weather

Starbucks Bans Blonde Jokes

by Newser.com on January 13, 2012

Huffington Post…

Starbucks launched its new, mellower “Blonde” roast this week, and it doesn’t want to hear any baristas sniggering about the name. “We were told at a regional rally there are absolutely no Blonde jokes to be told around the coffee whatsoever. It will be a written offense if so,” a worker writes at Starbucks Gossip.

View original post here:
Starbucks Bans Blonde Jokes

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

Huffington Post…

WASHINGTON — A burst of hiring in December pushed the unemployment rate to its lowest level in nearly three years, giving the economy a boost at the end of 2011. The Labor Department said Friday that employers added a net 200,000 jobs last month and the unemployment rate fell to 8.5 percent, the lowest since February 2009. The rate has dropped for four straight months. The hiring gains cap a six-month stretch in which the economy generated 100,000 jobs or more in each month. That hasn’t happened since April 2006. “There is no question that today’s employment report is a positive and there is also no question that the pace of job growth has accelerated of late,” said Dan Greenhaus, an analyst at BTIG LLC, a brokerage firm A better job market is a positive sign for President Barack Obama, who is bound to face voters with the highest unemployment rate of any sitting president since World War II. Unemployment was 7.8 percent when Obama took office in January 2009. Still, the level may matter less to his re-election chances if the rate continues to fall. History suggests that presidents’ re-election prospects hinge less on the unemployment rate itself than on the rate’s direction during the year or two before Election Day. For all of 2011, the economy added 1.6 million jobs, better than the 940,000 added in 2010. The unemployment rate averaged 8.9 percent last year, down from 9.6 percent the previous year. Economists forecast that the job gains will top 2.1 million this year. The December report painted a picture of a broadly improving job market. Average hourly pay rose, providing consumers with more income to spend. The average work week lengthened, a sign that business is picking up and companies may soon need more workers. And hiring increased across most major industries. Manufacturing added 23,000 jobs, as did the health care industry. Transportation and warehousing added 50,000 jobs. Retailers added 28,000 jobs. Even the beleaguered construction industry added 17,000 workers. Economists cautioned that some of the gains reflected temporary hiring for the holiday season. The government adjusts the figures to account for those seasonal factors, but doesn’t always fully account for them. The gains in transportation and warehousing, for example, reflected a strong increase in hiring for couriers and messengers. That could stem from a big jump in online shopping over the holidays, the department said. The nation’s work force, which includes both people working and those searching for jobs, shrank slightly last months and is little changed from this spring. That’s a concern because a strengthening job market normally draws more applicants. The work force has declined by about 160,000 over the past two months, one reason the unemployment rate has fallen. “You have to take that unemployment rate decline with a grain of salt when you look at the declines in the labor force,” said Marisa DiNatale, an economist at Moody’s Analytics. The government only counts people as unemployed if they are actively searching for jobs. Discouraged workers who have given up on looking are not included in the rate. And some of those who are counted as employed are working part time, but want full-time work. When including those groups, the broader “underemployment” rate was 15.2 percent. That’s down from 15.6 percent the previous month, but still high. The figure has dropped for three straight months. And the job market has a long way to go to recover from the Great Recession. The nation has 6 million fewer jobs that it did in December 2007, when the recession began. More jobs and higher pay are crucial to helping the economy grow. They could enable shoppers to increase spending, which fuels 70 percent of economic activity. The economy likely grew at an annual rate of above 3 percent, a healthy pace. A more robust hiring market coincides with other positive data that show the economy ended the year with some momentum. Weekly applications for unemployment benefits have fallen to levels last seen more than three years ago. Holiday sales were solid. And November and December were the strongest months of 2011 for U.S. auto sales. Many businesses say they are ready to step up hiring in early 2012 after seeing stronger consumer confidence and greater demand for their products.

Originally posted here:
Jobless Rate Falls To Lowest Since February 2009

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

Controversial Naperville ‘Breastaurant’ Goes Out Of Business

December 3, 2011

A controversial suburban Chicago restaurant known for its scantily-clad waitresses and the community outrage it attracted has closed its doors after being open for less than a year. Show-Me’s, located at 1126 E. Ogden Ave. in Naperville, closed abruptly on Wednesday. A restaurant franchise investor, Jay Madipadaga, told the Daily Herald that mechanical issues and management problems forced the business to close . (Scroll down to watch a video report on the eatery’s closing.) But Naperville Patch reports that the restaurant’s closing arrives on the heels of months of scrutiny from community members concerned about how the Missouri-owned business’s provocatively-dressed employees reflected on the rest of the west suburban city . The city had previously asked the business to institute a stricter dress code for its waitresses — who wore tank tops and short shorts — and close at midnight each day. The city also forced the business to refrain from installing outdoor seating. Madipadaga added to the Daily Herald that he didn’t feel his business was ever given a fair shake by the community, though he admitted they probably should have done more research before putting down stakes in the relatively socially conservative city. “I don’t think we got a fair chance from people,” he said. “But we didn’t know a whole lot about the neighborhood, and that was probably our mistake.” Naperville Mayor George Pradel admitted to the Chicago Tribune that he spent more time handling issues around Show-Me’s than any other restaurant in the city, but that most of those issues arose from community members ” calling in all the time and saying this and saying that, and most of it was unfounded .”

Read the full article →

Michael Moore Fires Back At Critics

October 29, 2011

Michael Moore has a message for Republicans: just because he’s wealthy doesn’t mean he can’t stand with those angry with America’s economic system. The documentary filmmaker, who has been active and vocal in the Occupy Wall Street movement since it began in September, posted on his blog on Thursday a response to conservatives who criticize the seeming juxtaposition between his personal wealth and his involvement in a movement that seeks to balance fiscal inequity in the United States. Noting that he was once an unemployed striver in Flint, Michigan, Moore laid out a basic set of guidelines that he has followed since the success of his film “Roger & Me” in 1989. Included were paying his full taxes, give a large chunk of his money to charity and avoid owning stock on the principle that he’d make money from work, not on the fiscal wrangling of Wall Street that hurt so many members of the middle class. Moore then defended his views in an historical context: “I make my money the old school, honest way by making things. Some years I earn a boatload of cash. Other years, like last year, I don’t have a job (no movie, no book) and so I make a lot less. ‘How can you claim to be for the poor when you are the opposite of poor?!’ It’s like asking: ‘You’ve never had sex with another man — how can you be for gay marriage?! I guess the same way that an all-male Congress voted to give women the vote, or scores of white people marched with Martin Luther Ling, Jr. … It is precisely this disconnect that prevents Republicans from understanding why anyone would give of their time or money to help out those less fortunate. The blog came after Moore squared off with Piers Morgan the night before, with Morgan also going after Moore’s wealth in an attempt to discredit his activism. “I am devoting my life to those who have less and who have been crapped upon by the system,” he said. “And that’s how I spend my time, my energy, my money on trying to up-end this system that I think is a system of violence, it’s a system that’s unfair to the average working person of this country.” He also noted that, given that the 1% made over a million dollars per year, he was not a member of that group. Moore on Friday visited Occupy Oakland , where he paid tribute to Scott Olsen, the Iraq war veteran who was beaten by authorities and remains in hospitalized. “We’ve killed despair across the country and we’ve killed apathy,” he told the crowd there . To read the entire blog, click over to Moore’s website .

Read the full article →

BofA Likely To Alter Rules For Debit Card Fees After Criticism

October 28, 2011

(Rick Rothacker) – Bank of America Corp, after receiving heavy public criticism for a planned $5 per-month debit card fee, is likely to give customers more ways to avoid the fee, a person familiar with the bank’s plans said Friday. The second largest U.S. bank is likely to allow many customers to avoid the fee by taking measures such as maintaining minimum balances, having paychecks direct deposited, or using Bank of America credit cards, the person said. Under earlier plans, customers might have needed balances totaling $20,000 across all their Bank of America accounts to avoid the fee. Bank of Americas unleashed a firestorm of criticism from customers, consumer advocates and politicians last month when it disclosed plans to charge customers $5 per month for using their debit cards, starting sometime next year. The goal was to make up revenue lost to a law that slashes the fees banks charge retailers when consumers swipe their cards. Some other major banks have quietly pulled back on the charges. After testing a $3 per month fee in two states since February, JPMorgan Chase & Co decided not to charge customers, a person familiar with the situation said on Friday. The test will end next month and will not be extended or expanded, the person added. Wells Fargo & Co started testing a $3 per-month fee in five states on October 14. The bank has not had time to evaluate results and has not made any changes in the program, Wells spokeswoman Lisa Westermann said. Charlotte, North Carolina-based Bank of America is not abandoning the fee now and will likely include it in new account types the bank is testing in three states. The bank plans to roll out these packages nationwide next year. The $5 per-month fee may still remain an option for customers, the person said. The bank has said the purpose of the new account types is to provide customers with upfront pricing, instead of hitting them with penalties after the fact. Customers can pay monthly fees of between $9 and $20, or avoid the charges by keeping minimum balances, using their credit cards or having a minimum amount deposited to their account. While some banks have disclosed plans to apply similar fees, many banks and credit unions decided not to institute the charge and have encouraged customers to switch banks. (Reporting by Rick Rothacker in Charlotte, North Carolina; editing by Andre Grenon) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

Halloween’s Eerie Evolution Into An Industry Worth Billions

October 28, 2011

By Alice Hines, AOL Daily Finance Looking for a last-minute costume isn’t too tough these days. In strip malls across the country, temporary Halloween stores have popped up in vacant retail spaces like an orange-spotted rash. But back when Chuck Martinez was growing up in the 1970s, the idea of a store devoted entirely to Halloween was considered kind of crazy, or at best, a silly business plan. Martinez had an unusual job. He worked at a San Diego Sears Roebuck as a company magician, performing at store openings and company meetings. He also helped out at his mom’s magic store. Every Halloween, the pair watched new shoppers flock in, searching for costumes. “We’d do as much business in October as the rest of the year combined,” he recalled. Sensing an opportunity, Martinez told Sears that he wanted to open a temporary Halloween store within its San Diego store. “Everyone thought it was crazy. But I felt very strongly it could work.” To get the hefty deposit that Sears required, Martinez convinced his mom to take out a mortgage on her house. The shop was a hit. And Martinez went on to help Sears (SHLD) open temporary Halloween stores across the country, spending the ’80s developing the Halloween Shop at Sears. He sold the Sears enterprise in 1988 for $6 million — a huge sum back then but just a small slice of 2011 Halloween money. The National Retail Federation estimates Halloween spending will reach $6.86 billion this year. Martinez, who went on to found Disguise Inc., one of the world’s biggest costume makers, is one of a few unlikely, if not accidental, businessmen who fell into Halloween in the 1970s and 1980s and have watched it grow from an indie enterprise to a massive industry. Marc Beige, CEO of Rubie’s Costumes, another large operation, jokes that they are the “Icons of Horror.” Pop-Ups Pop Up Everywhere Temporary Halloween stores have boomed in the years since the Sears experiment, growing in the past 10 years at a faster rate than spending for the holiday. In 1999, chain retailer Spirit Halloween, now owned by Spencer Gifts, operated 63 temporary Halloween stores. This season, it has 970 in the U.S. and Canada. Halloween Express, a Kentucky-based franchise launched in 1990 by a party store entrepreneur, had 130 stores in 2006. Halloween USA, a Michigan-based chain of pop-ups, had 100 stores in the same year. Today, the two have expanded to 300 and 400 pop-ups, respectively. Many more local chains have followed suit. The past five years have been explosive. In Manhattan, Ricky’s NYC, a beauty chain, opened up 30 Halloween pop-ups this year in the greater New York area. In the suburbs, pop-ups are practically ubiquitous. In Akron, Ohio, a city of 200,000 an hour south of Cleveland, there are ten Halloween stores this year, says Debbie Meredith, the owner of Akron Design. “Halloween has become so popular that it’s just about killing itself,” Meredith says. She started her store 31 years ago in her basement, when she was sewing costumes for her friends’ Halloween parties. Her first costume (still available for rental on the company’s website) was a purple grape suit inspired by the 1978 Fruit of the Loom commercial. Stores like Meredith’s that stayed local, while others expanded, are today under siege, encroached upon by big chains like Walmart (WMT) as well as the pop-up stores. “It’s really hard [to compete] when you pay taxes and keep people employed year-round.” She had managed to survive in part by moving sales to the web. Meredith, who is vice president of the National Costumers Association, says that the trade group has seen 20% of the 1,800 year-round costume shops it monitors close since 2006. Ironically, at the nadir of the economic crisis in 2009, when all other stores were suffering, Halloween pop-ups were at their peak, scooping up empty, low-rent space formerly occupied by stores like Circuit City and Linens ‘n’ Things. This year, many of the stores are opening in former Borders locations, though competition for space is now much fiercer, industry insiders say. Adventures and Acquisitions In the 1980s, others caught onto Martinez’s good idea. Big chains like Walmart and Macy’s (M) followed Sears by stocking Halloween goods. Meanwhile, other individuals had been striking gold with Halloween stores in malls, as more and more grown-ups starting dressing up for the holiday. Perhaps the most legendary of all the Halloween stores, however, is New York City’s Halloween Adventure. The huge store, which runs the width of a city block, was launched in 1996 by actor and former Halloween kiosk operator Bruce Goldman and Tony Bianchi, an artist and mask maker. The store was a natural next step for the pair, who had teamed up to create theatrical Halloween pop-ups — “entertainment retail,” as Goldman explained to The New York Times in 1994. On a recent Wednesday, Halloween Adventure was crawling with children, bachelors, students, couples — even rock star Elvis Costello and his son (so a salesperson claimed) were there. Also in attendance: 100 costumed employees, 60 of whom were hired for the season. Bianchi, now 66 and on his 15th Halloween at the location, was running around in a feathered cap helping customers and talking to journalists. While the store is open year-round, Bianchi says Halloween accounts for 60% of business. From his perch, Bianchi has watched the quirky Village celebration transform into an international industry. “The [big] chains realized there was a holiday between Back to School and Christmas,” he says. October is otherwise a dead month for retail, and when a few retailers began to make money, others big and small took notice. Costume manufactures also played a role, creating more elaborate costumes to fill the new stores and feed the burgeoning demand. With the current state of competition in the industry, Bianchi’s lucky to have his prime New York City location and eager East Village clientele. “We’re like the FAO Schwarz of Halloween,” he says. Every year without fail on Oct. 31, shoppers line up around the block to get costumes before the store closes at 10 p.m. Superstore Success Spirit Halloween, acquired by Spencer’s in 1999, was probably the first chain to open a “superstore” of the kind we see today, a 20,000-plus-square-foot box. Spencer Gifts was able to take the concept to a much bigger place when it bought Spirit, notes Martinez. In the 2000s, other chains like Halloween City were acquired by big companies like Amscan. Meanwhile, local businesses, inspired by their success, tried their hands at pop-ups through franchises like Halloween Express or private ventures. According to Bianchi, many of the operators who opened pop-ups in the 2000s were more interested in money than the meaning of the holiday. “I’m connected with the aesthetic of Halloween, the silliness of the holiday from infants to old age,” he says. “Pop-ups tend to be slapped together.” Still, the line separating the originals from the opportunists isn’t always clear. Some “mom and pop” costume stores have become national chains. Other pop-ups are now trying their hands at permanent retail. In addition to Bianchi’s location, Halloween Adventure now operates 26 permanent toy stores, all of which become Halloween stores during the season. But no matter how you look at it, what seemed like an all-you-can eat retail buffet ultimately turned cannibalistic. “Margins are big, and it looks like a no-brainer,” Bianchi says. “Then stores copy each other. You see them all along the highways up and down New Jersey. They wipe each other out.” Business of Fantasy Martinez and some of the other “icons” express regret that so many small costume shops — similar to the one he and his mother once owned — have closed. “I think what happened is Halloween really grew up,” he says. “Those baby boomers took it along with them to celebrate in an adult fashion and to pass on to their kids as a more involved experience.” “Europe has carnival and masquerade,” he says. “This is the closest thing we have to a fall harvest festival.” Meredith also acknowledges that the growth that has hurt her store has been wonderful for consumers. While some of the fantasy and creativity she loved about Halloween has been lost, the holiday is now accessible to more people. Today, anyone can buy a costume for as little as $5, if they don’t mind being a stock character — a vampire, witch, zombie, etc. — or last year’s forgotten superhero hit. Meanwhile, there are still some hardcore Halloweeners and costume fanatics keeping the holiday weird. New York shoppers who don’t find anything in the two neighboring pop-ups on Broadway can still wait in line to dig around Bianchi’s store, or else browse the wealth of costumes available online. This year, Meredith’s surprise hits were 25 homemade hamster masks (made popular by the Kia Soul commercials) that she sold for $75 a pop on eBay. No other manufacturer could produce them fast enough. Check out some photos of Halloween Adventure, courtesy of AOL Daily Finance :

