usa

Joshua Shulman: Rights Have to Be Enforced Somehow

by Joshua Shulman on April 18, 2012

Huffington Post…

There are two ways to enforce rights. A government agency can do it, or it can be outsourced to private contractors, which means plaintiffs’ lawyers. If we’re going to use a government agency, then we have to make sure they do it efficiently, because our tax dollars fund those agencies. If we’re going to use private lawyers, they’ve got to be able to make good money doing it, otherwise they’ll do something else instead. If neither of those systems works for us, then let’s not pretend that we care about the rights that we’re refusing to enforce. The New York Times presented a front-page article on April 17 about lawyers suing New York City businesses that don’t have good wheelchair access. The story is that the plaintiffs’ lawyers are finding violations — easy in New York City, with its many ancient buildings, narrow-aisled, with aging or nonexistent ramps — and then choosing a plaintiff from a cadre of disabled people. Then the lawyers threaten to sue the allegedly violating business, the plaintiff gets a few hundred dollars, the lawyer gets a few thousand, and it all seems like a shakedown to the poor business owner. Of course, this is not how it’s supposed to work. A wronged person is supposed to seek out the lawyer, not the other way around. So this article has provoked anger against the trial lawyers who are supposedly abusing the system for their own enrichment. Having lived in New York, I treasure the funky old out-of-compliance stores, where even a non-handicapped person has difficulty navigating the aisles. I love those places, and my personal belief is that a variance ought to be available to them so they can preserve their funky old character, even if it means that the “temporarily able-bodied” are the only people who can safely get in and out. But of course, that’s not the law. That’s not the choice that we as a country have made about this issue. The choice that we made, and the law that we passed to enforce that choice, is that almost all businesses open to the public have to be able to safely accommodate handicapped people. And then we as a country made another choice: the government would not be given the resources to enforce this law. Instead, we would give an incentive to private contractors (lawyers) to enforce the law, by forcing out-of-compliance businesses to pay the lawyers’ fees when the lawyer could prove that the business was out of compliance. So now we’re angry at lawyers for being too aggressive in their enforcement? Well, here’s a story about what happens when we choose the other path of having a government agency enforce the laws. The Equal Employment Opportunity Commission (EEOC) is supposed to investigate alleged employment discrimination, then if it finds a violation, negotiate with the violating business to fix it, and if that doesn’t work, then the EEOC may file a lawsuit against the business. Note that the EEOC is required to try to negotiate a workable solution before it files a lawsuit. Seems reasonable. But the EEOC is short of resources. They field about 100,000 complaints of discrimination every year. They recovered more than $450 million for employees last year, with a budget of $343 million. So you could say they’re running a profit, sort of. But they are still constantly understaffed, overworked, and simply don’t have anywhere near the resources needed to investigate every one of those 100,000 claims. So, like all government agencies, the EEOC has to decide how to most efficiently allocate their scarce resources. One obvious choice is to focus on companies that are practicing system-wide discrimination, so they can bring class-action suits. For example, CRST Van Expedited Inc. is one of the largest trucking companies in the United States. They have an “internship” program, in which women who want to become truck drivers are paired with male truck drivers, and left together unaccompanied for weeks at a time, with predictable results . By bringing a claim against a company like this, which has allegedly caused sexual discrimination and harassment against hundreds of women, the EEOC should be able to use its resources efficiently, right? Protect hundreds of women with just one big lawsuit, instead of trying to pick them off one at a time, which would take forever, and lots of agency resources. Well, the Eight Circuit Court of Appeals just slapped down the EEOC , saying that their lawsuit against the trucking company fails because the EEOC did not take the required step of trying to negotiate in good faith with the trucking company about each case individually . But doing that would eliminate the efficiency of having one big case instead of many small ones. The EEOC did negotiate with CRST about their (idiotic) program as a whole, but not about each individual case. Sure, in an ideal world, they would talk about each case separately. But in a world where efficiency matters, that’s a crazy requirement. It’s exactly the kind of requirement, in fact, that makes a government agency unable to perform its function of keeping the workplace free of discrimination. Which leaves it to whom, exactly, to to enforce our rights against workplace discrimination? Why, to the private lawyers, of course. In fact, one of the few women who opted out of the EEOC suit against this trucking company sued CRST privately. The jury awarded her $1.5 million . We as a country have to decide what rights we want to enforce, and whether to enforce them with government agencies, or with private contractors. But whipsawing back and forth is unfair. If we choose government agencies, then we’ve got to let them be efficient. Listen up, Eight Circuit. If we choose private contractors, then we’ve got to let the profit motive motivate them. Listen up, lawyer-bashers.

Here is the original post:
Joshua Shulman: Rights Have to Be Enforced Somehow

Find our Weekly Commercial Real Estate, Private Equity and Fund Newsletters at www.WeeklyBrief.net

White House Threatens Veto Of Tax Cut For The ‘Fortunate’

by Michael McAuliff on April 17, 2012

Huffington Post…

WASHINGTON — In the second major shot in Washington’s ideological battle over taxes this week, the White House on Tuesday slammed a small-business tax-cut proposal in the House as a handout for the “fortunate” and threatened to veto it. The Small Business Tax Cut Act of 2012, sponsored by House Majority Leader Eric Cantor (R-Va.), would slash taxes on the adjusted gross income of as many as 22 million small businesses — those with fewer than 500 employees — by as much as 20 percent for one year. It would add $46 billion to the deficit. The House is set to consider the bill on Thursday. On Monday, Senate Republicans blocked the Buffett Rule, a measure from the ideological opposite end of the spectrum, which aimed to ensure that multimillionaires and billionaires paid at least a 30 percent tax rate. Cantor argues that the average $6,500 tax break resulting from his measure would serve as a potent economic stimulus, which could spur growth by letting entrepreneurs keep more of their money to spend and reinvest as they saw fit. “This is a bill which will directly help small businesses create jobs,” Cantor told reporters on Tuesday. “And as the Senate voted last night and the Democrats brought up their priority, which was to raise taxes, we believe you ought to reduce taxes on small businesses to create jobs. And in fact, there’s a study out, which shows that this bill, when fully implemented, will create an additional 100,000-plus new jobs.” Cantor was referring to a study by conservative tax analyst Gary Robbins, who heads the firm Fiscal Associates. But critics have argued that the benefits would disproportionately land in the pockets of wealthy individuals and businesses such as sports franchises, financial firms and celebrities . Congress’ revenue estimators, the Joint Committee on Taxation, has calculated that the top 11 percent of small businesses would grab 64 percent of the break, while the 125,000 firms with $1 million a year in adjusted gross income would snag 18.3 percent. The 9.2 million small businesses at the bottom of the income heap would share about 15 percent of the break. The bill “is not focused on cutting taxes for small businesses, but instead would provide tax cuts to the most fortunate,” the Obama administration noted in a statement. “Under the bill’s definition of income, many of the ‘small businesses’ that would receive the largest tax breaks are law partners, consultants, and other wealthy individuals and corporations with the biggest profits. The proposal is a giveaway that will cost $46 billion and could, in fact, lead to delays and reductions in investment and hiring.” Rep. Xavier Becerra (D-Calif.), who also opposes the bill, recently told The Huffington Post that this proposal could lead to reductions in investment. That’s because any capital investment that a business counts for a tax break lowers its adjusted gross income. If a business takes that deduction this year, this would lower the income on its books eligible for the 20 percent break. So, he argued, businesses might put off capital investments. “You’re thinking, wait a minute, I want to get 20 percent off as much as I can now. Why don’t I hold off that investment until next year, ” Becerra said. “The reality is this is almost a wait-till-next-year tax break, which essentially makes a lot of businesses hold off making investments today that could lead to jobs tomorrow.” The White House argued that a more “targeted” approach that simplifies tax rates and encourages new hiring would be better. “If the President is presented with H.R. 9, his senior advisors would recommend that he veto the bill,” the administration’s statement concluded. Michael McAuliff covers politics and Congress for The Huffington Post. Talk to him on Facebook .

Continue reading here:
White House Threatens Veto Of Tax Cut For The ‘Fortunate’

Find our Weekly Commercial Real Estate, Private Equity and Fund Newsletters at www.WeeklyBrief.net

Rep. Carolyn Maloney Seeks To Deny Tax Breaks To Men-Only Businesses

April 17, 2012

If businesses like the Augusta National Golf Club, home to the Masters tournament, can continue to deny women membership , then the government should withhold their tax breaks, says Rep. Carolyn Maloney (D-N.Y.). Maloney’s Ending Tax Breaks for Discrimination Act, which she has introduced multiple times since 2003, prohibits businesses that discriminate on the basis of sex or race from deducting travel or advertising expenses from their taxes. Now, on Equal Pay Day and in light of the prestigious Georgia golf club’s refraining from extending membership to IBM’s new CEO, Virginia Rometty, because she is a woman, Maloney has reintroduced the bill with a new working title: the Equal Play at Augusta Act. “When a woman, Virginia Rometty, took over as head of IBM, it was an excellent time for the [Augusta National Golf Club] to change that tradition of not admitting women,” Maloney told The Huffington Post. “But instead of recognizing her and breaking with this outdated tradition, they decided to continue with this discrimination.” “I am filing a bill that really follows the example of when Congress passed Title IX for athletic equality,” Maloney added. “Any organization or institution that discriminates against women or men should not be able to deduct the cost of doing business, such as their meetings, flights and food.” While there is no official count of how many private country clubs and other organizations in the United States discriminate against women, media outlets have identified at least 24 males-only country clubs since the Augusta club garnered attention in 2003. If the bill makes it out of the House Ways and Means Committee this time around, it could put the GOP in an awkward position, since many prominent Republicans , including presidential candidates Mitt Romney and Newt Gingrich, former aspirant Rick Santorum, and Sen. John McCain (R-Ariz.), have publicly criticized the Augusta National Golf Club for not admitting women. House Speaker John Boehner (R-Ohio) is a member of a Maryland all-male golf club , which makes the issue even more awkward for him. But if Maloney’s ultimate aim is to coax private males-only clubs into changing their policies, the support of influential Republican men can provide her with more leverage to do so. “A woman can run a great company, she can run a country, she can run circles around her competition, she can be at the top of her profession, but Augusta National Golf Club believes she cannot be a member of its club simply because she is female,” Maloney wrote in an April 13 letter to William Payne, the club’s chairman. “There is a wide and growing consensus that this is a policy whose time has long since past. There are not many things in this world that Mitt Romney, Newt Gingrich, Rick Santorum, President Obama and I can all agree on. But this is one of them.”

Read the full article →

How To Turn Your Instagram Photos Into A Pillow

April 17, 2012

Instagram’s sale to Facebook earlier this month for $1 billion was the crescendo of the startup’s rapid rise and dominance in the mobile photo-sharing market. But within the Instagram universe lies another market — small businesses allowing you to customize products using photos from your Instagram account. From flipbooks to T-shirts to posters, a myriad of websites have sprung up around the ability to turn your Instagram photos into physical or decorative mementos. Apart from creation, startups have also come up with new methods for browsing Instagram and sites where you can look at statistics and insights from your account. Consider it the Instagram Economy. One such Instagram-inspired creation is Stitchtagram , a Washington, D.C.-based company that allows you to craft 15-inch throw pillows with photos from your Instagram account for $95 plus shipping. Stitchtagram is the brainchild of brother-and-sister duo Doug and Rachel Pfeffer. Doug works for Internet ad agency The Barbarian Group while Rachel leads Rachel Pfeffer Designs , a jewelry store. “My sister and I had been talking about it for a while and we wanted to get it out there into the world in time for our Christmas and holiday orders, so it has only been a few months,” Doug Pfeffer said of Stitchtagram’s November launch. “I’m not going to retire off Stitchtagram just yet, but it’s been a great project so far.” For Adrian Salamunovic, co-founder of CanvasPop.com , a site that blows up, prints and frames your Instagram photos, Instagram’s user base of some 40 million people has been a fertile customer pool. “We could tell early on that Instagram was going to explode,” he said. “We knew we had to be the first company to allow this huge marketplace to print large images and we achieved that. Fast forward six months later and we’ve sold tens of thousands of prints to our fellow Instagram fanatics, with almost no advertising.” Instagram’s clean, intuitive interface and easy access for third parties have allowed this secondary market to grow alongside the popular photo-sharing app. Apart from technical matters, Instagram photos are inherently practical for businesses printing and using the pictures. “It’s a simple thing to go in there and access your photos,” Pfeffer said. “Instagram has this great API, so it makes it really easy for third parties to go in and pull the photos out of there. A side effect of this simplicity is that all Instagram photos are the same dimensions so it actually makes it way easier to print.” “What makes Instagram so perfect for doing business is that they have a highly influential, early adopter, connected, creative audience that loves to share stuff — in other words, the clients that everyone wants,” Salamunovic added. “These people look for cool authentic products they can get behind. More importantly Instagram never had a focus on monetizing their audience, so we did it for them via their API that they provide for free to developers.” For CanvasPop, their printing extends beyond purely Instagram photos — offering prints and canvases for SLR photos and even Facebook pictures. Pfeffer echoed that he was hoping to open up his pillow creation tool to Facebook photos to expand his audience and offer more variety in pillow creation for customers. With Facebook’s high-profile — and high-priced — purchase of Instagram, there has been a ton of press and a flood of new users using the application. With the release of the app for Android and the big news of the purchase, Instagram added more than 10 million users in only 10 days , bolstering its user base to 40 million strong. “One reason a lot of people, including me, like Instagram is because it seems like it’s more of a closed network of people you’re interacting with,” Pfeffer said. “As far as business goes, more people is never a bad thing.” Here’s a look at some of the more creative third-party Instagram companies:

Read the full article →

U.S. Bank Faces Federal Investigation

April 17, 2012

U.S. Bank on Tuesday joined the ranks of large financial firms facing discrimination charges for the way it maintains foreclosed homes in mostly black and Latino neighborhoods. The National Fair Housing Alliance, a Washington, D.C.-based nonprofit, filed a formal discrimination complaint against the bank with the Department of Housing and Urban Development Tuesday. In the complaint, the organization accuses the bank of maintaining and marketing bank-owned foreclosed properties in predominantly white communities far more aggressively and consistently than it does homes in mostly black and Latino neighborhoods. The complaint filed against U.S. Bank and its parent company, U.S. Bancorp, marks the second charge in as many weeks brought by the National Fair Housing Alliance against a major bank. The alliance conducts housing discrimination investigations and receives some funding from HUD. Last week, the alliance accused California-based Wells Fargo , the nation’s largest mortgage lender, of similar civil rights violations. Minnesota-based U.S. Bank is the fifth largest commercial bank in the United States. On Tuesday, it also faced separate allegations logged by another nonprofit group that it offers pay day loans at annual interest rates approaching 400 percent to vulnerable consumers. Alliance investigators examined 177 U.S. Bank properties in seven cities, said Shanna Smith, the alliance’s president and CEO. Public records indicated each of the homes was owned, not simply managed, by U.S. Bank, she said. In Dayton, Ohio, alliance investigators found that 65 percent of U.S. Bank foreclosures in communities of color had broken widows or doors, according to the alliance’s complaint. Only 15 percent of the bank’s repossessed homes in white neighborhoods were in the same condition. In the Oakland, Calif.-area, 64 percent of the bank’s foreclosed properties in black or Latino neighborhoods were littered with, “substantial” amounts of trash. But, only 17 percent of properties in predominantly white Bay Area neighborhoods had the same problem. U.S. Bank said that the complaint filed with HUD Tuesday does not include the addresses of problem properties, which the bank needs to determine if it owns the properties or if it is simply the trustee managing administrative tasks for investors who own the home loans. Trustees oversee securities — in this case, mortgage securities made up of hundreds or even thousands of home loans — on behalf of investors. The investors are often large pension funds and insurance companies. Trustees, in turn, typically hire companies known as servicers to collect mortgage payments from the home buyers whose loans are part of the security. Banks often function as servicers and are responsible for dealing with loans before and after a foreclosure. So, servicers also often hire asset managers or contractors to maintain foreclosed properties. Nicole Sprenger, a U.S. Bank spokesperson, emailed a statement to the Huffington Post Tuesday that emphasized the complexity of these arrangements. As you may know, U.S. Bank is one of the nation’s largest corporate trustees. Accordingly, in the vast majority of cases where U.S. Bank is involved in a foreclosure, we serve as a trustee for an investment pool where the former mortgage was held, and have no role in servicing or maintaining the property. That is the responsibility of the servicer (typically another bank), and not the trustee. When we do own a property, we have a strong and comprehensive process in place to regularly inspect and maintain properties to marketing standards where we have legal access, regardless of their location. The bank’s argument is illegitimate, said Anne Houghtaling, executive director of HOPE Fair Housing Center in Wheaton, Ill. a city about 25 miles west of Chicago. HOPE is one of the nonprofit organizations that helped the National Fair Housing Alliance evaluate the state of foreclosed homes in cities around the country. “U.S. Bank has a list of its own properties, (and) could go and look at them, and should be going to look at them regularly,” Houghtaling said. “They could do that now.” There is clear evidence that U.S. Bank-owned properties in Chicago are treated differently if located in a community of color, she said. HUD declined to comment on the complaint but confirmed that it had been filed and will lead to a federal investigation. Should HUD find evidence that the alliance’s complaint against U.S. Bank is accurate, the federal agency can attempt to negotiate a settlement with the bank. If the parties are unable to reach an agreement, the Justice Department could file suit against the bank. The complaint filed Tuesday follows a nine-month probe during which the National Fair Housing Alliance evaluated the state of 1,000 bank-owned foreclosed homes in nine metro areas from California to Washington, D.C. Investigators found “overwhelming” and “troubling” evidence that six of the nation’s major banks market and maintain foreclosed homes in predominantly white neighborhoods differently than they do in others, according to a report issued by the agency last week. The pattern was pronounced in communities regardless of income, Smith said.

Read the full article →

Investors Run To Surprising Place

April 17, 2012

Investors around the world are getting more anxious, and they’re choosing to put their money in an unusual safe haven: the U.S. stock market. A new Bank of America Merrill Lynch survey of global mutual-fund managers, released on Tuesday, finds that investors scrambled for safety last month as worries about the European debt crisis once again flared. The percentage of money managers hoarding what they consider to be an unusually high amount of cash jumped to 20 percent from 10 percent in February, according to the BofA survey. And global money managers pulled some money out of the global stock market last month, according to the survey — not surprising at a time when there are worries that the global economy is slowing down. But on balance money managers around the world poured more cash into the U.S. stock market in March. The percentage of investors “overweight” U.S. stocks — meaning they had more money in U.S. stocks than usual — was higher than the percentage “underweight” the U.S. market by 27 percentage points, up from 14 percentage points inFebruary At the same time, global investors pulled some money out of the stock markets of Brazil, India and other “emerging” markets. And they continued to avoid the European, British and Japanese markets like a sneezing guy on the subway. This behavior isn’t too surprising if you think about it: Europe is in recession , with debt crises rolling around the continent. Japan is in a shaky recovery from a recession last year, and China’s growth appears to be slowing sharply. The U.S. economy, meanwhile, is still doing OK, though data on Tuesday suggested manufacturing and home construction slowed toward the end of the first quarter. But there was another funny wrinkle in the survey: While foreign investors might see the U.S. as a safe haven, U.S. investors are starting to sour on the prospects for U.S. economic growth and corporate profits, according to the survey. “A net 8 percent of U.S.-based investors say the country’s economy will get stronger in the coming year, down from a net 29 percent in March,” BofA said. “A net 8 percent predicts corporate earnings will fall – last month, U.S. investors were evenly split on whether earnings would improve or deteriorate.” So far, global investors’ faith in U.S. stocks has been both tested and rewarded: By putting more money into U.S. stocks in March, global money managers suffered through the stock market’s mini-swoon in mid-April. But they may also be enjoying the market’s sudden, neck-breaking rebound, which continued on Tuesday, with the Dow Jones Industrial Average up 170 points at midday in New York , thanks in part to better-than-expected corporate earnings. This sort of market volatility, this unpredictability, is the sort of thing a lot of money managers hate. But it’s not nearly as bad yet as it was last fall, when a 170-point swing up or down in the Dow was considered a relatively calm day. And money managers globally are still more cautious than terrified, noted Michael Hartnett, chief stock strategist at BofA Merrill Lynch Global Research. Last fall, for example, the percentage of investors hoarding cash jumped to 30 percent and stayed there for months. And during the crisis about half of all money managers were parked in cash.

Read the full article →

Apple Pays Shockingly Low Corporate Tax Rate

April 17, 2012

How much of your income went to taxes this year? There’s a decent chance Apple Inc. paid a smaller share. That’s the contention of a report released Tuesday from the Greenlining Institute, a research and public policy non-profit based in Berkeley, Calif. The report argues that Apple, which reported profit of $13 billion in its latest quarter, paid just 9.8 percent of its 2011 income in taxes. Apple, the world’s most valuable company, is one of many blue-chip tech companies whose 2011 federal income taxes checked in at something well below the marginal 35 percent corporate rate. “We looked at high tech specifically because they were making so much profit,” Samuel Kang, general counsel for Greenlining and a co-author of the report, told The Huffington Post. “They were one of the few industries making not just profits, but record profits, during the economic downturn.” Greenlining’s report arrives just as tax season draws to a close — and as debate continues in Washington over how much of a burden the country’s wealthiest people and corporations should be asked to bear. The U.S. tax code, and the leniency it often affords the well-off, has emerged as a dominant theme of this election cycle, with figures as diverse as Warren Buffett and Occupy Wall Street demonstrators citing it as a concern. President Barack Obama’s campaign team has used the relatively low tax rate paid by Mitt Romney, the presumptive Republican nominee for president, as ammunition against Romney , even as Obama has called for a lower top tax rate on U.S. corporations . For anyone dismayed at the way those corporations often seem to sidestep the brunt of their tax burden — sometimes paying nothing at all in federal income tax despite billions in profits — Greenlining’s report offers much to fret over. The report, which examined 30 tech companies within the Fortune 500, argues that these companies paid an average corporate tax rate of just 16 percent in 2011 — less than half the official 35 percent tax rate that Obama and Romney have each said is too high . Apple paid a top tax rate of just 9.8 percent in 2011, the report says. Google paid a rate of 11.9 percent, while Yahoo paid 11.6 percent and Microsoft paid 18.9 percent. Xerox paid 7.3 percent of its income in taxes, while Amazon paid only 3.5 percent, according to the report. None of these instances is as egregious as, say, General Electric, which was once infamously reported to have paid no federal income taxes in 2008, 2009 or 2010 — an assertion that the company disputed — and which has reportedly paid an average corporate tax rate of just 2.3 percent over the past decade, according to an analysis by the group Citizens for Tax Justice. Still, among those familiar with tax policy, the practices described in the Greenlining report might raise some eyebrows. For the sake of comparison, the report says, Apple (and Xerox and Amazon) paid a lower tax rate in 2011 than an American household making $42,500 a year. While Microsoft’s tax rate was lower than the nominal corporate rate, it was higher than the 16.4 percent rate the company paid last year, according to Greenlining. Apple, Google, Amazon, Yahoo and Xerox, on the other hand, all paid a lower rate this year than they did last year. Greenlining researchers said their figures are based on company filings with the Securities and Exchange Commission. A representative from Xerox told The Huffington Post that the company’s effective global tax rate in 2011 was 24.7 percent, higher than the 7.3 percent U.S. rate described by Greenlining. A Yahoo spokesperson declined to comment. Google did not respond to a request for comment. Apple and Amazon did not make spokespeople available to discuss the report. Many of the companies named in the report keep large portions of foreign earnings overseas, rather than bring them back to the U.S. where they can be taxed. Greenlining estimated that the 30 companies analyzed in the report have a combined $430 billion offshore — money that the U.S. government, for the moment, can’t tax, even as the country scrambles to plug budget gaps at the federal, state and local levels. “it’s unfair, and ultimately it’s going to have an impact on all of us,” Kang told HuffPost, in reference to companies’ efforts to keep their earnings beyond the reach of the tax collector. “When you look at who’s left holding the bag and who has to make up the difference, it’s all of us as individuals.” Several of the tech companies examined in the Greenlining report, including Apple, Google and Microsoft, support a legislative push for a so-called tax repatriation holiday — a one-time event that would allow companies to bring their overseas cash into the U.S. at a drastically reduced tax rate, which advocates say would spur new economic activity. Congress approved a repatriation holiday in 2004, but the consensus among economists has been that its effects on investment and job creation were negligible . “The firms that brought money back [in 2004] were not the same firms” that engaged in new hiring or investment, said Fritz Foley, an associate professor at Harvard Business School. “Most of the studies didn’t find much evidence of job creation among repatriating firms.”

