its rendezvous with politics, weirdly enough via the same President Lyndon Johnson who was prosecuting the same calamitous Vietnam war that led to his own downfall. In each case, it took several years for street protest to produce durable reform. These two great protests had happy endings (or beginnings), with great pain along the way. But history doesn’t guarantee happy endings. As Wall Street has finally engendered the kind of outrage that it so thoroughly deserves, democratically-elected officials are still light years away from embracing the kinds of drastic reforms that the system so desperately needs. In a democracy, once grassroots protest takes off, you never know what course it will take. Nobody at the time of the early sit-ins and freedom rides could have predicted three great civil rights acts within less than a decade. Bankers have immense power, until public opinion turns decisively against them and democratically-elected leaders decide to lead. These protests were a long time coming; I fear that it will take far longer for the system to deliver the drastic reforms that we need. Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril.

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Where Students Most Want To Work

September 30, 2011

Google (GOOG) is still the most popular employer in the world among business students, according to Universum’s latest global ranking.

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Meet X.commerce, eBay’s Latest Creation

September 17, 2011

By Alistair Barr SAN FRANCISCO | Fri Sep 16, 2011 5:27pm EDT (Reuters) – Ebay Inc is building a new division to woo developers and attract more merchants as the company tries to emulate the success of Apple Inc’s iOS platform in the e-commerce world. Ebay’s main business is still its giant online marketplaces, which bring shoppers and sellers together. The company’s other big division is the payment business PayPal and it acquired GSI Commerce earlier this year to add a third division. But a fourth business has emerged in recent months called X.commerce. The website for the division, X.com, revives a name from the early days of PayPal, when it merged a competing online payments business called X.com started by Elon Musk. X.commerce is trying to persuade outside developers to create applications, or apps, for merchants looking to sell more online. The apps can be designed to work on eBay’s marketplaces. They may also include payment capabilities from PayPal and work with websites built on Magento, an open-source e-commerce company that eBay bought in June. The more useful apps that developers build through X.commerce, the more likely merchants are to use eBay’s marketplaces, PayPal’s payment technology or GSI’s e-commerce services. “The idea is to indirectly monetize eBay’s main assets PayPal, GSI and Marketplaces,” said Matthew Mengerink, the eBay veteran who runs the new division. “X.commerce is in a unique position. I don’t have to drive revenue, I have to drive traffic.” Ebay has about 725,000 developers registered with its various developer programs and there are roughly 4,600 Magento apps active on X.com, up from 3,800 at the start of the year, according to Mengerink. Omniture, a unit of Adobe Systems, Kenshoo, an online marketing software company, and Outright, which makes a financial-management product for small businesses, are among companies that have signed up to develop apps on X.com. “They’re pulling an Apple, calling on the collective power of the developer community,” said Bill Smead of Smead Capital Management, which counts eBay as one of its largest holdings. Apple iOS is the operating system for the iPhone and iPad. The company has a massive following of developers who churn out thousands of apps for those gadgets, making them much more useful for customers. Mengerink reckons X.commerce can be more attractive for developers than iOS because merchants are willing to spend more money on useful e-commerce apps. Mengerink said he will measure X.commerce’s success partly on how much money developers make selling apps. “Apple’s iOS isn’t profitable for most developers,” he said. “On Magento, for every $1 we make, the developer makes $15.” “If developers are making the money, you can’t shake the platform,” he added. “We believe we can create the largest ecosystem.” Smaller merchants will not have to hire lots of in-house developers if a wide variety of e-commerce apps are available to buy and plug into their online stores, Mengerink explained. The success of eBay’s new division will depend on how large and attractive the pool of end-users is to developers, according to Stephen O’Grady, principal analyst at Red Monk, a technology industry analyst group that focuses on developer communities. Other specialty online marketplaces have sprung up in recent years, such as Etsy, cutting into eBay’s dominant position, O’Grady noted. “But eBay is still a major center of gravity,” he said. “For developers that’s still attractive.” Another important ingredient for attracting third-party developers to a technology platform is ease of use. Dan Shahin, a former comic book store owner who has developed an online storefront management system, went with a Google Inc payment system a few years ago, rather than PayPal. That was because PayPal had several different application programing interfaces, or APIs. APIs are sets of rules and specifications that help different software programs communicate with each other. PayPal’s APIs were “scattered around,” making it more difficult for Shahin to develop payment features to include in his storefront management system, he said. Shahin told Mengerink about this and the eBay executive got to work fixing the problem. “Third-party developers had to register for each API,” Mengerink said. “The X.commerce goal is to have one place to register for developers and partners. There are security and other issues with this, so it takes a while.” X.commerce is promising a lot, but Shahin reckons eBay has the technological chops to pull it off. “If anybody can do it, they can,” Shahin told Reuters. “Matthew is not one of those suits. He’s the real deal.” (Reporting by Alistair Barr, editing by Matthew Lewis) Copyright 2011 Thomson Reuters. Click for Restrictions

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Trumka Blasts ‘Outsourcer’s Bill Of Rights’ Pushed By Republicans

September 12, 2011

WASHINGTON — AFL-CIO President Richard Trumka blasted a Republican bill designed to cripple the National Labor Relations Board (NLRB), calling the legislation “an outsourcer’s bill of rights” and part of a larger attack on organized labor on Monday. The bill, introduced by Republicans earlier this summer , would forbid the NLRB from ordering a company to relocate or transfer any business even when that company violates labor law, effectively neutering the 77-year-old independent federal agency. The bill is aimed at scuttling a controversial complaint filed by the board’s acting general counsel against the Boeing Company this spring, although it’s part of conservatives’ larger attack on the board in the wake of several rulings seen as pro-union. “This is sweeping legislation that would gut [American labor law],” Trumka said of the Protecting Jobs From Government Interference Act , during a conference call with reporters. “This legislation won’t create jobs, while it’s clear the bill would change the rules to help a major campaign donor: Boeing.” Trumka warned that the legislation would take away the board’s ability to protect workers when companies illegally transfer or subcontract work. “Working people play by the rules,” he added. “So should business.” Republicans and business groups have been fiercely critical of the labor board during Obama’s presidency, accusing it of catering to labor unions in the decisions and rules it’s issued. The most contentious has been the complaint against Boeing, which the board has not ruled on yet. The aerospace manufacturer is accused of breaking the law by establishing a production line for its 787 Dreamliner in South Carolina. The board’s counsel alleged that the move was retaliation against Boeing’s unionized workers in Washington State for having gone on strike in the past. The complaint has put Boeing’s plans in South Carolina on hold for the time being. But Julius Getman, a labor law professor at the University of Texas, said the complaint was “not remarkable,” and that the bill drafted by Republicans in response amounts to an attack on workers. “The bill would essentially strip the board of its power to remedy unfair labor practices,” said Getman, who participated in Trumka’s call. “I have made a living being critical of the NLRB, but we absolutely need the NLRB if the rights of worker are to be protected.” Getman said he had drafted a letter in opposition to the Republican bill that more than 240 labor law experts have signed on to in a matter of days. He also said that “routine” decisions coming from the board had been “radicalized” by Republicans. When they introduced their bill in July, House Republicans accused the labor board of threatening American jobs by meddling in corporate decision-making. They also said their bill would ” provide employers with the certainty they need to invest in our economy and put Americans back to work, right here at home.” In a statement, a spokesman for bill co-sponsor John Kline (R-Minn.) said Trumka was spreading “misinformation.” “The committee has received testimony that describes the chilling effect the NLRB’s action against Boeing is already having upon employers, and manufacturers have reported that the complaint will negatively impact their hiring decisions,” spokesman Brian Newell said in an email. “The NLRB may have faithful friends in Big Labor, but House Republicans continue to stand by the nation’s workers and job-creators.” Patrick Bertucci, a unionized Boeing worker who puts wings on 747s in Washington State, told reporters Monday that he was “proud” of the NLRB for filing the complaint. “If the NLRB is not allowed to proceed with this case, we’ll all be a in lot of trouble,” Bertucci said.