Read the full article →

Businesses Can Help Their Employees Beat The Heat

July 22, 2011

NEW YORK — The searing heat this summer is giving small business owners a great opportunity to create some goodwill with their employees. When the heat index outside is 105, anything from a few commiserating words to a few hours off will go a long way toward helping workers feel appreciated. And maybe help you keep them when the job market gets better. Of course, in places like Southern California and Arizona, going to work when the temperature is above 90 or 100 is part of life. But in other parts of the country, such temperatures aren’t the norm and people struggle more to get through the work day. No matter what your climate is, you might want to consider ways to give your employees some comfort and a few breaks. BE SYMPATHETIC You’re probably as bothered by the heat as your staffers are. But, “it’s time for managers to say, `how are you doing with this awful heat,’ and to recognize that nerves are frayed,” says Beverly Kaye, an employee retention consultant in Sherman Oaks, Calif. Kaye says a few kind words and some understanding can lift a worker’s spirits. So can letting employees know that you appreciate the fact that it can be harder to get through the work day and still do a good job when everyone is so uncomfortable. This approach is particularly important if you have premises, like a factory or auto repair shop, that can’t be air conditioned. Your workers may really be suffering and would feel better if you show your human side. HELP YOUR WORKERS COOL OFF Are the only cold drinks on your premises in soda machines? And do employees have to pay for them? You might want to think about getting a refrigerator if you don’t already have one. And then go to a warehouse club retailer and stock up on bottles of water, iced tea and soda that everyone can help themselves to. It probably won’t break the bank and you’ll be creating a lot of goodwill. Kaye suggests bringing in ice cream. Or pizza – it may not cool anyone off, but it will lighten everyone’s mood. Depending on how big your staff is, it can get expensive. But, Kaye says, “do it, it’s going to come back in spades” in terms of loyalty from your staff. If your air conditioner should break down at the worst possible time, then you need to get fans in quickly. If you have a dress code, relax it so staffers can be as comfortable as possible until the AC is back. HOW ABOUT SUMMER FLEX TIME – AND TELECOMMUTING? If your business can stand a few lost hours of productivity, consider letting everyone go home early. Kaye suggests going even further, and offering staffers a day off. It may not be the company policy to have what Kaye calls “heat days.” But, she says, “which will you keep, the rules or the people?” You might also want to let staffers who work at a PC do their work from home. This can be essential if there’s a problem with the air conditioning in your company, or if you have a staffer who has health problems that are worsened by the heat. This all means being aware of what’s going on with your staff, and how they’re being affected by the heat wave. Here’s something else you can do: If staffers are running the air conditioner at home to keep their dogs cool, how about holding a “Bring Your Dog to Work Day?” That would let them keep their pets comfortable without running up a big electric bill. Chances are, everyone would get a kick from having the pooches around.

Read the full article →

Rahm Drastically Reins In City Agency Credit Card Usage

July 11, 2011

After his administration reviewed how government-issued credit cards are used in the city, Chicago Mayor Rahm Emanuel announced plans to drastically cut the amount of plastic being swiped by employees of city agencies. While some 500 credit cards have previously been in circulation among the city’s government agencies, that number will now be cut to just 30 , to be distributed evenly between the Chicago Transit Authority, Chicago Housing Authority, Chicago Park District, Chicago Public Schools, City Colleges and the Public Building Commission, the Chicago Sun-Times reports. Also, the cards’ use will now be limited to only top executives, whose spending will be made public on a monthly basis. Petty cash funds will be cut entirely and gifts, flowers, car washes, parking or red light tickets and refreshments for holiday parties or birthdays will also restricted under Emanuel’s new policy. “As public servants, we are employed by the people of Chicago, and misuse of their hard-earned tax dollars will not be tolerated,” Emanuel said of the new policies in a statement . “The City of Chicago must be a judicious steward of these funds, and I commend the Comptroller for his swift and thorough review of the city’s reimbursement policies and ask all department and agency leadership to implement these new policy guidelines immediately.” The move comes after City Comptroller Amer Ahmad discovered some questionable charges to agency cards. The charges, as reported by Greg Hinz at Crain’s , include $21,000 for an “executive coaching” session, $1,098 for a group dinner in Reno, Nev., $5,000 for an “appreciation event” and $34,000 in fuel costs, though the city has its own, separate contract covering gasoline expenses. Ahmad would not disclose which agencies were responsible for those charges. Last month, former CHA head Lewis Jordan, one of the top remaining holdovers from former Mayor Daley’s administration, resigned from his position after a Better Government Association/FOX Chicago investigation uncovered he and his department had misused city credit cards for gift cards, flowers, red light camera tickets and even a United Center suite.

Read the full article →

Foxes Guarding The Henhouse? Auditors Criticize Self-Regulation Of Hedge Funds

July 11, 2011

Allowing the hedge fund and private equity fund industry to regulate itself might not be very effective, according to a new Government Accountability Office audit released Monday . Since the Securities and Exchange Commission lacks adequate resources to police the sector, the GAO was tasked under the Dodd-Frank Act with determining the feasibility of forming a self-regulatory organization to provide primary oversight of private fund advisers. Though such an SRO could supplement oversight, it presents challenges and trade-offs, according to the report. By “fragmenting regulation between advisers that advise private funds and those that do not, a private fund adviser SRO could lead to regulatory gaps, duplication and inconsistencies,” concluded the GAO. Some of the disadvantages of a private fund adviser SRO include its potential to (1) increase the overall cost of regulation by adding another layer of oversight; (2) create conflicts of interest, in part because of the possibility for self-regulation to favor the interests of the industry over the interests of investors and the public; and (3) limit transparency and accountability, as the SRO would be accountable primarily to its members rather than to Congress or the public. Treasury Deputy Secretary Neal Wolin offered a vigorous defense of Dodd-Frank in Politico, warning that to carry out the reforms effectively, “we need to make sure regulators have the resources they need to do their jobs.” Warren Heads Back Into The Lion’s Den Elizabeth Warren, the presidential adviser who temporarily heads the Consumer Financial Protection Bureau, heads back to the lion’s den on Thursday — to testify before the House Oversight Committee. At the close of her last appearance before the committee, Rep. Patrick McHenry (R-N.C.) accused her of lying during a YouTube-worthy exchange about how much time she would be testifying. As iWatchNews.com notes, the hearing to be led by Chairman Darrell Issa (R-Calif.) is ominously titled, “”Consumer Financial Protection Efforts: Answers Needed.” Elsewhere in the world of financial regulatory reform, Monday is the deadline for public comments on a proposal to set margin and capital requirements for swap dealers and traders, and on an SEC proposal to raise the threshold at which investment advisers can charge a performance fee. ‘Fracking’ Wastewater Ruins National Forest Wastewater from natural gas hydrofracturing — known as “fracking” — decimated a national forest in West Virginia, according to a new study by a U.S. Forest Service researcher. The fracking fluids killed more than half of the trees and caused radical changes in soil chemistry in a quarter-acre section of the Fernow Experimental Forest in the Monongahela National Forest, reported Public Employees for Environmental Responsibility . The study found the following effects of the application of 75,000 gallons of fracking fluids over a two-day period in June 2008: • Within two days all ground plants were dead; • Within 10 days, leaves of trees began to turn brown. Within two years more than half of the approximately 150 trees were dead; and • “Surface soil concentrations of sodium and chloride increased 50-fold as a result of the land application of hydrofracturing fluids…” These elevated levels eventually declined as chemical leached off-site. The exact chemical composition of these fluids is not known because the chemical formula is classified as confidential proprietary information. SEC Slow to Police Problems at U.S.-Listed Chinese Companies After the SEC promised to overhaul and beef up its enforcement in the wake of the Bernie Madoff scandal, the agency been caught flat-footed with mounting problems at U.S.-listed Chinese companies. Since March, more than two dozen companies have announced auditor resignations or accounting problems, reported Reuters . Yet the SEC has been slow to respond, say critics, taking too long to tighten oversight of U.S. shell companies acquired by Chinese firms through “reverse mergers,” which allow the companies to avoid initial public offerings. Part of the problem is that such mergers fall under state law. This week, SEC officials are in China trying to get Chinese auditors access to inspect such companies. How Big Pharma Cornered Market On Asthma Inhalers Today’s must-read: how pharmaceutical companies took advantage of the 1987 ban on the use of ozone-depleting chlorofluorocarbons to corner the market on CFC-free asthma inhalers — squeezing out competitors and raising prices. Mother Jones’ Nick Bauman reports: Many of the patents for the new inhalers won’t expire for another six years, so there likely won’t be any generics until then, unless the patents are challenged in court. The switch to the new inhalers will cost American consumers, insurance companies, and the government some $8 billion by 2017, according to FDA estimates. That’s money in the drug companies’ pockets. In 2007, a top market-research firm alerted investors that the US inhaler market “will soon change from low-value to significant.” Sure enough, at nearly $1 billion a year, sales of the market-leading inhaler, ProAir, now rival Viagra’s. The FDIC vs. Forbes After Forbes published a tough piece on the Federal Deposition Insurance Corporation’s outgoing director, Sheila Bair, the agency’s counsel penned a sharp retort, calling the editorial “more personal attack than commentary.” That of course prompted editorial co-author Vern McKinley to write his own reply to the reply. It’s not exactly as scintillating as the volleys between Nadal and Djokovic at Wimbledon, but here’s the back and forth . Meanwhile, Bair will have plenty of space to vent in her upcoming book for the Free Press. In a proposal obtained by the New York Times , she wrote: “I will share perspectives on the problems of regulatory capture and the continuing reluctance of bank regulators to fully acknowledge current problems in the financial sector, which are substantial.” The Goat Watching Over The Lettuce Patch A 14-year-old program in Puerto Rico that allows companies to regulate themselves on workplace health and safety issues may not be adequately protecting the workers, reported the Centro de Periodismo Investigativo. Since 1997, the program has resulted in only two findings of a serious nature — one involved a non-work-related death in a parking lot of a company and a second incident, which was resolved outside of court and is confidential. CPI reports : Think it sounds too good to be true? Well, maybe that is precisely the problem with the Voluntary Protection Programs (VPP) – that it contradicts its own definition because it leaves in the hands of employers the establishment of health and safety parameters, with the supposed participation of the workers, and far from the eye of the state’s regulatory agencies. All of this in exchange for less inspections and exemption from fines in the majority of cases.

Read the full article →

Obama Aide On Social Security Cut Story: It ‘Overshoots The Runway’ (UPDATED)

July 7, 2011

WASHINGTON — The Obama administration is pushing back against a Wednesday night report that the president is prepared to offer cuts to Social Security as part of a deal to raise the debt ceiling. “The story overshoots the runway,” said a senior administration official. “The President said in the State of the Union that he wanted a bipartisan process to strengthen Social Security in a balanced way that preserves the promise of the program and doesn’t slash benefits.” “While it is definitely not a driver of the deficit,” the official added, “it does need to be strengthened.” The response, sent via email to The Huffington Post, provides a measure of assurance to Democrats who were taken aback by the abrupt news, broken by the Washington Post , that Social Security reform was now on the debt-ceiling table. Still, the devil is in the details, and the idea of “strengthening” the entitlement program remains the vague standard for reform. Making Social Security means tested , for instance, could be pitched as a way to improve the program’s solvency, even if doing so would drastically undermine its founding purpose, as some experts warn. There are also several smaller alterations that have been proposed. Last week, advocates expressed concern over news that lawmakers were considering changes to the way the government calculates the rate of growth for benefits people receive. Confusing the debate even more are the political implications of putting Social Security or any other entitlement reform at the heart of debt-ceiling negotiations. Democrats believe they can use Republicans’ votes for a Medicare voucher program earlier this spring as a potent political weapon. But by signing off on cuts of their own — the thinking goes — Democrats would lose any political advantage they’ve gained by saying they are protecting Medicare while the GOP is trying to fundamentally change or do away with the program. UPDATE 10:38 a.m: White House spokesman Jay Carney commented on the reports concerning Social Security cuts Thursday morning. “There is no news here,” Carney said. “The President has always said that while social security is not a major driver of the deficit, we do need to strengthen the program and the President said in the State of the Union Address that he wanted to work with both parties to do so in a balanced way that preserves the promise of the program and doesn’t slash benefits.”