Read the full article →

Buffett Rule Goes Down

April 16, 2012

WASHINGTON — Democrats’ attempt to pass a Buffett Rule tax on the super wealthy failed Monday in the Senate, as Republicans blocked the measure in a sharply partisan debate. Democrats cast it as a bid for fairness that would end the circumstance in which billionaires like Warren Buffett pay a lower percentage of their income in taxes than their secretaries. Republicans cast it as a political gimmick and an attempt by President Barack Obama to give more Americans a “free ride.” It was blocked 51-45 in a filibuster vote. Republican Sen. Susan Collins of Maine and Democratic Sen. Mark Pryor of Arkansas were the only politicians to cross party lines. “The wealthiest one percent takes home the highest share of the nation’s income since the early ’20s, the roaring ’20s,” Senate Majority Leader Harry Reid (D-Nev.) said . “Times are tough for many middle class American families. Millionaires and billionaires aren’t sharing the pain or the sacrifice, not one bit. Last year there were 7,000 millionaires who didn’t pay a single penny in federal income taxes.” Sen. Jon Kyl (R-Ariz.) countered that statistics show the rich are paying plenty, and that it’s the bottom half of the income ladder that is doing too little. “You’ve got the top 10 percent of taxpayers paying 70 percent of all the taxes, earning 45 percent of the income. Those are certainly the wealthy, and they’re certainly paying a big share,” Kyl argued. “How about less wealthy? The bottom 95 percent — in other words, everybody but the top 5 percent — pays 41.3 percent of income taxes, earns 65 percent of the money, of the income. Is this fair? “The Joint Committee on Taxation estimates that 51 percent of all households, which includes both filers and nonfilers, had either zero or negative income tax liability in 2009,” Kyl said, suggesting it was the middle class and poor who were not sacrificing. “People who do not share in the sacrifice of paying taxes have little direct incentive to care whether the government is spending and taxing too much. Maybe that’s why the president has no problem with even more Americans getting a free ride.” The measure does not lower rates for the poor, but Democrats have said the $47 billion raised by the measure over 10 years would either go to deficit reduction or to help for middle class families. “There are lots of ways that I think the American people would prefer to spend $47 billion than tax breaks for millionaires and billionaires who aren’t paying what the average person pays,” Sen. Chuck Schumer (D-N.Y.) said on a conference call with reporters before the vote. Republicans countered that the evening vote was a “political gimmick” — cooked up by Obama’s campaign team — that ignores the nation’s critical problems, starting with its mounting debt. “The problem is, we’ve got a president who seems more interested in pitting people against each other than he is in actually doing what it takes to face these challenges head on,” Minority Leader Mitch McConnell (R-Ky.) said on the call, arguing that the Buffett Rule will never pass. “By wasting so much time on this political gimmick that even Democrats admit won’t solve our larger problems, it’s shown the president is more interested in misleading people than he is in leading.” “President Obama looked at the options in front of him, sat down with his political advisers, and he said, ‘You know what, let’s go with the poll-tested tax increase on investment and job creation that won’t fix anything and won’t pass anyway,’” McConnell continued. Indeed, the Democrats’ position is popular. A CNN/ORC poll released Monday found that 72 percent of Americans favor taxing the very wealthy at 30 percent. The Buffet Rule would start phasing in at earnings above $1 million, and reach the full 30 percent for annual incomes above $2 million. Democrats found McConnell’s positions disingenuous, arguing before the vote that a GOP-waged filibuster would be the only reason for the Buffett Rule’s failure. “All of their arguments just don’t stand up because they’re so afraid of this issue,” Schumer said on the call. “Are they for it or against it? They say, ‘Well, it won’t pass.’ It won’t pass because they are opposed to it,” he said, adding that Republicans are the ones guilty of chicanery. “The gimmick is when they block something and say, ‘Let’s not pay attention to it because we won’t let it pass.’” Schumer vowed to keep bringing the Buffett Rule back until Republicans give in, the way they did on the payroll tax cut fight. “We’ll keep pushing this issue all year long, and we think we’ll pick up more and more Republicans,” Schumer said. He added that the idea is not just to score campaign points, but to show people that Democrats are more in line with them on tax policy, and to ultimately pass the bill. He suggested that the likely presence of Mitt Romney atop the GOP presidential ticket would help, because Romney has already been dubbed a poster child for the issue after paying a 13.9 percent tax rate on his last public return — less than many in the middle class. “It could be called the Buffett Rule, it could be called the Romney Rule,” Schumer said. “I don’t think he’s going to want to have this present inequity remain when he’s an example of it.” House Republicans are planning to counter the Buffett Rule push later this week with an attempt to cut taxes. A proposal by House Majority Leader Eric Cantor (R-Va.) would cut small business taxes by 20 percent. Since his bill would provide a disproportionately large benefit for the wealthy, it would mark an especially sharp contrast with the Democratic measure. This story has been updated with a final vote tally. Michael McAuliff covers politics and Congress for The Huffington Post. Talk to him on Facebook .

Read the full article →

NFL Plays Ball With Gambling Industry

April 16, 2012

Despite the NFL’s vocal opposition to betting on its games, the league’s move to allow teams to accept casino ads has generated a great, big … ho-hum. Scott Andresen, a sports attorney and Northwestern professor, said the new deal is “somewhat hypocritical” but didn’t bother him, he told The Huffington Post Monday. It could even boost teams’ payroll, he said. University of Michigan sports economist Rodney Fort said the advertising could help fill the hotel and convention space attached to the casinos. “There’s nothing hypocritical about it.” The NFL last week approved local casino advertising at stadiums and during game broadcasts for the next two seasons, the Associated Press reported. The ads are limited to the upper bowl of the league’s venues, local radio broadcasts and in-game programs. They must also include a “gamble responsibly” message. Casinos that host sports betting are prohibited from advertising. The decision could represent a jackpot for teams like the Philadelphia Eagles, who have 20 casinos within driving distance of their stadium, the Philadelphia Inquirer reported Monday. The New York Jets and Giants could also both gain as much as $5 million apiece , the New York Post estimated. NFL spokesman Brian McCarthy clarified Monday that it was the teams that could accept the advertising, not the league. And the clubs were restricted in how they can deploy the marketing. “There is no use of team logos, no special sections or clubs sponsored by casinos, no events, no promotions, etc. This is in contrast to what other sports have done for years,” he wrote in an email to HuffPost. McCarthy had said in an earlier statement distributed to the media: “We remain steadfast in our opposition to the proliferation of gambling on NFL games. There is a distinction between accepting advertising in this limited fashion and gambling on the outcome of our games.” That said, Andresen pointed out football’s uncomfortable yet profitable relationship with gambling. “Let’s be honest: a substantial part of the NFL’s popularity is based in gambling activity or gaming of some sort, whether it’s sports books out in Vegas or parlay sheets or even fantasy leagues.” Concluded Andresen: “The hypocrisy has always been there.”

Read the full article →

The Risk Of Foreclosure Scams Is Rising

April 16, 2012

If you’re a struggling homeowner watch out! The chance that you’ll get scammed is way up. The number of reported mortgage foreclosure scams has shot up 60 percent so far in 2012 , according to the nonprofit Homeownership Preservation Foundation. About 50 percent of the scams involve attorneys or others claiming to offer “specialized services.” The surge in schemes comes in the wake of recently launched federal programs that scammers have been able to exploit. “Regretfully, every new government initiative spawns a slew of foreclosure avoidance scams, often from the same cast of characters doing business under various names to avoid easy detection and identification,” Colleen Hernandez CFO of the organization said in a release that accompanied the findings . In one recent example, New York Attorney General Eric Schneiderman has warned that scammers may exploit the recent national mortgage settlement to take advantage of homeowners. The scammers claim to be government officials involved in the settlement and try to pry personal financial information, Schneiderman said earlier this month. In another example, a judge shut down a Santa Ana mortgage relief operation last month after the band of five companies and three websites raked in more than $1 million by allegedly taking advantage of hundreds of consumers, according to the Los Angeles Times . The operation allegedly used two scams: One that charged homeowners thousands of dollars to join a class-action lawsuit and another that for a price of at least several hundred dollars offered to do a home loan audit that would find lender violations at least 90 percent of the time. With the threat of foreclosure constantly looming there are many potential victims available for these scammers. One in every 662 housing units received a foreclosure filing in March, according to RealtyTrac. That’s an uptick from the month before indicating that there might be a surge in repossessed properties.

Read the full article →

Al Norman: Wal-Mart’s ‘Terrifying’ Attack on the First Amendment

April 16, 2012

Cathy Kern is somewhat of a folk hero in North Tonawanda, N.Y. But if you ask folks at city hall, or at Wal-Mart corporate headquarters, what they think of Cathy Kern, you’ll get the opposite response. Over the past six years, Kern and other anti-Wal-Mart activists have filed 5 lawsuits that effectively staved off the development of a Wal-Mart superstore in their community. Ultimately Wal-Mart prevailed, and their huge store is now in its final stages of completion. North Tonawanda (NT) is located midway between Buffalo and Niagara Falls, in Niagara County. There are already 6 Wal-Mart’s within 16 miles of NT, including a supercenter in Niagara Falls 9 miles away. In November, 2006, Wal-Mart submitted an application to the City to construct a 183,000 square foot superstore. In May, 2008, the city’s Planning Commission approved the environmental impact statement, and by September, 2008, the site plan was approved. Kern and other NT residents formed a group called NT First, and filed a lawsuit to annul the Planning Commission’s decision. In June, 2009 the state court did annul the site plan approval, saying that the city was required by its own code to submit a stormwater pollution prevention plan — which had not been done. The court sent the case back to the city to complete. Between November, 2009 and July, 2010, Kern et al. filed three more lawsuits against Wal-Mart, each raising a different point of law. In the fourth lawsuit, Wal-Mart and the City filed a motion to impose sanctions against Kern and her lawyer, David Seeger, for “frivolous” litigation. In September, 2010, Judge Ralph Boniello, III dismissed the fourth lawsuit, and permitted Wal-Mart and the city to seek the sources of Kern’s funding. Boniello ruled that the lawsuit was “filled with re-statements of matters previously litigated and half-truths [and] has only served to further delay the project and cause the Respondents to incur additional legal fees.” Boniello added: “In fact [Wal-Mart and the City] have raised the possibility that such delay tactics are consistent with a national campaign allegedly funded by outside groups whose sole goal is to block Wal-Mart developments.” The Judge ordered Kern and Seeger to produce their funding sources and NT First membership names, or face contempt of court. In a letter dated December 9, 2010 , Attorney Seeger informed the Judge that the group NT First had “terminated its existence,” ended its representation by Seeger, and liquidated its checking account balance of $13.22 — donating it to The Salvation Army. Seeger noted that under New York law, “an unincorporated association’s financial exposure is limited to those assets held by it and for it through its members.” Seeger noted, “The Association, now that it has laid bare its financial records [and] membership lists… has no reason to continue its existence, and no means to afford any further legal representation.” Seeger told the Court that the members of NT First “remain concerned that Wal-Mart, in furtherance of its nationwide campaign to legally attack its opponents, will attempt to force additional disclosures and otherwise terrify its member and officers.” Attorney Seeger warned, “The First Amendment secures Petitioners members’ various First Amendment freedoms including… the right to petition the government for redress of grievances.” Citing the Citizens United case, Seeger wrote: “disclosure of donations and funding is off limits, except upon a demonstration of compelling state interest.” Citing three U.S. Supreme Court cases between the NAACP and the State of Alabama (1959 to 1964), Seeger argued that unincorporated associations are immune from state scrutiny of memberships lists. “At bottom,” Seeger said, “Wal-Mart is not entitled to the requested disclosure, unless there is a compelling state interest overriding the First Amendment Protection.” In June, 2011, a group called The Clean Water Advocates of Western New York , led by Cathy Kern, filed a fifth lawsuit under the Clean Water Act in federal court. This suit was originally filed against Wal-Mart, North Tonawanda, and the N.Y. State Department of Transportation. A U.S. District Court Judge signed a consent decree requiring the NYSDOT to comply with its stormwater permit. To fight her contempt charges, Cathy Kern is now represented by Buffalo civil rights attorney Frank T. Housh. “When Wal-Mart began an illegal, permitless construction of its Superstore,” Housh told me, “North Tonawanda First did what citizens groups are supposed to do: they petitioned the Courts for relief. Their efforts were hugely successful. Wal-Mart and its rubber-stamp local government were forced to get a construction permit, divulge its plans to the public, and follow the procedures in the Clean Water Act.” Housh says because of this success, “my clients have been targeted for reprisal. Put simply, Wal-Mart is seeking the bankruptcy and public humiliation of a woman in her sixties who lives alone with her cats because she succeeded in making them follow the law. They want her ruined life to stand as an object lesson to anyone who believes the rules which apply to everyone else apply to the world’s largest corporation.” Judge Boniello has made it clear, Housh says, that he may order Kern to pay hundreds of thousands of dollars in fees to Wal-Mart’s attorneys. Boniello’s Order was stayed pending an appellate court ruling on the propriety of the Judge’s Order, which should be issued in the next few weeks. In December of 2010 — three months after Justice Boniello’s decision to allow Wal-Mart to pursue NT First documents — the New York Daily News reported that Wal-Mart had donated $10,000 to the Niagara County Republican Committee. NT Mayor Robert G. Ortt, and NT City Attorney Shawn Nickerson — both strong proponents of the Wal-Mart project — are Niagara County Republican office holders. So is Justice Ralph Boniello, III, who was elected to the Niagara County Supreme Court in 2001. As of 2010, Boniello’s salary is $146,700. The Republican Judge is up for re-election in 2014. Wal-Mart has used its legal muscle countless times to appeal local zoning decisions to the county courts, to the appeals courts, and beyond. The corporation has more lawsuits than men’s suits. In North Tonawanda, Wal-Mart’s hounding of local residents for legal fees, membership lists and donor lists, is just another attempt by a 1 percent corporation to chill public participation and to narrow the First Amendment freedoms not just of Cathy Kern — but of citizen activists everywhere across America. Al Norman is the founder of Sprawl-Busters. He has been helping communities fight big box sprawl for almost 20 years. His latest book, Occupy Walmart will be released in early May.

Read the full article →

Fed Officials Leave For Wall Street With Privileged Info

April 16, 2012

WASHINGTON — The Federal Reserve may be making an effort to open up some of its famously opaque decision making, but the newfound interest in transparency doesn’t extend to sharing records of meetings that happened years ago. The Huffington Post and MSNBC’s “Dylan Ratigan Show” filed Freedom of Information Act requests in January to obtain the minutes of Federal Open Market Committee meetings from 2007 to 2010. That month, the Fed had released the 2006 minutes of the confidential committee, which essentially sets national monetary policy. In response, the bank provided 513 pages of mostly blacked-out paper and cited policy to justify withholding the information. “[T]he Committee has a long-standing policy of routinely releasing full transcripts on a five-year schedule. Each year’s transcripts will be made public in their entirety according to that schedule,” the bank offered by way of explanation. By withholding the 2007 and 2008 minutes, the Fed is able to keep secret certain information on how it decided to respond to the financial crisis until after the presidential election, hampering what could be a serious debate between the two parties on its response. During the financial crisis, Mitt Romney was broadly supportive of the federal response, with the exception of the bailout of the auto industry. He has since spoken much more skeptically of the Wall Street bailout. Barack Obama, as a candidate and then as president, spoke favorably of the federal intervention as unfortunate but necessary. On Friday, his Treasury Department released a full-throated defense of its activity. How the Fed made its decisions, however, will be kept hidden until the bank releases the transcripts year by year. “The Federal Reserve has been looking for ways to increase its transparency now for many years, and we’ve made a lot of progress,” Fed Chairman Ben Bernanke said in April 2011, as he embarked on a series of lectures aimed at defending the Fed. “We have become, I think, a very — a very transparent central bank.” Bernanke said the bank would continue to improve. “We’re continuing to look for additional things that we can do to be more transparent and more accountable,” he said a year ago. “And I personally have always been a big believer in providing as much information as you can to help the public understand what you’re doing, to help the markets understand what you’re doing, and to be accountable to the public for what you’re doing.” There are some market participants, however, who know exactly what happened in those meetings. One of the few things not redacted in the Fed’s FOIA response is the list of officials who attended each confidential meeting. Many of those people have since left the central bank and gone to work in the financial industry, taking with them privileged information about the Fed’s thinking that is still closed to the public. Take Susan Bies. A onetime member of the Fed Board of Governors, she was involved with the Financial Stability Forum, an international group of central bankers, finance ministers and the like, and, according to Forbes , “led the Fed’s efforts to modernize the Basel capital accord.” Bies now sits on Bank of America’s board. Brian Sack has cycled between the Fed and the private sector more than once. In 2009, he returned to manage the System Open Market Account. Bernanke said at the time, “Many of you know Brian, I am sure. He was here. He went off to work with Larry Meyer for awhile. Now we welcome him back to the Fed family.” Laurence Meyer was himself a top Fed governor who left in 2002 to return to the firm he founded, Macroeconomic Advisers, which offers economic forecasts. David Stockton, another Fed official who attended Federal Open Market Committee meetings in question, also departed to join Meyer’s firm. In 2012, Sack once again left the Fed . Deborah Bailey has since gone on to Deloitte & Touche, where she is director of governance, regulatory and risk strategies. Meredith Beechey is now at Sveriges Riksbank, Paul Connolly is at Eastern Bank/John Hancock Life Insurance Co., and Benson Durham is at the Capital Group Companies. Joseph Gagnon, Michael Gapen and Jon Greenlee have moved on to the Peterson Institute, Barclays Capital and KPMG, respectively. Brian Madigan also went to Barclays, and Nathan Sheets is now at Citigroup. At least eight other meeting participants have moved on to private financial institutions. Clients deeply value the kind of insight a former Fed insider can bring — a value Citi didn’t overlook in its announcement of Sheets’ hiring, which featured this quote : “With over 18 years of experience with the Federal Reserve, Nathan’s appointment underscores Citi’s commitment to bring the highest quality insights to our clients.” Jason Cherkis contributed reporting to this story.

Read the full article →

Robert Teitelman: Stray Thoughts on the Rise of Shareholders

April 16, 2012

A post earlier in the week about a Gretchen Morgenson column in The New York Times continues to bug me. Morgenson was once again thumping the tub for “say on pay,” that is the ability of shareholders to have a greater say on corporate compensation schemes. The big takeaway here, to me, is that Morgenson and the corporate governance crowd continue to believe that some day, somehow, shareholders will take up their democratic responsibilities as owners and actively participate in corporate monitoring. I’m skeptical on empirical grounds, but whatever. More interesting is a stray thought that wandered through the post. From a certain perspective, governance arrangements — today that means shareholder hegemony — take on a kind of foundational importance, just as in democratic politics the constitution serves as a kind of governance operating system or source code. Rising from that model should theoretically flow a variety of either virtues or sins: alignment or misalignment of incentives; rough equality or inequality of pay; efficient or inefficient use of resources; good results or bad, which are then reflected in rising or falling shares; and, ultimately, in an economy that provides mobility, job creation and innovation — or the opposite. Historically speaking, we saw a shift somewhere in the ’70s from an earlier model that emphasized stakeholder interests — workers (often unions), communities, customers and shareholders — and that was embodied in a class of relatively large and stable corporations that dominated the landscape. This is often viewed as the bad old days of governance; and stakeholder governance, with its agency issues and separation of ownership and control, is the defective model that current governance theory has long defined itself against. The question then is a simple one, reflective of a complex historical situation: Why were many of the virtues we now seek — relative equality, lower CEO pay (relatively and objectively), global competitiveness, nearly full employment, considerable innovation (a difficult subject to pin down, of course, though there was little talk of technological stagnation in the ’60s, which stagnationists like Tyler Cowen look back on with nostalgia ) — more associated with that era of retrograde stakeholders than, say, the shareholder model of today? In short, if CEOs and boards used stakeholders to entrench themselves so effectively, why didn’t their pay go through the roof? Again, these are complicated and dynamic historical circumstances. It’s very true that American corporations existed in a kind of protected and hegemonic position in the three decades after World War II. With the rest of the industrial world trying to recover from the war, American corporations could do nearly anything they wanted. Globalism existed for American multinational companies, but it was relatively limited, hedged in by protectionism at home and abroad and restrictive regulations, particularly on the flow of capital and credit. It was also the last decades of high industrialism: Economies of scale prevailed, which allowed efficient output and plentiful jobs at relatively large and dominant companies. Even innovation was viewed as something best done on an industrial scale: It was the age that recalled not the Manhattan Project, but it was the heyday of Bell Laboratories which Jon Gertner lays out so well in his new book . It was also an era that came to a sudden and wrenching end with the stagflation of the ’70s. Still, while all those factors help explain relative equality and the dominance of large companies, they don’t begin to explain compensation and the destructive practices that are supposed to flow from “entrenched” management. So it’s intriguing. But now, like a dog chasing a stick, we head a little deeper into the weeds. Earlier this week, JW Mason, who normally posts on his own econoblog, The Slack Wire, wrote an essay as a substitute for Mike Konczal at Rortybomb. Mason explored the tensions and contradictions between two causal explanations of the financial crisis: The notion that the Federal Reserve had spawned the mispricing of assets (like mortgages) by keeping interest rates too low, and the argument, often made, Mason points out, by the very same economists, that global trade imbalances (well, mostly China) flooded the developed world with too-cheap capital. The post is well worth reading carefully, but what piqued my interest was Mason’s provisional conclusion that the real problem might not have been either of those phenomenon, but rather that the crisis represented a failure of the private financial system to optimally match up savings and useful investment ideas. Near the end of a fascinating comment discussion, Mason refers back to an earlier post on The Slack Wire on the subject of nonfinancial corporations and intermediation, that is banking. That post, in October 2011, opens up with one of the more fascinating graphs I’ve seen lately. It tracks nonfinancial corporate after-tax profits, dividends and total payouts from 1950 to 2011. I’ll let Mason lay it out: In the neo-liberal era, up until 1980 or so, nonfinancial businesses paid out about 40% of their profits to shareholders. But in most of the years since 1980, they’ve paid out more than all of them. In 2006, for example, nonfinancial corporations had after-tax earnings of $800 billion, and paid out $365 billion in dividends and $565 [billion] in net stock repurchases. In 2007, earnings were $750 billion, dividends were $480 billion and net stock repurchases were $790 billion. Mason goes on to compare what those numbers suggest about corporations to homeowners using residences as piggy banks: That is, a steady disinvestment has taken place. He then goes on to make a series of political arguments that you can accept or not. (A side note: Mason’s graph also casts a light on all the handwringing about companies hoarding cash after the crisis. In fact, while profits did plunge, the total payout mostly remained above that level — and for a time in 2009 the two ran together. Those very cries that companies must pay out more may suggest how far we’ve come in terms of shareholder expectations. It also points up the split between shareholder interests and workers. Companies were continuing to pay out to shareholders, not using the cash to rehire.) But what are the numbers really saying? Well, clearly something has changed (we should also be careful to note that the period 1950 to 1980 was not exactly “normal,” if normal means anything in this context). Here we take refuge not in economics as much as in economic history. If there’s any powerful trend that defined the shift in finance that was first strikingly evident in the ’70s, it was the rise of institutional shareholders, accompanied by the cult of performance and portfolio management. The historical context here is complex too — and it undermines some of the more reductionist arguments of the neo-liberal critique from the left — but it does trace a remarkable shift from equity markets that are sideshows for individual investors to institutionally dominated equity markets that have, since the ’70s, made a series of demands and arguments for their own prescience, efficiency, rationality and supremacy. The shift of governance from stakeholders to shareholders is only the most obvious sign of this demand for hegemony by shareholders. The track of rising corporate payouts is another piece of evidence. The question all this stirs up I’m in no position to answer: Are we better or worse off economically, socially and politically with shareholders in that pre-eminent a role? Is there a balance point? Have we, in a world of activist hedge funds and high-frequency trading, overshot that point? Has the cult of share performance, once such a tonic to a closed, inefficient and cartel-like Wall Street, devolved into rampant speculation? Is there — God forbid — a role for stable, even entrenched managers at, say, companies like Facebook or Google? (Felix Salmon goes after an entrenched Google floating an “evil” two-class share scheme here. ) Have we gotten corporate governance wrong? It’s easy to ask these questions but difficult to answer them. That said the ascendancy of the shareholder is a topic worth pondering. The original post can be found here . Robert Teitelman is editor in chief of The Deal magazine.