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Led By For-Profit Colleges, Student Loan Defaults At Highest Level In A Decade

September 12, 2011

Students at for-profit colleges are more than twice as likely to default on federal loans as their peers at public institutions, according to new data released Monday by the Department of Education that also shows the highest percentage of students defaulting on loans in more than a decade. The overall student loan default rate increased from 7 percent last year to 8.8 percent — the highest rate since the government released similar data in 1999. An outsized share of that increase came from the for-profit college sector, which had both the highest percentage of defaults and the greatest increase in defaults, compared to public universities and private nonprofit schools. Defaults at for-profit schools jumped from 11.6 percent to 15 percent this year, as opposed to an increase of 6 percent to 7.2 percent at public institutions and 4 percent to 4.6 percent at private nonprofit schools, raising questions about the degree to which for-profit schools are preparing students for careers that will allow them to pay off debts. Because the government must track loan repayment over two years, Monday’s data represents the first full assessment of students’ ability to repay college loans in the Great Recession. And the numbers were bleak: the overall student loan default rate increased at the highest rate in two decades . “We do think the economy is a big factor in the growth of these student loan default rates,” said James Kvaal, a deputy undersecretary of education. “Another trend worth highlighting is the growth in for-profit colleges. Many of those colleges offer excellent, innovative programs, but we do also see disproportionate default rates among students who are enrolled in those programs.” For-profit colleges have been conspicuous beneficiaries of the economic downturn, as many of the publicly traded corporations that own such institutions expanded enrollments rapidly as legions of unemployed Americans looked to college as a way to improve their fortunes. The high number of student loan defaults at for-profit institutions has prompted heightened government scrutiny in recent years, amid evidence that some schools aggressively market their programs to students but fail to deliver on the promise of careers. For-profit schools typically cost nearly twice as much as public colleges and universities , and students on average graduate with much higher student loan debt . Because of the high costs, students at for-profit colleges borrow at much higher rates than those who attend public or private nonprofit schools. According to an analysis of federal education data by The Institute for College Access and Success, 92 percent of students at for-profit colleges took out student loans in the 2007-’08 school year, compared to 27 percent of students at public colleges and 60 percent at private nonprofit colleges. For-profit colleges have also aggressively targeted minority students . Black and Hispanic students make up 28 percent of undergraduate students nationwide, but they represent nearly half of all students in the for-profit college sector. “When you see 15 percent of borrowers at for-profit colleges are defaulting, its important to remember that almost all students at those colleges are borrowing, so that shows a much more significant problem in that one sector,” said Debbie Cochrane, program director at the Institute of College Access and Success. Nearly half of all student loan defaults measured by the Department of Education could be attributed to students at for-profit colleges, even though students at such schools represent less than 28 percent of all borrowers. The federal government measures student loan default rates as a way to gauge student success, and to determine whether certain schools should be eligible to receive federal student aid dollars. Student loan debt is among the most difficult to discharge, persisting beyond even bankruptcy. Borrowers in default on student loans can be subject to wage garnishment as well as deductions from federal income tax refunds, and they are ineligible to receive federal student aid in the future. “What is really sad about this is that most of these people are done — this is their last chance, because they have now defaulted,” said Anthony Carnevale, director of Georgetown University’s Center on Education and the Workforce. “That will follow them to their grave. You can default on your house, but you can’t default on a student loan.” The Department of Education data released Monday is a snapshot of students over two years: the government tracked those who began repaying loans between October 2008 and September 2009, and measured whether they defaulted on those loans before October 2010. A loan is considered in default if no payment has been made after 360 days. In a statement, Brian Moran, the head of the Association of Private Sector Colleges and Universities, which represents for-profit colleges, said he was “disappointed” to see the data but noted, “we believe that the default rates will go down when the economy improves and the unemployment rate drops.” “Despite today’s disappointing news, we should remain focused on the overarching missions, which is to help individuals rise as high as their talent, ability and ambition will take them,” Moran’s statement read. Under current regulations, schools that have student loan default rates in excess of 25 percent for three consecutive years can face sanctions or lose access to federal student lending programs. Five schools were subject to sanctions this year, four of which were for-profit schools. Beginning in 2014, the Department of Education will start to analyze student loan default rates over three years, as opposed to the current two-year window. Data from the Department of Education shows that many more students default in the third year after entering loan repayment. And some schools have actively managed their default rates by putting students into loan deferment or forbearance plans that prevent defaulting within the two-year window, but do little beyond that timeframe. “That’s a good thing if that helps those students manage their student loan responsibilities, but in some cases it may serve just to delay the default and increase the amount of the loan,” said Kvaal, the deputy undersecretary of education.

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AT&T Gears Up For Rare Antitrust Fight With DOJ

September 1, 2011

SAN FRANCISCO — The Justice Department’s rejection of AT&T’s proposed purchase of T-Mobile USA will test new federal guidelines on challenging mergers and the companies’ resolve in forming the nation’s largest wireless carrier. A courtroom battle is likely and could wring out information that the companies would prefer to keep private. Still, AT&T Inc. has a big incentive to fight: If the deal is called off, the company has to pay a $3 billion breakup fee and surrender some of its unused spectrum for wireless communications. AT&T is promising to fight the Justice Department’s decision. The department filed a lawsuit Wednesday to block the $39 billion deal, saying it would reduce competition and lead to price increases for customers. If AT&T follows through on that, it could produce the biggest antitrust showdown since business software maker Oracle Corp. squared off with the federal government seven years ago. That dispute, triggered by the government’s decision to block Oracle’s proposed purchase of rival PeopleSoft Inc., exposed several well-kept corporate secrets and required Oracle CEO Larry Ellison to testify before a packed courtroom. In the end, Oracle pulled off something few companies have done in the past 30 years: It persuaded a federal judge that the Justice Department didn’t have grounds to block its PeopleSoft deal. Oracle closed its $11.1 billion takeover four months after getting the favorable court ruling. Usually, not even the most powerful companies bother to fight government regulators in an antitrust dispute. Google Inc., for example, backed off in 2008 when the Justice Department threatened to sue to block a proposed Internet search partnership with Yahoo Inc. Microsoft Corp., the world’s largest software maker, pulled out of a deal to buy Intuit Corp. in 1995 after the Justice Department objected. The Justice Department filed 138 antitrust cases in federal courts from 1999 to 2008 and lost just four of them, according to the latest breakdown from the agency. One reason that the Justice Department has such a good track record is because it rarely challenges a deal unless it’s very confident it can win, said Joseph Bauer, a University of Notre Dame law professor and antitrust expert. Knowing AT&T would probably go to court, the Justice Department may have wanted to signal that it intends to get tougher on corporate marriages between rivals in markets with few other competitors. A union between AT&T and T-Mobile USA would leave Verizon and Sprint as the only other major cellphone carriers in the U.S. T-Mobile, a subsidiary of German telecom company Deutsche Telekom AG, is currently the No. 4 wireless carrier, while AT&T is second. Combined, AT&T would be the largest. In a sign of its confidence, the Justice Department decided to strike down the deal even though it could have taken about three more months to study the pros and cons. The timing stunned AT&T, which said it didn’t get any advance warning. “It was an aggressive and impressive move by the DOJ to take the battle right at AT&T,” said Daniel Wall, a San Francisco attorney who represented Oracle in its 2004 fight to win the right to buy PeopleSoft. “It sent a statement that the DOJ intends to fight this one all the way to the finish line.” Wall said AT&T may have a tougher time proving its case than Oracle did against the Justice Department. In the PeopleSoft deal, Wall said, antitrust enforcers seemed to be manipulating the definition of the business software market. “This time, it looks to me that they have a pretty solid market definition,” Wall said. “They don’t appear to be playing games.” University of Iowa law professor Herbert Hovenkamp said the Justice Department is being guided by a set of new guidelines, issued late last year, which make it clearer when mergers should be challenged on antitrust grounds. “I don’t think they are overreaching here,” Hovenkamp said. “If there is a broader message here, it’s that the government intends to enforce these new guidelines.” Besides being forced to divulge potentially damaging information, AT&T will face other risks if it doesn’t settle with the Justice Department. Going to trial will take months, or even years, leaving the company in a legal limbo that could depress its stock price and cause customers and key employees to defect. There’s another risk to going to trial: as they try to prove their case, antitrust lawyers sometimes obtain confidential e-mails that contain embarrassing snippets and present other evidence that can make companies look bad. Those are some of the reasons why AT&T mayl try to reach some kind of settlement with the government. If AT&T persists, antitrust experts said that it’s better off going up against the Justice Department than the Federal Trade Commission, which also handles antitrust reviews. That’s mainly because lawsuits with the Justice Department are contested in federal courts. By contrast, the threshold for the FTC to block deals is generally lower, and the ensuing legal skirmishes occur in administrative law proceedings that drag on longer. “The merging parties usually have a better shot when they are going up against the DOJ than the FTC,” said D. Daniel Sokol, a University of Florida professor specializing in antitrust law.