Read the full article →

Google, Tres Amigas Aim To Fix America’s Electrical Grid With Novel Technologies

May 27, 2011

Anaheim, Calif. — During the American wind industry’s annual convention this week, two of the boldest proposals for the future of renewable industry didn’t involve bigger or better turbines. They’re instead focusing on the comparatively unsexy issue of America’s creaking electricity grid. The Internet giant Google and an upstart New Mexico-based company called Tres Amigas want to transform the way power gets from wind farms and solar power arrays to your house. Both plans rely heavily on unproven technologies: Google and other investors plan to build a 350-mile long undersea cable off the Atlantic coast , while Tres Amigas wants to create a 22-square mile superconductor “Superstation” to synchronize the nation’s three major electrical grids. As the U.S. becomes more and more energy-hungry, the country needs more generating capacity. And with most Americans resistant to new projects anywhere near cities and suburbs, new plants need to be placed far away from population centers to win approval. Google’s backbone could open up hundreds of miles of ocean territory for offshore wind farms, and the Tres Amigas project would open up wind and solar projects in remote parts of New Mexico and Texas. Both of these projects are taking place within a larger push to improve the American antiquated electrical grid, said Peter Fox-Penner, a principal at The Brattle Group, a consulting firm that worked on the Google-supported project’s application to federal regulators. “All segments of the industry are building more transmission now,” Fox-Penner told HuffPost. “Primarily to integrate renewable into the grid, abut also for reliability and other reasons.” Google’s support for the Atlantic Wind Connection — a 37.5 percent stake — could be a good public relations move for a company that relies on energy-sucking data centers to run its core business. According to an estimate in Harper’s , just one data center “can be expected to demand about 103 megawatts of electricity — enough to power 82,000 homes, or a city the size of Tacoma, Washington.” Environmental organization Greenpeace has dinged the company for not relying enough on renewables (while acknowledging that it performed far better than some tech companies, like Apple). So far Google has invested a total of $400 million in clean energy projects. Google says it is pursuing the projects both because they make good business sense and because they make the company more environmentally responsible. The Atlantic Wind Connection project is still at an early stage, and no one knows if Google and its co-investors can pull it off. One of the project’s lead developers has said the scheme is “about as risky as you can get.” The engineering challenges of laying all the cables and connecting them to both wind farms and the grid on land are daunting — and Google isn’t even proposing to build any wind farms itself. Offshore wind is still a young segment of the industry, and no project at this scale has yet been completed: Google’s plan would create development opportunities for up to 6,000 megawatts of power when all of Europe, the world leader in offshore wind, only has about half that many megawatts online. The project got good news last week when the Federal Energy Regulatory Commission approved a 12.59 percent profit rate, but other federal and state regulators still need to weigh in. And while Google says the project, which is 22 miles off the coast, is far enough off-shore to ensure that any offshore wind farms that sprout up along the electricity backbone aren’t a visual nuisance, the long saga of the Cape Wind project shows just how tenacious seashore dwellers can be about their ocean views. Watch Google’s Rick Needham, the company’s green business operations director, explain the Atlantic Wind Connection and Google’s green energy plans. Building a wind farm on land is less technically challenging than building one far offshore, but it still has to connect into the grid somehow. America’s grid is so balkanized that when the wind is blowing hard in Texas and electricity is cheap there, California utilities can’t buy the cheap power and pass the savings along to customers. While grid difficulties are not unique to renewable energy, the sector has the most to gain from improvements because wind and solar depend on the weather and thus need to be able to send their extra energy across large distances as flexibly as possible to balance out supply fluctuations, experts say. Tres Amigas is trying to connect the western, eastern and Texas power grids — an idea the federal government proposed but failed to execute in the 1950s — with a $1 billion plus project that could ultimately send 30 gigawatts zooming across the country. Because the three grids don’t quite operate on the same frequency, Tres Amigas would use novel technology to synchronize the electricity: superconducting high-voltage direct current cables and new computer programs. Power would first need to be converted from AC to DC, then whipped around the superstation on the superconducting cables and finally be converted back to AC to be shipped off to another grid. The company that makes the high-tech cables, American Superconductor, is an important investor in the project, but it has recently weathered fire for management problems . The market for this plan, though, remains untested. Texas in particular seems reluctant to open up its grid — and its wind farms — over fears of utility bill increases. The Federal Energy Regulatory Commission, moreover, cautioned Tres Amigas last March over the lack of detail in its applications. The man behind Tres Amigas, however, is optimistic — CEO Phil Harris plans to break ground this year on the first part of the project, which will transmit a few gigawatts between the three grids. The final superstation plans to be able to transfer around 30 gigawatts. See Tres Amigas founder and CEO Phil Harris talk about the project. Even if these splashy projects never get off the ground, the push towards renewable — now mandated by many state laws — means the U.S. will likely need many more transmission lines in the future. “There’s the highest activity probably in the history of the country right now,” said Fox-Penner.

Read the full article →

U.S. Economy Slows To A Crawl — At Least For Now

April 28, 2011

NEW YORK — At least temporarily, the U.S. economy has slowed to a crawl. U.S. gross domestic product — one of the key gauges of overall economic growth -– fell dramatically to 1.8 percent in the first three months of this year after growing at a rate of 3.1 percent at the end of last year, according to figures released by the Commerce Department on Thursday. While some economists argue the quarterly figure could simply be an economic blip caused by harsh winter weather and spiking gas prices, others warn that the recovery could still be a jobless one. A dramatic drop in consumer spending — which makes up roughly 70 percent of economic activity — weighed GDP in the first part of the year. Bad weather hurt construction and limited consumer spending, keeping many Americans away from winter sales in January and February. As the weather improved, soaring gas prices and higher grocery bills limited spending for many people. Consumer spending fell from 4 percent at the end of last year to 2.7 percent at the beginning of this year, according to the Commerce Department figures. “We think the GDP numbers are a little bit of a fluke,” said Nariman Behravesh, chief economist at IHS Global Insight, a financial and economic analysis firm. “There is a disconnect between the GDP numbers and some of the other data on the U.S. economy,” said Behravesh. “The other numbers we’re seeing are more consistent with 4 percent growth than 1.8 percent growth.” Behravesh said he believes growth is already picking up following the low of the first quarter of 2011. GDP numbers often lag behind other data, and revisions of the data released as the Commerce Department gets more information could reveal growth was stronger than thought, he argued. But some of the dropoff in consumer spending in the first part of 2011 was also a function of its relative height at the end of 2010, when U.S. consumers spent in earnest for the first time since the recession. The holiday season, the fact that many people had saved up during the downturn, looser financing for large purchases and even the Federal Reserve’s quantitative easing program pushed personal consumption expenditures to 4 percent for the last quarter of 2010, said Constance Hunter, chief economist at the investment banking firm Aladdin Capital. For the overall year, however, that spending grew by just 1.7 percent, Hunter added. “So if we can maintain anywhere close to the current 2.7 percent rate of growth in 2011, we will be doing much better than in 2010,” said Hunter. “It’s not all a bed of roses, we have higher gas prices,” Hunter said, adding that she didn’t believe they’d stay high, as many were already cutting down on driving , which she argued, would eventually drive demand, and prices down. But, she cautioned, jobless claims for April didn’t bode well for overall unemployment figures. “The problem is the Fed is coming up against the boundary of their effectiveness in terms of generating jobs growth and Bernanke said as much,” she said, referring to the Federal Reserve’s closely watched Wednesday press conference. During the central bank’s first-ever presser, Fed Chairman Ben Bernanke said growth will lag this year as inflation picks up. The Fed also lowered GDP estimates for the entire year to 3.3 percent from 3.9 percent. Even the Fed’s forecast of growth isn’t enough to create a significant number of new jobs, said Josh Bivens, an economist at the Economic Policy Institute, a Washington think tank. “Just to keep our currently high unemployment rate stable, we’ve actually got to put upward pressure on it,” he said. “What it means for people is that it’s not going to get appreciably easier to find a job any time soon unless we start seeing much higher GDP growth numbers.” Other economists argued that there was enough growth to sustain moderate increases in employment, with manufacturing alone growing by 9 percent in the first part of 2011. Unemployment fell to a two-year low of 8.8 percent in March after the economy added 216,000 jobs. Many employers have wrung all the productivity they can out of employed Americans, said Lynn Reaser, chief economist at Point Loma Nazarene University in San Diego. “Companies do need to take on additional employees because otherwise the huge gains in productivity that we saw in 2010 are not sustainable,” she argued. Reaser also cautioned against directly linking GDP and jobs, explaining that the economic impact of various events often lagged behind, and that both growth and employment fluctuated from quarter to quarter. “We’re seeing growth, it’s just disappointing,” said Kathy Bostjancic, director for macroeconomic analysis at the Conference Board, an economic research group. And what little growth there was would be buffeted by major headwinds, like high unemployment and the depressed housing market, she said. Adding to the strain, state and local governments have drastically cut spending, and the same is about to happen nationally, Bostjancic said, with wrangling over the best way to cut spending in Washington. “We’re going to see more contraction at the federal level,” said Bostjancic. Government spending and hiring will be slashed, and industries and jobs dependent on them will also take a hit, she warned.