Read the full article →

U.S. Lost $1 Billion To Banks In Last 10 Years Thanks To Tax Shelter

April 16, 2012

By Megan Murphy and Vanessa Houlder, Financial Times and Jeff Gerth, ProPublica In November 2001, Bank of New York, a mid-tier U.S. bank, transferred nearly $8 billion of its own assets to a trust in the small, business-friendly state of Delaware through several layers of newly created companies. A mixture of home mortgages, shares and other securities, the transferred assets made up almost 10 percent of the bank’s total assets at the time. Yet, the transaction was not discussed with BNY’s regulators; nor was it noted in the bank’s financial statements or annual report. It had little practical effect on the lender’s day-to-day operations 2014 the assets continued to be managed and serviced by the same employees in New York. But it was a critical first step in setting up a complex structure known as STARS 2014 structured trust advantaged repackaged securities 2014 which U.S. tax authorities claim was used by several American banks as an abusive tax shelter that has cost the government more than $1 billion in tax revenue in the past decade. This week, BNY will square off against the Internal Revenue Service in U.S. Tax Court in New York over STARS and the tax benefits tit triggered for the U.S. bank and U.K.-based Barclays, its counterpart in the deal. At issue is whether STARS was set up primarily to generate artificial foreign-tax credits, as the IRS contends; or was a legal way for BNY to obtain financing at rock-bottom rates. The arguments heard this week will pose a crucial test of the U.S. government’s resolve to rein in sophisticated corporate tax planning that has sapped vast amounts of potential revenue. Tax authorities worldwide, notably in the U.S. and U.K., are under mounting pressure to show that large companies are shouldering their share of the tax burden as part of a broader political debate about fairness and corporate social responsibility. “We are upping our game in the large business area, particularly as it relates to international tax issues,” Douglas Shulman, the U.S. internal revenue commissioner, said in a speech this month in Washington, D.C. For the IRS, losing the STARS disputes would be a serious blow to its strategy in high-value cases, tax lawyers said. For the banks, the risk is both financial 2014 $900 million is at stake in the BNY case alone 2014 and to their reputations. An investigation last year by the Financial Times and ProPublica first detailed how STARS produced tax benefits for U.S. banks beginning in 1999. In all, six banks 2014 BNY (now Bank of New York Mellon), BB&T, Sovereign (now a unit of Santander), Wachovia (now part of Wells Fargo), Washington Mutual and Wells Fargo 2014 participated in STARS deals with Barclays between 1999 and 2006. Five of those banks are challenging IRS rulings that disallowed foreign tax credits generated in those transactions. WaMu has settled a STARS dispute in bankruptcy court by agreeing to forgo $160 million in claimed tax credits. In total, the IRS says, the STARS deals created $3.4 billion in foreign tax credits. Now, documents filed in BNY’s case in the past few weeks 2014 the court proceedings begin Monday 2014 provide unprecedented detail about how STARS was crafted at a time when banks and accounting firms were offering deals for multinational corporations to take advantage of loopholes in rules governing foreign tax credits. At the simplest level, foreign tax credits are designed to prevent U.S. companies from being taxed twice on overseas income by allowing them to claim credit for taxes paid in foreign jurisdictions. In the BNY case, the IRS claims STARS allowed both Barclays and BNY to claim credits for the same “illusory” foreign tax charges, ultimately reducing the U.S. government’s tax revenue by $18.15 for every $100 of income funneled through the Delaware trust. “The record will establish that STARS was a pricey financing that no prudent banker would undertake but for the tax benefits generated by the meaningless circulation of cash flows,” according to a court filing by the IRS on March 27. BNY has argued that the deal was a complex but entirely legal , allowing the bank access to low-cost financing from Barclays for its everyday business activities. Brainchild of Barclays Like hundreds of other foreign-tax-driven transactions sold to companies in the boom years before the financial crisis of 2008, STARS was developed by Barclays’ famed structured finance group, known as Structured Capital Markets. Roger Jenkins, one of Britain’s best-known dealmakers, and Iain Abrahams, the expert behind most of the bank’s tax arbitrage transactions, led SCM. The idea was for STARS to manufacture tax credits for Barclays and a U.S. corporate taxpayer by circulating U.S. income through an entity taxed in the U.K., the IRS said in its filing. Because of the differences between U.S. and U.K. accounting rules, STARS would allow Barclays to reimburse a U.S. company for half the tax paid in the U.K. while not reducing the amount of foreign tax credits that could be claimed by either party, the IRS said. Barclays is not a party to the IRS dispute with BNY and has not been accused of wrongdoing by U.S. authorities. According to the IRS, blue-chip U.S. companies including Microsoft and insurers AIG and Prudential Life passed on early versions of STARS for unspecified reasons. But the IRS said BNY, which bought the deal in 2001, had grown “addicted” to tax-driven transactions, which provided it with an important source of revenue. Before buying STARS, the IRS says, BNY had entered into more than 100 “lease-back” transactions, known as Lilos and Silos, that produced tax advantages. Shortly after participating in STARS, BNY also purchased from Barclays another foreign-tax-credit structure, nicknamed Toga, that involved high-grade debt securities, the IRS said. “Barclays understood that BNY was highly receptive to a wide range of tax-based ideas, and had targeted BNY for an SCM 2018tax product’ after discussions with BNY senior executives,” the IRS said in its court filing. The IRS also described KPMG as a pivotal player. The accounting firm provided a U.S. tax opinion blessing the structure for Barclays and sold STARS to BNY for a fee of $6 million, according to the IRS filing. David Brockway, then of KPMG, was engaged to provide the firm’s opinion on STARS, and is expected to testify at trial, according to the IRS. Brockway, a leading U.S. tax lawyer, left KPMG in April 2005 amid scrutiny of the firm’s previous sales of potentially abusive tax shelters. The IRS also has named lawyer Raymond Ruble, formerly a partner at Sidley Austin in Washington, D.C., as a key adviser on the structure. Ruble was convicted of multiple counts of income-tax evasion in a separate tax-shelter case involving wealthy taxpayers in 2009. He is in a federal prison in Lewisburg, Pa. The IRS, Barclays, BNY, KPMG and Sidley Austin declined to comment on the case. Jenkins, now a partner at the Brazilian investment bank BTG Pactual; Abrahams, still a senior executive at Barclays in London; and Brockway, now a Washington-based partner at the law firm Bingham McCutchen LLP, also declined to comment. $900 Million Disputed Both sides acknowledge that BNY’s STARS deal was executed through highly choreographed steps. First, BNY transferred about $7.9 billion of income-producing assets to the Delaware trust through layers of newly created subsidiaries. Barclays, as the counterpart, acquired shares in the trust, giving it a right to nearly all the income generated by the assets. In return, Barclays loaned $1.5 billion to BNY, also via the trust. Barclays and BNY then executed a repurchase agreement, or “repo,” under which BNY agreed to buy back the shares in the Delaware trust five years later, in November 2006. BNY appointed a U.K. company as trustee of the Delaware trust, making the income it produced subject to U.K. tax. At the outset of the deal, the trust’s pool of assets were expected to generate about $460 million of income a year 2014 of which, at a tax rate of 22 percent, $100 million would be paid to U.K. tax authorities. When the trust income failed to reach $460 million, as expected, BNY injected extra assets, essentially to boost the income stream. At the heart of the structure are differences between how it is treated under U.S. and U.K. tax law. Under U.K. rules, Barclays was allowed to take a deduction against its other taxable income in the U.K. on the condition that it immediately reinvested the income produced by the assets in the trust. But it was able to simultaneously take a credit for the tax paid by the trust. According to the IRS, those tax benefits were shared with BNY, generating gains for both banks. For every $100 of income circulated through the trust, the U.S. government lost $18.15, which funded BNY’s profit of $7.15, Barclays’ profit of $7.70 and U.K. tax receipts of $3.30, the IRS claims. But under U.S. tax law, the deal was considered a secured lending arrangement. So, subject to U.S. tax rules, BNY, as owner of the U.K. trust, could also claim a foreign tax credit for the U.K. taxes paid. In 2001 and 2002, BNY claimed nearly $200 million in foreign tax credits from the STARS structure, which the IRS has disallowed. Including interest, the total amount in dispute is about $900 million, according to the bank’s most recent annual report. “The foreign tax credits that Bank of New York claimed in the U.S. at a 22 percent rate were far more than the actual U.K. tax attributable to STARS,” the IRS said in its filing. “In other words, Bank of New York claimed credits for phantom U.K. tax expense.” BNY is challenging the IRS’ refusal to allow the credits and says it entered the STARS deal to borrow low-cost funds. Because of the U.K. tax benefits the structure generated for Barclays, BNY claims the British bank was able to provide it with the five-year, $1.5 billion loan at more than three percentage points below the prevailing benchmark lending rate. “The complication was required by Barclays’ U.K. tax objectives, not by BNY,” the bank said in a court filing March 27. “By lending to [BNY] through the structure that Barclays designed, Barclays could offer a very favorable borrowing rate.” In the coming weeks, U.S. Tax Court will hear from the bankers, lawyers and accountants involved as well as a raft of experts. A final decision is not expected for at least several months. With much at stake, BNY and the IRS appear to be digging in for a protracted battle. In its latest filing, BNY accuses the government of using “emotionally laden” arguments to try to deliver a “sweet sound bite.” The IRS says “no rational person” would have participated in STARS if not for the foreign tax credits. Let the war of words begin. Vanessa Houlder covers taxation and Megan Murphy investment banking for the Financial Times in London. Senior reporter Jeff Gerth is in Washington, D.C.

Read the full article →

Confederacy Of Dunces

April 16, 2012

Four hundred miles without a word until you smile, four hundred miles on fields of fire. Less confusingly, there are only seven and a half things you need to know today. Here they are: Thing One: Europe: See, this is why nobody ever believes the Pollyannas who tell you things are just fine, so you can get on back in the stock market. Those same clowns told us everything was fine in Europe, too, a few months ago, and now look at it. It’s just a big mess again, The New York Times writes, with the euro at its lowest level in two months, super-safe German bunds at record highs and Spanish and Italian borrowing costs jumping through the roof. Why’s all this happening again? Well, funny story, the Goofball Circus that is Europe’s leadership decided that the best medicine for a starving economy was to choke off government spending, which resulted in the economy getting even weaker, which resulted in scads of people getting laid off, which resulted in lower tax revenues, which resulted in even worse government deficits and also a depression , writes Paul Krugman. Only now is Europe starting to seriously debate whether austerity is maybe possibly a bad thing, writes Reuters . Meanwhile, they’re coming hat-in-hand to the IMF for more cash to bail out their countries and banks and such. Speaking of which, the other genius idea the European Leadership had was to give European banks free money to buy up the bonds of shaky European countries. This Ponzi scheme worked for about three months, before the bond market started beating up on European bonds again — because of worries about the effects of austerity, writes Wolfgang Munchau in the Financial Times — and now suddenly these banks are saddled with more risky debt than ever and facing the prospect of rating downgrades , the Wall Street Journal reports. Thing Two: Buffett Rule Ruse: So the Senate votes on the Buffett Rule today, which would impose a minimum tax on millionaires. Don’t fret, Thurston Howell, the parliament of millionaires will shoot it down , but not before making GOP Senators shamefully take your side. Anyway, even if it did pass, it’s riddled with loopholes , writes 7.5 Things’ own Khadeeja Safdar. Thing Three: Google Fight Club: A great philosopher once opined that having more money often results simply in having more problems. Tell me about it, says Google, today entwined in not one but two legal tussles arising out of money. The first is with the FCC , which has its regulatory panties in a bunch because Google hasn’t been cooperating with its inquiry into Google’s plan to use its spare cash to take pictures of everything in the world and put them on the Internet. The second is with Oracle, which wants a cool billion dollars out of Google in a patent-infringement case going to court this week, the Wall Street Journal writes. Thing Four: Carlyle’s Modesty: Famous private-equity firm Carlyle Group, which occasionally employs former bigwigs from government, is going to sell shares of itself to the public — but not very many , writes the Washington Post . The trouble is that the stock market is not in great shape , and people really don’t like owning shares of these strange private-equity firms. Thing Five: Yuan It, You Got It: For years the United States has been griping about how China keeps its currency artificially cheap, to give it a leg up in making plastic junk that it then sells back to Americans for pennies. Well, China is starting to feel its oats a little bit and is starting to let its yuan get a little stronger , the Wall Street Journal writes. But only just a little, which means the griping from the U.S. will continue , Reuters writes. Thing Six: Mustang Sally: I tell you, these crazy kids today just aren’t interested in gas-guzzling death machines for some reason. To rectify this disappointing state of affairs, Ford wants to re-design its famous Mustang death machine to make it more appealing to the youngs somehow, by making it more Europe-y or YouTube-y or something, the Wall Street Journal writes . “The next generation would retain the shark-nosed grille and round headlights, but would look more like the new Ford Fusion than the current Mustang, these people said.” Yes, nothing quite says “buy me, youth,” like “Ford Fusion.” Thing Seven: Bond Sausage: Nothing spells the end of the last financial crisis — and the start of the new one — quite like the fact that Wall Street’s math wizards are once again busily stuffing financial instruments with all sorts of crap to sell to you, the public, so that you can spend your golden years eating cat food. The Wall Street Journal reports that asset-backed securities made out of whatever happens to be lying around the house — fast-food franchises, lottery tickets, whatevs — are back in vogue. Thing Seven And One Half: Hillary Gone Wild: Hillary Clinton is single-handedly trying to take over the Internet. Not satisfied with being her own meme , she is now living it up in South America with style , which is more than we can maybe say for the Bush twins or the Secret Service . Calendar Du Jour : Economic Data Releases : 8:30 a.m. ET: Retail sales for March 8:30 a.m.: Empire State manufacturing report for April 10:00 a.m.: NAHB housing market index for April Corporate Earnings Reports : All before 9:30 a.m.: Citigroup Gannett Mattel M&T Bank Charles Schwab Heard On The Tweets : @ritholtz : Too many people insisting that 2+2=5. Way too time consuming to overcome their cognitive dissonance. Its why Twitter’s Block was invented! @ObsoleteDogma : Who would win in a fight between Cory Booker & Chuck Norris? @ReformedBroker: Prepare to have your minds blown by this story http://t.co/lXwkv581 $GOOG @cate_long : “Titanic’s owner J. P. Morgan was scheduled to travel on the maiden voyage, but canceled at the last minute…” @zerohedge : OBAMA SAYS U.S. `ON TRACK’ TO GOAL OF DOUBLING EXPORTS. And quadrupling imports… All to Mars @zerohedge : Can everyone stop blaming the central banks already? It is not like markets are addicted to every word they utter or anything @WSJDealJournal : Just FYI: This is the second quarter in a row JPMorgan reported its earnings on Friday the 13th. Jamie Dimon is daring fate to intervene. — Calendar and tweets rounded up by Khadeeja Safdar. And you can follow us on Twitter, too: @markgongloff and @byKhadeeja

Read the full article →

Robert Kuttner: You’ve Come a Long Way, Ben

April 16, 2012

I heard a terrific speech last Friday by the Federal Reserve Chairman, Ben Bernanke. In his address, to a Russell Sage-Century Foundation Conference on the causes and cure of the financial crisis, Chairman Bernanke said just about everything a progressive would want to hear. Read it for yourself and see if you agree. The financial industry, he said, had been characterized by “high levels of leverage; excessive dependence on unstable short term funding; deficiencies in risk management in major financial firms; and the use of exotic and non-transparent financial instruments that obscured concentrations of risk.” In other words, Wall Street went berserk; and markets did not correct themselves. Add a little more invective about Goldman Sachs and Rolling Stone ‘s Matt Taibbi could not have put it better. As for the regulators, “gaps in the regulatory structure” allowed very large firms and markets “to escape comprehensive supervision.” There were “failures of supervisors” and “insufficient attention to the stability of the system as a whole.” Bernanke added that though the immediate losses in the tech bust of 2000 were about the same as the losses in the value of housing — $7 to 8 trillion — the dot.com crash “resulted in a relatively short and mild recession with no major financial instability,” while the sub-prime collapse brought down the entire economy. Why? Because of the massive disguised leverage and related abuses in the shadow banking industry that caused financial markets to grind to a halt. Bernanke defended the Fed’s policy of driving interest rates nearly to zero, including buying securities as necessary from the Treasury and from private financial markets. In pursuing these policies, he has braved attacks by the right and by several inflation-phobic regional Federal Reserve Bank presidents. So does Bernanke deserve the accolade bestowed in the April Atlantic magazine cover profile by Roger Lowenstein, “The Hero?” Not entirely. Bernanke certainly gets an A for using monetary policy to keep the economy from collapsing. But if you look at Bernanke over the past ten years, what you see more than anything else is a learning curve on matters of regulation. Lowenstein misses that. Supreme among those supervisory agencies criticized in his speech that failed to contain escalating abuses was the Bernanke Fed itself. Bernanke, in his scholarly writings about the failure of the Federal Reserve to head off or cure the Great Depression, emphasized failures of monetary policy. He said not word one about regulatory failures. “The correct interpretation of the 1920s,” he wrote in 2002, “is not the popular one — that the stock market got over-valued, crashed, and caused a Great Depression. The true story is that monetary policy tried overzealously to stop the rise in stock market prices.” But that view is not only wrong but at odds with the views that Bernanke espouses today. The over-leveraging, conflicts of interest, and regulatory lapses of the ’20s were precisely analogous to the market abuses and supervisory corruption that caused the bubble and crash of our own era. Bernanke also gave a now (in)famous scholarly paper in 2004, in which he spoke of “The Great Moderation,” meaning a world of “reduced volatility”, low interest rates and plentiful capital. Bernanke utterly missed what was really occurring. Today, he would recognize that “moderation” as a fools’ paradise — the result of the reckless and un-policed creation of leverage by the shadow banking system. Though Bernanke was determined not to repeat the mistakes of his predecessors once the system crashed in 2008, when he acted to pump in as much money as necessary, it was only later that he learned the regulatory lessons. In the spring of 2009, he was on the side of Larry Summers and Tim Geithner in wanting to prop up large, effectively insolvent banks rather than acting to nationalize them and break them up in the public interest. The Fed also resisted releasing documents on the bailout, whose disclosure was required by Dodd-Frank, until ordered by the courts. Today, however, Bernanke is increasingly on the side of the regulators in wanting to crack down on abuses in the banking and shadow-banking systems. Which is a very good thing, because the Dodd-Frank bill, which is only a partial solution to those abuses, is under assault from all sides, and so are the other regulatory agencies. The Republican House, urged on by Wall Street, is trying to gut Dodd-Frank’s regulation of derivatives. Thousands of Wall Street lawyers and lobbyists are flooding the zone to undermine the rule-making process necessary to implement Dodd-Frank. Congress is also trying to starve regulatory agencies that have new enforcement responsibilities. The D.C. Court of Appeals threw out the SEC’s first set of rules to implement Dodd-Frank on the ground that the Commission failed to do an adequate cost-benefit analysis. This brand of cost-benefit analysis mainly looks at compliance “costs” of banks. It ignores the cost, running into the tens of trillions, of the collapse itself. The Fed’s actions are not subject to this brand of cost-benefit analysis. Nor is the Fed captive to Congressional actions limiting its enforcement budget, since the place creates money. It is an odd feeling, certainly, seeing the largely undemocratic Fed, long an agency historically beholden to Wall Street, as an important ally in the effort to clean out the financial system and to prevent the next collapse. I’d be much happier if Congress had passed even tougher legislation, and if President Obama and his Treasury Secretary — that would be Tim Geithner (!) — were leading a popular crusade for deep financial reform. Bernanke, thanks to his baptism by fire in the crisis, has steadily moved from regulatory dove to regulatory hawk. Several of his colleagues deserve credit, too, notably Governor Sarah Bloom Raskin, who prodded the Fed to take an assertive stance pressing for more housing and mortgage relief, and Governor Daniel Tarullo, the Fed’s point man on banking regulation. The Fed remains a deeply undemocratic institution, structurally in bed with the financial industry. But in times like these, we take allies where we can find them. And Ben Bernanke’s odyssey deserves our respect. Robert Kuttner is co-editor of The American Prospect and a Senior Fellow at Demos. His latest book is A Presidency in Peril .

Read the full article →

Expert: Oil & Gas Wastewater Needs Treatment

April 16, 2012

PITTSBURGH (AP) — A former top environmental official says Pennsylvania’s successful efforts to keep Marcellus Shale wastewater away from drinking water supplies should be extended to all other oil and gas drillers. “It’s the same industry. It is the same contaminants. And the goal should be the same,” said George Jugovic Jr., who was formerly the Department of Environmental Protection’s southwest regional director. He’s now president of PennFuture, an environmental group. An AP analysis of state data found that in the second half of 2011 about 1.86 million barrels — or about 78 million gallons — of drilling wastewater from conventional oil and gas wells were still being sent to treatment plants that discharge into rivers. The core issue is whether a problem in waterways has been solved, or if more needs to be done. In 2010 health experts raised alarms when they found soaring levels of ultra-salty bromides in rivers and streams that are major sources of drinking water. The general view was that wastewater from Marcellus Shale gas drilling — polluted with heavy bromides from deep underground — was contributing to the problem. High levels of bromides can contaminate drinking water with levels that exceed national safety standards and are potentially harmful. Though not considered a pollutant by themselves, the bromides combine with the chlorine used in water treatment to produce trihalomethanes, which may cause cancer if ingested over a long period of time. Bromide levels were so high in rivers during 2010 that they caused corrosion at some plants that were using the water. But since the spring of 2011 most Marcellus drillers have been recycling the fluids, or sending then to deep underground wells mostly in Ohio. The gas-rich Marcellus, which lies thousands of feet underground, has attracted a gold rush of drillers who have drilled almost 5,000 new wells in the last five years. But the state also has about 70,000 older oil and gas wells, according to DEP statistics, that target different, shallower reserves. Researchers say the bromide levels did drop last summer, but they had also expected even more of a decline after virtually all of the Marcellus Shale drillers stopped disposing wastewater into plants that discharge into rivers. But conventional oil and gas wells weren’t included in last year’s recycling push — a loophole that state environmental officials downplayed at the time. Jugovic said DEP secretary Mike Krancer should now take “the next step” and get voluntary compliance from the rest of the gas industry. “It’s hard scientifically to justify a distinction between treating conventional wastewater differently. The wastewater is being disposed in plants that are not capable of treating those contaminants,” he said. Dave Mashek, a spokesman for the Pa. Independent Oil & Gas Association, declined to comment. Kevin Sunday, a DEP spokesman, claimed that the volume of conventional oil and gas waste is “substantially smaller” than the Marcellus amounts. But the AP found that 78 million gallons of oil and gas wastewater were still being taken to treatment plants in the last half of 2011 — about 33 percent less than the Marcellus quantity that was raising concerns in 2010, but still a substantial amount. If that rate continues, the conventional wells will send about 150 million gallons of the wastewater to treatment plants that discharge into rivers this year. Sunday said the agency encourages wastewater recycling, “regardless of the industry involved,” and added that the conventional oil and gas drillers don’t produce as much wastewater as the Marcellus drillers. Sunday also said that the agency has created a new, revised permit to encourage recycling of waste. Ten facilities have applied for the new permit, and if all are approved, that would double the number of such facilities in the state. David Sternberg, a spokesman for the U.S. Environmental Protection Agency, didn’t directly answer a question about whether there was any scientific justification for treating the non-Marcellus waste differently. Sternberg said EPA, which urged Pennsylvania regulators last year to halt the dumping, is working closely with state regulators “to ensure that, where wastewater treatment facilities are accepting oil and gas wastewaters, discharges from these treatment facilities are in compliance with the Clean Water Act.” Jugovic said that some previous assumptions about the non-Marcellus waste turned out to be false. For example, there were suggestions that it generally contained much lower levels of bromides and other contaminants. He said some of the shallow wells had very high levels of total dissolved solids and other contaminants that can be a problem for drinking water supplies. Jugovic also said that the fact that 97 percent of Marcellus drillers appear to be complying with the wastewater restrictions raises a fairness issue. Why, he asked, should the conventional oil and gas drillers and the remaining 3 percent of drillers get a pass? Now, researchers are waiting for expected lower river levels in the summer, to see if the bromide problem has really gone away. The higher flows in early spring dilute any contaminants and make it harder to draw conclusions about the bromides.