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Consumer Sentiment Plummets To 30-Year Low

August 12, 2011

Just as it seemed the bad news about the economy couldn’t get much worse, a new nugget of data was released Friday: U.S. consumer sentiment plummeted to a low not seen since 1980. According to survey data released by Thomson Reuters and the University of Michigan, the mood of the nation’s consumers in August was abysmal, raising concerns about any prospect of an economic turnaround. There’s not a lot of mystery behind the numbers, as consumers have been buffeted by weeks of bad economic headlines: a political deadlock over the government’s debt ceiling, a widening economic crisis in Europe and wild gyrations on the stock market. Economists pay close attention to consumer confidence as a driver of economic growth, given that consumer spending makes up roughly 70 percent of gross domestic product. According to Reuters , the survey was taken before the historic decision by Standard & Poor’s to downgrade the nation’s credit rating: “Never before in the history of the surveys have so many consumers spontaneously mentioned negative aspects of the government’s role,” survey director Richard Curtin said in a statement. The drop in consumer sentiment, from 63.7 last month to 54.9 , was much greater than economists predicted, according to Bloomberg. Those economists expected the number to fall between 59 and 66.5. The stock market has weathered the bad news so far. The Dow Jones Industrial Average was up more than 1 percent by early afternoon, despite having lost ground after the consumer sentiment data was first released. “The market’s doing reasonably well considering how bad that number was,” Paul Zemsky, head of asset allocation at ING Investment Management, told Dow Jones Newswires . “But we still think there’s more to go on the downside as the effects of confidence start showing up in the economic data.”

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Is College Worth It? Later Earnings Tied To Major, Study Finds

August 4, 2011

Later this summer, as millions of students around the country return to college, many will question the value of their investment. But according to a report released earlier today, both parents and students can rest assured: College is still worth it, and perhaps never more so than in a weak economic climate. Georgetown University’s Center on Education and the Workforce released the study, titled ” The College Payoff .” It found that earnings increase with education and that higher levels of educational attainment will almost always yield the greatest financial rewards. Although individuals with more education tend to make more money, Anthony P. Carnevale, who is the director of the center and co-authored the report, cautions students to be especially careful when it comes to selecting their choice of major. “While going to college and getting a degree is important, what really matters is the classes you take and what you do for a living,” said Carnevale, an economist. “Major trumps degree level and your choice of major is so important because that likely becomes the on-ramp to what you’ll eventually be doing.” This study is the third of the Georgetown center’s three consecutive papers examining the value of college. In May, ” What’s It Worth? The Economic Value of College Majors ,”first highlighted the stark difference in earnings between college majors . And in June, ” The Undereducated American ” argued that an economic recovery hinged on the addition of 20 million college-educated workers to the labor force. Considering the three studies’ findings, Carnevale sees an economic and future-earnings argument for picking the right major and, generally speaking, a benefit to earning degrees. Though a bachelor’s degree holder typically makes 84 percent more than someone with only a high school diploma, the report found that college major and later occupation often matter more than just the degree itself, when it comes to earnings. While students majoring in petroleum engineering earned paychecks averaging $120,000 a year, their counterparts who majored in counseling and psychology ranked among the lowest, at $29,000 a year. Occupation can sometimes trump education level, the authors argued, but not enough to trump a college degree. Accountants and auditors with only a high school diploma can expect to make about $1.5 million over the course of their lives, while an individual working in the exact same job but with a graduate degree can expect to earn double — or as much as $3 million. The study’s other main finding is that a woman generally needs more degrees than a man in order to earn the same amount of money. For example, the average woman must obtain a Ph.D in order to keep pace with the average bachelor’s degree-holding man. “The women’s story is grand and dismal,” concluded Carnevale. After scanning all 171 majors included in the study, he found not one major where women consistently out-earn men . The report also found similar gaps by ethnicity and race. For instance, African Americans and Latinos earn less money than their white peers — even those whites with less education. Further, the average African American or Latino with a master’s degree doesn’t exceed the lifetime earnings of white bachelor’s degree holder. Finally, the report concluded that Asian Americans with graduate degrees earn more than all other races, including whites. Despite the difference in earnings by race and gender, Carnevale still sees the investment in college as the essential gateway to the American middle class — allowing for greater career mobility, greater lifetime earnings power and a more promising future in general. While the findings come at a time when increasing college costs and a weak labor market have sparked talk of a potential higher education bubble , Carnevale and many of his peers remain wholly unconvinced. “The idea that college is less valuable or not worth it is just plain wrong,” said Jamie P. Merisotis, president and chief executive officer of the Lumina Foundation. It sponsored the report. Merisotis cited Facebook founder Mark Zuckerberg as the rare college dropout who later amasses a huge fortune. “Those success stories are incredible long shots. Its like getting hit by lightning,” said Merisotis. “This report demonstrates over and over again that today’s jobs and the jobs for tomorrow will require post-secondary education.” Carl Van Horn, a professor of public policy and director of the John J. Heldrich Center for Workforce Development at Rutgers University, sees the findings as particularly valuable for students looking to translate their expensive college degrees into actual jobs. “Students can’t change the dismal state of the current labor market but institutions and individuals can change the supply side of things and how they prepare themselves for life after graduation,” said Van Horn. “We’re living in a brutal marketplace but how you fare in that marketplace is based on how savvy you are about equipping yourself with the right skills once you get there.”