Read the full article →

Steve Mariotti: Remembering Ayn Rand

April 21, 2011

I am the founder of the Network for Teaching Entrepreneurship (NFTE) and I would like to share my personal memories of Ayn Rand and the effect she and her work had on my life, which provide interesting sidelights on the legendary founder of Objectivism. It took me two months to read all 1069 pages of Atlas Shrugged in 1967, as a 14-year-old. Rand’s famous novel was sent to me by my grandfather, Lowell B. Mason, who was Ayn’s friend and advisor. Reading it was what made me want to be an entrepreneur. Featuring an inspirational hero who was independent and could get things done, Atlas Shrugged was the first work of fiction I had ever read that talked positively about entrepreneurs and the wealth they created. It eventually motivated me — as a 9th grader in Flint, Michigan — to move to New York and start a business. So here is my story. I met with Ayn Rand three times, beginning on Memorial Day of 1980, and our correspondence continued through mid-January of 1982, two months before she passed away, on March 6th. Our last meeting was right before her trip to New Orleans, in the fall of 1981, where she spoke at my friend Jim Blanchard’s convention on investments. Jim was the top expert in the world on gold investment, and he got Ayn to be the featured speaker by arranging for a private train car for her trip. My appointment on Memorial Day in 1980 was at 11 in the morning. I was overdressed for the weather, and sweat streamed down my face as I walked around the block at 34th Street and Lexington Avenue, putting off the meeting with my role model. Despite her well-known inaccessibility, Ayn Rand had agreed to meet me, a 26-year-old entrepreneur, through a connection with my grandfather, a famous libertarian lawyer who had worked with Clarence Darrow in the Depression. Now, procrastinating, I could barely breathe. I was exhilarated and terribly nervous. She was a great hero of mine; I had memorized large parts of Atlas Shrugged . However, I would find out that the Ayn Rand I had fantasized about was not the Ayn Rand I was about to meet. I finally went into the lobby of the Tudor-style building at 128 East 34th Street, and rang the bell for apartment 6D. (The name on the directory was O’Connor — Frank O’Connor, her husband, had recently passed away.) “I never agree to meet with anyone,” were her first words. And then: “You’re right on time. That tells me something about you. Your grandfather Lowell has been my close friend since I started writing The Fountainhead. He gave me good advice on some legal issues. His Language of Dissent was brilliant,” she continued, pointing to the copy on a bookshelf. “Otherwise I would never have agreed to see you. I am old and do not have the energy.” She wore a black dress that came to just below her knees, and her hair was pulled back and up. She made a point of standing beneath a topless portrait of herself painted 40 years before, when she was in her thirties. She examined me intently, wearing the same sly smile she had in the portrait. She was beautiful and, standing directly below the picture, she seemed to be saying: “And I am still this sexy?” She was. With her high cheekbones, full bosom and bright green eyes, she looked like an earthly goddess who had stepped out of one of her novels. I called her “Dominique,” and then “Dagney,” and she smiled and touched my arm. She knew I meant it when I told her how beautiful I thought she was, and laughed a loud, Russian laugh.” I was in love. She showed me around the apartment — everything but the bedroom; she said it was too untidy for me to see. She showed me the massive drafting table on which she’d written every page of Atlas Shrugged by hand. She mentioned how she’d outlined various thoughts and ideas from Part Three of Atlas Shrugged : “A is A” — on the table in ink. When I asked where she had outlined parts One and Two, she laughed and said she would tell me later. (She never did.) It was amazing to think that she had laid out the handwritten pages of her masterwork on this very table every night. She showed me some handwritten pages of an unpublished article about the impact of Atlas Shrugged , as well as ten or so pages from a draft of the manuscript of Part One of Atlas Shrugged , “Non-Contradiction.” We talked for about an hour in her apartment — over the noise of a maid, who was cleaning. Then we headed out for lunch. The maid, a soft-spoken African-American woman, said: “Ms. Rand, please do not be long, and absolutely no smoking.” (I didn’t know at the time that she had been diagnosed with lung cancer.) As we walked down Lexington Avenue, I quoted my favorite passages from both her novels, and also from the Objectivist Newsletter. At the corner of 33rd and Lex, I happened to mention King Vidor being the director of King of Kings . It was Cecil B. DeMille. Ayn said: “Now that you’ve gotten one wrong, can you be quiet and let me talk?” Of course I had been rattling on, as we walked from her apartment to the restaurant. I wanted to impress upon her just how significant she had been to me growing up, and that I knew she had met her husband on the set of King of Kings, in 1927. But, because of that one slip, I had to pretty much suppress my urge to talk further and, over the next four hours, let her have the lion’s share of the conversation. The restaurant was closed because of the holiday. As we walked on, looping back around towards her apartment, I remember thinking, “This is going to be a short meeting; we are going to end up back at her front door and that will be it. She won’t invite me up because the maid is cleaning.” Luckily we found a diner a block further on, back on 34th Street, and settled in. Ayn ordered cereal and I got a hamburger. She lit a cigarette and didn’t stop smoking and blowing smoke in my face for the next four hours. She did not eat at all. When it was apparent that I was uncomfortable with her smoking, Ayn shrugged and said, “I can’t do this in front of my housekeeper because it’s bad for my health. Do not be such a complainer.” The time went by in an instant. We talked about philosophy and economics and her work and career, and the love of her life, Frank O’Connor. In our time together I understood how she could have created a worldwide movement against totalitarianism just through force of will. But, sadly, she was also an adherent of atheism, a point of view I so strongly disagreed with that I could not keep silent about it, and the debate was on. In her words, I was a “mystic fool,” but I pushed back with Pascal’s argument that this world is so complex that some higher power must have created it. She was fearless and said exactly what she thought, in short, perfectly formed sentences. She was extremely judgmental, and every remark was dissected and commented upon. But earlier in my life I had faced off with Madelyn Murray O’Hare, the famous American atheist, and I too was fearless, at least on this subject. But she also spoke about her childhood, her father the pharmacist, growing up in and then leaving Russia, and about her sister, who came to live with her in the 1960′s. Throughout the conversation she would laugh often — loudly and joyously. I listened intensely to her every word, sensing that being with this beautiful woman would impact my life forever. As our visit was coming to an end, she said, “You listen and talk well but too much sometimes. You would make a good teacher. I’ve been taking math lessons in arithmetic; can you show me how to do this problem?” It was a simple procedure of dividing fractions and I showed her how to do it, feeling the pleasure of knowing something she did not. (Years later, in one of life’s great coincidences, I was in the same class with her math teacher.) I paid the check, we walked back to her apartment building, and said goodbye. I told her: “You are a great teacher, Ms. Rand.” She walked into her building and that was the end of our first meeting. A few days later, I sent her a book about Hollywood that she was mentioned in, along with a hand-written thank-you note. She didn’t reply, so a few weeks later I sent another gift — Russian candy — meant humorously, with another note. She sent them back. The returned gifts were accompanied by a letter from Ayn’s secretary, saying that Ms Rand had only seen me out of courtesy to my grandfather. I was devastated. This incident cut me deeply. I was so scarred by the rejection that I couldn’t even tell anyone about it for 15 years. Ayn had been so nice to me during those smoke-filled hours, which made the letter from her secretary all the more distressing. (I promised myself never to treat anyone like that, and I never have.) I felt then what others had told me: my idol was nothing more than an egotistical, self-absorbed recluse, and just as flawed as anyone else. Fifteen months later, in September of 1981, we both got another chance. Again my grandfather had intervened, calling Ayn and apologizing on my behalf. To me, he said: “You were too intellectually aggressive.” I was shocked, and didn’t say anything about my virtual silence for those four hours in the restaurant. My grandfather continued: “Because she hurt your feelings last year, she will see you one last time — for fifteen minutes. Don’t mess it up this time. She is a genius and you can learn a great deal from her. Do not talk or take issue with anything at all.” I met her in the lobby of her building in the early fall of 1981. I had been so shaken by her letter and the return of my gifts that I must have looked like a stunned little kid — beyond chagrined. She said, “Don’t be so weak. Weakness sickens me. Do not make me feel pity.” I knew she was quoting from The Fountainhead ; I then quoted the preceding and following sentences. She laughed, and said, “OK, you’re forgiven.” She looked even more beautiful to me this year. Her intelligence shone from a face that was now over 76-years-old. We went back to the restaurant on 33rd and Lexington that had been closed the previous Memorial Day. I gave her a bracelet my mother had given me when I left Flint. She put it on over a green shirt that was covered by an old blue sweater, with an elegant gold brooch pinned to the sweater. Her outfit was completed by a pair of baggy black pants. We sat at her favorite table by the door, exactly on the corner. She knew all the waiters, who were very respectful to her. I excused myself and went to the bathroom. On the way, I asked one of the waiters: “Do you know who that is?” “Of course,” he replied, “she’s a writer, right?” This time Ayn and I talked for at least five hours. She was still grieving over her husband Frank’s death. She smoked continuously, and said: “No one knows how sad I am. And this pain from Frank is killing me.” She blew a cloud of smoke in my face and said, “You should come to my funeral.” I laughed when she added: “And I mean it” — the four words that had guided her life. She told me in detail how she met Frank O’Connor on the set of King of Kings on a bus for the extras. She then did not see him for several months, until running across him by chance at the studio library, where he was reading about art history. She told me with a breaking voice what he was wearing on his tall frame. She had kidded him about his baggy pants and he had laughed at her accent. They both liked the poem “IF,” and she recited it to him from memory. For her, it was love at first sight. She told me many anecdotes about Frank and related how he had had a stroke before he died, which interfered with his ability to talk but not his ability to hear. Then she started to cry. I was shocked — everyone had told me she never cried, except once at the Foundation for Economic Education (FEE), a think tank for the ideas of Henry David Thoreau, when Ludwig von Mises — the legendary free market economist — had yelled at her. Von Mises told her that she was a stupid ignorant Russian peasant woman, and she broke down. When I mentioned this story, she got upset. She said Von Mises, always a gentleman, would never have said such a thing, that he had a deep respect for her. As she tells it, William F. Buckley had made up the story to hurt her. To change the subject, I brought up God and spirituality. We had spent a good deal of time at our first meeting arguing about spirituality — my belief in God and her hatred of the concept. “You will see Frank again in a spiritual sense,” I said, “there is just too much energy for it all to disappear. There are over two billion calculations a second for the body to function. That is so incredible, someone had to create that. And if that is so, then anything is possible.” She nodded, half-sobbing, her face heavy with tears. “I hope so” she said. “I would do anything to see him one more time.” She showed me notes he had written to her after the stroke. They were in large letters in what looked like a third-grader’s printing. “I hope you are right, maybe you are. I think about it all the time. I do not know. I just do not know,” she said. After a long pause, she added: “I will find out soon enough.” “Let me know,” I said, and we both laughed. I pointed out her use of “God” on Phil Donohue (whom she adored). “You did say God bless America,” I teased. She laughed that wonderful laugh again — she was so charismatic. I said: “You should let the public know that, that you have doubts. So many people follow you.” She waved her hand dismissively: “So what. Let them find their own way, I cannot help them.” I told her about my interest in politics and my desire to help maximize people’s personal and professional freedom — particularly for poor children. (I had recently been mugged and was thinking about making a career change to work with the type of children that had humiliated me.) She agreed that that was laudable, “Provided they have a good philosophy of reason and that they are objective and face reality,” she added — in what sounded like a harbinger of the didacticism that would come soon after her death, and scar Objectivism for decades. “You should be a teacher. You have a knack for it,” she said, repeating her comment of fifteen months before. “If you could teach people that are born poor to create value and be capitalists, that would be good. Look at what I was able to do with nothing — I had no money or skills, just a vision of what I could become. I wanted to be a writer and philosopher.” Little did I know how those words would guide me in the very near future. I gave her copies of three papers I had written on economics. One of them has since become famous as the first statistical test of the Austrian Trade Cycle Theory; another was my attempt to bring a unity to the different methodologies of economics, a paper F.A Hayek — a Nobel Prize winner — had loved when I had studied with him in 1977. She promised to read them. In passing, I told her of my activism for gay rights, thinking she would be pleased. She was not pleased, and also made it clear that she hated Murray Rothbard who, along with Charles Koch and I, had just co-wrote the Libertarian Party Platform. “We made him leave our study group,” she said, referring to Rothbard’s excommunication from the Collective, a discussion group of intellectuals that met weekly in her apartment. When we left the restaurant, having let her do almost all the talking, I said nothing — but gave her a hug. We walked back to her building, just as the housekeeper was coming out: “Ms. Rand, I was just coming to find you.” A colleague of hers had come out too, and began yelling at me that I had kept Ayn out too long and that I was boring her. I think perhaps he felt threatened by her being with me. Ayn turned and said, “You made me feel better.” I laughed and replied, “I thought people were not supposed to feel.” She gave me a quick one-finger handshake and said: “One more meeting and that is it — I am tired.” She added: “Do not count on me for any more visits.” I answered: “OK, but you did say we could have coffee; I love being with a beautiful woman. Can I get a picture with you, please?” I handed my camera to the housekeeper, at the same time calming her colleague down. “No, absolutely not, I am too old! If I am alive next year, perhaps,” she said laughing. “If not, come to my funeral.” Over her objections, the housekeeper took a picture (which unfortunately I lost 20 years later). Ayn and I both laughed, and she went inside the building with her companions. This time I waited a month to call her and sent no notes or gifts. When I got her on the phone, she said, “I am too tired now,” and then: “I can see you for a cup of coffee, perhaps, but only for twenty minutes. You wear me out.” I was pleased and promised not to talk at all. I met her at the same restaurant, but she was grumpy, irritable, and tired. We left after twenty minutes. I had absentmindedly left my jacket at the restaurant and her housekeeper called to say that I could come over to the apartment and get it from the doorman, that I could say hello to Ms. Rand for a minute, then leave. My visit got postponed several times. The last time I called, Ayn got on the phone and we spoke for a minute, but she sounded tired. I never picked up the jacket. After her return from the trip to New Orleans, where she had spoken on the topic of Morality and Capitalism, I received a letter from out of the blue: “I had seen you out of respect for your grandfather. You turned out to be a terrible disappointment. The fact that you support the immoral acts of homosexuals shows me you are a second-hander who likes his heroes with clay feet. Do not call me again or contact me in any way. Here is the bracelet — I do not want it. I am burning your papers.” It was like someone had taken a hot knife to my stomach. But the letter so contradicted how our last encounter had played out, that I was unsure if it was even written by Ayn herself. She had made a point to “cc” this letter to several individuals, including Leonard Peikoff. And that was that. This final communication hurt so much that I have never talked about it until now. In my opinion, based on our last conversation, Ayn Rand died a deist or an agnostic, not an atheist. Sadly, her intense dislike of gays and the gay liberation movement led to our falling out, during that last meeting in January of 1982. I felt that she had replicated the world she had grown up in, where the Tsar — then Lenin — would ostracize (or worse) anyone who disagreed with official attitudes. I will forever reject Rand’s philosophy of Objectivism, because it denigrates the importance of spirituality. It also overlooks the limits of a market economy in solving a variety of serious problems caused by the economics of externalities and public goods. I fully appreciate Ayn Rand’s influence in stopping the worldwide rise of totalitarianism, in encouraging the feminist movement, stimulating discussion of the legalization of victimless crimes, and the jump-starting of libertarian politics . And she was uncannily prescient. Inspired by her, I subsequently spent 30 years teaching at-risk youth and, in 1987, I founded NFTE, where I still teach. Sadly, many of the events she wrote about in Atlas Shrugged are coming to pass.

Read the full article →

John M. Eger: Creative Clusters Lead to Creative Communities

April 5, 2011

“Creative Clusters” are the early indicators that a creative community — committed to nurturing an economy and society based on the importance of art and culture — is being developed; that a new architecture of a city is taking shape. In the creative age, developing the “creative clusters,” like author Michael Porter’s earlier industrial or ” economic clusters “, is perhaps more important to meeting the challenges of a new, global, knowledge-based economy. Why? Because art and culture are central to ensuring vibrant economic activity and to workplace success in the 21st century. Indeed, as we talk about the development of creative enterprises today and the foreshadowing of a whole economy based upon creativity and innovation — the dawn of a Creative Age — we are more acutely aware of the importance of a new overlay called the creative cluster, and the growing importance of fostering the development of creative products and services. In a sense, these essentially real estate developments are often are the first signs that a community is awaking to the importance of creativity and innovation as essential elements of a successful new global economy, It is no surprise that these clusters of creativity are popping up in cities in Europe and across America. In the UK, co-location of creative industries has been a mainstay of economic development. The National Endowment for Science, Technology and the Arts ( NESTA ) said it best in a major study on Creative Clusters and Innovation: “The case studies also show that the mere existence of a creative agglomeration is not enough for the benefits from clustering to emerge. The other crucial ingredient is connectivity between firms within a cluster, with collaborators, business partners and sources of innovation elsewhere… and finally, with firms in other sectors that can act as clients, and as a source of new and unexpected ideas and knowledge. These three layers of connectivity are underpinned by a dense web of informal interactions and networking.” In Miami, we are well aware of the astounding success the city has had establishing such a cluster. Maybe it was getting the most successful art fair in the world — The Basel — to host as second fair in Miami. Maybe it was the art deco hotels or the weather. Nonetheless, the Miami Design District is one of the most successful examples of a city revitalizing itself for the new economy. In the last few years, the Urban land Institute (ULI) helped start a project in Chicago called the “Industrial Renaissance” aimed at “establishing a Creative Industries District” in one of the oldest but most blighted areas of the city. If successful, the district will be a “jobs producing creative hub” targeting designers, graphic designers, architects, urban planners, all the entertainment arts professionals and others representing one of fastest growth sectors of the new economy, the “creative industries”. More than 200 organizations, and over 1000 individuals are part of the Chicago effort . And in San Diego, entrepreneur Pete Garcia, a successful artist and engineer, is also planning an arts district called I.D.E.A., for Innovation, Design, Education and Art. Garcia sees design itself, combining technology and art in ways that the new economy most values, as the next wave of economic development. Co-location, he says, is the secret to nurturing this kind of development and he and others involved in the effort envision a ten block area of the city as ideal for such a new district. Key, as elsewhere is getting the politicians, the business community, the developers and the education establishment to see the opportunity — indeed the urgency — of reinventing the city through incubators, through arts districts, through the establishment of creative clusters. It is slowly but surely becoming apparent that the most successful communities of the 21st century will be places with strong and vibrant creative clusters. Those communities placing a premium on cultural, ethnic and artistic diversity will likely burst with creativity and entrepreneurial fervor. Those that don’t will be the ghost towns of the era.