Read the full article →

Startup Turns Problem Solving Into Sport

April 15, 2012

SAN FRANCISCO — Strange secrets hide in numbers. For instance, an orange used car is least likely to be a lemon. This particular unexpected finding came to light courtesy of a data jockey who goes by the Internet alias SirGuessalot, who in fact wasn’t guessing at all. Instead, he and his partner, PlanetThanet, relied on the hard math skills that make them top contenders in a sport tailor-made for the 21st century: competitive number-crunching. The used car defect prediction contest is one of dozens hosted by San Francisco online startup Kaggle, whose creators believe they can tap the global geek population’s instinct for one-upmanship to mine better answers faster from the world’s ever-rising mountain of data. “Competitions bring together a wide variety of people into a wide variety of problems,” said Jeremy Howard, who became Kaggle’s president and chief scientist after winning multiple competitions himself. “You get people looking at stuff they’d never look at otherwise.” While the used car contest was fun, Kaggle has its eye on weightier scientific problems. In one contest, an English major who trained himself in data science built a model for predicting the progress of HIV infections in individual patients. In another, a scientist who studies glaciers for a living won a NASA-backed Kaggle competition to measure the shapes of galaxies by mapping the universe’s dark matter. The data problems that need solving are so important that those who find the solutions should be paid like professional athletes, said Kaggle founder Anthony Goldbloom. By turning data-mining into a crowdsourced contest, he hopes he’s created a way to make that happen. Already one of Kaggle’s contests offers a multimillion dollar prize. “We want to see the best data scientists earning more than Tiger Woods,” said Goldbloom, who started the company in his native Australia and recently came to San Francisco’s South of Market startup haven. The job market for mathematicians and statisticians has become hot as the sheer volume of data generated by ever faster, cheaper computing resources explodes. Data storage has become so inexpensive that a 2011 McKinsey and Co. report estimated that a disk drive capable of storing all the world’s music would cost about $600. Walmart stores 10 times more data on customer transactions and other parts of its operation than is contained in the entire Library of Congress, according to the same report. Analyzing the so-called “big data” deluge has become a key task for businesses in an effort to divine everything from which ads online customers will click to how much inventory they need to maintain. Political candidates analyze data to predict voting patterns. Dating websites try to predict ideal mates. Kaggle competitions focus on creating and testing formulas that can be used to make predictions based on the contents of giant datasets. The more accurate the formula, the better the chances it will accurately provide answers to complex questions, such as the orange used car being the least likely to break down. Goldbloom argues that no matter how many data scientists companies hire, relying on in-house data talent means companies can’t know if they’re getting the best solution. In a Kaggle contest, competitors find out as soon as they submit their solutions how they stack up against fellow contestants. They can keep trying for the duration of the typically three-month contests, which are highlighted on the company web site. As the first entries come in, the accuracy of competing models improves by leaps, Goldbloom said. As the contests progress, the improvement curve flattens out. Goldbloom and Howard believe that shows the competitive approach pushes data scientists toward the best solutions within human reach. “Crowdsourcing allows you to squeeze data dry,” Goldbloom said. Not all competitions are open to all comers, however. About 33,000 contestants have taken part in Kaggle’s public competitions, where prize money tends to top out at around $10,000. Winners can get invited to participate in elite private contests, which may include access to sensitive private data sets. Kaggle’s business model depends on deep-pocketed contest sponsors like banks seeking to outdo each other with more lucrative prize purses to attract the best competitors, who themselves in theory could then make their livings off Kaggle competitions alone. The biggest prize by far open to the public is $3 million offered by the California-based Heritage Provider Network medical group to the data scientist best able to use hospital admission records to predict the profiles of people most likely to end up in the hospital. The next-biggest purse is $100,000 in prizes put up by the Hewlett Foundation for algorithms that can automatically grade student essays. In its grandest vision of itself, the 11-person company backed by PayPal co-founder Max Levchin will have tens of thousands of competitions running simultaneously. Guilds of data gurus will band together to unleash software that enters competitions automatically. Kaggle becomes not just a way to push humans to perform at their best but to make machines themselves smarter as code-based contestants battle and “learn” from their mistakes. In this way, Howard said, data competitions become steps along the development of artificial intelligence systems such as self-driving cars. As for why orange used cars are most likely to be in good shape, the numbers did not hold the answer. One notion was that such a flashy color would only attract car fanatics who would be more likely to take care of their vehicles. That didn’t pan out, however, since the least well-kept used cars turned out to be purple. ___

Read the full article →

Obama Praises Controversial Free Trade Deal

April 15, 2012

CARTAGENA, Colombia — Exposing a rift with Israel, President Barack Obama on Sunday insisted that the United States has not “given anything away” in new talks with Iran as he defended his continued push for a diplomatic resolution to the dispute over Tehran’s nuclear ambitions. Obama said he refused to let the talks turn into a “stalling process,” but believed there was still time for diplomacy. His assessment, delivered at the close of a Latin American summit in Colombia, came after Israeli Prime Minister Benjamin Netanyahu on Sunday had said the U.S. and world powers gave Tehran a “freebie” by agreeing to hold more talks next month. Obama shot back: “The notion that somehow we’ve given something away or a `freebie’ would indicate Iran has gotten something. In fact, they’ve got some of the toughest sanctions that they’re going to be facing coming up in just a few months if they don’t take advantage of these talks.” Still, in a news conference here, Obama warned to Iran, “The clock’s ticking.” Winding down his three-day trip in the port city of Cartagena, Obama also sought to offer hope for fresh start with Cuba, saying the U.S. would welcome the communist-run island’s transition to democracy. There could be an opportunity for such a shift in the coming years, Obama said. Standing alongside Colombian President Juan Manuel Santos, Obama also proclaimed a free-trade agreement between their countries as a win all-around, even as labor leaders back home denounced it. Obama announced that the trade pact can be fully enforced next month, now that Colombia has enacted a series of protections for workers and labor unions. Obama had hoped to keep his role in the Summit of the Americas focused on the economy and the prospect of the region’s rapid economic rise as a growth opportunity for American businesses. But that message was quickly overshadowed by an alleged prostitution scandal involving Secret Service personnel who were in Colombia to set up security for Obama’s trip. The president said Sunday that he expected a full, rigorous investigation of the allegations, and said he would be angry if the accusations turn out to be true. As Obama met with Latin American leaders, negotiators from the U.S. and five other world powers were in Turkey for a fresh round of nuclear talks with Iran. While previous talks have done little to dissuade Iran from moving forward on its nuclear program, diplomats called the latest negotiations constructive and useful. Both sides agreed to hold more talks in Baghdad at the end of May. The Israeli prime minister balked at the announcement of more talks, saying the intervening five weeks would simply give Iran more time to continue enriching uranium without restrictions. Netanyahu has said Iran uses diplomatic negotiations as a diversion while it continues to pursue a nuclear weapon. Israel has raised the prospect of a preemptive military strike on Iran’s nuclear facilities. The Obama administration has urgently sought to hold off Israeli military action, which would probably result in the U.S. being pulled into a conflict as well. The U.S. believes a combination of diplomacy and crippling economic sanctions could push Iran to abandon its nuclear ambitions. Obama reaffirmed his commitment to that approach Sunday, saying it was “absolutely the right thing to do.” Iran insists its nuclear program is for peaceful purposes and says it does not seek a bomb. With his re-election campaign in full swing, Obama came to Colombia seeking to pitch an economic message that would appeal to voters back home. Implementation of the Colombian trade pact was a central part of that effort, and won Obama praise Sunday from the U.S. business community, which contends the pact will be an economic boon for American businesses. Labor union officials, however, said they were disappointed by the agreement, insisting that Colombia still has an abysmal record on union rights. Union workers are a core Obama constituency, but have opposed some of his efforts to expand free-trade deals, which they believe take jobs away from U.S. companies. Obama officials insisted they moved ahead only after Colombia took steps to halt deadly violence against labor unionists. AFL-CIO President Richard Trumka said the announcement was “deeply disappointing and troubling” and accused the administration of placing “commercial interests above the interests of workers and their trade unions.” Dan Kovalik, a lawyer with the United Steelworkers, said the announcement was “premature in light of the continued violence against unionists and human rights defenders in Colombia.” Under the terms of the trade pact, more than 80 percent of industrial and manufactured products exported from the U.S. and Colombia will immediately become duty-free, making it cheaper for American businesses to sell their goods to the South American country. The hemispheric summit wrapped up Sunday with few notable achievements. And much of the attention was on who wasn’t there – namely, Cuba. Some Central and South American leaders hoped to include language in the summit’s final declaration stipulating that Cuba be included in the next gathering. But with the U.S. staunchly opposed to that effort, leaders decided to end their meetings without a final communique. The U.S. insists that Cuba should not be allowed to attend the regional meetings until it enacts democratic reforms. Obama suggested Sunday that scenario may not be all that far away. “There may be an opportunity in the coming years as Cuba begins to look at where it needs to go in order to give its people the kind of prosperity and opportunity that it needs, that it starts loosening up some constraints within that country, and that’s something that we will welcome,” he said. Before departing, Obama had his only real encounter with the people of Cartagena, joining Santos in a celebration of the country’s efforts to recognize Afro-Colombian communities that have been historically marginalized. The ceremony gave these communities, descendants of slaves, formal title to their land, and it prompted Obama to reflect on his own ancestry and his 2009 trip to Ghana with his family. ___ Associated Press writers Jim Kuhnhenn and Frank Bajak in Colombia contributed to this report. ___ Follow Julie Pace at . http://twitter.com/jpaceDC

Read the full article →

Despite Shaky Accusations, Mitt Gets Back On Point

April 14, 2012

WASHINGTON — Did Vice President Joe Biden really call for a new global business tax on U.S. companies operating abroad? Could it be true that half of high school students in the 50 largest cities don’t graduate? And is President Barack Obama pushing Roman Catholics to “violate the tenets of their faith” with his expansion of mandatory contraception coverage? Republican presidential candidate Mitt Romney was on shaky ground Friday with his accusation about birth control, because Obama backed down from forcing religious-affiliated employers to offer contraception coverage in a compromise devised to placate the church. On education and taxes, he was more on point. A look at those claims in his speech to the National Rifle Association and how they compare with the facts: ROMNEY: “Today half the kids in our 50 largest cities won’t even graduate from high school.” THE FACTS: Bleak but mostly true, according to a study by America’s Promise Alliance, a children’s advocacy group founded by former Secretary of State Colin Powell. Romney did not directly blame Obama for that; he couldn’t, because the research mostly predated his presidency. But it found that only 53 percent of all young people in the 50 largest cities were graduating from high school on time. That was well below the national average of 71 percent. A subsequent report by that and other groups found improvement overall, with the national graduation rate rising to 75.5 percent in 2009, but it did not break down the 50 cities. ___ ROMNEY: “Now the Obama administration has decided that it has the power to mandate what Catholic charities and Catholic schools and Catholic hospitals must cover in their insurance plans for their employees. It’s easy to forget how often candidate Obama assured us under Obamacare, nothing in our insurance plans would have to change. Remember that one? Well, here we are just getting started with Obamacare and the federal government is already dictating to religious groups on matters of doctrine and conscience.” THE FACTS: If that administration thinks it has that power, it at least decided not to exercise it. Under pressure from Catholic bishops and others, the administration changed its proposed policy so that religious employers could opt out of having to cover contraception, but women who work at such places would still be assured of getting free coverage if they want it through the insurers instead. This mollified some, though not all, critics. Houses of worship were never going to be forced to offer contraception coverage. Instead, nonprofit institutions affiliated with a religion, like Catholic hospitals, were to be required to cover birth control as part of a package of preventive services for women. But that sparked a backlash and Obama sought the middle ground, a development that Romney skipped past in his NRA remarks. Recently, the administration offered options to help insurers offset the costs of the coverage, perhaps by giving them credits against fees they have to pay under another part of the health care law. The idea is to discourage insurers from trying to recoup the money from religious institutions that object to birth control. The likely bottom line: Taxpayers will help pay for it. ___ ROMNEY: “The vice president has now proposed a new global business tax.” THE FACTS: Indeed he has. Obama wants tax breaks for domestic manufacturing and tax penalties on U.S. companies that outsource jobs and production. That’s essentially a new tax, with a global reach, and Biden was happy to call it such in Iowa last month. “We want to create what’s called a global minimum tax,” he said. ___ Associated Press writers Ricardo Alonso-Zaldivar, Ben Feller and Kimberly Hefling contributed to this report.

Read the full article →

Trapped Orangutan Rescued From Snare (GRAPHIC PHOTOS)

April 13, 2012

An orangutan trapped in a snare for ten days was rescued by International Animal Rescue (IAR) Thursday. The rescue team sedated the young male, freed him from the snare and gave him fluids for severe dehydration before transporting him back to IAR’s clinic in Ketapang, West Kalimantan, Indonesia . The trap snatched the animal’s right hand, which will be amputated after the animal tried to gnaw its hand off, says the charity. The orangutan was named Pelangsi after the area of forest in the Ketapang region where he was found, reports Metro . The latest incident highlights how palm oil production (along with wood and paper) is killing off the habitat of the orangutan by clearing forest in order to make more room to grow the crop. “Pelangsi’s story is a graphic illustration of the fate of countless orangutans that are left homeless and hungry when the forest is cut down,” IAR’s Karmele Llano Sanchez said in a press release. The site of the entrapment isn’t coincidental. According to IAR, the land is home to a large number of orangutans that have fled from the new palm oil plantation that has been created next to it by palm oil company PT KAL (Kayung Agro Lestari) from Austindo Nusantara Jaya Group . Palm oil is a product widely used in cosmetics and processed food, including Girl Scout cookies. Recently, a pair of renegade Girl Scouts have been lobbying the organization to drop the ingredient given the threat palm oil production poses to orangutans and the rainforest in Malaysia and Indonesia. Sumatran orangutans are critically endangered species with only 9,000 found in the world , according to the International Union for Conservation of Nature Red List. Take a look at some graphic photos from the rescue earlier this week.

Read the full article →

Obamas Claim Tax Break That Most Helps The Rich

April 13, 2012

President Barack Obama didn’t benefit last year from the huge break in the tax code that allows his presumptive rival, Mitt Romney, to pay taxes at a lower effective rate than most anyone who earns a regular middle-class salary. But the president and his wife did save more than $10,000 in 2011 by claiming a tax break that favors the wealthiest Americans. According to their tax returns released Friday by the White House, the president and the first lady claimed a $47,564 home mortgage interest deduction on their house in Chicago, which they bought in 2005 for $1.65 million. That equates to $13,318 in savings on their federal tax bill, according to an analysis by Michael Gillen, director of the tax group at the Philadelphia law firm Duane Morris. While most of the beneficiaries of the mortgage deduction are middle-class borrowers — about two-thirds of those who claim the deduction earn less than $200,000 — homeowners with larger, more expensive houses typically save much more on their tax bills. Average homeowners with incomes between $40,000 and $75,000 who claim the deduction save just $523 in taxes, economists at the University of Pennsylvania found . Average homeowners with incomes greater than $250,000 who claim the deduction save $5,459 on their tax bills. Renters, of course, save nothing. Nor do the millions of Americans in low-cost homes who pay mortgage interest each year, but don’t itemize their deductions because it is not worthwhile for them to do so. Just 1 in 4 Americans claimed the benefit on their taxes in 2010, the last year studied, according to the nonprofit Tax Foundation. The mortgage interest deduction, which allows borrowers to reduce their taxable income by the amount of interest paid on a loan (or loans) with a value of up to $1.1 million, has long been seen as an untouchable middle-class benefit. But many academic studies over the past few years have found it benefits the wealthy the most — and doesn’t really encourage homeownership. “Lots of middle-class people take the deduction and realize some savings on their tax bill, but they don’t understand that it is badly skewed,” said Seth Hanlon, director of fiscal reform at the liberal-leaning Center for American Progress. “A lot of people don’t realize that the benefit can be taken on vacation homes or even a boat.” Hanlon said his organization favors altering the deduction so that everyone receives the same level of tax benefit regardless of tax bracket. He said this change could be phased in slowly to avoid rattling an already depressed housing market. With the federal budget deficit careening out of control, some in Washington have proposed paring back the deduction. Most notably, the deficit reduction commission appointed by President Obama — and led by former Sen. Alan Simpson and onetime White House Chief of Staff Erskine Bowles — suggested reducing the limit on the deduction to $500,000 of a home’s value and eliminating the tax break for a second home. The bipartisan group of senators known as the Gang of Six that met last year in an effort to hammer out a deficit deal also reportedly embraced this plan. Would-be reformers face powerful opposition from groups like the National Association of Home Builders. An association spokesman did not return a message left Friday afternoon, but the group put out a press release earlier this week that called the interest deduction “a cornerstone of U.S. tax and housing policy.” “The mortgage interest deduction primarily helps middle class home owners and is consistent with the principles of a progressive income tax,” the April 11 release said. “Two-thirds of the benefits flow to working class American households who earn less than $200,000 annually and nearly all those who own a home of their own will claim the deduction at some point during their tenure as home owners.” Changing the rules would “penalize millions of baby boomers nearing retirement and seniors who own their homes outright,” said association Chairman Barry Rutenberg, according to the press release. “The collateral damage to the economy would be even more devastating, resulting in lower home values, which would leave more home owners underwater, trigger more foreclosures and prolong the housing slump for years to come.” The president and the first lady paid an effective tax rate of about 20.5 percent in 2011 on adjusted gross income of $789,674. The rate would have been higher if not for the mortgage interest deduction, but the largest tax saving came from charitable deductions. The Obamas gave $172,130 to charity in 2011, which was 22 percent of their income. In January, the Romney campaign released an estimated tax return for 2011 indicating he will likely pay an effective tax rate of 15.4 percent on $20.9 million in adjusted gross income. Romney also makes charitable donations, but his biggest tax benefit is due to how he makes money. Almost all of his earnings come from investments, which are taxed at a 15 percent rate. The White House did not return a request for comment on Friday. This story has been updated with a revised estimate of the Obamas’ tax savings from Michael Gillen.

Read the full article →

Governor Asks Feds To Stop Horse Slaughterhouse

April 13, 2012

ALBUQUERQUE, N.M. (AP) — New Mexico Gov. Susana Martinez said Friday she is asking federal officials not to allow a southeastern New Mexico company to open the nation’s first slaughterhouse for horses since 2007. Martinez plans to send a letter to the U.S. Department of Agriculture asking it deny a Roswell meat company’s request for inspections that would allow it to operate. “Despite the federal government’s decision to legalize horse slaughter for human consumption, I believe creating a horse slaughtering industry in New Mexico is wrong and I am strongly opposed,” Martinez said in a statement. Valley Meat Co. has filed an application with the U.S. Department of Agriculture for its 7,300-square-foot plant outside of town. Documents obtained by the Humane Society of the United States and Front Range Equine Rescue show that horses would be “custom slaughtered” and processed for human consumption at the plant, the Albuquerque Journal reported (http://bit.ly/IlnrcB ). Valley Meat didn’t immediately returns calls from the Associated Press on Friday. USDA spokesman Aaron Lavallee said in a statement that there are no facilities approved for horse slaughter in the United States. “One establishment, located in New Mexico, recently applied for a grant of inspection exclusively for equine and USDA’s Food Safety and Inspection Service is reviewing the application,” Lavallee said. Horse slaughter has effectively been blocked since Congress withheld funds for USDA inspections of horse meat plants in 2006. But a recently passed agriculture bill provides the money. The last horse slaughterhouse closed in Illinois in 2007. Since Congress renewed inspection funding, several plants are under consideration, including one in Missouri that would process up to 200 animals a day. More than 100,000 American horses are shipped out of the country to plants in Canada and Mexico for slaughter each year, and their meat is bound for markets in Europe and Asia, according to the Humane Society. Although there are reports of Americans dining on horse meat a recently as the 1940s, the practice is virtually non-existent in this country. A spokesman for New Mexico Attorney General Gary King said his office so far has found no legal basis for stopping the plant, but a lawyer has been assigned to continue looking into the matter. “A horse slaughtering plant in Roswell is a terrible idea. Such a practice, while not illegal, is certainly abhorrent to public sentiment, and I strongly suggest it be abandoned,” King, a Democrat, said in a written statement. “Horses are different and should be treated differently,” he said. The Humane Society, Front Range Equine Rescue and other groups are pushing the federal government to ban the export of American horses for the foreign meat market and to formally prohibit the slaughter of horses for human consumption in the United States. “Horse slaughter for food is a national disgrace, given the iconic nature of American horses and the especially brutal methods used to kill them,” Front Range Equine Rescue said in a statement. Pro-slaughter activists say the horse slaughter ban had unintended consequences, including an increase in neglect and the abandonment of the animals. Details about the extent of the proposed horse slaughtering operation were unavailable, but the application obtained by the groups says the plant would only handle horses, not cattle or chickens. The plant would operate eight hours a day year-round, according to the application. Front Range’s lawyer, Bruce Wagman, said Valley Meat first filed an application for USDA inspections in December, and then a second application in March. The groups said it has obtained email correspondence showing that company representatives have been talking for months to officials from the Denver office of the Food Safety and Inspection Service, which inspects animals and meats in American slaughterhouses. According to Front Range, one January email from an FSIS official said, “Public wants assurances there is no way for horse meat to get into their beef products.” The USDA said FSIS regulations prohibit horse slaughter or other preparation of horse products in the same establishment in which cattle, sheep, swine or goats are slaughtered or their products are prepared. Critics also contend former companion, working, racing and wild horses should not be used as human food because drugs routinely given to such horses are potentially dangerous to people. Elisabeth Jennings, executive director of Animal Protection of New Mexico, said residents of a state with roots in cowboy culture “have a deep and enduring appreciation for horses, especially given their important role in our state’s rural way of life.” “It is an affront to our citizens to suggest bringing the cruel, dangerous and polluting enterprise of horse slaughter to New Mexico as we celebrate our state’s centennial,” she said.

Read the full article →

More Good News On Main Street?

April 13, 2012

There’s more good news on Main Street, it seems. More than half (56 percent) of business owners feel good about their prospects for the next six months, up 8 points from the fall, according to the American Express OPEN Small Business Monitor . In the semi-annual survey, 35 percent of employers also said they plan to hire full or part-time workers during that time. Even though 44 percent still plan to freeze hiring or cut back, that represents 17-point drop since the fall. While 31 percent of those surveyed are most concerned with maintaining their current business, 29 percent are still focused on growing new customers and revenue. “While small-business owners are more optimistic about the economic recovery, they are not turning a blind eye to the uncertainty that lingers,” Susan Sobbott, president of American Express OPEN, said in a statement. “They are waiting for more proof that the recovery is real and sustainable before investing heavily in growth initiatives.” Most businesses plan to take a closer look at their customer service, as 46 percent said that keeping current clients and increasing customer demand is a top priority. In order to create a good working environment, 57 percent of business owners said they train their staff themselves, while others enlist senior staff members or outside training for the task. In order to keep employees happy, 59 percent of businesses are offering benefits, up from 49 percent last fall. While growth isn’t at the top of the priority list, more than half of business owners have invested in low-cost marketing methods like social media to help grow their business and stay in touch with customers. Some 38 percent are using Facebook, with Google+ and LinkedIn rounding out the top three. Still, most businesses don’t feel a social media presence is completely necessary for business success, with only 27 percent seeing the real value in it. In the current election year, business owners cited their greatest concerns, including tax cuts, access to capital and the ability to hire more staff. However, 33 percent felt that tax relief was the most pressing issue that President Obama and Congress need to address.