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Art Markman, Ph.D.: How To Win A Negotiation

July 31, 2011

There are lots of opportunities for negotiation these days. Bargain hunters wander through weekend garage sales and haggle with the sellers. Car buyers have to settle on a final price for a car with a dealer. House hunters send proposals back and forth trying to decide on a selling price for a house. There is a lot of interesting psychology in these negotiations. The first thing that happens in most negotiations is that either the buyer or the seller makes an offer. That initial offer serves as an anchor. Research on the rules that people use to make judgments suggests that we often use a strategy called anchoring and adjustment . According to this strategy, we start with some anchor point and the adjust our belief about the true value based on other information. In the case of a negotiation, we know that people try to buy low and sell high. So, if the buyer makes an offer, the seller knows that the initial offer needs to be adjusted upward to get a fair price. The key question is how much that offer should be adjusted. This issue was addressed by Yossi Maaravi, Yoav Gonzach and Asya Pazy in a paper in the August, 2011 issue of the Journal of Personality and Social Psychology . They were interested in the role that persuasive arguments might play during negotiations. Because people use the initial offer as an anchor, many people have suggested that including a persuasive argument for why the anchor is correct may minimize the amount that people adjust the anchor when making their counteroffer in the negotiation. For example, if you are interested in buying a house, the seller might ask for $350,000, arguing that the house was newly-renovated and is near good schools. Maaravi, Gonzach and Pazy argued that when people hear an argument in favor of the initial offer, they think of counterarguments. These counterarguments may actually push the counteroffer further away from the initial offer than it would have been had there been no persuasive argument. Someone looking at a house might find all the areas that still need renovation and think about other houses even closer to the better schools in town and give a low offer on the house. They supported this view in a number of studies. In one of the four experiments in this paper, half the people played the role of the seller of a factory, while the rest played the role of the buyer. Everyone received detailed information about the factory. In some groups, the seller was asked to make the first offer. For half of these groups, the seller also had to give arguments in favor of their offer. In this case, the counteroffers by the buyer were lower when the seller made arguments in favor of the initial bid than when the seller gave no arguments. The buyers were asked to write down reasons for their counteroffers, and they gave more reasons for making a low bid when they were responding to arguments by a seller than when there were no arguments. The final price the group agreed on was also lower when the seller made arguments with the initial offer than when no argument was made. The opposite pattern was observed for groups where the buyer went first. In this case, sellers generated more reasons why the buyer’s initial offer was bad when the buyer made arguments along with the initial offer than when there were no arguments. The sellers made higher counteroffers when there were arguments along with the initial offer than when there weren’t. Finally, the purchase price was higher when the buyer made arguments than when there were no arguments made. Putting all this together, then, it appears that it is hard to be persuasive when negotiating. People enter negotiations knowing that the other party is an adversary. Each side wants to get the best deal, and so they treat every piece of information given by the other party with skepticism. They find reasons why persuasive arguments are flawed and use those counterarguments when adjusting the anchor set by the initial offer. What does this mean for you? If you are involved in a negotiation, it is probably a good idea to make the first offer. That initial offer serves as an anchor. However, after you make that initial offer, resist the temptation to give reasons to justify that initial bid. Instead, let the other party come back with a counteroffer. Chances are, that counteroffer will not be adjusted as far away from your initial offer as it would have been if you had made arguments in your own favor.

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Obama Takes His Case To The American People At Town Hall

July 22, 2011

WASHINGTON — President Barack Obama is taking his case to the public as the clock ticks down to an Aug. 2 deadline to raise the government’s borrowing limit or default on U.S. obligations. The president holds a town hall meeting Friday morning at the University of Maryland, College Park campus. It’s a quick trip from the Beltway but will be Obama’s first public appearance this month outside what he calls the White House “bubble.” The president has been occupied with near-daily negotiations with congressional leaders on a deal to raise the debt limit. The town hall session comes amid some signs of progress. But Obama still faces a big selling job, given Democratic unease with cuts to Medicare and other entitlement programs and Republican opposition to tax increases.

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American Cities With The Most Millionaires

July 14, 2011

From 24/7 Wall St: Each year, Capgemini publishes the U.S. Metro Wealth Index, which ranks the number of high-net-worth individuals living within the ten largest metropolitan statistical areas. According to the report, high-net-worth Individuals “are defined as those having investable assets of $1 million or more, excluding primary residence, collectibles, consumables, and consumer durables.” Since the last report, the number of millionaires has increased by 7.3 percent, following a gain of 17.5 percent in 2009, which came after a steep drop in 2008. Despite the rosy state of America’s rich, the same cannot be said for the residents of the cities these millionaires call home. A review of the local economies of these cities demonstrates that the fortunes of the rich don’t depend on how their neighbors do. Unemployment remains a significant issue for the country. Half of the cities on this list have unemployment rates above the national average of 9.1 percent. San Jose, San Francisco and Chicago are over 9.3 percent. Los Angeles and Detroit are both over 11 percent. Read: The American Cities With The Most Millionaires Housing markets in most of these cities present an even starker contrast. Eight of the ten markets on the list were flat or decreased in value. While Boston, Philadelphia and New York dropped less than 5 percent, in Chicago, Detroit and San Francisco housing dropped in excess of 10 percent. Despite moribund local economies, millionaires in all of these cities increased in number, in some cases significantly. Houston had 88,200 millionaires in 2009. In one year, the number of millionaires grew 9.6 percent to 96,700. This followed an impressive gain in the prior year, when the number of millionaires in the city grew nearly 30 percent. The number of millionaires in other cities on the list also grew significantly between 2008 and 2009, and less the following year. San Jose’s millionaire population increased by 24.5 percent in the first period and only 2.7 percent in the most recent. These initial recoveries have as much to do with the drops in wealth in 2007 as anything else. While there is a clear disconnect between the fates between the cities’ millionaires and their average residents, the reasons why the wealthy became wealthier seem to be the same. In all of the cities on the list industry recovered. In New York and Chicago, finance prevailed. In Houston, energy powered the economy. In San Jose, it was tech. And although gains were seen, in sales and stock price, the fortunes of average workers have remained constant and in some places become worse. To provide perspective on the local economies on the Capgemini’s list, 24/7 Wall St. used Zillow’s real estate database for the yearly change in home value for each metropolitan statistical area in June 2011. We also included the most recent unemployment data for each area. Finally, we reviewed the Fortune 500 list to identify the largest publicly traded companies that are headquartered in those cities. These are the American Cities with the Most Millionaires, provided by 24/7 Wall St .