Read the full article →

Miles Mogulescu: GE: "Imagination at Work" in Building the Corporate State

March 30, 2011

I was watching Meet the Press on Sunday as a panel of Washington insiders offered a variety of views from across the political spectrum ranging from A to B. Halfway through the program an authoritative-sounding voice interjected itself into the proceedings to announce, “Meet the Press is Sponsored by GE: Imagination at Work” while a GE “Imagination at Work” logo filled the screen. And I thought, there you have it: The perfect embodiment of the emerging corporate state in which discussion of our economics and politics is dominated by a handful of multinational conglomerates; the middle class is hollowed out; wealth is concentrated in the top 1% who pay a lower and lower percentage of their personal and corporate income in taxes as the government is increasingly unable to afford basic services like public schools; political leaders blame teachers and unions for our financial plight and undermine collective bargaining; corporate functionaries rotate between business and government; corporations can make unlimited donations to political candidates who advance their interests; and the Washington pundit class calls on politicians to have the “courage” to cut Social Security and Medicare because “America is broke and we can no longer afford it”. GE : You may think they’re the guys who ” bring good things to life ” by manufacturing refrigerators and washing machines in American factories, paying living union wages and benefits, and selling affordable appliances to American consumers. But that was yesterday; this is today. Today, less than 6% of GE’s revenues come from its consumer appliance division. GE’s main businesses are global finance, media, energy, defense contracting, and lobbying the government for tax breaks and subsidies. GE is incorporated in New York and its worldwide headquarters are at 30 Rockefeller Plaza (“30 Rock”) where every Christmas they’re kind enough to display quite a lovely tree for the public to enjoy. But its wealthy top executives, like those of many American-based global corporations, are increasingly untethered from any interest in the economic and social well being of America as a whole. Here’s a snapshot of some of GE’s global businesses: • GE Media : Not only does GE sponsor Meet the Press , which is highly influential in setting the policy agenda in Washington. It owns 49% of NBC Universal whose media assets include not only the NBC TV network (including NBC News) and local stations in America’s largest cities, but Universal Studios (one of the 5 major US film studios), Telemundo, which is the second largest Spanish language TV network in the US, and such cable networks as Bravo, CNBC, MSNBC, SyFy, USA Network, the Weather Channel, and (in partnership with Hearst and Disney/ABC) A&E, the Biography Channel, the History Channel, and Lifetime, along with television networks in other countries around the world. There’s hardly an area of the motion picture, television, and TV news business where GE doesn’t own a substantial stake. • GE Financial Services : GE’s financial arm, GE Capital, is responsible for 30% of GE’s revenues and more than half its profits . If it were classified as a bank, GE would be the 7th largest bank in America. As the New York Times put it, “many Wall Street analysts view G.E. not as a manufacturer but as an unregulated lender that also makes dishwashers and M.R. I. machines.” Since GE is not classified as a bank, it manages to avoid most of the regulation that applies to banks. Nevertheless, during the 2008 financial crisis, GE deployed a team of top lobbyists (GE spent nearly $40 million in lobbying last year) to convince the federal government to allow it to exploit a loophole ( it owns two small Utah savings and loans ) to become one of the largest recipients of Federal bank bailout funds. Unlike other banks like Bank of America, JP Morgan Chase, and Citigroup, it didn’t take the bailout funds through TARP and thus wasn’t subject to TARP restrictions, such as limits on executive compensation — in 2010, GE CEO and Obama economic advisor Jeffrey Immelt made $15.2 million. Rather it took the bailout funds in the form of $139 billion in Federal guarantees of GE Capital debt under the Temporary Liquidity Guarantee Program (TLGP) , nearly 25% of the total federal funds provided under the program. The Federal guarantees expires in 2012, a date known in banking circles as “the cliff”, since at that time the Federal government will have to make good on the debt if GE and other borrowers don’t honor their obligations. But despite the fact that a large part of GE’s profits are due to financial support from the Federal government, and the Feds are liable for a big part of GE’s debts, GE pays not a single dollar in Federal taxes. • GE Energy : The GE Energy Infrastructure unit of GE is made up of 3 GE companies, GE Energy, GE Oil & Gas and GE Water Process Technologies. While GE is developing a large solar energy business in the hopes of taking advantage of government-subsidized financing, and has launched its “Ecomagination” ad campaign in the hope of marketing itself as a green company, it has a record as one of the largest corporate polluters. Using EPA data, the Political Economy Research Institute found that GE is the 4th biggest producer of air pollution in the US. According to the EPA , only the US government, Honeywell and Chevron produce more Superfund toxic waste sites. But most striking, GE designed and built one of the six nuclear reactors at the Fukushima Daiichi power plant in Japan that is now spewing radiaton, and built two of the others in partnership with Toshiba. These Japanese nuclear plants are based on GE’s Mark 1 boiling-water reactor designs that were marketed by GE as cheaper and easier to build than other designs. But according to the New York Times , “it has long been thought to be more susceptible to failure in an emergency than competing designs.” GE, it brings good things to life. • GE Defense Contracting : GE is a key member of the military/industrial complex which, according to its own reports, in 2009 sold over $5 billion in military products both to the United States and foreign governments, including engines for naval vessels and military aircraft such as fighters, tankers, helicopters, surveillance aircraft and bombers. Among other things, GE provides alternative engines for the F-15 Fighter jets, one of which, costing $30 million, was shot down over Libya last week. Naturally, the nearly $40 million dollars a year GE spends on lobbying seeks to protect Federal spending on GE-manufactured armaments and doesn’t suggest lowering the deficit by cutting America’s defense spending which nearly equals the aggregate total defense spending of every other country in the world combined. • GE Lobbying and Tax Avoidance Divisions : While not officially operating divisions, GE’s tax avoidance, lobbying, and political contribution operations may effectively be among the most profitable areas of the GE empire. According to an investigative report in last week’s New York Times , in 2010 GE reported $14.2 billion in worldwide profits, including $5.1 billion from US operations, but GE owed exactly $0 dollars in Federal taxes. In fact it claimed a tax benefit from Uncle Sam of $3.2 billion. Over the past 5 years, GE has accumulated $26 billion in American profits, yet received $4.1 billion in net Federal tax benefits. Yet contradicting Republican political claims that cutting tax on corporations and the wealthy creates American jobs, since 2002, GE has eliminated 20% of its US work force while expanding job creation overseas. According to the Times : It’s extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax laws firm. Indeed, the company’s slogan ‘Imagination at Work’ fits this department well. The team includes officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress…Over the last decade, G.E. has spent tens of millions of dollars to push for changes in tax law. It’s a classic example of how the modern corporate state operates. Moderately paid employees at government regulatory agencies and key congressional committees aspire to lucrative jobs at GE and other major corporations when they retire from government if they write regulations and laws which enhance corporate profits. Corporations then rotate some of their employees back for new stints in government service where they insure rules and laws favorable to the corporations. According to the Center for Responsive Politics , GE spent nearly $40 million in lobbying in 2010 (over $200 million in the past decade) and contributed $2,230,270 to Republican and Democratic House and Senate candidates in 2010. This doesn’t count things like an $11 million donation from GE’s foundation to schools in the district of Democratic Congressman Charles Rangel, then Chairman of the House Ways and Means Committee, which “coincidentally” came a month after Rangel reversed his position to support continuation of a tax break which, according to a regulatory filing, had saved GE more than $1 billion on US taxes in the 3 years after it was enacted. And it doesn’t include perhaps GE’s biggest political coup of all, President Obama appointing GE CEO Jeffrey Immelt — the man who presided over GE’s success in avoiding taxes and eliminating American jobs — to replace Paul Volcker as head of Obama’s panel of economic advisers, the newly renamed President’s Council on Jobs and Competitiveness. It’s the ultimate case of regulatory capture in which the industries being regulated by the government come to dominate the agencies charged with regulating them. This time it’s the White House itself. The man who presided over GE’s success in avoiding American taxes on its $14.2 billion in profits and in eliminating 20% of its American workforce gets to advise the president on how to rebuild the economy and create American jobs. (Hint: I don’t think it will include raising taxes on the rich, reducing military spending, strengthening regulation of business, or increasing worker rights.) So there you have GE’s “imagination at work” . A bank that’s not a bank but gets over $100 billion in Federal bank bailout loan guarantees. An energy company that builds the nuclear reactors that are radiating people in Japan. A major defense contractor that profits from America’s wars. A media company that owns TV networks, movie studios and major news operations. A political lobbyist and campaign donor whose executives rotate between business and government and back again and create loopholes that allows the largest corporation in the world to pay no taxes. A corporation whose $15 million a year CEO is appointed by President Obama to be his chief advisor on creating jobs. It’s the very definition of the corporate state at work. Fighting back to protect democratic rights and the income and economic security of the middle class is in some ways a more complicated in an ostensibly democratic, but increasingly corporate-run, country like the United States than it is more directly authoritarian societies like those in the Middle East. But we have no choice but to fight back if America is to continue as a broadly middle class nation where most people can realistically hope that their children will live a better life than they do. The protests sparked by Republican overreaching on behalf of corporations in states like Wisconsin, Ohio and Michigan may be the beginning of a movement to reclaim America’s middle class dream. This past weekend, 250,000-400,000 people marched in London to protest the conservative government’s draconian cuts in social services and the failure of some of Britain’s largest corporation to pay a fair share of taxes. It’s vital that the movement they began cross the Atlantic Perhaps a good next step in America would be a well-organized boycott of GE, accompanied by mass demonstrations at GE headquarters and sales outlets, to make GE the poster child for corporate greed in response to its failure to pay US taxes on its billions in profits while exporting jobs overseas. It wouldn’t, by itself, stop GE. But it might focus the country on the manifest injustices wrought by companies like GE and encourage the emergence of a progressive Tea Party-type movement against the power of the growing corporate state.

Read the full article →

Dean Baker: The Imaginary World in Which Washington Lives

March 23, 2011

It is a beautiful spring day in Washington. This is a nice respite from the horrors taking place in Japan and the ever-growing nuttiness of D.C. politics. Enjoying the weather provides a nice alternative to listening to the news or reading the newspaper. The flood of nonsense in the traditional news outlets just continues to grow. At the top of the list is the steady stream of senators or members of Congress whose response to higher gas prices is to insist on drilling in every square inch of environmentally sensitive territory in the country. This is supposed to reduce our dependence on imported oil and lower the price of gas. Both sides of this assertion are absurd. According to the Energy Information Agency, the United States has proven reserves of 22.3 billion barrels of oil . Given our current rate of consumption of 6.9 billion barrels a year , U.S. reserves could meet our demand for oil for less than 3.5 years. That means if we could somehow drill here, now, and everywhere, we could be energy independent until the middle of 2014 and then we would be 100 percent dependent on imported oil. Of course, we cannot suddenly suck all the oil out of the ground at once, it takes time to explore and drill wells and then the oil must be drilled out over time. If we decided that we want to destroy every last national park and coastal region, we may be able to increase production by 1.0-1.5 million barrels a day in 5-10 years. At the high end, this would be a bit less than 2 percent of world supply. Given normal assumptions about how demand responds to price, we would be very lucky to see a 6 percent decline in the price of oil. This means that in the most optimistic “drill everywhere” scenario we would save less than 20 cents from our $4 a gallon gas. More likely the savings would be less than half this size. In other words, when a politician says that they want to end environmental restrictions on drilling in order to end U.S. dependence on foreign oil or bring the price of gas down, they are speaking utter nonsense. The correct response of a reporter to such assertions would be to say something like: “Senator, you know that the United States does not have nearly enough oil to be energy independent or to substantially reduce the price of gas.” However, you won’t hear this response from outlets like National Public Radio or the Washington Post . Instead, they will just allow politicians to make absurd statements about energy independence and lower prices and treat them as though they are reasonable positions in the public debate. They will often add their own framing comments explaining to their audience that the issue is one between concerns over energy independence and concerns over the environment. When major news outlets make wrong and damaging statements about a company like General Electric or Microsoft, they can count on angry and threatening phone calls from company lawyers. Unfortunately, there is no one in Washington with a comparable interest in protecting the environment, so these absurd statements get passed along in major news outlets unchallenged. Politicians routinely make similarly absurd statements about Social Security, implying that the program and the country are about to go broke. Of course both claims are obviously untrue. According to the Social Security trustees, the program can pay all scheduled benefits for the next 26 years with no changes whatsoever and even after that date can always pay close to 80 percent of scheduled benefits . Instead of our children being broke, average wages are projected to be more than 40 percent higher in 2040 than they are today. This means that when a politician whines about Social Security or the country going broke, the correct response from a reporter should be “Congressman, you know that the program is fine for more than a quarter century into the future,” or “Congressman, you know that our children and grandchildren will on average be far richer than we are today.” Unfortunately, you won’t hear reporters making these corrections either. Fortunately, there are groups like the Social Security Works , the Campaign for America’s Future , and the Institute for Women’s Policy Research that do correct bad reporting on Social Security, so there is at least some limit to how bad it can get. However, the country is unlikely to see competent reporting on these and other topics that are central to national political debates until new media outlets, like Truthout, The Huffington Post and ProPublica, mature further and displace the traditional outlets. The latter still play far too large a role in setting the bounds for acceptable political discourse. The sooner we see the transformation of the media the better. Until then, maybe we can at least enjoy the weather.