Read the full article →

The Great Green Cook Off: Environmentally Friendly Ways To Dine

April 13, 2012

Jean Anthelme Brillat-Savarin once said, “tell me what you eat and I’ll tell you who you are.” However, unless you’re into 18th-century French history, you’re probably more familiar with the old adage, “you are what you eat.” Both stress the importance of what people are putting on their plates , but in terms of environmental consciouness, where you eat can have as much of an impact as what you eat. Case in point, the decisive moment of what to eat for dinner: do you cook, order take-out, or dine out? For those looking to minimize their impact on the environment, there are options to go green across all three fronts. Restaurants tend to be pretty terrible offenders in terms of environmental friendliness with 10 percent and 25 percent of commercially prepared food that gets wasted annually. There’s also the inefficient energy usage that’s costing the commercial food service sector 80 per cent of the $10 billion dollars in annual spending , according to a report by Pacific Gas & Electric’s Food Service Technology Center. And it’s this hemorrhaging of cash that explains the rash of reforms the sector’s taken on in the last few years. While some are more apparent to patrons, like straws made from biodegradable paper, others can be found behind the scenes, like low-flow valves in the sprayers that pre-rinse dishes. SEE: The best and worst take-out containers for the environment. Story continues below: And by going green, it looks like restaurants can earn more green. In 2011, the National Restaurant Association reported that 65 percent of restaurant operators had recycling programs in place — and for good reason. Sixty per cent of consumers prefer restaurants that recycle and 51 per cent of diners will even pay more to eat at an eco-friendly restaurant. Restaurants may take the cake for waste, but ordering take-out doesn’t fall far behind. While more eco-friendly containers are becoming available, the volume of take-out containers that end up in the trash is causing trouble for many North American cities . It’s also paved the way for some states to ban Styrofoam take-out containers altogether, because of the time-consuming and expensive recycling process. While cooking at home may be the most environmentally friendly option for eating, it also produces a fair amount of waste , though significantly less compared to dining out and take-out. For energy usage, it’s the best of the three, thanks to its smaller scale. And for the time-pressed at-home chefs, there’s more good news. According to a Swedish study, there’s little to no difference in buying pre-packaged food compared with cooking a meal from scratch.

Read the full article →

Jared Bernstein: A Debate on Inequality, Opportunity, and Politics

April 13, 2012

Had a rousing debate on inequality last night with Scott Winship from Brookings, moderated by Reihan Salam, both of whom lean conservative, and both of whom brought generally interesting and provocative views to the discussion. The conservative take on the issue tends to fluctuate from mild denial (Winship, not Salam), to which I strongly object, to “is it really that big a deal?” with which I disagree but find interesting and challenging. On the denial front, what you mostly get is the “if-you-just-adjust-it-this-way-or-that-way-it-all-goes-away.” Scott raises immigration, incarceration, family structure, employer-provided health insurance, deflators, to name just a few. Some of these don’t affect inequality, like deflators (although Scott cited research that finds prices grow more slowly for poor people); others cut “the other way” — incarceration disproportionately takes lower earners out of the mix, so putting them back in would widen the gap between lower and middle-wage earners. Most of these are dealt with in the CBO data shown in the figure below, including health care, family size, taxes and transfer payments. So, yeah, there’s a lot more inequality and forgive me if I won’t swim in de-Nile on this point. More interestingly, both Scott and Reihan raised questions about how much all this inequality matters. The first argument is that there’s nothing zero-sum about the rise in inequality. Romney’s or Buffett’s or Gates’ or Zuckerberg’s gains are not anyone else’s losses. That’s hard to accept, given that it’s not just that most people’s real incomes kept going up like they used to, just not as fast as those at the top. Income grew more slowly for middle- and low-income households and poverty rates were stickier (i.e., less responsive to growth) in times of rising inequality. The divergence of median compensation from productivity suggests that in the age of inequality, the typical worker is simply not capturing as much of their contribution to growth as was formerly the case. In economese, some of what these and other rich guys and gals capture are ” rents ,” which are not zero-sum. We see this most commonly in the growth of financial markets as a share of the American economy, an important factor in not just the growth of inequality but in the bubble-bust cycle that’s done so much damage of late. In the 2000s, the median income of working-age families stagnated and poverty went up, even as the economy grew and the capital-gains powered income of the top 1% soared (see figure). Since the current recovery began, profits have soared, inequality is back on the rise , and the pay of average workers has stagnated of late. My own longer-term analysis of the factors responsible for the diminished elasticity of poverty with respect to growth finds inequality to be the most important factor (see figure here ). The latter 1990s provides a very useful counterexample. With true full employment upon the land — my favorite inequality antidote — inequality actually diminished between the middle and bottom (the top continued to pull away — cap gains, again), low wages grew with productivity for a New York minute, and poverty rates fell sharply. Inequality, at least in the bottom half of the wage scale, compressed and a lot more growth reached a lot more people. Similarly, Scott doesn’t buy that inequality negatively affects opportunity, despite all the arguments here . From that post, I keep coming back to this anecdote, because I think it’s so emblematic of the problem: …once you start looking for these linkages between inequality and opportunity, they show up everywhere. Here’s a great example from this AM’s WaPo, where public schools facing budget cuts–the disinvestment in public goods noted above–turn to parents to raise funds, and not for one-off trips to Mount Vernon, but for science curriculum, guidance counselors, smaller class sizes, music classes, etc. Of course, the affluent parents can raise hundreds of thousands; the poor parents, barely hundreds. It’s a classic example of inequality reinforcing itself through educational opportunity. One of the problems, admittedly, is that, as noted, this is anecdotal. And most of the other evidence that inequality thwarts opportunity is too, showing that, for example, the inequality of enrichment expenditures on kids or college completion rates grew as income inequality grew. It’s evidence but it’s circumstantial. But it’s convincing to me, and to most others who’ve looked at this closely, so I don’t for a second buy the argument that inequality is economically benign. More challenging was their point that income concentration is a lot more politically benign then I’ve been thinking. As I argue in this deck (slides 16-18), hopefully well known to OTEers, while money in politics has long been a problem, it’s gotten a lot worse as there is so much more income at the top and so much more leeway for that income to “buy” the politics it wants. Read Hacker and Pierson’s book , and you find it awfully hard to avoid the conclusion that we’re stuck in a nasty feedback loop, where the increased concentration of money in politics locks and blocks–it’s locks in policies that perpetuate its growth, and blocks policies that would ameliorate it. An egregious example of late is that one person -Sheldon Adelson, whose net worth according to Forbes in $25 billion (yes, that’s with a ‘b’)-by dint of the Citizen’s United decision, was able to keep a candidate in a national primary for months on end. That strikes me as profoundly undemocratic, and is a potent symbol of how corrupt our political system has become. But Reihan and Scott argued that perhaps this was less portentous than all that. It was basically just a rich guy wasting some money, indulging a fantasy or something (hey, whatever turns you on, I guess). As Scott put it, if Gingrich wins the election, I’ll have a point. And of course he won’t. That’s interesting, although it’s a bit weird to contemplate that allegedly smart investors would make such foolish investment. But are they really that foolish? They’re using their unimaginable riches to steer the ideology, and they’re doing it throughout the system, from local school boards to national elections. This is scary and damaging to America. I’m open to good arguments from smart people like Scott and Reihan. But I simply don’t see how these extreme economic, social, and political imbalances are so benign. I fear they’re cancerous, and if we allow ourselves to be distracted by adjustments to deflators or we over-discount correlations because we haven’t yet determined causality, that cancer will metastasize and America will be in real trouble. Added bonus/penalty : here’s Scott and me debating this stuff on the radio yesterday.

Read the full article →

Lawmakers Push To Keep Silicon Valley From Going Underwater — Literally

April 13, 2012

SAN FRANCISCO — Business leaders and Sen. Dianne Feinstein launched a $1 billion, 10-year fundraising goal on Thursday that is aimed at preventing some of Silicon Valley’s leading technology companies from going underwater – literally. The money, the biggest share of which is expected to come from the federal government, is being sought to build a new earthquake- and storm-proof levee system along the southern part of San Francisco Bay, where the corporate campuses of Facebook, Google and other high-tech ventures abut land that was drained a century ago for commercial salt-making. Planners predict those sites and thousands of South Bay homes are at risk of catastrophic flooding over the next half-century due to a climate change-fueled sea level rise. Currently, the bay’s tidal waters are contained by low-lying levees constructed more than 100 years ago to create salt ponds, and they would be inadequate to the task of protecting prime real estate even if they were not deteriorating, Gordon and Betty Moore Foundation President Steve McCormick said. “There are dozens of corporate campuses in that flood zone,” said McCormick, who is leading a committee of corporate and foundation heads, elected officials and environmental representatives who plan to promote and lobby for the project. “There is billions of dollars’ worth of land that would be, for all intents and purposes, rendered unusable.” Most of the $1 billion in anticipated costs would go toward building new levees, but the preliminary budget also covers restoring about 36,000 acres of wetlands that were drawn off and filled in over the last 150 years, Save the Bay Executive Director Davis Lewis said. Returning the bay’s shores to a wetland state would not only be a boon for wildlife, but provide a natural safeguard against future flooding, Lewis said. “The need for wetland restoration is already on the radar screen and is under way in parts, but to get it all done is going to require a lot more money,” he said. “The significance of what’s happening today is these powerful constituents in business, the foundation world and government are saying one of the next big priorities is raising the money to make this happen.” At this stage, the coalition expects half of the money for the project to come from the federal government, a quarter from the state and the remaining quarter from local sources such as a property parcel tax, McCormick said. Corporations and foundations are being encouraged to foot the bill for preliminary planning, public education and lobbying, he said. Feinstein, California’s senior U.S. senator, endorsed the effort while she was in San Jose on Thursday to break ground on a public transportation project. The work would comprise the largest wetlands restoration plan in the nation outside the Florida Everglades, she said.

Read the full article →

The Business Of Bounce

April 12, 2012

Perhaps more than most entrepreneurs, the Platt family knows a thing or two about bouncing back. In 2004, Rick Platt used $2 million to recruit athletes and build a 17,000-square-foot arena in Las Vegas to make his sport Sky Zone a reality. The elaborate design involved trampolines, spinning hoops and acrobatics. It fizzled out. But the venue became popular among local skateboarders who wanted to bounce for themselves, and that sparked a new idea — open trampoline parks for the general public. After some renewed interest, Rick’s son Jeff eventually opened a second site in St. Louis in 2006, and since then business has been booming Bloomberg BusinessWeek reports . The initial flop has roared back into profits and a growing number of locations. From four corporate and 15 franchise locations in 2011, Sky Zone posted $15.7 million in revenue this year and have plans to add another 34 franchises. Their staff consists of 50 full-time and 500 part-time employees. It seems like this trampoline venture is well past getting its bounce back. On its website , Sky Zone emphasizes franchising a location to “leap into the future with an amazingly appealing and dynamic concept.” Results across America have shown that Sky Zone might be catching on with all ages. In Grimes, Iowa, a Sky Zone location is constantly filled with dozens of people looking to play arial variations of dodgeball and basketball according to the Des Moines Register . Three high schools have even scheduled their post-prom parties at the facility. In Indianapolis, “Skyrobics” classes have adults breaking a sweat, to the tune of up to 1,000 calories per hour according to USA Today . In South Bay, California, birthday parties and the expansive spin on their old trampoline connotations and nostalgia drive customer interest in Sky Zone. The Contra Costa Times notes that the supervision and safety measures taken by Sky Zone keep parents at ease that their child won’t end up as one of the 100,000 people that are sent to the emergency room yearly with injuries sustained from trampoline use. Sky Zone hopes that through diversifying the activities available and interacting with fans and customers plastering YouTube and social media with evidence of the fun they will be able to keep their revival running. With high costs for construction — to the tune of $1.1 to $1.5 million — and a sizable demand for real estate space, it may hard to court some investors or franchisees however. For Jeff Platt, it comes down to ensuring a customer experience that people want to relive. “As you grow a business and get different operators and franchisees, everyone has a different management and training style,” Platt told Bloomberg BusinessWeek . “It’s critically important to maintain consistency as you grow a brand, so we want to get our training the exact same way at every location. Your competitors can adopt what you have created and do similar marketing, but they can’t clone your people.”

Read the full article →

Would You Camp 300 Feet From A Fracking Well?

April 12, 2012

COLUMBUS, Ohio (AP) — A state natural resource agency’s proposed rules for drilling in state parks would require natural gas and oil companies to stay at least 300 feet — the length of a football field — from campgrounds, certain waterways and sites deemed historically or archaeologically valuable. Documents on proposed rules were released by the state Department of Natural Resources this week after the Ohio chapter of the Sierra Club filed a lawsuit claiming the agency ignored repeated requests by the group to review them. The proposals for drilling leases also includes an 89-page report listing “best management practices” on topics like site restoration and guidelines for emergency and pollution incidents. Other proposals include state approval before companies could store drilling waste in pits and an agreement on the locations of all drilling equipment. Eastern Ohio is in the midst of a natural gas boom as developers seek to capture rights to Utica Shale deposits. The state passed a law in September that opened its parks and other state-held lands for drilling, and officials have been developing leasing terms for drilling companies. Opponents say they’re concerned about the environmental impact of the drilling, which includes hydraulic fracturing, or “fracking.” The process involves drillers blasting millions of gallons of water, sand and chemicals deep underground to break up rock deposits. Supporters of the law say there’s a potentially vast reservoir of oil and gas in the Utica Shale, which lies below the Marcellus Shale, where oil companies in Pennsylvania have drilled thousands of wells in search of natural gas and oil. But natural gas drilling has become a contentious issue in Pennsylvania, where public health advocates have criticized a new law that will limit accessible medical information on illnesses that may be related to gas drilling. It takes effect April 14. According to the National Conference of State Legislatures, more than 130 bills have been recently introduced in 24 states to address fracking. It includes a range of topics like waste treatment, disposal regulations and requirements to publicly disclose the composition of fracturing fluid chemicals. At least nine states have proposed fracking suspensions or studies on their impact. It’s unclear whether the 300-foot buffer rule in Ohio will be applied above ground or below. A message left for a natural resource agency spokesman was not immediately returned Thursday morning. Jed Thorp, the Sierra Club’s Ohio chapter manager, said the proposals are inadequate. He said he’s hopeful state lawmakers will eventually reverse the law. “When people go to a state park, they don’t want to see fracking, or hear fracking, or smell fracking,” he said in a statement. “They want to relax.” Thorp also said the Sierra Club, which filed its lawsuit Monday, won’t drop its suit. He said the agency failed to follow the state’s public records law by ignoring requests for the documents as far back as October.

Read the full article →

WATCH: iPad Assembled At Foxconn Factory

April 12, 2012

Rumors, reports and downright lies have been swirling around the conditions of Foxconn factories in China that assemble products like Apple’s new iPad . But, thanks to Rob Schmitz , the Shanghai bureau chief for American Public Media’s Marketplace and the journalist who helped uncover the fabrications in author and actor Mike Daisey’s story about Foxconn factory conditions, the world now has a better idea of what’s going on behind Foxconn’s closed doors. In an April 4 report , Schmitz described what he had seen and heard during his visit to Foxconn’s Longhua factory campus in Shenzhen, China. According to Fortune , Schmitz is the first public media reporter, and second journalist after Bill Weir of ABC, to be granted an exclusive tour inside one of these factories by Foxconn and Apple public relations. Paired with an exclusive video showing iPad assembly in action, his report reveals that conditions at this particular factory aren’t quite as bad as some might think. The hundreds of thousands of factory workers — most of whom are migrant workers between the ages of 18 and 25 — have access to a wide variety of stores, services and facilities located right on the factory’s campus. According to Schmitz , the company has spent millions of dollars to build and improve these facilities as well as to provide organized activities for the workers. However, he also points out that there’s still a lot to be desired, writing, One of the most common complaints I heard: being treated unfairly by immediate supervisors. Some workers complained about being forced to work even though they were sick. Others said their supervisors didn’t let them bill the overtime they had actually worked. From dozens of interviews, favoritism seems common among Foxconn supervisors. And, of course, nobody is a fan of the work. His discoveries align closely with those of the Fair Labor Association (FLA), which just recently published the results of an audit of three Foxconn factories that manufacture Apple products, two of which are also located in Shenzhen. For example, the FLA reported thus, regarding worker overtime : “The assessors discovered that unscheduled overtime was only paid in 30-minute increments. This means, for example, that 29 minutes of overtime work results in no pay and 58 minutes results in only one unit of overtime pay.” Apple first partnered up with the FLA to run voluntary audits of these Foxconn factories back in January , following the airing of Mike Daisey’s story on a broadcast of “This American Life,” as well as a series of damning reports on Foxconn factory conditions published by the New York Times . Months later, so-called iFactories overseas still have lots of room to improve when it comes to the working conditions, and Foxconn seems willing to put in the effort to make these improvements happen. On March 29 , Tim Cook personally visited a Foxconn factory that had been accused of improper labor practices. According to Reuters , Cook toured the factory lines and greeted workers during the visit. In the meantime, it’s not likely that Foxconn will be suffering from any lack of workers; as Schmitz explained in his video report , “The work is tedious and boring, but each day, hundreds of people line up outside the factory to apply for jobs here. On this day, 500 applicants — many of them tired from traveling days from their home village — arrive with the hopes of working here.” Check out Schmitz’s video (above), and read his report in its entirety here . What do you think of his findings so far? Share your thoughts in the comments. Take a look at the slideshow (below) to see some of the most surprising things uncovered by ABC’s Bill Weir during his tour of a Foxconn factory.

Read the full article →

Bailout Money Fails To Reach Neediest Homeowners: Report

April 12, 2012

A federal housing program funded with taxpayer money left over from the government’s bailout of the banks and auto companies is failing to deliver on its promised relief to struggling homeowners. The Hardest Hit Fund, a $7.6 billion initiative established by the federal government in February 2010 to help families in states most crippled by the collapsed housing market, has distributed just 3 percent of its money — or $217.4 million — to help homeowners, according to a report released Thursday by the Office of the Special Inspector General for the Troubled Asset Relief Fund, or SIGTARP. “Look at the TARP money that goes out to the banks,” said Special Inspector General Christy Romero in an interview with The Huffington Post. “That goes out in a matter of days. This has been two years and only 3 percent of these funds have trickled out to homeowners.” The Hardest Hit Fund has helped just slightly more than 30,000 homeowners, or 7 percent of the roughly 480,000 homeowners targeted for assistance by the end of 2017 when the program expires, according to the report. The program is funded by TARP, the 2008 legislation that has provided a $600 billion to bail out various banks and other companies in the wake of the nation’s financial crisis. “The Hardest Hit Fund is really struggling to get off the ground and it’s a real concern about whether this money can get out to these homeowners,” Romero said. The 76-page report reads like the autopsy of a dead housing program, placing the blame for the program’s paltry performance squarely on the Treasury Department, the government agency responsible for TARP and, in turn, the Hardest Hit program. According to the report, Treasury initially dragged its heels in getting the largest mortgage servicers to participate in the initiative, instead relying on the individual states to broker arrangements with the servicers. Some of the states lacked the necessary clout to secure servicer participation, thus limiting the program’s ability to reach needy homeowners, concluded the report. “These states don’t have the bargaining power that Treasury has with these large servicers,” Romero said. “Treasury is already working with these same servicers, having similar conversations with them for other housing programs, so Treasury should be using its influence to really get these servicers on board.” The Treasury Department was similarly slow in securing support from Fannie Mae and Freddie Mac, the government-owned mortgage giants that collectively control nearly half of all outstanding loans, further curtailing the initiative’s reach. The report also blames the Treasury Department for giving states too little time to roll out the program and for failing to establish clear, specific goals that would let the government and the public measure the program’s success. “Treasury actively and consistently engaged with servicers and [Fannie and Freddie] from the earliest stages of the program, encouraging support and addressing impediments to participation,” wrote Tim Massad, the department’s assistant secretary for financial stability, in a letter responding to the report’s findings . Massad also called the report “disappointing” for its focus on the program’s early months instead of more recent progress asserting that last quarter the number of homeowners helped by the fund grew 60 percent and the amount of money delivered to homeowners increased 93 percent. “This report misses the mark by not acknowledging the hard work of participating states and the innovative ways they are preventing foreclosures in their local communities,” wrote Massad in an email to The Huffington Post. “The Hardest Hit Fund is helping states address some of the most difficult problems caused by the housing crisis in ways that suit local conditions and have already kept tens of thousands of families in their homes.” While the Hardest Hit Fund’s performance is weak, it is not unique. Many of the federal government’s housing assistance programs have underdelivered, most notably the flagship Making Home Affordable loan modification program. Announced in the spring of 2009, the program was designed to help 3 million to 4 million homeowners avoid foreclosure by changing the terms of loans and lowering monthly payments. Nearly three years later, fewer than 1 million homeowners have received a permanent loan modification . The Home Affordable Refinance Program was also introduced in 2009 with the intent of helping 4 million to 5 million homeowners refinance their mortgages, taking advantage of the nation’s historically low interest rates. As of this past January, fewer than 1.1 million homeowners have refinanced through the program, which is reserved for borrowers whose loans are backed by Fannie Mae or Freddie Mac. Thursday’s report concludes with suggestions for how the Treasury Department can strengthen the Hardest Hit Fund’s effectiveness, including establishing measurable program goals, making performance data available online for the public and developing a plan to win “industry support” for the initiative. “If Treasury doesn’t make a change, the Hardest Hit Fund risks becoming another government housing program with limited impact,” Romero said. “It’s time to change the status quo.”

Read the full article →

Income Inequality Worse Under Obama Than George W. Bush

April 11, 2012

President Obama may talk a big game about economic fairness, but his record on the issue doesn’t quite match up. There are lots of reasons to think so — and we’ll touch on several in just a minute — but the most recent comes from Matt Stoller, blogging at Naked Capitalism , who points us toward a recent bit of number-crunching from Emmanuel Saez, a professor at the University of California, Berkeley. Saez, who’s known for his work on the income gap, has highlighted a surprising and discouraging fact: during the post-recession period of 2009 and 2010, the rich snagged a greater share of total income growth than they did during the boom years of 2002 to 2007. In other words, inequality has been even more pronounced under Obama than it was under George W. Bush. This news may not come as a shock if you’re one of the many Americans who lost their job during the recession and couldn’t find another that paid as well . It also might not surprise you if you’re one of the 46 million people living in poverty — a record number, as it happens — or among the millions of Americans who can get by week to week, but would be ruined by a single financial emergency . You might likewise not be surprised if you already knew that some household-goods companies are catering to this new reality by quietly neglecting their mid-price product lines, focusing instead on their high-end and budget offerings , since wages are diverging so much. Or if you knew that the U.S. ranks closer to China, Serbia and Rwanda than any other country in the developed world when it comes to income inequality. On the other hand, if you’ve been listening to Obama decry the wealth gap on the campaign trail , and talk about the need to impose higher tax rates on millionaires , well, then you might be a little surprised. It was only a few months ago that the Congressional Budget Office released a report illustrating how the very richest Americans have pulled away from the rest of society in the past 30 years. But that report used data that was only complete through 2007. Saez’s calculations go through 2010, suggesting that White House rhetoric or no, the trends of the past three decades haven’t started to reverse themselves. Here’s how Saez’s math breaks down, for the curious: In the 2009-2010 period, a time of modest economic growth, the top 1 percent of U.S. earners captured 93 percent of all the income growth in the country. Got that? Now compare it to how the mega-rich made out during the Bush upswing years of 2002 to 2007. During that time, the top 1 percent of earners captured just 65 percent of all the income growth. That means the rising tide has lifted fewer boats during the Obama years — and the ones it’s lifted have been mostly yachts.