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Congressional Black Caucus Members Call for Action on Joblessness

July 8, 2011

Members of the Congressional Black Caucus on Thursday publicly accused the Obama administration of failing to adequately address a veritable epidemic of African American unemployment. “Can you imagine a situation where any other group of workers, if 34 percent of white women were out there looking for work and couldn’t find it?” asked Rep. Emanuel Cleaver, a Missouri Democrat and chairman of the caucus. “You would see congressional hearings and community gatherings. There would be rallies and protest marches. There is no way that this would be allowed to stand.” In May, the black unemployment rate was at 16.2 percent compared to 9.1 percent overall joblessness and 8 percent levels among white workers. In Milwaukee, Wis., a staggering 34 percent of black men are unemployed, CBS news reported. The Obama administration has focused on broad-based initiatives aimed at lowering unemployment in general, while declining to address elevated rates among minority groups. The administration unleashed an $800 billion package of spending measures aimed at stimulating economic growth, while extending unemployment benefits and increasing funding for community health centers. These programs are also sure to help black and Latino Americans hard hit by the recession, Obama said at a White House press conference in April. Debate about the ability of a universal job creation strategy to address persistent and disproportionate African American unemployment occupied a significant portion of Thursday’s gathering. So too did concerns about the political feasibility of any sort of effort to target black joblessness, the public’s appetite for programs that may look and sound like affirmative action and common assumptions about why so many black people do not have jobs. Black Americans make up about 12 percent of the nation’s population, but about 20 percent of the unemployed. “This is an American crisis that demands an American response at the highest echelons of our government,” said Michael Eric Dyson, a writer, Georgetown University professor and frequent social and political commentator on television and radio programs aimed at a black audiences. “And that does include the White House.” In March, the White House’s chief economic adviser, Austan Goolsbee, told The Huffington Post that it seemed virtually impossible that the White House would be able to wrestle any additional spending — including spending to create jobs — out of Congress. Goolsbee announced in June that he will leave the White House and return to a teaching position at the University of Chicago. Some economists have speculated that Goolsbee has been frustrated by the fact that any and all spending — even spending that might create jobs — has been shelved. At Thursday’s gathering Dyson and the Reverend Jessee Jackson indicated that it was time for members of Congress and African American voters to make more specific calls for political action in Congress and at The White House. Concerns about offending or politically imperiling Obama were not reason enough to remain publicly silent about the black jobs crisis, Dyson said. “As gay and Latino and other Americans have done, we have to leverage our political power and our voices to make this happen,” Dyson said. The Congressional Black Caucus also announced plans Thursday to launch a multi-state jobs tour. Beginning Aug. 8 in Cleveland, the caucus will host a series of job fairs and town hall meetings for the unemployed.

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Steve Mariotti: Memories of Flint, Part 2

July 4, 2011

This is part two of a two-part series. Read part one here . GM was founded by a great entrepreneur, William C. (Billy) Durant. Durant had been born in 1861 in Massachusetts. His family moved to Flint in 1871. Billy dropped out of high school to work in his grandfather’s lumber business, and then became a salesman. His lifelong motto was: “Get a self seller, and if you do not have one, get one.” One day in 1884, Durant was walking down the street in Flint and a friend came by in a buggy and offered him a ride. Noticing that the ride was virtually jolt-free, due to a unique spring (suspension) system, he asked where his friend had purchased the buggy. The very next day he took a train down to the town of Coldwater, and bought controlling interest in the Coldwater Road Cart Company from the inventor of the spring system. Moving operations to Flint, changing the company’s name to the Flint Road Cart Company, and taking on Josiah Dort as a partner, Durant was now in business. Within days he drove one of the buggies to a trade show in Wisconsin. Offering rides in his “self-seller,” Durant took orders for 600 carts. He used these to contract with a buggy manufacturer in Flint to make the carts. That transaction was the beginning of Billy’s domination of the buggy industry in the late 19th century, and it put Flint on the map as an industrial center. In 1904, he expanded into the new motor car field and purchased a failing company from David Buick. He acquired many automobile companies, consolidating them into the five lines that became ubiquitous on American roads and highways: Buick, Cadillac, Oldsmobile, Chevrolet, and Pontiac (originally Oakland). Durant incorporated General Motors in 1908. GM was for decades the most successful corporation in the world. Durant lost control of General Motors the first time — through overexpansion — in 1910. He made a comeback in 1917, and then was pushed out for good in 1920. He started Durant Motors the following year, was dealt a crippling blow (like so many others) by the Stock Market Crash of 1929, and had to close the business in 1933 — having lost his personal fortune as well, by single-handedly trying to shore up the company’s stock price (he was especially sensitive to the fact that his fellow citizens in Flint were losing the money they had invested in his company). He died broke in Flint in 1947, after an unsuccessful try with operating a bowling alley, which he rightly saw as a great opportunity in family entertainment. After 1937, Flint became a city that cared about its workers getting a fair shake. I think that the city’s support of the working class was a major reason why the revolutionary group, the Weathermen, held a “war council” in Flint. It was December 1969 and, as president of my junior class and the de facto leader of the anti-war effort in my high school, I knew some of the SDS leaders from Ann Arbor and would often send them letters asking for advise. They arranged for me to meet with several of the Weathermen when they came to Flint, as I wanted to see how I could get involved with their efforts to end the war in Vietnam. I had no idea that their ranks were composed of disturbed and violent people, who saw no difference between Thomas Jefferson and Josef Stalin. During the meeting at a local Howard Johnson’s, I quickly realized I was dealing with psychotics and got out of there as fast as I could. Another memory I have of Flint is the love of cars that we all had. Also, sports were a common interest. All sports were played and appreciated. The local golf courses were outstanding. Even though golf can’t be played in the area until May, it was popular, and two of my friends played on the University of Michigan’s varsity team. I remember Rick Leach, the legendary football player, who grew up half a mile away from where I lived; he was named the Big Ten’s MVP in the mid-70s. I was his elementary school soccer coach. The Mott Foundation sponsored a summer sports program, and at least a dozen sports were offered through the annual Flint Olympian Games; the best athletes in each category competed against Hamilton, Ontario, in the CANUSA Games. Three of the great memories of my life are winning the AAU state wrestling championship at the IMA (now the Perani Arena) — the largest building in Flint — against Arnold Deleon, in 1967, when I was 14; being part of a track team in 1967 that ran a relay carrying a torch 245 miles to Hamilton, to begin the Games; and being on the first Flint team to beat the Canadians in soccer! Growing up in Flint I developed skills in no less than 17 sports and games, including badminton, archery, and bowling. As in all communities, there was a dark side to Flint. The wage rate that the unions and General Motors had agreed to made it almost impossible for the young or minorities to get jobs. Unemployment rose to over 50% for minority youth. Compounded over decades, this led to tragedies — my high school friend Angie turned to prostitution and was murdered, and my favorite English teacher was killed with an arrow! Flint now has one of the highest murder rates in America (45.7 per 100,000 in 2006, as compared with 7.3 in New York City). The population is down to about 102,000, the 1950s level, and the wages in the plants, which were as high at $45 per hour — plus $30-worth of benefits — are in some cases down to $14 dollars, with benefits. Only 8000 people work for GM now, compared with the 80,000 of the late 70s. But things are starting to turn around, as the small-business community is fighting back and the major plants are starting to hire again. As Flint continues its renaissance, the violence should drop significantly. To earn money in the summers, I always worked, and even started my own businesses — seven between the ages of 11 and 21: golf ball recovery in the Flint River, home cleaning services, newspaper delivery, bike repair, selling fire alarms, etc. In the golf-ball-recovery venture, I hired “Golfball Charlie” — a specialist in finding things in dirty river water — to fish for missing balls in the Flint River. I would buy them from him at a quarter apiece and resell them at the clubhouse for fifty cents. No doubt I would sometimes be selling the found ball back to the golfer that had lost it! Being Flint’s first male Avon sales representative was exciting! The lessons I learned included how to sell and the importance of keeping good records. I learned to ask questions and listen to other people’s problems and needs. One summer I designed and had made a key holder that could go on the inside of people’s doors as a place to hang their keys, and offered them to my door-to-door Avon customers. I sold thirty. I wanted to sell fire alarms because I thought every home needed one. I would call people in neighborhoods that had had fires and make appointments to go see them. Invariably, at some point I was always shown politely to the door. However, this endeavor gave me a mental toughness and taught me to keep going no matter what. These early experiences with entrepreneurship and small business became part of the foundation for the Network for Teaching Entrepreneurship (NFTE) that I founded in 1987. Many of the organization’s concepts and lessons were first developed in these entrepreneurial businesses that I created in Flint, and then applied to teaching at-risk children many years later. In Flint, we all learned to play team sports, and to be loyal and honest to one another. The techniques of small business — sales, marketing, and goal setting — were a vital part of our daily culture. Perhaps most important, we learned to make things — like rafts and boats and small electric carts. We understood the value of will, persistence, determination, and pride. “Sometimes life is pure joy,” was our motto. The lessons I learned in Flint have stayed with me all my life.