Read the full article →

Robert Reich: The Jobs Report, and America’s Two Economies

February 4, 2011

At a time when corporate profits are through the roof, the Dow is flirting with 12,000, Wall Street paychecks are fat again, and big corporations are sitting on more than $1 trillion in cash, you’d expect jobs be coming back. But you’d be wrong. The U.S. economy added just 36,000 jobs in January, according to today’s report from the Bureau of Labor Statistics. Remember, 125,000 are needed just to keep up with the increase in the population of Americans wanting and needing work. And 300,000 a month are needed — continuously, for five years — if we’re to get back to anything like the employment we had before the Great Recession. In other words, today’s employment report should be sending alarm bells all over official Washington. Granted, unusually bad weather may have accounted for some of the reluctance of employers to hire in January. But even considering the weather, the economy is still terribly sick. (Technical note: The official rate of unemployment fell to 9 percent from 9.4 percent, but that’s because more workers have left the labor market, too discouraged to continue looking for work. The official rate reflects how many people are actively looking for work.) We have two economies. The first is in recovery. The second remains in a continuous depression. The first is a professional, college-educated, high-wage economy centered in New York and Washington, that’s living well off of global corporate profits. Corporations continue to make money by selling abroad from their foreign operations while cutting costs (especially labor) here at home. Wall Street is making money by taking the Fed’s free money and speculating with it. The richest 10 percent of Americans, holding 90 percent of all financial assets, are riding the wave. And their upscale spending has given high-end retailers and producers a bounce. The second is most of the rest of America, and it’s still struggling with a mountain of debt, declining home prices, and job losses. In coming months most Americans will also be contending with sharply rising prices of food and fuel. Our representatives in Washington see and hear mostly the first economy. The business press reports mainly on the first economy. Corporate and Wall Street economists are concerned largely with the first economy. But the second economy will determine our politics in 2012 and beyond. And not even the first can be sustained permanently on its own. Corporate profits cannot continue to rise on the basis of foreign sales (which are slowing as Europe adopts austerity and China raises interest rates), the purchases of the richest 10 percent of Americans (which are dependent on a rising stock market), and cost-cutting measures at home (which are necessarily limited). Without a strong and broadly-based middle-class recovery, America’s big money economy will fall in on itself. A major stock market “correction” is a certainty. Robert Reich is the author of Aftershock: The Next Economy and America’s Future , now in bookstores. This post originally appeared at RobertReich.org .

Read the full article →

Cold Weather Chills UK Growth; First Contraction Since Q3 2009

January 25, 2011

Cold Weather Chills UK Growth; First Contraction Since Q3 2009

Read the full article →

Car Buyers Likelier To Find Deals Later This Year

November 2, 2010

DETROIT — If you’re holding out for a bargain on a car, you could be rewarded this month or next. Automakers are more likely to offer promotions on certain makes and models – particularly luxury cars, SUVs and trucks – to clear out their older models and improve their year-end numbers. Overall, the auto industry remains cautious about generous rebates and low-cost loans to lure customers. Newly lean and profitable carmakers don’t want to erode the bottom line by offering too many sweet deals that cut into profit margins. But as the end of the year approaches, some shoppers, including many Toyota buyers, could find bargains. Even a disciplined industry can’t resist end-of-the-year sales. So far this year, auto sales have held fairly steady, at a level well below what was considered normal before the recession. The automakers held back on rebates in July and August, which are typically big months for promotions, and results were mixed. July sales were slightly better than a year earlier. August sales were the worst since 1983. Americans are still unsure about the economy, and hesitant to make a large purchase like buying a new car unless they absolutely need to or the deal is too good to pass up, says Jessica Caldwell, senior analyst at consumer web site Edmunds.com. “People are on the sidelines waiting for that deal message to come,” she says. “When they hear it, generally during the holiday season, they might start buying again.” In general, automakers offered more incentives this October than last – about $2,800 per car, a 6 percent increase, according to the car price information service TrueCar. Final estimates won’t be available until Wednesday, when carmakers report U.S. auto sales for last month. Many automakers kept incentives flat, while others, such as Honda and Toyota, piled on the rebates. Honda’s incentives were double last year’s, and Toyota’s were up 50 percent. October sales are expected to come in slightly below 1 million vehicles, hitting around 12 million on a seasonally adjusted annual sales rate. Sales in October were uneven, coming in strong some days and really weak on others. The last eight days were particularly weak. So far this year, sales have ranged from a low annual rate of 10.53 million in February to a high of 11.76 in September. “There’s been so much focus on the elections, people are not as confident,” says Bert Boeckmann, owner of Galpin Ford in suburban Los Angeles. “My hope is that after the election, they’ll come back in.” Customers may come back when they see holiday deals on luxury cars. Those Christmas-themed commercials with the big red bows may start airing well before the holidays – a not-so-subtle attempt by automakers to remind customers that buying cars can be fun. “This whole idea about giving a car as a gift, it’s one of the long-standing holiday commercial campaigns that has really resonated with the luxury consumer,” says Steve Jett, national marketing communications manager for Lexus. Lexus and Mercedes-Benz are battling this year for the title of No. 1 luxury carmaker. It’s a title Lexus has held for years, but the carmaker is lagging behind Mercedes by about 3,000 vehicles in 2010. And with newer models rolling out, the carmakers will try to push out the older models. “It’s such a sensitive segment to old-versus-new,” said Caldwell. And when it comes to holiday marketing, retailers believe it’s never too soon to haul out the holly. Expect the Mercedes and Lexus Christmas commercials to start soon. “We’ll start to see those commercials by Thanksgiving, if not earlier,” says Jesse Toprak, vice president of industry trends at TrueCar. “I don’t know anyone who actually gives someone a car for Christmas, but those commercials are incentive to some customers to go out and buy a car.” Toyota will probably maintain big rebates for the rest of the year, trying to win back customers scared off by the company’s recalls from earlier this year for problems with acceleration and braking. And Ford, which is offering the biggest rebates on 2010 models in an attempt to grab market share from rivals, will probably keep up the promotions. The company is offering up to 15 percent off the sticker price on some of its 2010 models, such as the Ford Focus. Truck and SUV buyers will also find deals in the upcoming months, Toprak predicts. Typically, as the weather starts getting colder, it’s easier to convince people they need four-wheel drive and all-wheel-drive vehicles. George Fowler, general manager of Superior Buick-GMC in Dearborn, Mich., says leasing is loosening up, making it possible to offer some smaller SUVs for around $300 a month. Banks have eased back into the leasing market after abandoning it because of the financial crisis in 2009. Today’s $300 monthly leases are a good deal these days, Fowler says, but that’s nothing compared with the deals he was able to push just three or four years ago. “I don’t think we’ll ever get back to the days of $200-a-month leases,” he says. “Those days are gone forever.”

Read the full article →

Josh Silver: Washington Post Endorses Comcast-NBC: Ironically Proves Dangers of Mega-Merger

October 25, 2010

Today, the Washington Post published a piece of unabashed corporate advocacy , arguing that the pending mega-merger of cable giant Comcast and NBC-Universal should be swiftly approved by regulators. The editorial claims that media concentration is not a problem, and that “advocacy groups (opposing consolidation) have been poor prognosticators of the effects of large media mergers.” I’m not sure what planet the WaPo editors live on. Weakened media ownership limits have led to a media system with far too many newspapers, radio and television stations in too few hands. Public interest groups have correctly predicted the host of problems brought by rampant consolidation: woefully few outlets owned by women and people of color, huge profit pressures that result in job cuts, closed news bureaus, and a system where hard hitting, investigative commercial television and radio journalism is nearly an oxymoron. Radio is homogenized, with too many ads and opinions, and scant original reporting. On television, the most important issues are synthesized into seven second sound bites and impossibly short segments that are devoid of context and crucial information. The net result of ownership consolidation (aided and abetted by the rise of the Internet) is poorly-staffed newspapers and commercial television and radio that are long on hot-headed opinions, advertisements and mindless entertainment, but short on the substance that an informed democracy requires. Defenders of the status quo are either benefiting from it, or are like frogs in warming water: it happened so slowly, they haven’t realized it’s boiling over. The great irony of the Post’s endorsement is that the editorial itself is a poignant example of why the Comcast-NBC merger is so dangerous. When media companies control too much, their own interests — and opinions — directly conflict with the public’s desperate need for sound policy and diverse, independent, critical viewpoints. The Post is not a disinterested or neutral observer in this case. The Washington Post Company owns Cable One, provider of television, internet and phone services to several states. They own six television stations, a long list of print publications, plus Slate.com, Foreign Policy and other online sites. Yes, the op-ed technically discloses this, but fails to disclose how greatly these interests influence the Post’s position on this issue. The Post suggests that “FCC officials should resist calls by some merger opponents to impose ‘net neutrality’ principles.” Yet it fails to explain that, as an Internet service provider, the company has self-interest in abolishing Net Neutrality, the rule that prevents Internet providers from creating fast lanes and slow lanes on the Internet in order to maximize profits. The Post argues that the $30 billion deal “should be allowed to proceed,” and that strong conditions need not be applied to the deal. Instead “[c]ompetitors who believed that they were harmed by unfair dealing could have their complaints adjudicated by the FCC” on a case by case basis. But to anyone familiar with the FCC, the threat of enforcement is almost always an empty one. The process is long and expensive — and complaints languish for months or even years before any FCC action, if at all. And that’s for companies that can afford high-powered connections and high priced-attorneys. If you’re an average person whose cable bill is skyrocketing, or whose internet connection is slow and expensive — well, you’re screwed. The backlog of consumer complaints at the FCC is notorious. For the vast majority of people, the agency’s complaint process is a right without a remedy. Comcast is already the nation’s largest Internet broadband and cable television provider. NBCU owns 26 television stations, Universal Pictures, the NBC Television Network, Bravo, CNBC, NBC News, MSNBC, Oxygen, Syfy (Sci Fi Channel), Telemundo, USA Network, and the Weather Channel. If the merger is approved, a single corporation would own a huge array of popular content and would control how that content — and the content produced by its competitors – is distributed over the airwaves, cable, and Internet. As all media moves to a digital platform, the harms of the “vertical integration” of content and distribution become more severe. Comcast can starve competing online video providers by withholding access to NBC programming. It can also move video content that is currently offered for free on sites like NBC.com behind a “paywall” tied to a cable subscription so that you must pay for cable TV if you want to watch TV online. President Obama boldly proclaimed — on the campaign trail and once he took office — that he would promote policies that “encourage diversity in the ownership of broadcast media, promote the development of new media outlets for expression of diverse viewpoints, and clarify the public interest obligations of broadcasters who occupy the nation’s spectrum.” Obama’s top antitrust official Christine Varney said in May 2009, that “vigorous antitrust enforcement must play a significant role in the government’s response to economic crises to ensure that markets remain competitive.” Yet today, Wall Street analysts are increasingly bullish that the merger will be approved by the FCC and the Justice Department, cheered on by Washington Post’s editorial page. Score yet another victory for the entrenched big money interests that rule Washington, and yet another defeat for the American people.

Read the full article →

Patricia Handschiegel: The New Power Girls: How Women in Business Are Taking It To The Next Level Despite The Economy

October 12, 2010

I suspect there have always been secret meetings and clandestine relationships among forces in business. The “Old Boy’s Club” didn’t get its name from having just one member, of course. People bond and create relationships with their colleagues, fellow CEOs, investors, etc. We get to know who is who at work. It evolves to grabbing lunches, drinks, hanging together at the holiday and industry parties. For Jenna, Sayeh, Meghan and myself, and many of the other women in the city, that’s the scene here as well. We work together, we play together. Business is talked over brunch, lunches, drinks, manicure/pedicures and shopping excursions. It’s like a New Girls Club – swap out the old guys with cigars, add in a group of fun, fearless female founders and executives who are gunning for big things in their lives and work. I’m not sure when we started more officially regularly meeting and getting together, but every few weeks or so we grab brunch, dinner or drinks, and talk about our projects. We all hang out individually all the time, but there’s nothing like getting together as a bunch. Meghan as you may know from reading NPG is a TV personality, author and expert with media brand. Jenna’s a health and fitness expert. Sayeh’s the youngest in the group, with an online boutique that she’s working to expand. And then there’s me – I’m a serial media and internet entrepreneur. I build and sell internet and media projects. I sold my first (Stylediary) in 2007, and am about to launch my next big thing. As we chatted over wine and snacks at the rooftop restaurant of the Hotel Angelino, I realized one thing: All of us were working to take our work to the next level. It got me wondering, can business owners still take their companies to the next level in what’s said to be one of the worst economies in history? And, more importantly, how? It’s something that women like the four of us, and many more beyond us, are doing today despite market conditions. One has an innovative marketing plan that works around the congestion in the media, which has made even the most seasoned publicists struggle with securing articles on clients. Another has put together a unique and unexpected approach to combat the saturation in her industry. A third is exploring financing options for future projects. Nobody’s letting the economy dictate what’s possible. As we noshed on dinner and wine, I couldn’t help but feel inspired. And as always, there’s value in collaborating. Meghan gave Sayeh two solid ideas, while I was able to share some insight into some areas of Jenna’s future plans. Sayeh had nothing but encouragement as I told about my current projects. And, Jenna reminded everybody that the number #1 sales tool was a belief in yourself and what you’re offering. One by one as we left dinner that night, all I could think was this: If life hands you lemons, don’t just make lemonade. You expand that into a lemonade empire. Partner with a lemon grower, and expand the brand across continents. That’s the way the women founders and executives I’ve met and know are approaching growing business in the down market: They aim for the sky no matter what the weather conditions may be.

Read the full article →

Inder Sidhu: What Did You Do on Your Summer Vacation?

August 19, 2010

In a few short weeks, tens of millions of schoolchildren will be asked a familiar question: What did you do on your summer vacation? Considering that most kids spend the summer riding bikes, going to camp or manning lemonade stands, it might be more revealing to ask parents instead: Did you take some time off this summer? If not, then I have five words of advice for you: Go jump in a lake. Seriously. Chances are you need a break. That’s especially true now as the recession eases and business starts to heart up. Worried about job security, many workers powered through the recession without any down time. In fact, surveys indicate that just 42 percent of Americans planned a leisure trip in 2009 , down from 49 percent in 2005. Not surprisingly, the number of working professionals who say they suffer from burnout is staggering, and not just in the U.S., but in Germany , New Zealand and elsewhere, too. Burnout, of course, leads to job dissatisfaction, loss of productivity and even morale problems. This isn’t just a problem for individuals, but employers, too Can it be fixed–or prevented? It can, but it requires both an understanding of the core problem, and a commitment to fixing it. Let’s start with the former: Like many working professionals, you may have prioritized your professional life at the expense of your personal one. Have you marginalized personal relationships, allowed your health or fitness to suffer, and/or reduced the amount of time you spend relaxing? Many workers persuade themselves these sacrifices are worth it. They convince themselves that they will be rewarded for their dedication. So they work longer hours, hoping for a promotion, holding out for a large bonus or just some job security. Even when their sacrifices are rewarded, few workers stop to evaluate whether their efforts were worth it. More should. That’s because many of us are slow to realize the toll that these sacrifices take. We don’t see the signs that our attitudes may be slipping, or that ours stress level may be rising. But employers do. Left unchecked, these conditions can fester and turn a once capable and productive worker into a malcontent and office misfit. That’s why the question of “what did you do on your summer vacation” is so important. If you did not take time off because “you were too busy,” then your priorities may be out of alignment. Remember: you have two lives to live: one at home, and one at the office. Though they may blend from time to time, they still have separate and distinct needs. Living both fully is the only way to reach long-term happiness and contentment. If you discover that your professional life is holding your personal life hostage, you need to commit to addressing the problem. Start by scheduling that overdue summer vacation. Taking time off allows us to regroup and think about our priorities. It also allows us to assess the state of our personal affairs. Vacation is often a time when people ask themselves the following: Am I in the shape I want to be in? Are my finances in order? When was the last time I called my best friend? I’m not talking about trying to de-emphasize your professional responsibilities in favor of personal fun, but instead pursuing both, for the benefit of each other. Think about that in the final remaining weeks before Labor Day, while the weather is still warm enough to splash around at the end of a dock. Inder Sidhu is the Senior Vice President of Strategy & Planning for Worldwide Operations at Cisco, and the author of Doing Both: How Cisco Captures Today’s Profits and Drives Tomorrow’s Growth . Follow Inder on Twitter at @indersidhu .