Read the full article →

Hulya Aksu: Women in the SoLoMo Boardrooms

April 11, 2012

Those of us who pay attention to marketing trends have all probably heard the term “SoLoMo” by now. Companies are encouraged to appeal to a hyper-connected and technologically savvy, new consumer base through the use of social, local and mobile applications. Seems like a no-brainer. What entrepreneur wouldn’t want to utilize sites like Facebook and take advantage of the ever-progressing and near-universal use of mobile technology to promote their businesses? The problem is that the SoLoMo is missing something that is in many respects also a no-brainer. The Wo(men)! There is more. Women are the savviest of savvy tech junkies, whether they know it or not. Consider the illuminating data compiled by Aileen Lee in her March 20, 2011, TechCrunch post, ” Why Women Rule the Internet .” In it she states, Comscore, Nielsen, MediaMetrix and Quantcast studies all show women are the driving force of the most important net trend of the decade: the social web. Comscore says women are the majority of users of social networking sites and spend 30 percent more time on these sites than men; mobile social network usage is 55 percent female according to Nielsen. Women are not only outnumbering men in social media usage, but they are spending more time on the social sites that they visit. The importance of women consumers to businesses is only amplified when we take into account that women also control family budgets — the purse strings. Lee also tackles this point: In e-commerce, female purchasing power is also pretty clear. Sites like Zappos, Groupon, Gilt Groupe, Etsy, Pinterest and Diapers are all driven by a majority of female customers. According to Gilt Groupe, women are 70 percent of the customer base and they drive 74 percent of revenue. And 77 percent of Groupon’s customers are female according to their site. These are profound numbers. Women are fueling the economy as we know it. So if we are such avid users and are socially connected, then why are we not among the founders and the leaders of the companies that serve us? I publish Modern DC Business Magazine and in our latest issue we covered the burgeoning technology startup scene in Washington D.C. This year, I was also invited to be a part of a private group of hand selected CEOs that represent the technology community of Washington D.C. While I did meet women who are leaders in their companies, our numbers in boardrooms sadly did not mirror our dominance on the web. I am unfortunately a minority as a publisher and technology startup founder. Recently, I was a part of a startup pitch contest at one of the most prestigious law firms in the D.C., and the room was filled with Angel investors and venture capitalists, along with 12 companies’ founders eager to score the cash they needed to catapult them into mainstream success. As I quietly sat in my chair waiting for the presentations to start, a man, who upon making eye contact with me exclaimed: “Wow, we don’t see too many women at these events!” How illuminating, I thought. But he was right. I was one of the few women present at the event. One of the women presenting entrepreneurs could not hide her excitement when she saw me in the audience. Yes, another one of us. At risk of sounding too dramatic, I couldn’t help but draw similarities to a bygone era when companies were encouraged to sell products to minorities but not hire them into leadership positions. You obviously can’t mandate companies to hire women into their executive teams or flick a switch and have women spontaneously establish technology companies. But things can be done now to ensure that future generations of women will have access to the highest levels of success in the boardrooms of America. Encouraging young girls to enter the sciences and entrepreneurship early could be a good start. But there needs to be an overall shift in the way we think about women in leadership before any reform can actually take root and be meaningful. Companies too, can make a difference, and can do so in the short term rather than waiting for a generational shift in priorities. SoLoMo companies can begin hiring smart and qualified women into leadership roles to help better communicate and connect to the women who keep these companies afloat. It is time to be an “uncool” company if your boardroom doesn’t represent your consumer’s demographic representation. That would be a good start, and who knows, it may perhaps serve as a smart strategy in other industries as well.

Read the full article →

The Student’s Bucket List: Things You Need To Do Before Graduation

April 10, 2012

Get those resumes ready — graduation is fast approaching. Though still a couple of months away, June marks that time for students to trade in attending lectures in sweatpants and pajamas for graduation gowns. It’s a period of transition for the hundreds of thousands of Canadian students graduating this summer, but it’s also a scary time to be joining the workforce. According to Statistics Canada, the youth unemployment rate amongst 15-to-24-year-olds is at 17.4 per cent , nearly double the newest national rate of 7.2 per cent. And although a university degree decreases your chances of unemployment, as shown by national unemployment rate dropping to 6.3 per cent for people in that age bracket, some analysts attribute that to students returning for graduate studies because they were unable to find work with only an undergraduate degree. Then there’s the mounting crisis of student loans across the country. According to the Globe and Mail, the average amount of debt taken on by students when graduating is $27,000 , and the interest built on that can fall between five per cent to nine per cent, depending on your residing province. With so much doom and gloom, taking a few more courses or applying for a graduate program doesn’t seem like such a bad option, does it? Fortunately for students, universities and companies have taken notice that being a student can be synonymous with being strapped for cash. The result is a series of perks that students — particularly soon-to-be-graduates — should take advantage of while they still can. Do you take advantage of any university-specific perks? Let us know what they are below in the comment section or share your thoughts with us on Twitter @HuffPostCaLiv. Cashing In On Extended Healthcare Coverage Thinking of making that last trip to the dentist? Better do it soon. That’s because once you’ve graduated from university or hit a certain age (anywhere from 18-25), you can no longer claim any benefits under your parents’ healthcare insurance. Other procedures that students lose out when they graduate include prescription drugs and eye care, but for the basic healthcare needs, there’s always provincial health insurance. Student Savings: Public Transit While driving offers a sense of freedom, it can be a financial death trap. Between monthly payments if you’re leasing, the cost of insurance and the price of gas, your wallet is more likely to run empty before the gas tank does. Instead, make use of the discounts offered on public transit — universities like Carleton and University of Toronto, for example, give their students unlimited use of the city’s public transportation as part of their enrolment. Student Savings: Food Next to transportation, the most valuable discount students can take advantage of is in the food department. From restaurants to grocery stores, students generally save at least 10 per cent off their total purchase. Just think of all the Kraft Dinner you can buy with the savings. Student Savings: Finances Finally, in addition to saving money for transportation and food, students can take advantage of savings when it actually comes to their finances. Most of Canada’s major banks offer student bank accounts that include perks such as no-fee banking or accounts with no minimum transactions. Gather All Your References While you could start networking after landing your first job, the smarter thing to do would be to start networking while in university. Professors, teaching assistants, even older students with connections in your industry can all make excellent references. All you have to do is get them to notice you amongst the other hundreds of students they see on a weekly basis. Eat A Combination Of Kraft Dinner And Ramen Noodles Did you know that if you combine Kraft Dinner and instant noodles together, it still tastes like student poverty? Still, that shouldn’t deter you from trying such bold concoctions while you still have the “starving student” stereotype to justify it. Organize Your Email’s Inbox If you”re about to graduate, chances are that you’ve been working out of a university assigned email the last few years. But once you’ve graduated, schools close off these accounts, locking you out of whatever contacts or emails you may need. Instead, take the time to start importing all your precious info into an email account that’s less temporary. Visit A Career Counsellor For many students, university is a time for self-discovery and one of those discoveries could be what your ideal career to pursue once you graduate. That’s not to say you can’t consult career counsellors once you’re out of school, only that it’ll cost you to do so. Take Advantage Of Your Student Athletic Centre If you thought paying a few dollars for a semester’s worth of access to your school’s gym was ridiculous, you haven’t seen the membership fees to join gyms outside of campus. Centres like L.A. Fitness, Goodlife or Extreme Fitness tend to require year-long memberships, which can easily put costs in the hundreds. Enjoy That Last Tax Return It’s not often you get to expense your moving costs, nor is it often you get to add in the expenses you’ve incurred if you’ve received research grants, but both are deductibles students can file on their tax returns. Some other deductibles students can take advantage of include child care services and the cost of your tuition.

Read the full article →

TurboTax Customers Say Can’t Access Their Tax Refunds

April 10, 2012

As if filing taxes isn’t already a pain, some consumers are facing another giant hassle: They can’t access their tax refund. Customers who filed their taxes using TurboTax software are flocking to the Internet complaining that refunds issued on the company’s prepaid debit cards are inaccessible. “I used my TurboTax card once. It is closed now and I can’t get my money,” wrote Jennifer, from St. Cloud, Fla., on Consumeraffairs.com . “There are no explanations.” Dameda Hopson of San Jose, Calif., had a similar experience. “I was able to use [my TurboTax debit card] right away. Everything was perfect, the balance was there, the card worked fine, everything was perfect and just one day botta boom, it was closed,” Hopson said in an interview with ABC7 News , adding that she “went into a panic because I knew I still had lots of money [on the card].” Many complaints tell the same story. Taxpayers elected to receive their tax refund on a prepaid debit card as opposed to receiving a check or a direct deposit into a bank account. From there, one of three things happened. Either the card never arrived, it arrived but was immediately unusable, or it became unusable within days of activation. In all instances, the hold up appears due to a security block imposed on individual customer cards by TurboTax. “As a result of a significant rise in fraud across the industry, Intuit has put in place more stringent processes to ensure that only legitimate cardholders receive the refunds to which they are entitled on a TurboTax Refund Card,” explained Intuit spokeswoman Colleen Gatlin in an email to The Huffington Post. “For the protection of our customers, when we detect suspicious activity that could indicate fraud, we place a hold on the card so no transactions can be made,” she explained. According to Gatlin, Intuit is providing these customers with “very specific” instructions to provide the necessary documentation to remove the block. However, customers maintain that the security block remains in place even after providing the required paperwork. “I have not received my card because it is under security review,” complained “Coley,” on Customerservicescoreboard.com . “I have faxed copies of things they needed three times and I am still waiting. I call everyday and all they tell me is to call back.” Coley filed on Jan. 26, received confirmation that the refund was deposited onto the card on Feb. 3, and was still waiting to receive the card as of March 6. Ironically, the cards were designed to facilitate a faster payment for customers who did not have a bank account and didn’t want to wait weeks to receive a check. “Typically, with the cards, it takes about 7 – 14 days right now to receive your refund, which is about the same as getting it through direct deposit,” Gatlin said. The card, which is issued after the IRS accepts and approves the refund, is free for the first month, after which the consumer is charged $5.99 per month. That fee is waived as long as the customer maintains a $50 balance, according to Gatlin. “We understand that some legitimate customers are being caught up in this process and will continue to work with them to resolve issues,” Gatlin wrote. In the mean time, customers are waiting to access refunds that, in some instances, are worth thousands of dollars. “I chose to receive my refund of over $6,000 to a TurboTax card so that I would have a card to pay for my wedding expenses since I do not have credit cards,” explained Wendy of Chula Vista, Calif. Seven weeks after filing, she was still waiting to receive the card due to a security block.

Read the full article →

Income Tax Day Can Be Deadly: Study

April 10, 2012

TORONTO – This month’s income tax deadline day can not only be stressful for those who have left filing their return to the last minute, but it can also be deadly. A 30-year study of traffic accidents in the United States has found that the country’s mid-April tax deadline day is associated with an elevated risk of fatal crashes. Using data for fatal vehicle crashes for every April 15 over the last three decades, the study found that Americans have a six per cent increased risk of dying on tax day — and a similar risk likely occurs on Canada’s tax deadline day, April 30, researchers say. “We find about the same increase in risk both during the morning hours, the afternoon hours and the evening hours,” said lead researcher Dr. Donald Redelmeier, an internal medicine specialist at Sunnybrook Health Sciences Centre in Toronto. “So it’s not all confined to the 11th hour, right before the stroke of midnight. But it prevails for the full day.” That differs from Super Bowl Sunday — another event Redelmeier has studied. His 2003 analysis of traffic deaths on the day of the hugely popular televised National Football League showdown found a 41 per cent increased risk in the average number of road fatalities over a 27-year period. But Super Bowl Sunday traffic deaths occurred primarily within three hours following the game’s completion — not throughout 24 hours, as is the case for tax-filing day. Redelmeier, who is often called on to treat victims of vehicle crashes at Sunnybrook’s regional trauma centre, said the increased risk on U.S. tax day translates into about 13 deaths per year. “None of these people had to die … Road trauma destroys the lives of thousands of people in the United States each year,” as it does in Canada, he said. “And driver error contributes to about 93 per cent of such events.” The study, published in this week’s issue of the Journal of the American Medical Association, used tax day road fatalities as a marker for what high stress can do to driver behaviour on any day of the year, anywhere in the world. “Stress is often speculated as a contributing factor in driver error, and yet stress is almost impossible to study in a scientific manner,” Redelmeier said. “Here, we were trying to pull out one particular form of stress.” He said the largest jumps in risk for fatal crashes on tax deadline day occurred during the last two decades, despite the advent of electronic tax filing during that period. “So that we don’t think that what’s going on here is increased amounts of driving … like the proverbial rushing to the post office at the stroke before midnight. We don’t think that that’s the largest factor here.” Ironically, he said, electronic filing may encourage more people to leave tax-return preparation to the last minute. The study, which also looked at traffic death data for seven days before and seven days after tax day over 30 years, also found that bad weather, such as snow or rain storms, does not appear to be a factor. “We looked at different regions, and the increase in risk was about same, in northern versus southern states, west versus east, urban versus rural,” Redelmeier said. Researchers aren’t clear on what factors are behind the bump-up in the chance of dying in a road accident on the final day for filing taxes. While one explanation is that stressful deadlines can lead to driver distraction and human error, sleep deprivation and drinking alcohol could also play a role. And although the study data only allowed researchers to nail down the six per cent increased risk for fatalities, Redelmeier believes a similar level of risk applies to the spectrum of outcomes that can arise from collisions on roadways — from brain and spinal cord injuries to other kinds of physical trauma and property damage. Intriguingly, only about 20 per cent of Americans leave their tax filing to the deadline, yet there is still a significantly elevated risk of dying on that day. “What that means is even if you as an individual have filed early, it doesn’t mean you’re immunized against the situation, because you live in a community of all sorts of other drivers out there,” he said, noting that non-drivers aren’t immune either. “The increase in risk on tax day included the passengers and pedestrians, which is a common theme of all of road trauma — bad driving imposes risks on other people.” The study was not able to look at traffic deaths in Canada on April 30 because of a lack of good data, but he said high stress leads to distracted drivers in this country as well. “And that stressful tax deadline, like we’ve got in Canada on April 30, might also contribute to short-term human error and result in fatal road trauma.” Redelmeier said no matter how much stress is being experienced, it’s critical that drivers remember to wear their seatbelts, obey the speed limit, restrict alcohol consumption and minimize distractions while behind the wheel. “Almost every one of these fatal crashes could have been entirely avoided by a small change in driver behaviour. Basic safety practices should not be forgotten at times of stress.”

Read the full article →

Get Hired: Restaurant Biz Adds More Half A Million Jobs

April 10, 2012

Here’s some good news for the restaurant biz: The National Restaurant Association reports that more than 560,000 restaurant jobs have been added since the start of the employment recovery in March of 2010. More than 200,000 of those were created in the last six months. The numbers reflect the growing job market , which is rebounding after a long 18-month recession. Dawn Sweeney, the association’s president and chief executive officer, stressed the importance of the restaurant industry’s progress, saying, “The restaurant industry strongly contributes to the health of our nation’s economy by driving job growth across industry segments, and providing rewarding career and employment opportunities for millions.” One example of the hiring boom is at Landry’s Inc., which encompasses more than 400 restaurants, hotels and casinos. In an interview with Bloomberg, CEO Tilman J. Fertitta said that the company can’t find enough workers . “Business is good,” he told the news service. “The consumer is spending money.” He’s currently looking for about 40 employees for its corporate office in Houston and thousands more for roles across its many U.S. properties. The National Restaurant Association also points out that the industry’s growth has outpaced the overall economy’s recovery in recent months. In the 12 months ending March 2012, eating and drinking place employment jumped 3.2 percent, more than double the 1.5 percent increase in total U.S. employment during the same period. In addition, 2012 marks the 13th consecutive year in which restaurant employment growth has outpaced overall employment growth in the United States. However, the news comes amid reports of wages falling across the industry . Online compensation data website PayScale recently reported that wages for food service and restaurant dropped 0.6 percent from the first three months of 2011 to the first three months of 2012. In the same stretch, U.S. wages rost 1.4 percent on average across all industries.

Read the full article →

Is The United States’ High Spending For Cancer Care Really Worth It?

April 10, 2012

* US patients live longer after diagnosis than in Europe -study * Experts question validity of data * Analysis fuels debate over U.S. healthcare spending By Sharon Begley NEW YORK, April 9 (Reuters) – With the United States spending more on healthcare than any other country – $2.5 trillion, or just over $8,000 per capita, in 2009 – the question has long been, is it worth it? At least for spending on cancer, a controversial new study answers with an emphatic “yes.” Cancer patients in the United States who were diagnosed from 1995 to 1999 lived an average 11.1 years after that, compared with 9.3 years for those in 10 countries in Europe, researchers led by health economist Tomas Philipson of the University of Chicago reported in an analysis published Monday in the journal Health Affairs. Those extra years came at a price. By 1999 (the last year the researchers analyzed), the United States was spending an average of $70,000 per cancer case (up 49 percent since 1983), compared with $44,000 in Europe (up 16 percent). Using standard figures for an extra year of life, the researchers concluded that the value of the U.S. survival gains outweighed the cost by an average $61,000 per case. The greater spending on cancer care in the United States, they conclude, is therefore “worth it.” Experts shown an advance copy of the paper by Reuters argued that the tricky statistics of cancer outcomes tripped up the authors. “This study is pure folly,” said biostatistician Dr. Don Berry of MD Anderson Cancer Center in Houston. “It’s completely misguided and it’s dangerous. Not only are the authors’ analyses flawed but their conclusions are also wrong.” ‘BEST HEALTHCARE SYSTEM IN THE WORLD’ The question of how U.S. healthcare compares with healthcare systems in other wealthy countries has become highly politicized. The 2007 film “Sicko” by activist Michael Moore compared U.S. healthcare unfavorably with systems in Cuba, France and elsewhere. U.S. House of Representatives Speaker John Boehner regularly claimed America has “the best healthcare system in the world.” Philipson is a fellow at the conservative American Enterprise Institute and at the Manhattan Institute, served in the administration of President George W. Bush and was a healthcare adviser to Sen. John McCain’s 2008 presidential campaign. For the new analysis, Philipson and his colleagues analyzed the survival of cancer patients diagnosed from 1983 to 1999 with any of 13 common cancers, including breast, prostate, colorectal, and leukemias. Survival means how long a patient lived after being diagnosed. Philipson’s team focused in particular on survival gains; that is, how long did patients diagnosed in later years live compared with those diagnosed earlier in the period? Such gains, they argued, show what progress countries made in treating cancer. While that may seem straightforward, survival data is among the most problematic cancer statistics, Philipson’s team acknowledges. In particular, they are plagued by something called lead-time bias. If a tumor is diagnosed very early in its existence – if it has a long “lead time” – the patient may survive, say, two years if the tumor is very aggressive. If an identical tumor is found in that patient’s identical twin later, the twin will survive, say, six months. But the twins die at the same age. The first survived longer with cancer due to lead-time bias, but did not have a longer lifetime. Crediting medical care with “improving survival” is therefore misleading, cancer experts have long argued. Lead-time bias makes it seem patients live longer, but the only thing that is longer is the number of years they know they have cancer, not their lifespan. The authors of the “worth it?” study nevertheless base their analysis on survival data. They argue that because U.S. cancer mortality rates fell faster than those in Europe, the survival gains must be real and not an artifact of lead-time bias. Others call that approach fatally flawed. “Lead-time bias is an issue,” said MD Anderson’s Berry. “I can see no hint of logic in their statement that ‘lead-time bias did not confound our results.’” DIFFERENCES IN SCREENING IN U.S. AND EUROPE Even more problematic, said Berry, is a problem cancer experts have only recently recognized: overdiagnosis. Because cancer screening is much more widespread in the United States than in Europe, especially for breast and prostate cancer, “we find many more cancers than are found in Europe,” he said. “These are cancers that tend to be slowly growing and many would never kill anyone.” Screening therefore turns thousands of healthy people into cancer patients, even though their tumor would never threaten their health or life. Counting these cases, of which there are more in the United States than Europe, artificially inflates survival time, experts said. “As long as your calculation is based on survival gains, it is fundamentally misleading,” said Dr. H. Gilbert Welch, a healthcare expert at the Dartmouth Institute for Health Policy & Clinical Practice. In the new analysis, the survival gains in the United States compared with Europe were greatest for prostate cancer, at more than triple the gains for breast cancer, the cancer with the second-greatest U.S. survival edge. “These are the two cancers where screening has raised the most serious issues about lead-time bias and overdiagnosis,” said Welch. For melanoma and colorectal and uterine cancer, survival gains over the period analyzed were greater in Europe than the United States. The Philipson team acknowledges that survival data can be misleading. They justify their approach, however, by saying that because deaths from cancer as a percentage of a country’s population fell faster in the United States than in 10 countries in Europe from 1982 to 2005, the higher U.S. survival “suggests that lead-time bias did not confound our results.” Some experts in cancer statistics were not convinced. “Why do the authors use the wrong metric – survival – in the analysis and then argue that the right measure – mortality – provides corroborating evidence?” asked Welch. “As long as your calculation is based on survival gains, it is fundamentally misleading.” Other calculations cast doubt on the superiority of U.S. cancer care. For instance, breast cancer mortality fell 36 percent in the United Kingdom from 1990 to 2006, calculates MD Anderson’s Berry, and fell 30 percent among whites in the United States. (The U.S. figure would be even lower, he said, if it included African-Americans, who generally have less access to health care.) Cancer mortality in the United States is higher than in 11 countries reporting to the Organization for Economic Co-operation and Development, and lower than the rate in 14. Mortality is lower in Switzerland, Sweden, Japan and Finland, among others, but higher in Hungary, Slovenia, France and Britain, in the latest years for which OECD has data. The reduction in cancer mortality in the United States since 2000 also puts it toward the middle of OECD countries. It is less than in Israel, Japan, Switzerland and some others, for instance, but better than in Britain, Estonia and Poland. THE VALUE OF MORE SPENDING The researchers acknowledge that it is not possible to conclude that improved survival comes from higher spending on cancer care. It might also come from more widespread cancer screening which, experts say, detects more and more “pseudo-disease” – that is, a tumor so nonaggressive it would never have threatened the person’s health or life. That alone would make the survival data look better. The Philipson paper was supported in part by Bristol-Myers Squibb Co, whose cancer drugs include Yervoy. A drug for advanced melanoma, it costs $120,000 for a full course of treatment. Clinical trials showed that Yervoy produces a near-miraculous cure for some patients, with a median increase in survival of 3.6 months. U.S. spending on cancer care has continued to increase, reaching $72 billion in 2004, the last year for which data is available. The new study did not examine the cost-effectiveness of that care. “In the last decade, spending in the U.S. has increased more than in Europe,” said Philipson. “I would be extremely surprised if the survival gains haven’t continued. But it is a much more open question whether that additional spending has been accompanied by an increase in longevity.” In the last decade, a number of very expensive cancer drugs were introduced into the United States, including Dendreon Corp’s Provenge for prostate cancer ($93,000 per treatment) and Bristol and Eli Lilly and Co’s Erbitux ($100,000 per year). Their analysis, say Philipson’s team, “does not imply that all treatments are cost-effective.” Worse, many are not medically effective. Last week, the American Society of Clinical Oncology released a list of five cancer tests and therapies that do not help patients live longer or suffer less – even apart from how much they cost. VALUING OF A YEAR OF LIFE Healthcare economists focused on a different aspect of the new study, namely, how much each additional year of life is worth. Philipson’s team assumes a value of $150,000 to $360,000. “Are American taxpayers willing to pay $150,000 in added taxes to purchase an added life year for some poor person?” asked health economist Uwe Reinhardt of Princeton University. “Does the urge to cut government spending on Medicare and Medicaid suggest Congress is willing to purchase added life years for anyone who cannot purchase it with his or her own money at a price of $150,000 per year?” Other studies in the journal raise questions about the value of some aspects of cancer care. One finds that the use of a prostate-cancer treatment called “intensity modulated radiation therapy” has soared since 2001, including for men with low-risk forms of the disease. Since IMRT costs $15,000 to $20,000 more than other therapies despite a lack of evidence that it improves outcomes, that raises “concerns about overtreatment, as well as considerable health care costs,” write University of Michigan researchers. Another study finds that urologists who perform biopsies themselves, rather than refer patients to another physician, are more likely to perform prostate biopsies on men who are unlikely to have prostate cancer. “These findings suggest that doctors’ own financial interests are driving decisions to perform biopsies which are of little to no benefit to patients,” Health Affairs said in a statement. (Reporting By Sharon Begley and Kate Kelland; editing by Matthew Lewis)