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Labor Dispute Turns Into Headache For Obama

June 29, 2011

WASHINGTON — The government’s labor dispute with Boeing Co. is turning into a political headache for President Barack Obama, giving his Republican rivals a fresh opening to bash the administration’s economic policies. From congressional hearings to presidential debates, outraged Republicans are keeping up a steady drumbeat of criticism over the National Labor Relations Board’s lawsuit against the aerospace giant. The NLRB says Boeing retaliated against its unionized workforce in Washington state by opening a new production line for its 787 airplane in South Carolina, a right-to-work state. The agency wants a judge to order Boeing to return all 787 assembly work to Washington, even though the company has already built a new $750 million South Carolina plant and hired 1,000 new workers there. The case – which could drag on for years – has become an unwanted distraction for Obama as he tries to mend relations with the business community and contend with polls that show growing public disapproval over his handling of the economy. It makes an easy target for Republicans, who call it a case of government overreaching at a time when the private sector is struggling to create new jobs. And it’s a major story in South Carolina – a bellwether early primary state in the GOP presidential race. Candidates are lining up to impress voters and the state’s Republican governor, tea party favorite Nikki Haley. “Obama’s NLRB has united the Republican Party and turned this government agency into a political pinata,” said GOP consultant Scott Reed. “Boeing spent a billion dollars building a plant to create thousands of jobs and it looks like the NLRB stuck their nose in and tried to pull the rug out.” Business groups and their GOP allies say the government is interfering with the right of company managers to choose where and how to expand business operations. Boeing claims it opened the plant for a variety of economic reasons, but NLRB officials say Boeing executives made public comments showing the move was meant to punish union workers for a series of costly strikes. For Haley, the case has been a litmus test for every GOP presidential candidate visiting the state. And they have not disappointed her. Former Massachusetts Gov. Mitt Romney, visiting New Hampshire on Monday, said Obama had appointed “union stooges into the NLRB and then they come up with decisions that are really quite extraordinary,” like the Boeing lawsuit that he and others have said will drive companies to seek workers overseas. GOP presidential hopeful Newt Gingrich called for defunding the agency during a recent New Hampshire debate, saying the case could threaten the viability of the nation’s 22 right-to-work states, where labor unions can’t force employees to be members. And during a tour of South Carolina last week, GOP presidential candidate Jon Huntsman called on Obama to step in and end the lawsuit to prevent it from scaring other businesses away from the state. Haley says the only way to make things right “is for the president to tell the NLRB to back off. And until that happens, it is my job to be loud and annoying and in his face until he realizes that what they have done is wrong.” Even South Carolina’s Democrats have piled on, focusing on the complaint’s effect on business less than the politics of the board. “Clearly it’s an independent agency and is taking an action that I know was not directed by the president,” said Charleston Mayor Joseph P. Riley Jr., a Democrat. “But in this case, I think it was a very, very bad decision and a huge mistake that is not good policy for the country.” Obama, ordinarily a reliable supporter of organized labor, has carefully avoided taking a position on the case. White House spokesman Jay Carney said the president does not want to interfere with the conduct of an independent federal agency. “We don’t get involved in particular enforcement matters of independent agencies,” Carney said last week. “But I would also say that the president has a strong record on labor rights.” He added that Obama also supports “a strong private sector in the United States that helps our economy grow and create jobs.” But the issue became more awkward for Obama when John Bryson, his pick to head the Commerce Department and a former Boeing board member, openly criticized the lawsuit during a Senate confirmation hearing last week. “I think it’s not the right judgment,” Bryson said. He said Boeing officials thought they were “doing the right thing for the country” by keeping jobs in the U.S. and not moving them overseas. Some Democrats and union officials have stepped up their defense of the NLRB, saying Republicans are misrepresenting the case against Boeing. Iowa Sen. Tom Harkin, chairman of the Senate’s Health, Education, Labor and Pensions Committee, accused Republicans of peddling “misinformation,” distorting the public perception of the case and unfairly attacking the agency. Labor experts say if the allegations in the complaint are true, it would constitute a standard violation of federal labor laws, which prohibit a company from moving work to punish union workers for past strikes. The complaint lays out several public statements by Boeing executives saying they wanted to relocate new lines for the Dreamliner because of strike activity, including a 58-day work stoppage in 2008. But such violations can be difficult to prove, especially if the company can show it had other valid motives for opening the new lines in South Carolina. The government has to show the company relocated work for the purpose of stopping workers from exercising their legal rights to strike, said Catherine Fisk, a law professor at the University of California at Irvine who specializes in labor issues. Perhaps the best scenario for Obama would be for the case to be settled, an outcome that many labor experts expect. “The unions don’t want an adverse decision, management doesn’t want an adverse decision and the best way to avoid that is to reach a settlement on their own,” said Gary Chaison, professor of industrial relations at Clark University. ___ Associated Press writers Bruce Smith in Charleston, S.C., and Kathy McCormack in Salem, N.H., contributed to this report.

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Matthew Dakotah: Women In Power: The Race To Create Next-Gen Batteries