Read the full article →

Inder Sidhu: What Did You Do on Your Summer Vacation?

August 19, 2010

In a few short weeks, tens of millions of schoolchildren will be asked a familiar question: What did you do on your summer vacation? Considering that most kids spend the summer riding bikes, going to camp or manning lemonade stands, it might be more revealing to ask parents instead: Did you take some time off this summer? If not, then I have five words of advice for you: Go jump in a lake. Seriously. Chances are you need a break. That’s especially true now as the recession eases and business starts to heart up. Worried about job security, many workers powered through the recession without any down time. In fact, surveys indicate that just 42 percent of Americans planned a leisure trip in 2009 , down from 49 percent in 2005. Not surprisingly, the number of working professionals who say they suffer from burnout is staggering, and not just in the U.S., but in Germany , New Zealand and elsewhere, too. Burnout, of course, leads to job dissatisfaction, loss of productivity and even morale problems. This isn’t just a problem for individuals, but employers, too Can it be fixed–or prevented? It can, but it requires both an understanding of the core problem, and a commitment to fixing it. Let’s start with the former: Like many working professionals, you may have prioritized your professional life at the expense of your personal one. Have you marginalized personal relationships, allowed your health or fitness to suffer, and/or reduced the amount of time you spend relaxing? Many workers persuade themselves these sacrifices are worth it. They convince themselves that they will be rewarded for their dedication. So they work longer hours, hoping for a promotion, holding out for a large bonus or just some job security. Even when their sacrifices are rewarded, few workers stop to evaluate whether their efforts were worth it. More should. That’s because many of us are slow to realize the toll that these sacrifices take. We don’t see the signs that our attitudes may be slipping, or that ours stress level may be rising. But employers do. Left unchecked, these conditions can fester and turn a once capable and productive worker into a malcontent and office misfit. That’s why the question of “what did you do on your summer vacation” is so important. If you did not take time off because “you were too busy,” then your priorities may be out of alignment. Remember: you have two lives to live: one at home, and one at the office. Though they may blend from time to time, they still have separate and distinct needs. Living both fully is the only way to reach long-term happiness and contentment. If you discover that your professional life is holding your personal life hostage, you need to commit to addressing the problem. Start by scheduling that overdue summer vacation. Taking time off allows us to regroup and think about our priorities. It also allows us to assess the state of our personal affairs. Vacation is often a time when people ask themselves the following: Am I in the shape I want to be in? Are my finances in order? When was the last time I called my best friend? I’m not talking about trying to de-emphasize your professional responsibilities in favor of personal fun, but instead pursuing both, for the benefit of each other. Think about that in the final remaining weeks before Labor Day, while the weather is still warm enough to splash around at the end of a dock. Inder Sidhu is the Senior Vice President of Strategy & Planning for Worldwide Operations at Cisco, and the author of Doing Both: How Cisco Captures Today’s Profits and Drives Tomorrow’s Growth . Follow Inder on Twitter at @indersidhu .

Read the full article →

Saly A. Glassman: ‘Sorry Seems to Be the Hardest Word’

July 22, 2010

In the past three years of the economic downturn, we’ve read and heard a lot of talk about “apologizing.” After all, we’ve all been hit pretty hard, financially and emotionally, and it must be someone’s fault, right? Why were the people responsible so reluctant to say they were sorry? And why, after so much anticipation, did the sparsely-presented apologies have such a hollow, empty sound? Merriam-Webster’s Online Dictionary suggests that an apology “usually applies to an expression of regret for a mistake or wrong with implied admission of guilt or fault…” Ah, there’s the bug, stuck on its back! If the financial community had come forward to apologize, that would have been the equivalent of accepting blame. This might have sent the financial volcano into a whole new series of eruptions and meltdowns. So, the strategy was, “say nothing, keep your head down, and wait.” But that strategy was not the best one, either. Laying low and not speaking out left the public to its own interpretation of events. An “omission” soon became an “admission.” As a result, the financial community was blamed for a whole host of problems, many of which were far from its jurisdiction — and therefore beyond its responsibility. The investing public has summed this up as “lying and denying,” and concluded that “you just can’t trust Wall Street.” In retrospect, the financial community missed an opportunity to inform the public by defining the extent of its responsibility for what happened. More important, in the eyes of the investor, financial institutions lost their connection with compassion, understanding, and commitment, and jeopardized their long-term relationships with clients. When the financial environment gets tough, it is wise for both investment professionals and investors to talk more, not less. Communicate sincerely and profoundly, not superficially. Seek the greatest level of transparency. Face adversity head on, with courage and uncompromising principles. Don’t back away or give up. This isn’t easy: Some days it feels like the battle of Gallipoli, and advisers and investors think they’ll never survive the experience! On the other hand, it’s important to acknowledge that the problems do not lie all in one camp or the other. The upside of surmounting these challenges is that you are stronger and more proficient for the next series of crises in the future. Perhaps advisers and investors need a word for a type of apology that expresses sympathy and an acknowledgment of pain without implied admission of guilt or fault. That does not mean that no one is to blame! But to initiate constructive dialogue and repair wounds, we have to start with an understanding of what someone else might be feeling. We’re already familiar with this kind of apology: “I’m so sorry it rained and the picnic was ruined… I feel so bad that you broke your ankle just before your trip… My heart goes out to you over the loss of your mother… I apologize that I recommended that job, and it did not work out.” So, we’re not responsible for the weather, an injured ankle, the death of a loved one, or how the job went, but we still feel a sympathetic sense of loss and pain when we care for someone who is suffering. We may even empathize from our own experience. In essence, we offer a sympology. If Wall Street offered even a whisper of a sympology, we did not hear it. This is where the financial community took a wrong turn in the road, and why there is now such a vacuum of credibility. I’ve actually heard investors say “Those Wall Street people care only about themselves, and getting rich off of us.” Maybe investors need to hear an infrequently discussed fact: we investment professionals need YOU, the investor. Without you, we have no career, no purpose, no income, and no professional identity. The last thing we want to do is “get rich off of you,” at your expense. Many advisers are compensated as a percentage of the assets they manage. Their success is directly correlated to yours. When your assets go down in value, the advisers endure a financial penalty. So when financial storms are raging, advisers are using every technique they know to protect your capital and your family’s welfare. Payment for performance is a powerful incentive. How might Wall Street phrase a true sympology in such a way as to re-establish confidence and trust? It might begin with an expression of sympathy, and an acknowledgment of the enormous pain and loss of the past three years. It might sound something like this: “We recognize that you have made sacrifices in the interest of your financial future, and you may be frustrated and disappointed with the result. It’s painful to have expectations foiled by events out of your control. That angst is widespread, and we in the financial community feel it acutely. We know we have to take responsibility for our role in the downturn, and do whatever is necessary to regain your trust and confidence.” Without investors, advisers have no professional world. Without the financial community, investors have no place to invest. While we can’t forget — and shouldn’t, we can seek understanding — and should. For financial professionals and investors alike, this must begin with a heartfelt appreciation of a point of view outside of their own. While attribution of responsibility has value in the recovery process, meaningful healing can begin only after the doors of dialogue have been unlocked. The first step to turning those keys is to express genuine sympology, and this begins with each one of us. “Sorry Seems to be the Hardest Word” is the title of an Elton John song. Saly A. Glassman is author of It’s About More Than the Money: Investment Wisdom for Building a Better Life

Read the full article →

David Leonhardt: Climate Bill, Like The Country, Overcome By Heat And Inertia

July 20, 2010

This city just endured its hottest June since records began in 1872, according to the National Oceanic and Atmospheric Administration. So did Miami. Atlanta suffered its second-hottest June, and Dallas had its third hottest. In New York, the weather was relatively pleasant: only the fourth-hottest June since 1872. Then again, New York is on pace for its hottest July on record. Yet when United States senators and their aides file into work on Wednesday, on yet another 90-degree day, they may be on the verge of deciding to do approximately nothing about global warming. The needed 60 votes don’t seem to be there, at least not at the moment.

Read the full article →

Hilary Kramer: Is Tesla a Buy?

July 2, 2010

Tesla (NASDAQ:TSLA), the first U.S. auto company IPO in 54 years, opened trading Wednesday at over-subscribed and at $17 a share. That would be enough of a victory, considering it was facing a $14-$16 consensus target. When you consider shares gapped up about +40% in their debut, it makes the Tesla IPO even more impressive. Add in the fact that the Dow lost over 250 points to hit a 2010 low, and you can really see that this stock is something special. Prior to the IPO, a lot of investors were talking about it being a bad time for Tesla to go public. I suppose you could still say that now, arguing that the TSLA public offering could have topped $25+ on a more hospitable day. But I’ve never been one to worry about timing when it comes to the stock market. It’s like complaining about the weather. There’s simply no point, because, complain as you may, you aren’t going to change the weather. You just dress accordingly and go on with your life. And in my opinion, Wednesday’s blow-out IPO performance proves Tesla is tailor-made for this kind of overcast environment on Wall Street. This electric vehicle company is a cleantech innovator — a stock I call a “game changer” that has what it takes to succeed despite a particularly volatile environment on Wall Street right now. See: Two other Cleantech Game Chaning Stocks to Buy I’ll admit the enthusiasm may have pushed TSLA up a bit too far too quickly, so I would buy on a dip below $23.50. But for investors who enter below that mark, I expect hefty returns in the months ahead no matter what antics we see from the broader market. Let me be clear, I normally don’t weigh in on small cap IPOs. But I do pride myself on singling out explosive small cap and mid cap innovators that are redefining their industry with a game-changing technology. That’s Tesla to a T. See: 7 Ways to Find Great Cheap Stocks Yes, I’ve read the research. I know Tesla has only sold a little over 1,000 cars thus far (GM sells more cars before lunch on a slow day!), and hasn’t made a penny of profit yet. But that is one of my favorite things about the company. These guys are hell-bent on growth — and this IPO was part of that plan by raising a boatload of cash. If they had simply stopped their research and development after creating their Roadster model, they’d be a successful little niche automaker and they’d probably be profitable custom making these $100,000 machines for an elite group of motorists. But the reason they are bleeding cash (as so many naysayers like to point out) is that they are instead racing forward on their first “mass-production” model, a $50,000 Model S due out late next year. This gives Tesla the potential to revolutionize the automobile marketplace — becoming a competitor of Ford (F) and Toyota (TM) instead of fighting with niche luxury brands like Lotus or Ferrari. The cynics will point to Tesla’s small scale and lack of automotive manufacturing expertise. After all, billionaire braniac Elon Musk had runaway success with PayPal but an internet startup is far less capital intensive than tooling up an automaker. But that lack of a production chain could also be seen as a plus by those who watched GM and Chrysler crippled by deep connections to the UAW or a deep sense of “automotive tradition.” See: The Worst IPOs of the Last Year And even if you doubt Tesla Chairman Elon Musk, there’s Sergey Brin and Larry Page (Google founders), and former EBay President Jeff Skoll steering this stock. If these guys are believers, then so am I! My hunch is that some time in mid-2011, as production on the Model S ramps up, and consumer frenzy reaches a fever pitch, these guys get bought out one of the larger legacy auto-companies who are trying to reinvent themselves. Perhaps it’ll even be Daimler or Toyota doing the buying (or even one of the aggressive new Chinese auto companies), but for certain, the purchase price would be at $75 a share or higher…representing a quick 450% profit in a classic American success story. See: Five Reasons Chrysler is still Doomed But even if I’m wrong about a take over, and these guys succeed in going it alone (and if anyone can do that, it’s Musk & Company), and all the buzz around this stock shows that it’s got a real shot at $40, and a quick 75% profit before year-end. That is why I am recommending all investors take a small stake in Tesla at $23.50 a share or less.

Read the full article →

Hilary Kramer: Is Tesla a Buy?