Read the full article →

Occupy Groups Unite Over Foreclosures

April 9, 2012

* Occupy groups working in several cities * Foreclosure crisis inspires middle class * Some banks cooperate, wanting to avoid publicity By Nick Carey April 9 (Reuters) – Mercedes Robinson-Duvallon turned 83 in February, but there was little time for celebration. On her birthday, as she sat in a wheelchair recovering from surgery, sheriffs’ deputies arrived to evict her from the Miami home where she has lived since 1966. A year earlier her property had moved into foreclosure after she defaulted on a refinanced loan. Robinson-Duvallon says she would be homeless now but for the intervention of about 40 members of Occupy Fort Lauderdale, a Florida branch of the national movement that is protesting income inequality and corporate greed. The group took over her lawn and house and even baked her a birthday cake. The deputies decided to let her stay. “I owe the Occupy people,” said Robinson-Duvallon, who is now challenging the eviction in court. “This has all been so horrible, I can’t tell you how many times I’ve cried and cried.” What happened in Miami is also occurring in Cincinnati, Los Angeles and Minneapolis, as local Occupy groups pursue an issue they believe has emotional resonance among America’s struggling lower and middle classes. Fighting foreclosures and evictions, activists say, gives the disparate movement a unifying focus and embodies its anti-Wall Street message. It also has offered a way for Occupy – up till now a largely white, middle-class movement – to broaden its reach to minorities. Interviews with Occupy activists in 11 states show groups from coast to coast have taken up foreclosure fights through rallies, home occupations and court appearances. Matt Browner Hamlin of occupyourhomes.org, a national group focused on this cause, counts “more than 100 Occupy groups” that have taken direct action or formed foreclosure working groups. Cheryl Aichele of Occupy Los Angeles said activists there have helped a dozen homeowners thus far and have many more requests. “This cause,” she said, “brings together everything that we are fighting against – corporate greed, bank bail outs, a corrupt judiciary and corrupt government.” There is little evidence that the banking industry is taking notice, however. Robert Davis, executive vice president of an industry lobby group, the American Bankers Association, said, “It is unlikely that protests are going to have any bearing on the court process” where foreclosures often are challenged. He said banks rely on law enforcement to quash eviction protests that constitute “unlawful occupation of a property … They need to be removed so the property can be sold.” In Cincinnati, a group called Occupy the Hood has found the issue a rallying point in the city’s East Price Hill neighborhood, an ethnically mixed, working-class area hard hit by the economic downturn. Average neighborhood home values have fallen 41 percent since 2002. Amid chants of “Banks got bailed out, we got sold out,” Rigel Behrens and other activists in Cincinnati recently conducted a “foreclosure tour,” visiting seven boarded-up homes. “Abandoned homes are the most obvious, physical manifestation of what is wrong with our system,” said Behrens. Those who have watched the Occupy movement since its September beginnings say the foreclosure focus may help it recover from a slump that followed forced shutdowns of encampments in New York, Washington and other cities. “The Occupy movement seems to have lost some of its punch,” said Susan MacManus, a University of South Florida political science professor. “Focusing on an issue that affects the working class and leaves people feeling alienated is potentially a good strategy. If they can make it work.” FINDING COMMON GROUND Activists in Cincinnati and elsewhere say foreclosures are a serious political issue in minority neighborhoods, where the five-year-old housing crisis cast a long shadow. Housing counseling groups have cataloged how black Americans and Hispanics – even those with good credit – were more likely to end up victims of predatory lenders. Millions of Americans lost their homes in the downturn and around one in four American homeowners is “under water” — owing more than their homes are worth. Again, minorities suffered disproportionately, studies show. A recent study by the non-profit Woodstock Institute, examining properties in six Chicago area counties, showed 17 percent of those located in predominantly white areas were under water. In predominantly black and Hispanic areas, the number soared above 40 percent. In Minneapolis, Anthony Newby, a black housing counselor, appealed to the Occupy group to take on the case of struggling black homeowner Monique White. “It was very much a conscious decision to approach the Occupy movement,” said Newby, now a member of Occupy Homes MN. “The African-American community has been dealing with hardship for decades. But it was new for those white kids on the plaza who were falling out of the middle class for the first time.” In Atlanta, Occupiers say fighting evictions began as an impromptu battle that became a long-term strategy. “This is a strategy to generate tangible wins and build a broader base for the movement,” said Tim Franzen of Occupy Atlanta. “You don’t have to go to a park downtown to make a difference. You can go two doors down and help your neighbor.” “BANKS DON’T LIKE BAD PRESS” Evan Rosen, a lawyer in southern Florida, said the interest of Occupy Fort Lauderdale helped in a foreclosure case he was handling. Occupiers showed up in court to back his client, which he believes influenced the judge’s favorable ruling. “I am not a religious man, but it felt like divine intervention,” said Rosen, who asked that his client’s name be withheld while negotiations with the lender continue. Jeff Weinberger of Occupy Fort Lauderdale said the group has helped four homeowners avoid eviction. “The banks really don’t like bad press,” he said. “So when we show up with the local TV station, it has an effect.” But Bobby Hull says the Occupy movement can only do so much; the rest depends on homeowners themselves. “Occupy is a movement and the best they can do is to help us organize our communities,” he said. “That’s what it takes to win.” Hull, 57, faced eviction in Minneapolis when his health failed and his contracting business tanked. Occupiers rallied for him in December, and he renegotiated his Bank of America mortgage, though he says he is under a gag order and cannot discuss his loan terms. A Bank of America spokesman confirmed a loan modification is underway. Now, Hull and his neighbors have formed an “eviction-free zone” to fight foreclosures. Occupy groups claim the response they get is overwhelmingly positive. The first home on the “foreclosure tour” in East Price Hill was sold off in foreclosure for $1,347. It lost its roof and mildew is eating through the walls. “It’s truly great that these folks are doing something,” said Ron Etter, nodding toward the Occupiers as they approached the next house on the tour. “No one else is.”

Read the full article →

The Top 5 Fastest-Growing Spirits Brands

April 9, 2012

Here’s some good news for Bethenny Frankel: her Skinnygirl Cocktails are the fast-growing spirits brand in the entire U.S., according to data released by Technomic’s Adult Beverage Resource Group. Her brand grew 388% from 2010 to 2011. Frankel sold her brand to the fourth largest spirits company, Beam Global, for a pretty penny in 2011. The growth of Skinnygirl is consistent with other trends of the spirits industry. “These brands are performing well overall, which points to the strength of the spirits market,” says David Henkes, vice president and head of Technomic’s adult beverage practice, in a press release. “Some of the more established Top 250 brands were affected by the recession and may now be experiencing a somewhat slower growth pace than prior to the recession. Others, however, are enjoying tremendous gains as they tap into various consumer trends.” Want to see which companies are nipping at Bethenny’s heels? Check out the slideshow below. Note: The 2011 volume is by thousands of nine-liter cases. The percentage growth is from 2010 to 2011.

Read the full article →

Tax Audits Go More Smoothly For The Rich

April 9, 2012

Here’s another way the rich are different: If they get audited by the IRS, they have a much better chance of dealing with an actual person. According to Nina Olson — a taxpayer advocate recently profiled at length in Bloomberg Businessweek — the Internal Revenue Service has two ways of conducting its audits. One involves computers, and one involves real live human beings. Increasingly, says Olson, what kind of treatment you get depends on how much money you earn. “We’re getting to a situation where the only people who will get face-to-face audits are the 1 Percent,” Olson is quoted as saying in Businessweek . WIth the deadline for tax season approaching, Olson’s work with the Taxpayer Advocate Service — an internal division of the IRS that helps guide taxpayers through the labyrinthine tax code, and sorts out disputes when they arise — serves as a reminder that for many Americans, paying taxes can be a highly impersonal experience. Humans don’t necessarily have to be involved for the audit process to get underway. Rather, audits often begin with a computer throwing up an automated red flag , according to USA Today . If a particular tax return appears to vary in a big way from others in the same income bracket or ZIP code — if, for example, the computer notices a category, like charitable contributions, that’s conspicuously different from the average — that can mean an audit for the outlying taxpayer. In a situation like that, the taxpayer usually hears about the audit by mail or by phone, which means things may not go smoothly. A full 27 percent of people who receive audit notices by mail can’t tell from the letter that they’re being audited , according to Businessweek . And 10 percent of all the mail the IRS sends out doesn’t reach the right person. The IRS’s automated audit process is far from error-free. In 2010, the agency flagged some 300,000 returns for including mistakes about dependent children, according to CNN. In more than half those cases , the IRS ended up letting the returns stand as they were. Wealthy filers are more likely to get one-on-one attention, according to Olson. The 1 percent may not enjoy the scrutiny of the IRS — and they’ve been getting more of it lately, with audits for millionaires taking a sharp jump in 2011 — but the taxpayer gets certain rights during a personal audit that don’t come along with an automated audit , according to CNN. Someone who gets audited by phone or letter has fewer options when dealing with the agency.

Read the full article →

Housing Scarce As Number Of Homeless Female Vets Spikes

April 9, 2012

WASHINGTON — Misha McLamb helped keep fighter jets flying during a military career that took her halfway around the world to the Persian Gulf. But back home, the Navy aircraft specialist is barely getting by after a series of blows that undid her settled life. She was laid off from work last year and lost custody of her daughter. She’s grappled with alcohol abuse, a carry-over from heavy-drinking Navy days. She spent nights in her car before a friend’s boyfriend wrecked it, moving later to a homeless shelter where the insulin needles she needs for her diabetes were stolen. She now lives in transitional housing for homeless veterans – except the government recently advised occupants to leave because of unsafe building conditions. “I wasn’t a loser,” McLamb, 32, says. “Everybody who’s homeless doesn’t necessarily have to have something very mentally wrong with them. Some people just have bad circumstances with no resources.” Once primarily male veteran problems, homelessness and economic struggles are escalating among female veterans, whose numbers have grown during the past decade of U.S. wars while resources for them haven’t kept up. The population of female veterans without permanent shelter has more than doubled in the last half-dozen years and may continue climbing now that the Iraq war has ended, sending women home with the same stresses as their male counterparts – plus some gender-specific ones that make them more susceptible to homelessness. The problem, a hurdle to the Obama administration’s stated goal of ending veterans’ homelessness by 2015, is exacerbated by a shortage of temporary housing specifically designed to be safe and welcoming to women or mothers with children. The spike comes even as the overall homeless veteran population has gone down, dropping by nearly 12 percent to about 67,500 between January 2010 and January 2011, officials say. “It can’t get any worse,” McLamb says matter-of-factly, “’cause I’ve already been through hell.” Veterans’ homelessness, the subject of a March congressional hearing, has received fresh attention amid government reports documenting the numbers and identifying widespread flaws in buildings that shelter veterans. “I think it’s very clear that women veterans in particular lack the services they need,” Sen. Patty Murray, D-Wash., chairwoman of the Senate Veterans Affairs Committee, said in an interview. Female veterans make up about 8 percent of all veterans, or about 1.8 million, compared to just 4 percent in 1990. The number of homeless female veterans has more than doubled from 1,380 to 3,328 between fiscal year 2006 and fiscal year 2010, according to a December U.S. Government Accountability Office report that found many with young children and nearly two-thirds between ages 40 and 59. A new report from the VA inspector general examining veteran housing that receive VA grants found bedrooms and bathrooms without locks, poorly lit hallways and women housed in facilities approved for men only. Nearly a third of the 26 facilities reviewed didn’t have adequate safety precautions. One female veteran and her 18-month-old son were placed in the same facility as a male veteran who was a registered sex offender. Female service members, who in wars with increasingly blurred front lines return with post-traumatic stress disorder, face unique challenges, advocates say. Many have suffered sexual assault and remain too traumatized to share common space with men. Many are single mothers struggling to find housing for themselves and their children. They’re also more likely to be jobless: Unemployment for female veterans who’ve served since September 2001 was 12.4 percent last year, slightly higher than for their male counterparts. Michele Panucci, a psychologist who treats women with military sexual trauma at a women-only VA clinic in Nashville, said traumatic experiences in the military can be a barrier to turn to the VA for help. “If it was authority that you don’t like because of what happened to you in the military, you can then associate that with the VA or other helpful authorities,” she said. The Department of Veterans Affairs says it’s making progress. The proposed VA budget calls for, among other things, $300 million for grants and technical assistance to community nonprofits to help veterans stay in their home or find alternate housing. The department is increasingly focused on preventing veterans from becoming homeless and helping families stay together when possible, said Pete Dougherty, executive director of the VA’s homeless veterans initiative office. One example is a support grant program for low-income veterans through which nonprofits and cooperatives provide health care services and financial planning, among other aid. “Part of what brings people to homelessness is isolation … The more you can keep that internal support around, the better,” he said. Chenae Perkins, who at 23 is the youngest woman in a transitional home for female veterans in Nashville, bears familiar hallmarks of homelessness. At 19, she deployed with her National Guard unit to Iraq, where she said she was sexually assaulted – she never reported it – endured an unnerving barrage of rocket attacks and witnessed gruesome injuries while working at a military hospital. She struggled to find steady jobs after returning from her 14-month deployment. “You go from making a certain amount of money while overseas and then coming back and living from paycheck to paycheck,” she said. “It felt kind of demeaning.” After substance abuse led to legal troubles, she was referred to a veterans service center in Nashville, which runs the women’s transitional house. She’s found women who understand her. “When I hear their stories, it relates to me, right on point. Their tempers and attitudes. How they changed from bubbly back then to how you are now. Everyone is irritable,” Perkins said. The system was “built around a guy soldier,” and female sexual trauma victims require extra care, said Kim Olson, a retired Air Force colonel and president and CEO of Grace After Fire, a female veterans’ advocacy organization. “You think she’s going to go to a facility with 46 other guys sleeping next door to her? No, she’s not. She’s simply not going to re-enter the environment if that is her issue,” Olson said. The VA accommodates homeless veterans through a few initiatives. One program operated with the Department of Housing and Urban Development provides housing vouchers for veterans is particularly popular among women and has housed tens of thousands of veterans and their families. But the program is geared toward veterans who are most in need, and is generally limited to those requiring substance abuse, medical and mental health problems and other issues that need continuing attention. Another program offers grant and per diem money to nonprofits and community organizations to house veterans. But current law doesn’t allow the VA to reimburse providers for housing children, creating a financial disincentive to do so. The GAO report said more than 60 percent of the grant and per diem programs it surveyed that serve homeless women didn’t house children. In Nashville, about an hour south of a major Army installation, there are just seven transitional beds for homeless single women veterans. “The new model is not in place around the country to serve women and children,” said Dan Heim, the homeless veteran program manager in Nashville. McLamb never expected to be homeless. She joined the Navy in 1998, where she helped ensure aircraft had the necessary components for launch, and deployed three times to the Middle East – including after the Sept. 11 terrorist attacks. She left the military in 2005 to care for her daughter and after, she says, she was sexually assaulted at a Navy base in California. She never reported it. She held various jobs in the following years, but the bottom fell out in January 2011, when she lost an administrative contracting position at Fort Belvoir, Va. Unable to pay rent, and without reliable income, she lost custody of her 8-year-old daughter. She pingponged between a car, a homeless shelter and alcohol treatment before arriving in a nondescript brick building in Washington that offers transitional housing for homeless veterans participating in a work-therapy program. She had been earning a minimum-wage stipend from a clerical job at a VA hospital, but she said that position has expired. Benefits under the post 9/11 GI Bill provide her with a housing allowance, but her shoddy credit makes it near impossible to find a place of her own. She carries with her reminders of her life – past, present and future. A pink U.S. Navy hat. A resume touting accurate typing and excellent administrative skills. A photograph of her daughter, Simone, who lives in Georgia with her father but whose name will one day grace the name of a restaurant McLamb dreams of opening. Sometimes she feels she shouldn’t be entitled to special treatment. But, she quickly added, “Then I jump back into the other mode and say, `They owe me this because I risked my life for them and now I need somebody else’s help, and I don’t think that that’s a bad thing to do, ask for help.” Hall reported from Nashville. Online: See the GAO report’s state-by-state breakdown of beds available for homeless female veterans. Support organizations filling in the gap to help homeless female vets find housing: U.S. Vets The VA National Coalition for Homeless Veterans provides resources related to housing, health care services, military sexual trauma and information on how the needs of female veterans is evolving. Get involved with this VA organization here. Steps ‘n Stages The program provides transitional and permanent housing for homeless female vets. The organization also assists with job searches, mentoring, financial literacy and more. Get involved with Steps n Stages here . The National Center on Family Homelessness The national initiative supports local nonprofits and organizations that provide housing, as well as those that address domestic violence, mental health and other issues for families not necessarily directly enrolled in programs. Get involved with the National Center on Family Homelessness here . National Call Center for Homeless Veterans Homeless veterans and veterans at risk can find services at the National Call Center for Homeless Veterans at 1-877-4AID-VET (1-877-424-3838), or online at veteranscrisisline.net .

Read the full article →

Companies Feel Your Pain, Sort Of

April 9, 2012

Though you cannot roll each one of them up and smoke them , you still need to know seven and a half things each day, and here they are: Thing One: Strong Like Bull: One of the hallmarks of the economy the past few years has been that, unlike American humans, American companies have been making tons of money. The Wall Street Journal today, in two separate stories, points out that big ginormous companies are still making tons of money , but at what seems to be a slightly slower pace . “Big U.S. companies have emerged from the deepest recession since World War II more productive, more profitable, flush with cash and less burdened by debt,” Scott Thurm writes. Yay. “This week will bring the first trickle of U.S. corporate earnings in a season that many analysts are predicting will be lackluster,” Jonathan Cheng writes of first-quarter earnings season, which kicks off on Tuesday. Boo. The net result? That you still will not have a job , with companies are doing less great, too, which could cause the stock market to finally come down off its crack high , at least until the next fix of stimulus from Ben Bernanke. But don’t worry, those companies will keep on cutting costs, so it’s all cool. Take, for example, Sony, which is laying of 10,000 people , or 6 percent of its global work force. Thing Two: No Training For You: These companies are always complaining that they can’t find enough skilled workers to fill higher-tech jobs than good old burger-flipping or ditch-digging. And yet government money is running out to teach new skills to those who have been out of work for a long time , The New York Times reports. If only companies had the extra cash to do some of the training themselves! Oh, wait. Thing Three: Ben Speaks: A slower week for economic data, following Friday’s disappointing jobs report , kicks off at 7:15 p.m. ET tonight with a speech from Federal Reserve Chairman Ben Bernanke . People laughed at Gentle Ben when he suggested the Fed didn’t think the job market was out of the woods yet, but nobody’s laughing now. People will be reading this speech for signs of more Fed easing to come. Thing Four: What’s In The Pipeline: If you want to know why normal people don’t trust the stock market any more, consider the case of Pipeline Trading Systems, as Scott Patterson and Jenny Strasburg do in the WSJ today. The “dark pool” operator promised to protect clients as they traded stocks away from public exchanges, but last fall settled claims it had traded against those clients. “That revelation… delivered a stark lesson in how today’s computer-driven stock market, replete with complex algorithms, agile trading firms and obscure computerized trading platforms, has in many ways become less transparent than when most buying and selling took place in the open on the floor of an exchange,” Patterson and Strasburg write. Thing Five: JPMorgan’s Voldemort: Meanwhile, a JPMorgan Chase credit-derivatives trader in London has earned himself the quaint nickname “Lord Voldemort,” reports Bloomberg , because of his massive, market-moving trades. In fact, he has single-handedly highlighted the dangers of proprietary trading, in which banks make bets with their own money, Bloomberg writes. Thanks, Voldemort! Thing Six: About Those Sovereign Bonds: Late last year and early this year, the Europan Central Bank pumped many billions of dollars in free money to European banks, in part to encourage them to buy up risky European sovereign debt. European banks did exactly that, and now everybody’s worried about all the risky European sovereign debt they own, the NYT reports. Some day we’ll all look back on this and laugh, as we warm our hands around our burning wallets. Thing Seven: The Price Of Everything In China: Here’s a conundrum for Chinese policy makers, and a test for the thesis in the West that nothing could ever go wrong with China’s economy. Chinese growth is slowing down, meaning policy makers are looking for ways to goose the economy. Except, whoops, China this morning reported a surge in inflation , driven by food and energy prices meaning policy makers can’t stimulate too much, the Financial Times reports. Thing Seven And One Half: R.I.P. Mike Wallace: I’ll never forget, about eight years ago, seeing Mike Wallace waiting to cross 57th Street in Manhattan. In his early 80s then, he was smoking and staring down the oncoming traffic with grim fury, the same look we’d all seen him give helpless interview subjects for decades. One of the greats of this or any business . Economic Data : 7:15 p.m. ET: Ben Bernanke speaks in Atlanta Corporate Earnings Reports : None to speak of

Read the full article →

Andreas Souvaliotis: When Profit and Social Responsibility Collide

April 9, 2012

Albert Einstein once famously said, “We cannot solve our problems with the same thinking we used when we created them.” It may very well have been the great thinker’s most prophetic warning ever. Here we are, faced with some of the gravest existential threats in the history of our species, and all we’ve been doing is throwing conventional thinking at the problems — and then we wonder why things keep getting worse. The most obvious of those problems? Climate change, of course. The conventional thinking? Incremental, uninspiring, regressive “sustainability” strategies. In blatant disregard for the great thinker’s teachings, we are continuing to stick our head deep in the sand and convincing ourselves that if we simply do a little less bad, the whole thing will go away like a bad dream. We have even packaged up our brilliant thinking into neat little sound-bites: recycle a few more paper cups, build a few more green office buildings, drive a few more hybrid cars, buy a few more carbon offsets, and it will all be fixed! Really? Has anyone ever done the real math? A long time ago, as our parents and grandparents began to worry about some of the side effects of uncontrolled capitalism, society’s response was to build up a system of important checks and balances: health and environmental NGOs, government regulations, media watchdogs, etc. The explosion of prosperity in the Western world through the second half of the last century naturally resulted in an equivalent increase in the strength and pervasiveness of the counter-balancing systems. NGOs became huge and global, governments grew massive regulatory teeth and the media became angrier and sharper. And we went on with our happy lives, believing that we live in a beautifully balanced world… Clearly, we had it wrong. We thought the model was balanced, but in reality it was just polarized — and the wealthier we got, the more polarized it became. By birthing “forces for good” and giving them the simplistic mission to mop up the mess that we created with our for-profit businesses, we actually made things worse! We fuelled a very well-entrenched belief among all participants in our capitalist society that you can’t make a profit without harming the world — and that the only people who can do good for our world are the ones who don’t make a profit. In our obese, lazy, polluted, climate-threatened 21st-century society, “giving back” has become one of the most fashionable lines — as if to imply that we really must have stolen something from the world as we were making a profit! It’s time to hit the reset button. Time to heed Einstein’s advice. We’re in trouble. Our “balanced” model isn’t working. Our planet is getting sicker by the day; our children are already assuming they will have a lower standard of living and that their lives will be shorter and less healthy than ours. Could it be that we actually allowed ourselves to become the “peak” generation in the history of our species? We need real solutions, not yesterday’s ineffective incremental stuff. We need to ignite the imagination of our 7 billion fellow passengers if we stand a chance to really turn this thing around. A few recycled cups and carbon offsets, when some estimate we’re making more than a billion new babies a decade, is not the solution — it was just a nice, cute start. It’s time to re-invent our path to profit and wealth, because that’s what it will take to excite and drive our fellow passengers. We are creatures of nature and that makes us greedy by design. Yesterday’s sustainability preachings were all about suppressing our instincts and our nature. Tomorrow’s solutions need to be about prosperity through innovation and about practical ideas about a new kind of capitalism, like Michael Porter’s shared value model . It’s time for new, big thinking. Time to kill our polarized old models. Time to intertwine profit and good in such a way that you can’t generate one without the other. Time to start creating real value and prosperity and time to ban that awful line about “giving back”…