June 26, 2011

A special series profiling trailblazers in energy innovation and champions of the environment. See previous stories here . “In my family the expectation was that I would contribute,” says Ann Marie Sastry. “My dad was a huge inspiration to me. He was my hero. And the expectation was there from a very early age that, ‘Of course, I would do mathematics. Of course, I would be interested in science.’ That is a huge advantage–that expectation that you will not only be competent at the sciences and technology, but also that your aim is to make a difference.” One can only imagine how proud Sastry’s father must be. As President and CEO of Sakti3 –a promising next-generation battery startup backed by the likes of Khosla Ventures and G.M. Ventures –and Professor of Mechanical, Biomedical and Materials Science and Engineering at the University of Michigan, she has clearly embraced the lessons of her childhood. “Sakti is Sanskrit for power and three is from the atomic number of lithium and the three founders of the company,” Ann Marie explains. “But the name does comprise a bit of an homage to my father, who is from India and a math professor.” Not all girls grow up with such a powerful mentor and Ann Marie seems well aware of this. When asked about the underrepresentation of women in the STEM (science, technology, engineering, math) fields, she says, “We, as a culture, as an academic community, and as an industrial community need to make the opportunity clear to all groups.” But Sastry sees herself as “more of a glass-half-full kind of a guy.” There is “ample evidence of gender bias. That is incontrovertible,” she says. But at the same time we see young women being much more successful in both early and secondary, and graduate and post-graduate education than young men. And there are a number of studies that show that women’s assessment of their own performance is persistently lower than men’s. But the women’s assessment in carefully controlled sociological and psychological studies hues closer to the fact.” When asked what she takes away from those findings, Ann Marie replies, “Well, Women are right. My feeling is that realism is very helpful to women and girls as they go through a formalized educational program. Not being armed with over self-esteem is not always a bad thing. One thing I tell everybody that I work with–especially students–is that if you want to have high self-esteem, do something estimable. You can read yourself a mantra in front of the mirror every morning before you go to work, but that’s no substitute for going to work.” And if the observations of Sakti3′s founding investor are any indication, Sastry lives by her own words. In the fall of 2007, venture capitalist Samir Kaul –who leads one of the world’s largest clean technology investment funds at Khosla Ventures–traveled to Michigan. “Because my wife and I both went to [the University of] Michigan, I’m always on the lookout for technology out of Ann Arbor–they have terrific research,” he explains. “A number of different people pointed me towards Ann Marie as a shining star in battery technology.” After conducting the requisite due diligence, Samir swiftly placed his bet. “At Khosla, we look for big markets and special people and Ann Marie certainly qualifies in the category of special people,” he says. “We probably decided to invest within six weeks. She is very strong academically and has excellent business instincts–which is a rare breed. And she reaches out a lot for advice. She’s just as much a student as a teacher.” Kaul is also impressed by Sastry’s team-building skills: “She’s not afraid to hire really good people around her– Bob Kruse who ran the electric vehicle program at G.M. and [another] very senior manufacturing guy from Dow. She’s fiercely loyal and really goes to the mat for her folks.” When reflecting on her career, one of the first things Ann Marie emphasizes is the importance of collaboration. “I have been fortunate to have terrific collaborators over the years and sometimes I’m the math guy and the other person is the applications guy, and sometimes I’m the applications guy and I have to find a chemist or a materials scientist or a physicist to work with,” she says. “But what unites the teams that I’ve been privileged to lead is a shared mission to do with the ultimate aim of the project and that typically is a societal aim.” As for the work ahead, Sastry says the energy density of batteries must double “if we’re to have a serious impact on the market with electric vehicles.” That translates to twice the range, or “doubling the size of your electric gas tank.” She sees battery cells eventually being replaced by other technologies, but not for “decades to come.” But in the face of serious competition from a slew of other startups and more established players like A123 Systems and LG Chem , what gives Sakti3 a leg up? First: The company’s solid-state batteries just landed on the annual list of 10 emerging technologies predicted to have the greatest impact by MIT’s technology review. Second: “We started the company based on a series of rather detailed calculations to do with what was achievable in a next-generation battery. We thought battery cells should be designed with proper computational modeling. We’re very focused on disruptive technology,” Ann Marie explains. “The other thing we did was focus very hard on equipment that was scalable, because the bottom line is these battery cells need to be affordable. We’ll be sending prototypes to others this year and hope to bring it to scale within the next few years.” True to form, Ann Marie approaches the realities of entrepreneurship with blunt realism, but she clearly sees a path to success for her nascent company. “We may fail. That means that we’re taking appropriate risks. And as far as the competitors are concerned, I certainly hope they’re working as hard as we are,” she says. “I don’t mean that as a throw down. We’ve got huge numbers of people in the emerging economies that are going to join the middle class and they may adopt the internal combustion engine [instead of electric vehicles] unless the science and technology fields are working hard on energy storage. The markets are enormous and there is room for dozens and dozens of companies to fill the need.” And how will all of those people join the middle class? By having parents that set the same kind of expectations that Sastry’s father did. “When you look at the numbers of people going into technology fields globally, they dwarf our own numbers. In prior decades the United States had hegemony in math, science and technology,” she says. “It’s fading because other nations are becoming very savvy to the fact that people who offer unique capabilities in science and technology are in high demand, and, therefore, can command higher salaries and create a better way of life for their families.” At a Glance Hometown: Peoria, Illinois Education: B.S. in Mechanical Engineering, University of Delaware. M.S. and Ph.D. in Mechanical Engineering, Cornell University Professional Highlights: President and CEO, Sakti3. Arthur F. Thurnau Professor of Mechanical, Biomedical and Materials Science and Engineering at the University of Michigan. Advice for Young Women: “If you want to have high self-esteem, do something estimable. You can read yourself a mantra in front of the mirror every morning before you go to work, but that’s no substitute for going to work.”

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Oilsands To Blame For Caribou Decline Says Fecal Study

June 22, 2011

THE CANADIAN PRESS — Humans, not wolves, are behind declining caribou populations in Alberta’s oilsands region, an analysis of animal feces shows. The same research also found there may be many more caribou in the region than previously thought, meaning there may still be time for industry to change how it does business without resorting to wolf culls to protect the herds. “Nobody is denying that the trend in caribou decline is alarming,” said University of Washington biologist Samuel Wasser, lead author of a paper published Wednesday in Frontiers in Ecology and the Environment. “While we still think we need to do something now, we think that there’s a little bit more time than some people have been advocating.” Caribou in the oilsands are considered a threatened species and have been in decline for decades. Balancing oilsands development and healthy herds has proved to be a tough act for the provincial government, which is still trying to develop a caribou policy for the area. Some scientists have predicted caribou will be gone within 30 years, suggesting the desperate measure of a wolf cull could be the only way to preserve them. Alberta does cull wolves to protect caribou, but not in the oilsands area. In 2006, Wasser and his team were brought in by oilsands leasee North American Oil Sands to look for answers. Their research continued when the lease was sold to Norway-based Statoil, which has so far spent about $500,000 on Wasser’s work. Using dogs trained to sniff out caribou, wolf, moose and deer droppings, scientists eventually found about 2,000 samples and carefully marked when and where each was found. Those samples were carefully analyzed for chemicals that revealed how the animal was feeling at that moment. Animals under stress produce hormones that show up almost right away in their feces. Feces can also reveal how well-nourished an animal is. DNA contained in the material can even identify — and count individual animals. After four winters of sampling, the researchers concluded that there seem to be a lot more caribou than previously thought. Government estimates put the number in the area at about 150; DNA in the feces suggest there were about 330 animals. Nor did that number change during the study period. They also found that about 80 per cent of the wolf diet was deer, with only about 11 per cent from caribou. Wolves even seek out deer in preference to caribou. And once they started analyzing scat for stress hormones, they found what really bugged caribou was people. Stress increased the closer the animals got to busy roads and also during times when humans were nearby. Caribou — unlike moose and deer — are so skittish they’d rather hang out somewhere where the food isn’t as plentiful if it’s further from human impact, Wasser concluded. Previous studies have linked human disturbance and caribou declines before. One study released Monday found that, on average, about 75 per cent of the caribou range in the oilsands area is disrupted either by industry or forest fires. Wasser found, however, that caribou didn’t care so much about the road or the wellsite itself. What they cared about was how close it was and how busy it was. “Psychological stress was highest and nutrition poorest when humans were most active in the landscape, but caribou recovered when oil crews left the area,” the report says. That leaves plenty of avenues for humans to change their ways, said Wasser. Now, crews tend to build roads through open, grassy areas because that’s where it’s easiest. But those areas, which provide a clear view of approaching predators, are places caribou like as well. Wasser said roads could be built to avoid those areas. “It’s not the (industrial) footprint, it’s the use of that footprint,” he said. Hoping to encourage caribou by shooting wolves won’t work — and might even hurt them by boosting deer numbers and forcing them to encroach on caribou habitat. “That is really a bad way to approach the situation,” said Wasser.