Read the full article →

Apple’s iPad: The Tablet People Know

April 8, 2012

NEW YORK — Apple is on the verge of doing what few others have: change the English language. When you have a boo-boo, you reach for a Band-Aid not a bandage. When you need to blow your nose, you ask for Kleenex not tissue. If you decide to look up something online, you Google instead of search for it. And if you want to buy a tablet computer, there’s a good chance there’s only one name you’ll remember. “For the vast majority, the idea of a tablet is really captured by the idea of an iPad,’” says Josh Davis, a manager at Abt Electronics in Chicago. “They gave birth to the whole category and brought it to life.” Companies trip over themselves to make their brands household names. But only a few brands become so engrained in the lexicon that they’re synonymous with the products themselves. This so-called “genericization” can be both good and bad for companies like Apple, which must balance their desire for brand recognition with their disdain for brand deterioration. It’s one of the biggest contradictions in business. Companies spend millions to create a brand. Then, they spend millions more on marketing that can have the unintended consequence of making those names so popular that they become shorthand for similar products. It’s like if people start calling station wagons Bentleys. It can diminish a brand’s reputation. “There’s tension between legal departments concerned about `genericide’ and marketing departments concerned about sales,” says Michael Atkins, a Seattle trademark attorney. “Marketing people want the brand name as widespread as possible and trademark lawyers worry … the brand will lose all trademark significance.” It doesn’t happen often. In fact, it’s estimated that fewer than 5 percent of U.S. brand names become generic. Those that do typically are inventions or products that improve on what’s already on the market. The brand names then become so popular that they eclipse rivals in sales, market share and in the minds’ of consumers. And then they spread through the English language like the common cold in a small office. “There’s nothing that can be done to prevent it once it starts happening,” says Michael Weiss, professor of linguistics at Cornell University. “There’s no controlling the growth of language.” FIGHTING BACK A company’s biggest fear is that their brand name becomes so commonly used to describe a product that a judge rules that it’s too “generic” to be a trademark. That means that any product – even inferior ones – can legally use the name. A brand usually is declared legally generic after a company sues another firm for using its name and the case goes to a federal court. Drug maker Bayer lost trademarks for the names “aspirin” and “heroin” this way in the 1920s. So did B.F. Goodrich, which sued to protect its trademark of “zipper” in the 1920s after the name joined the world of common nouns. Similar cases deemed “escalator” generic in 1950, “thermos” generic in 1963 and “yo-yo” generic in 1965. It’s difficult to quantify how much revenue a company loses when its brand is deemed generic. But companies worry that it breeds confusion among consumers. To prevent their names from becoming generic, some companies use marketing to reinforce their trademarks. For instance, after its Band-Aid brand name started becoming commonly used to refer to adhesive bandages, Johnson & Johnsons changed its jingle in ads from “I’m Stuck on Band-Aid” to “I’m Stuck on Band-Aid brand.” Kleenex uses “Kleenex brand” instead of just “Kleenex” on its packaging and in marketing and places ads to remind people Kleenex is trademarked. And the company contacts some people who use Kleenex generically to refer to tissue in order to correct them. “We’ve worked very hard to keep `Kleenex’ from going the route of `escalator’ and `aspirin,’” says Vicki Margolis, vice president and chief counsel, intellectual property and global marketing for Kimberly-Clark, which owns Kleenex. “If we lose the trademark, people can use it with sandpaper and call that a Kleenex.” Xerox is taking a similar route. The company, which introduced the first automatic copier in the U.S. in 1959, has been on a public crusade for decades to keep its brand from becoming generic. The machine’s success has led people to start using “Xerox” to refer to any copying machine, copies made from one and the act of copying. “In the mid- to late-1970s, we ran dangerously close to Xerox becoming `genericized,’” says Barbara Basney, vice president of global advertising. “That prompted a lot of proactive action to protect our trademark.” Xerox has spent millions taking out ads aimed at educating so-called “influencers” like lawyers, journalists and entertainers about its brand name. A 2003 ad said: “When you use `Xerox’ the way you use `aspirin,’ we get a headache.” More recently, a 2007 ad read: “If you use “Xerox” the way you use “zipper,” our trademark could be left wide open.” While people still use “Xerox” generically – the Merriam-Webster dictionary lists the word as both a lower-case verb with the definition “to copy on a xerographic copier” and a trademarked noun – the brand says its campaign has been a success. Xerox is still popular: It’s ranked the 57th most valuable global brand, worth $6.4 billion, according to brand consultancy Interbrand. And perhaps most importantly, Xerox hasn’t lost its trademark. TAKING IT IN STRIDE Sometimes companies embrace when their brands become common nouns. Perhaps the best example of this is Google, a company created in 1998 when Alta Vista and Yahoo.com were the top online search engines. Google, which created a formula that returned more accurate results than its competitors, became so popular that people began saying “Google” to refer to a Web search, in general. Experts say Google has benefited from its name becoming a part of the lexicon. “You don’t say `Why don’t I Google it’ and go to Yahoo or Bing,” says Jessica Litman, professor of copyright law at the University of Michigan Law School, referring to other search engines. Apple also has gotten a boost from its brand names becoming synonymous with products. The iPod, which was the first digital music player when it came out in 2001, is still the name people use for “digital music player” or “MP3 player.” And it appears Apple’s iPad is headed down the same path. For consumers like Mary Schmidt, 58, the “iPad” is generic for “tablet.” Schmidt, a Baltimore marketing executive, owns an iPad and doesn’t know the names of any other tablets. “When I think of tablets, I think of an iPad,” she says. “I think it’s going to be the generic name. They were first.” It remains to be seen if the iPad will maintain its name domination in the tablet market. Apple declined to comment for this article. For now, Apple Inc. has a majority of the tablet category, which includes Amazon’s Kindle Fire and Samsung Electronics Co.’s Galaxy Tablet. The iPad accounted for about 73 percent of the estimated 63.6 million tablets sold globally last year, according to research firm Gartner. Apple’s market share is likely to decline as more rivals roll out tablets. But experts say that won’t necessarily diminish iPad’s name recognition. “Apple is actually pretty good at this,” says Litman, the law school professor. “It’s able to skate pretty close to the generics line while making it very clear the name is a trademark of the Apple version of this general category.” When the iPad debuted in 2010, some people offered up “Apple Tablet” or the “iTab” as better names. Others even suggested that the name sounded more like a feminine hygiene product than a tablet: “Get ready for Maxi pad jokes and lots of `em!” wrote tech site Gizmo at the time. Two years later, those complaints are all but forgotten. “At the end of the day, the product was so successful that even if it wasn’t the `quote unquote’ best name, it made the name synonymous with the category,” says Allen Adamson, managing director at branding firm Landor.

Read the full article →

Job Creators Alliance: What the Federal Government Can Learn From Florida

April 8, 2012

The headline numbers of 121,000 in March and 240,000 in February were well below the consensus expectations, which ran about 205,000. Private payrolls increased by 121,000, with the bulk coming from private services at 90,000. Gains were strongest in business services (31,000), education and health (37,000), and leisure and hospitality (39,000), but gains in these sectors were below what had been observed in recent months. On the goods-producing side of the ledger, construction payrolls fell by 7,000. Manufacturing payrolls, however, grew by 31,000 and, along with gains in leisure and hospitality, suggest that some underlying labor market strength in cyclical sectors remains in place. The public sector shed 1,000 jobs, and recent trends there suggest that the persistent declines in public sector payrolls have subsided. The three-month average change in public sector payrolls is now 1,000, versus the -22,000 average monthly change recorded in 2011. Finally, net revisions to previous months added 4,000 jobs, continuing the pattern of upward revisions to the data, but at a slower rate. EARNINGS GROWTH STAGNANT Average hourly earnings rose 0.2 percent, compared with an upwardly revised 0.3 percent in the previous month (initial estimate: 0.1 percent), and the y/y change now stands at 2.1 percent. The average workweek was unchanged at 34.5 hours, in line with expectations, while the February data were revised higher to 34.6 from 34.5. Aggregate hours worked increased at a 3.7 percent 3m/3m (saar) pace in March, compared with 4.1 percent in February and 3.4 percent in January. The payroll proxy for labor income (aggregate hours worked times average hourly earnings) rose at a 5.6 percent 3m/3m (saar) pace after rising 5.8 percent last month and 5.0 percent in January. The household survey also took on a weak tone, with employment falling by 31,000. This is well below the three-month average of 415,000 and breaks eight consecutive months of household employment gains. THE CLAIMS DROP BECAUSE CLAIMANTS DROP OFF The unemployment rate fell to 8.2 percent (8.192 percent unrounded), reflecting a drop in the participation rate of one-tenth, to 63.8 percent. Overall, the report had an undeniably weak tone and will raise doubts about the strength of the labor market. Given that the report reflects only one month of data and some of the underlying cyclical sectors registered payroll gains, I do not view it as conclusively signaling a shift to a lower trend rate of employment growth. THE BOTTOM LINE OF THE BOTTOM LINE Although the unemployment rate went down to 8.2 percent, the number of jobs created was only 121,000. This is basically in line with population growth. The only reason the number of unemployment claims went down is because the overall labor force participation went down — those hundreds of thousands who are no longer eligible for unemployment. This is what happens when you give people less incentive. The president says we have tried ‘on-your-own economics’ but now we can see how ‘government-run, high-tax, heavily-regulated, bureaucrats-pick-the-winners-and-losers economics’ destroys job growth. The 121,000 new jobs are in line with what you would expect with GDP growth and income growth. As I have always said the prior job growth was not in line with the low GDP and income growth we were seeing. Our low GDP and income growth during this period should have given us job growth of 120,000-150,000 a month, rather than the anemic growth we had in February and March. What this says to me is the growth in jobs is a just bounce from too many layoffs during the recession beyond what the GDP at that point was indicating. The effect of the administration’s policies are finally showing. One month is not a trend, but we finally have a correlation between the GDP and Income growth. And on the bright side, we have job growth in the service industry that serves alcohol. THE FLORIDA EXCEPTION One state that stood apart from national trends was Florida. What they saw there was amazing, and it was the result of a government approach to economics that was 180 degrees from what the White House wants. With the release of March’s data, Florida has now had 11 consecutive months of job growth. Their unemployment is at a three-year low . These job growth trends are a result of Florida’s reducing regulation, easing the tax burden on small businesses and delivering two consecutive balanced state budgets without tax increases. This is the example we need in every state, and most especially in Washington, D.C. The parties must come together to create a positive business environment, with established and common sense rules, a reduction in bureaucratic induced burdens, and the removal of uncertainty and ambiguity that comes from arbitrary and radical policies. By David Park, Chairman, Job Creators Alliance David Park is Managing Partner at Austin Capital, LLC, a merchant bank that assists small companies with financial consulting, and is also Chairman of the Job Creators Alliance , a nonprofit comprised of current and former major business leaders who are committed to the defense and preservation of the free enterprise system.

Read the full article →

AT&T Workers Stay On The Job

April 8, 2012

NEW YORK (Reuters) – More than 40,000 employees at AT&T Inc will keep working under the terms of an expired labor contract while their union continues negotiations with the telephone company, averting a potentially costly strike for now. The workers in AT&T’s traditional wireline telephone business and some other units voted recently to give their union, the Communications Workers of America, authority to call a strike ahead of the expiration of four separate labor contracts at midnight local time April 7. AT&T, whose total workforce is roughly 256,000, is looking to trim worker benefits to cut costs in its wireline business, which has declined rapidly in recent years. But the union says AT&T is seeking too many concessions. In particular, it says that AT&T wants to significantly increase healthcare costs for workers. At midnight eastern time April 7, contracts expired for almost 10,000 workers, including almost 6,000 so-called legacy AT&T workers in various states and about 4,000 workers in the eastern United States. The union said just after midnight eastern time on Saturday that it made “some progress” but had “a lot of ground yet to cover” to reach agreement with the company. At midnight central time, a contract covering thousands more AT&T workers in the midwest region expired. AT&T said that the midwest contract covers 13,000 people while the union said it covers 15,000. At midnight Pacific time, a fourth contract that the union said covered about 18,000 workers in western states such as California and Nevada also expired. Negotiations were continuing in that region as well, according to a union statement. AT&T said the negotiations reflected “the spirit of the longstanding relationship” between AT&T and the union. Last August, AT&T’s rival, Verizon Communications, had to cope with a two-week strike after contracts expired for 45,000 workers. Roughly eight months later, Verizon is still negotiating with unions for a new contract. AT&T has been negotiating with the CWA on the four contracts since February. Contracts covering another 30,000 AT&T wireline workers expire in coming months, the company said. The last time AT&T faced a big strike was in 2004 when 100,000 workers walked out for four days on the company, which was then known as SBC Communications. SBC changed its name to AT&T Inc after it bought AT&T Corp in 2005. (Reporting By Sinead Carew; Editing by Ron Popeski)

Read the full article →

Sorry, Kindle: The iPad Is The Only Tablet Most People Know

April 7, 2012

NEW YORK (AP) — Apple is on the verge of doing what few others have: change the English language. When you have a boo-boo, you reach for a Band-Aid not a bandage. When you need to blow your nose, you ask for Kleenex not tissue. If you decide to look up something online, you Google instead of search for it. And if you want to buy a tablet computer, there’s a good chance there’s only one name you’ll remember. “For the vast majority, the idea of a tablet is really captured by the idea of an iPad,’” says Josh Davis, a manager at Abt Electronics in Chicago. “They gave birth to the whole category and brought it to life.” Companies trip over themselves to make their brands household names. But only a few brands become so engrained in the lexicon that they’re synonymous with the products themselves. This so-called “genericization” can be both good and bad for companies like Apple, which must balance their desire for brand recognition with their disdain for brand deterioration. It’s one of the biggest contradictions in business. Companies spend millions to create a brand. Then, they spend millions more on marketing that can have the unintended consequence of making those names so popular that they become shorthand for similar products. It’s like if people start calling station wagons Bentleys. It can diminish a brand’s reputation. “There’s tension between legal departments concerned about ‘genericide’ and marketing departments concerned about sales,” says Michael Atkins, a Seattle trademark attorney. “Marketing people want the brand name as widespread as possible and trademark lawyers worry … the brand will lose all trademark significance.” It doesn’t happen often. In fact, it’s estimated that fewer than 5 percent of U.S. brand names become generic. Those that do typically are inventions or products that improve on what’s already on the market. The brand names then become so popular that they eclipse rivals in sales, market share and in the minds’ of consumers. And then they spread through the English language like the common cold in a small office. “There’s nothing that can be done to prevent it once it starts happening,” says Michael Weiss, professor of linguistics at Cornell University. “There’s no controlling the growth of language.” FIGHTING BACK A company’s biggest fear is that their brand name becomes so commonly used to describe a product that a judge rules that it’s too “generic” to be a trademark. That means that any product — even inferior ones — can legally use the name. A brand usually is declared legally generic after a company sues another firm for using its name and the case goes to a federal court. Drug maker Bayer lost trademarks for the names “aspirin” and “heroin” this way in the 1920s. So did B.F. Goodrich, which sued to protect its trademark of “zipper” in the 1920s after the name joined the world of common nouns. Similar cases deemed “escalator” generic in 1950, “thermos” generic in 1963 and “yo-yo” generic in 1965. It’s difficult to quantify how much revenue a company loses when its brand is deemed generic. But companies worry that it breeds confusion among consumers. To prevent their names from becoming generic, some companies use marketing to reinforce their trademarks. For instance, after its Band-Aid brand name started becoming commonly used to refer to adhesive bandages, Johnson & Johnsons changed its jingle in ads from “I’m Stuck on Band-Aid” to “I’m Stuck on Band-Aid brand.” Kleenex uses “Kleenex brand” instead of just “Kleenex” on its packaging and in marketing and places ads to remind people Kleenex is trademarked. And the company contacts some people who use Kleenex generically to refer to tissue in order to correct them. “We’ve worked very hard to keep ‘Kleenex’ from going the route of ‘escalator’ and ‘aspirin,’” says Vicki Margolis, vice president and chief counsel, intellectual property and global marketing for Kimberly-Clark, which owns Kleenex. “If we lose the trademark, people can use it with sandpaper and call that a Kleenex.” Xerox is taking a similar route. The company, which introduced the first automatic copier in the U.S. in 1959, has been on a public crusade for decades to keep its brand from becoming generic. The machine’s success has led people to start using “Xerox” to refer to any copying machine, copies made from one and the act of copying. “In the mid- to late-1970s, we ran dangerously close to Xerox becoming ‘genericized,’” says Barbara Basney, vice president of global advertising. “That prompted a lot of proactive action to protect our trademark.” Xerox has spent millions taking out ads aimed at educating so-called “influencers” like lawyers, journalists and entertainers about its brand name. A 2003 ad said: “When you use ‘Xerox’ the way you use ‘aspirin,’ we get a headache.” More recently, a 2007 ad read: “If you use “Xerox” the way you use “zipper,” our trademark could be left wide open.” While people still use “Xerox” generically — the Merriam-Webster dictionary lists the word as both a lower-case verb with the definition “to copy on a xerographic copier” and a trademarked noun — the brand says its campaign has been a success. Xerox is still popular: It’s ranked the 57th most valuable global brand, worth $6.4 billion, according to brand consultancy Interbrand. And perhaps most importantly, Xerox hasn’t lost its trademark. TAKING IT IN STRIDE Sometimes companies embrace when their brands become common nouns. Perhaps the best example of this is Google, a company created in 1998 when Alta Vista and Yahoo.com were the top online search engines. Google, which created a formula that returned more accurate results than its competitors, became so popular that people began saying “Google” to refer to a Web search, in general. Experts say Google has benefited from its name becoming a part of the lexicon. “You don’t say ‘Why don’t I Google it’ and go to Yahoo or Bing,” says Jessica Litman, professor of copyright law at the University of Michigan Law School, referring to other search engines. Apple also has gotten a boost from its brand names becoming synonymous with products. The iPod, which was the first digital music player when it came out in 2001, is still the name people use for “digital music player” or “MP3 player.” And it appears Apple’s iPad is headed down the same path. For consumers like Mary Schmidt, 58, the “iPad” is generic for “tablet.” Schmidt, a Baltimore marketing executive, owns an iPad and doesn’t know the names of any other tablets. “When I think of tablets, I think of an iPad,” she says. “I think it’s going to be the generic name. They were first.” It remains to be seen if the iPad will maintain its name domination in the tablet market. Apple declined to comment for this article. For now, Apple Inc. has a majority of the tablet category, which includes Amazon’s Kindle Fire and Samsung Electronics Co.’s Galaxy Tablet. The iPad accounted for about 73 percent of the estimated 63.6 million tablets sold globally last year, according to research firm Gartner. Apple’s market share is likely to decline as more rivals roll out tablets. But experts say that won’t necessarily diminish iPad’s name recognition. “Apple is actually pretty good at this,” says Litman, the law school professor. “It’s able to skate pretty close to the generics line while making it very clear the name is a trademark of the Apple version of this general category.” When the iPad debuted in 2010, some people offered up “Apple Tablet” or the “iTab” as better names. Others even suggested that the name sounded more like a feminine hygiene product than a tablet: “Get ready for Maxi pad jokes and lots of ‘em!” wrote tech site Gizmo at the time. Two years later, those complaints are all but forgotten. “At the end of the day, the product was so successful that even if it wasn’t the ‘quote unquote’ best name, it made the name synonymous with the category,” says Allen Adamson, managing director at branding firm Landor.

Read the full article →

Caught In the Act: Codes Enforcement Officers Wore Police Badges

April 6, 2012

NASHVILLE — Last fall, The Huffington Post reported that the city of Nashville had begun to push new regulations that were driven by big limo companies and aimed at squashing independent competition. The small car companies fought back, filing a lawsuit to overturn the new requirements. That’s when it got ugly. Drivers allege that after the lawsuit was filed, city inspectors, working on behalf of the Nashville Transportation Licensing Commission , began targeting independent operators by pulling their cars over and issuing citations — even when presented with the legal documents in question — and harassing off-duty drivers in their personal vehicles. During these stops, inspectors wore badges identifying themselves as members of the Nashville Police, according to a former TLC inspector and exclusively confirmed to HuffPost by Kris Mumford, spokeswoman for the Metro Nashville Police Department after months of queries. According to the former inspector, the police impostors also improperly used badges, sirens and flashing lights. Under Tennessee law , impersonating a police officer for the purpose of “causing another to believe that the person is a law enforcement officer” constitutes a Class A misdemeanor, which can carry a penalty of up to 11 months in jail, fines of up to $2,500 or both. “It just came to my attention on Tuesday that one of our officers actually saw an inspector wearing a badge that said ‘Inspector’ but also said ‘Nashville Police.’ Metro is not aware of exactly when or how they got those badges, but they were not authorized by Chief Steve Anderson,” Mumford told HuffPost. According to Mumford, the police have confiscated seven badges that identified TLC inspectors as members of Metro Police or Nashville Police. According to the former inspector, who resigned in late 2011 and wishes to remain anonymous out of fear of retaliation, the commission had been making ample use of the spurious badges. TLC workers would conduct stakeouts in unmarked vehicles and use blue lights — permitted only for official police vehicles — to make traffic stops, the former inspector said. Undercover inspectors would specifically target smaller, independent private car services and give them specious citations, the former inspector said. TLC Director Brian McQuistion admits his department used the badges and blue lights to pull people over, but maintains the practice stopped when he realized they weren’t allowed to. Inspectors’ use of these badges, however, continued until just a few days ago, when the police chief requested the badges’ return. McQuistion says that his department has carried the police badges for the past 35 years but won’t do so any longer. “They were given to the department’s inspectors decades ago for use by the police — I guess they were given [by] police commissions. We didn’t know we weren’t supposed to be using them anymore, so [when the police asked for them,] we turned them in,” said McQuistion. Mumford said the police department is still looking into the circumstances that allowed the TLC to obtain the seven badges. “If they were commissioned by the police department, it would be on a year-to-year basis and most likely would have expired by now. Chief Steve Anderson has been here for 36 years, and he is certain they have not been commissioned in recent years,” she said. Mumford added that she is unaware of any badges ever being issued by special commission to non-police agents. McQuistion refused to comment on the allegations by livery companies when HuffPost contacted him in January. He now says he refused to comment because he wanted to determine if there was a problem with the TLC’s use of these badges. “After my conversation with [HuffPost] about job descriptions and if we had police commissions, I requested to the chief then to get police commissions, and I didn’t hear back from him until Tuesday [April 3,] when he contacted us wanting the badges back.” Ali Bokhari, owner of Metro Livery and one of the plaintiffs in the lawsuit, said TLC officials have pulled his drivers over to issue false citations. “After they passed the regulations, they targeted my business for selective enforcement … because a lot of the high-end clients [of the major taxi companies] were switching to our services,” he said. On January 27, eight days after the city’s motion to dismiss the court case, the TLC ran an undercover sting operation against Metro Livery, in which the former chief of police for Lavergne, Tenn., worked as an undercover agent to persuade one of Bokhari’s drivers to charge less than the minimum fare required under the new laws. Because of the sting operation, Metro Livery now faces having its permit revoked, and the driver faces the loss of his license. Independent drivers fear more than ever that TLC officials are retaliating against the companies who instigated the lawsuit. The commission will continue to issue citations, said McQuistion, pulling over livery vehicles and carrying out inspections with or without badges. “There’s another avenue for us: We still have the authority to do what we do, but we will have to go through the Civil Service Commission to get the job descriptions changed so we no longer have to have police commissions. We still have the right to do what we’re doing by charter.” When asked if the TLC faced investigation by the police, Mumford said, “We don’t have any jurisdiction over them. So I don’t know if they’re under investigation.” Susan Niland, communications director at the Davidson County District Attorney General’s Office said that at this time, her office has not received any criminal complaints or requests to investigate the TLC.

Read the full article →

PHOTOS: Jaw-Dropping Dakota Apartment Listed At $29.6M

April 6, 2012

Ever want to live in the Dakota? Yes, you have. A rather jaw-dropping three-bedroom, three-bathroom just hit the market for a cool $29.6 million. The seller? The president of the Dakota co-op board. Why? The New York Post suggests, without much evidence, that Bruce Barnes, the co-op president, is selling the place because of a skirmish with a previous board president. But in an email to friends Barnes insists that the space is simply too large for two people. The apartment overlooks Central Park and has been incredibly restored to its original 1884 beauty. The Brown Harris Stephens listing describes the place: Rich in history and architectural grandeur, the residence has been meticulously renovated and carefully restored, preserving the original 19th-century details, including 12-foot ceilings, soaring doorways, plaster moldings, exquisite hand-carved woodwork, pocket doors, shutters framing all twelve windows, and seven wood-burning fireplaces . The Dakota takes its historical relevance so seriously that it has an “aesthetics committee that reviews and approves renovation plans and that tours each apartment before and after any work is done,” reports the Times . The Dakota, as you may know, is the building in which John Lennon lived and died, and is the setting for the fictional ‘Bramford’ building in Rosemary’s Baby . Photos courtesy of Brown Harris Stevens . [ VIA ]

Read the full article →

← Previous Entries