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Tightening Supply Boosts Industrial Rents

June 16, 2011

The industrial sector is growing faster than expected, largely a result of a shortage of “suitable and available properties,” according to CB Ric read more

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Economic Uncertainty Hampers Construction Outlook

June 15, 2011

Rising construction material costs and continued economic uncertainty are two of many factors tempering the construction outlook through year-end, according FMI

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Lunch With This Man: $2.63 MILLION

June 11, 2011

(Reuters) – A steak lunch at Smith & Wollensky in Manhattan starts at $36.50. The same lunch, eaten in the company of legendary investor Warren Buffett, costs approximately $2.63 million. That was the final result of the annual online charity auction for lunch with the “Oracle of Omaha,” which ended late Friday night. A total of two bidders entered eight bids in the eBay (EBAY.O) auction, which started last Sunday. The final bid was actually for just under $2.35 million, but the anonymous winner added to that after the auction to surpass last year’s winning bid by $111, organizers said. Interest was much lower than in 2010, when nine bidders made a total of 77 bids for the luncheon. The proceeds benefit GLIDE, a San Francisco charity that Buffett was introduced to by his late first wife, Susan. Buffett, 80, is the chief executive of the insurance-to-ice-cream conglomerate Berkshire Hathaway (BRKa.N) and one of the world’s richest men. His fondness for red meat is also well known; during Berkshire’s annual shareholder meeting in Omaha he urges investors to visit his favorite steakhouses for a T-bone steak or two. (Reporting by Ben Berkowitz; Editing by Paul Simao) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Financial Ignorance and Denial High But Preparedness Low, Study Says

June 9, 2011

NEW YORK — Americans are mired in debt they don’t understand, according to a new working paper. Not only do many Americans not have a financial plan in place for emergencies or even foreseeable expenses, but a “sizable” number also don’t understand the terms of their own mortgages and credit cards, the National Bureau of Economic Research report found . And it seems Americans are also ignorant of their financial ignorance. Although many haven’t mastered basic economic concepts, such as inflation, nearly 40 percent of gave themselves high scores when asked to rate their own financial literacy. Just 14 percent rated their knowledge level three or worse on a seven point scale. The chart below shows how Americans judge their own level of financial knowledge: The study, released this week, isn’t the first to point to the limits of the average American’s financial literacy . It echoes other findings that suggest financial ignorance and a lack of emergency savings made many American families vulnerable to the economic shocks unleashed during the Great Recession. The report finds the average American family has very little financial breathing room; almost half of the population has trouble covering monthly expenses. And just over half of the population lacks a household rainy-day fund that could cover three months of living. Nearly 30 percent of American have no savings account at all. Nearly that same share have at least four credit cards. Yet the report finds very few American consumers compare credit cards or other financial goods across the market before choosing a product. The report also found one in five Americans borrowed money in the most expensive ways — from a pawn shop, a pay day lender or through a tax return advance. And then there’s mortgages. The study found that 20 percent of those with home loans did not know whether they held an interest-only mortgage or a loan that includes this option. Another 10 percent did not know their interest rate at all, and 12 percent did not know how much money they had put down on their homes. The evidence indicates many Americans have difficulty protecting themselves financially. But the move to create an agency to defend consumers from abuse faces a slow, difficult political track. Republicans have made clear their opposition to appointing Elizabeth Warren, an outspoken consumer advocate and Harvard law professor, to head the newly-created Consumer Financial Protection Bureau. Warren conceived the agency and is currently shaping it as an appointed adviser. Last month, a group of nearly 45 Senate Republicans also sent President Obama a letter indicating they would not support any nominee for the CFPB chair position until Congress is given more oversight of the agency, The New York Times reported . Republicans fear the agency will be able to exercise too much control or place too many limits on financial businesses and the way they interact with customers.

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Is Increased Debt Inflating The Self-Esteem Of Recent Grads?

June 7, 2011

NEW YORK — When Kate Rollins went further into debt in order to postpone the repayment of her existing student loans, she knew she was in trouble. Two years ago, Rollins, now 24, graduated from San Diego State University with a degree in political science. Though she owes $50,000 in undergraduate student loan debt, as well as another $2,400 split between two credit cards, she recently started a full-time certificate program in marketing at a local community college. Being enrolled in school allows her the relative freedom of loan deferment — a stopgap measure that is nothing if not a temporary solution. Rollins, who earns about $1,000 per month working part-time as a cashier at Radio Shack, said she ran up her credit card debt “just buying food, and low-budget food at that — things like ramen and frozen fruits vegetables from Costco. I just couldn’t keep up.” Rollins is hardly alone in her struggle to pay down large quantities of debt . According to Mark Kantrowitz, a financial aid expert who publishes Fastweb.com and Finaid.org , the average graduate finishes school with about $25,000. Many of them are encountering an unanticipated struggle when it comes time to finally start paying them off. But does debt — even when it’s assumed in service of educational goals — wind up negatively impacting a young person’s self-esteem? Yes and no, according to a new study released yesterday by Rachel E. Dwyer, an assistant professor of sociology at Ohio State University. “Debt can be a good thing for young people — it can help them finance goals they couldn’t otherwise, like a college education,” said Dwyer, whose findings appear in the latest issue of Social Science Research , an academic journal. Many people who participated in her study viewed debt, even large amounts of it, as an investment in their future selves, Dwyer said. After sampling more than 3,000 young people between the ages of 18 and 34, she found that many people under the age of 27 were positively impacted by debt; her data showed that both higher levels of credit card and college loan debt equated to higher rates of self-worth. Additionally, these respondents reported feeling not only in control of their lives, but uniquely primed to achieve their goals. But apparently such optimism has its limits. Specifically, those 28 and older began showing signs of stress when it came time to pay back the money they took on in their youth. “It may be that the positive effects are closer to when people take on the debt and at the time think it was a good reason,” reasoned Dwyer. Among the people she sampled, the average educational debt was $6,600, while credit card debt averaged $950. “Those positive effects may wear off as the payment schedule starts to intensify.” Whether it carries positive effects with it or not, other scholars have wondered when debt became not only accepted, but a normalized part of everyday life. “How did American culture shift to the point where everyone is totally fine with carrying such large amounts of debt?” asked Michelle Barnhart, an assistant professor of marketing at Oregon State University. Earlier this spring, she completed a study that examined how Americans became burdened with five-figure credit card bills and “mortgage payments up to their eyeballs.” Barnhart noted that 20-somethings had an especially hard time integrating credit cards into the routine of normal, everyday life — for instance, balancing the need to establish decent credit ratings while also learning to use them responsibly. Younger respondents also separated debt into two distinct categories: good debt versus bad debt. “Good debt was for things seen as investments — school loans, mortgages. Even credit card debt you were using to build your credit score could be seen as good debt,” said Barnhart. “But bad debt was seen as overspending on your credit card, whether for clothes or charging last night’s dinner.” Yet Rollins has trouble thinking of the money she owes as “good” debt. While she has her degree, the subsequent job offerings have been less than robust, and a persistent cloud of debt looms above all else. Rollins is aiming to pay off her credit cards before tackling her student loans. Lately, she’s only been able to afford he minimum monthly payment, she said. “My spending habits are a lot different now,” said Rollins, who has turned down multiple offers for additional credit cards. Dreams of graduate school are indefinitely delayed as well. “I touched the pan and got burned and I’m not going back for more. I’ve finally learned my lesson.”

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Energy Efficiency Is Central to New Multifamily Financing Program

June 7, 2011

Green Refinance Plus, a new joint initiative from the Federal Housing Administration and Fannie Mae, gives affordable multifamily housing owners the opportunity to refinance and use additional loan read more

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