July 2, 2010

Tesla (NASDAQ:TSLA), the first U.S. auto company IPO in 54 years, opened trading Wednesday at over-subscribed and at $17 a share. That would be enough of a victory, considering it was facing a $14-$16 consensus target. When you consider shares gapped up about +40% in their debut, it makes the Tesla IPO even more impressive. Add in the fact that the Dow lost over 250 points to hit a 2010 low, and you can really see that this stock is something special. Prior to the IPO, a lot of investors were talking about it being a bad time for Tesla to go public. I suppose you could still say that now, arguing that the TSLA public offering could have topped $25+ on a more hospitable day. But I’ve never been one to worry about timing when it comes to the stock market. It’s like complaining about the weather. There’s simply no point, because, complain as you may, you aren’t going to change the weather. You just dress accordingly and go on with your life. And in my opinion, Wednesday’s blow-out IPO performance proves Tesla is tailor-made for this kind of overcast environment on Wall Street. This electric vehicle company is a cleantech innovator — a stock I call a “game changer” that has what it takes to succeed despite a particularly volatile environment on Wall Street right now. See: Two other Cleantech Game Chaning Stocks to Buy I’ll admit the enthusiasm may have pushed TSLA up a bit too far too quickly, so I would buy on a dip below $23.50. But for investors who enter below that mark, I expect hefty returns in the months ahead no matter what antics we see from the broader market. Let me be clear, I normally don’t weigh in on small cap IPOs. But I do pride myself on singling out explosive small cap and mid cap innovators that are redefining their industry with a game-changing technology. That’s Tesla to a T. See: 7 Ways to Find Great Cheap Stocks Yes, I’ve read the research. I know Tesla has only sold a little over 1,000 cars thus far (GM sells more cars before lunch on a slow day!), and hasn’t made a penny of profit yet. But that is one of my favorite things about the company. These guys are hell-bent on growth — and this IPO was part of that plan by raising a boatload of cash. If they had simply stopped their research and development after creating their Roadster model, they’d be a successful little niche automaker and they’d probably be profitable custom making these $100,000 machines for an elite group of motorists. But the reason they are bleeding cash (as so many naysayers like to point out) is that they are instead racing forward on their first “mass-production” model, a $50,000 Model S due out late next year. This gives Tesla the potential to revolutionize the automobile marketplace — becoming a competitor of Ford (F) and Toyota (TM) instead of fighting with niche luxury brands like Lotus or Ferrari. The cynics will point to Tesla’s small scale and lack of automotive manufacturing expertise. After all, billionaire braniac Elon Musk had runaway success with PayPal but an internet startup is far less capital intensive than tooling up an automaker. But that lack of a production chain could also be seen as a plus by those who watched GM and Chrysler crippled by deep connections to the UAW or a deep sense of “automotive tradition.” See: The Worst IPOs of the Last Year And even if you doubt Tesla Chairman Elon Musk, there’s Sergey Brin and Larry Page (Google founders), and former EBay President Jeff Skoll steering this stock. If these guys are believers, then so am I! My hunch is that some time in mid-2011, as production on the Model S ramps up, and consumer frenzy reaches a fever pitch, these guys get bought out one of the larger legacy auto-companies who are trying to reinvent themselves. Perhaps it’ll even be Daimler or Toyota doing the buying (or even one of the aggressive new Chinese auto companies), but for certain, the purchase price would be at $75 a share or higher…representing a quick 450% profit in a classic American success story. See: Five Reasons Chrysler is still Doomed But even if I’m wrong about a take over, and these guys succeed in going it alone (and if anyone can do that, it’s Musk & Company), and all the buzz around this stock shows that it’s got a real shot at $40, and a quick 75% profit before year-end. That is why I am recommending all investors take a small stake in Tesla at $23.50 a share or less.

Read the full article →

‘Cautious’ U.S. Consumers Could Fuel Debate Over Deficits

June 28, 2010

WASHINGTON — A tepid gain in consumer spending last month could fuel a debate over whether the United States and other governments should further stimulate their economies to sustain the recovery. A report that Americans spent cautiously in May came after world leaders meeting in Toronto over the weekend pledged to reduce government deficits by cutting spending and raising taxes. They did so despite warnings from President Barack Obama that scaling back spending too fast could derail the global recovery. U.S. lawmakers are wary of approving more stimulus spending in light of record-high budget deficits. As a result, millions of Americans could lose unemployment benefits and states could be forced to lay off tens of thousands of workers. “In our view, it is way too early to apply the fiscal brakes,” said Zach Pandl, an economist at Nomura Securities. Cutting off unemployment benefits “is a dangerous way to cut deficits when the economy is still fragile.” Economic growth, which leads to higher tax receipts and less spending on social programs, is the best way to reduce the deficit, Pandl said. Other economists note that wages and salaries rose 0.5 percent in May, a second consecutive month of strong gains. That is a sign that the recovery can survive without government propping it up. If the trend in income growth continues, “consumers’ spending power will be bolstered, which will in turn drive economic growth, necessitating less government support,” said Dan Greenhaus, chief economic strategist at Miller Tabak. One thing is certain: Americans are being careful with their money. Consumer spending rose 0.2 percent last month after no change in April, the Commerce Department said Monday. Consumer spending accounts for about 70 percent of economic activity. But the consumer hasn’t been driving this recovery. Instead, it has depended more on business and government spending, along with exports. In the four quarters following the steep 1981-82 downturn, consumer spending rose by an average of 6.5 percent per quarter. By contrast, even as the economy has grown for the past three quarters, consumer spending rose an average of only 2.5 percent per quarter. If consumption remains sluggish, the economy may not grow fast enough to generate jobs and quickly bring down the 9.7 percent unemployment rate. Some economists are concerned the economy could slow later this year if government cuts back on stimulus spending. Pandl said Nomura is lowering its forecast for third-quarter economic growth to 2.2 percent from 2.6 percent based on the assumption that Congress will not extend federal unemployment benefits. Up until last month, jobless workers who exhausted their 26 weeks of state benefits had been able to qualify for up 73 weeks of additional federal benefits. But Senate Republicans have blocked an extension, citing concerns over the deficit as their main reason. That means about 2 million out-of-work Americans could lose their benefits by the middle of July, the Labor Department estimates. The Senate has also balked at providing stimulus money to cash-strapped state governments. Thirty states had been counting on federal support to help balance their budgets. Without the money, governors warn they’ll have to lay off tens of thousands of workers. The debate over how big a role governments should play featured prominently at the G-20 summit. World leaders agreed to cut deficits in richer countries in half by 2013, although they gave themselves some wiggle room to meet that goal. Obama, who has been pushing for an extension of unemployment benefits in the U.S., said countries had to proceed at their own pace in either emphasizing growth or cutting deficits. “We can’t all rush to the exits at the same time,” Obama said. Income is rising as employers slowly add jobs. That could make up for lost unemployment insurance and other benefits. Personal incomes rose for the sixth time in seven months, boosting household finances. The savings rate, or the percentage of income that wasn’t spent, bumped up to 4 percent. Paychecks gained from recent increases in the average work week, as well as temporary census hiring. “This supports our view that a rebound in labor income growth will support consumer spending” even as government payments fade, said Peter Newland, an economist at Barclays Capital. Americans spent more on services in May, likely the result of greater use of electricity as the weather warmed up. Money spent on goods actually declined. Many economists expect consumer spending to grow by about 3 percent in the current quarter, the same as the first quarter. The government said Friday that the nation’s gross domestic product, the broadest measure of economic output, rose 2.7 percent in the January-to-March period, slower than previously estimated. Employers added 431,000 jobs in May, but the vast majority were temporary census positions. Private employers added only 41,000 jobs. About 250,000 of census jobs are expected to end this month.

Read the full article →

Subbarao Risks `Falling Behind’ on Rates After India’s Growth Accelerates

May 31, 2010

By Unni Krishnan and Kartik Goyal June 1 (Bloomberg) — India’s central bank needs to be less wary of the fallout of Europe’s debt crisis and raise interest rates to curb inflation stoked by growth, economists said. Asia’s biggest economy after Japan and China expanded 8.6 percent last quarter from 6.5 percent in the previous three months, India’s statistics office said in New Delhi yesterday. The acceleration in growth came even as consumer spending slowed, a drag that may lift in coming months, according to HSBC Group Plc economist Frederic Neumann. The Reserve Bank of India said last month it will be “cautious” in tightening the monetary policy even as the country’s consumer-price inflation rate is the highest among Group of 20 nations. India’s stance, in the face of risks to growth posed by Europe’s sovereign-debt crisis, may be echoed across the Asia Pacific this week as central banks from Australia to the Philippines set interest rates. “If India’s central bank pays too much attention to Europe and waits for clarity, then it risks falling behind the curve,” said Ramya Suryanarayanan, an economist at DBS Bank Ltd. in Singapore. “It is important that interest rates are normalized.” She expects a quarter-percentage point increase in rates by the end of June. The Mumbai-based Reserve Bank has raised interest rates twice since mid-March by a quarter-percentage point each time. Consumer Prices The bank’s benchmark reverse-repurchase rate is 3.75 percent while the consumer-price inflation rate for industrial workers touched about 13 percent in April. Prices paid by farm workers are close to 15 percent, hurting the purchasing power of the 650 million people who live in India’s countryside. In contrast, consumer prices are running at 2.9 percent in Australia, 3.9 percent in Indonesia and 4.4 percent in the Philippines. The Reserve Bank of Australia may leave the overnight cash rate target at 4.5 percent today, according to a Bloomberg News survey. Bank Indonesia will probably maintain its benchmark rate on June 4 and borrowing costs in Philippines may be kept unchanged on June 3, separate surveys showed. “The euro jitters may have left policy makers across the world in a more accommodative mood, but in India tightening is now needed to avoid a hard landing later on,” HSBC’s Neumann said. “They should add some urgency to the tightening cycle.” Benchmark 10-year Indian government bond yields rose 17 basis points last week, the biggest increase in more than a month, as traders increased bets Governor Duvvuri Subbarao will boost rates. The yield closed at 7.56 percent yesterday. The rupee lost 4.3 percent against the U.S. dollar last month and the Sensitive Index declined 3.5 percent in the period. Consumption As growth accelerated last quarter, consumption by individuals and companies increased 2.6 percent, the weakest pace in eight years, data from the statistics office showed. “This, presumably, reflects in part soaring food prices, which eroded real disposable incomes and made shoppers generally more cautious,” the Hong Kong-based Neumann said. “With agriculture prices now easing, we expect consumption to get a real kick over the coming quarter, helped, too, by rising incomes as a tightening labor market spurs wage growth.” Rains in this year’s June-September monsoon season will be “normal,” the weather office forecast in April, boosting prospects for agriculture and rural incomes. Salaries are increasing in urban areas as well with companies including Tata Consultancy Services Ltd., India’s biggest exporter of software services, boosting employees’ pay. Tata Consultancy said in April it plans to spend about $200 million on wage increases this year. The central bank acknowledges that consumer demand is strengthening, making inflation a “visible” concern, Subir Gokarn , who is in charge of monetary policy at the Reserve Bank, said in an interview in Warsaw on May 26. Still, he said the “pace and magnitude” of monetary policy actions will be conditioned by global developments. To contact the reporters on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net .

Read the full article →

New York City Temperatures May Reach 90 This Week as Heat Pours Into East

May 24, 2010

By Brian K. Sullivan May 24 (Bloomberg) — New York City temperatures may reach 90 degrees the day after tomorrow as a heat wave setting records across the U.S. moves into the East Coast, according to the National Weather Service. If the city reaches 90 Fahrenheit (32 Celsius), it will be the first time since April 7, when readings hit 92 in Central Park, said Richard Castro, a weather service meteorologist in Upton, New York . The normal high temperature for New York for this time of year is about 74, he said. “It will be close, it is possible at this point we could fall a degree either side of 90,” Castro said by telephone. “We’re quite a bit above normal for this time of year.” Heat has settled over the U.S. Midwest, with St. Louis reaching a record 92 degrees yesterday and an excessive heat warning posted today in Minneapolis and St. Paul, where temperatures are expected to rise into the mid-90s with high humidity. Yesterday’s cooling degree days value in Minneapolis was 16, 14 higher than normal, according to the weather service. St. Louis was 12 above normal at 17; Cedar Rapids, Iowa was 11 above normal at 14; and Chicago was 9 above its usual mark for the day at 11, according to the weather service. Cooling Degree Days Cooling degree days value is calculated by subtracting the average daily temperature from a base of 65 degrees, and is designed to show energy demand, according to the National Weather Service. The higher the value, the warmer the weather, and thus more energy is probably consumed to cool homes and businesses. “Power grids across the Midwest and Northeast will see a surge in demand as hot conditions warrant an increased cooling demand across the regions this week as people increase their air conditioning usage,” said Travis Hartman , energy manager at MDA EarthSat Weather in Rockville, Maryland. “Cooling degree days are going to be high enough where it will be impactful.” Philadelphia temperatures are forecast to hit 90 the day after tomorrow, with Baltimore reaching 89 and Washington 87. Boston may reach 86 tomorrow, according to the weather service. Cooler air is forecast to arrive as the week ends, Castro said. The drop probably won’t be enough to keep New York from seeing its third month in a row of above-normal temperatures, Castro said. March was 5.7 degrees on average above normal, April was the warmest on record at 5.4 degrees above normal and so far May is averaging 1.8 degrees above normal, he said. To contact the reporter on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net .

Read the full article →

Wall Street `Joyride’ May End as Senate Approves Reform Bill in 59-39 Vote

May 20, 2010

By Alison Vekshin and Phil Mattingly May 20 (Bloomberg) — The U.S. Senate approved a sweeping overhaul of Wall Street regulation that would create a consumer protection agency, strengthen oversight of derivative trading and ban proprietary trading at banks. Senators voted 59-39 today in favor of the measure, which also creates a mechanism for liquidating failing financial firms and a council of financial regulators to monitor markets for threats to the economy. The move sends the legislation into negotiations designed to reconcile differences with the House bill approved in December. “We’ve got a very strong, good bill,” Senator Christopher Dodd , the Banking Committee chairman who offered the legislation, told reporters before the final vote. “There’s still a conference probably to go and we’re going to do some additional work,” the Connecticut Democrat said. Congressional Democrats moved to overhaul governance of U.S. financial companies in response to the 2008 financial crisis that followed the collapse of the subprime mortgage market. The Senate and House measures aim to prevent a repeat of the $700 billion taxpayer-funded bailout that helped firms including American International Group Inc. and Citigroup Inc . weather the worst recession since the 1930s. Republican Criticism Republicans criticized the Senate bill, saying it failed to deal with government-sponsored enterprises Fannie Mae and Freddie Mac, which were seized by the government in 2008. The Republicans also said the consumer financial protection bureau the bill would create at the Federal Reserve would establish a massive new bureaucracy. “The failure to address the GSEs is the most glaring omission in this legislation,” Senator Richard Shelby , the banking committee’s top Republican, said before the vote. “This bill will stifle innovation in consumer financial products and reduce small-business activity,” he said. The Senate measure adopts priorities Obama outlined last June for strengthening financial rules. It allows the Federal Deposit Insurance Corp. to take apart large failing financial firms in an orderly way if their collapse could threaten the economy. The regulatory bill would create a consumer financial- protection bureau at the Fed with powers to write and enforce rules banning abusive credit-card and mortgage lending practices. It calls for a one-time audit of the Fed’s emergency actions since December 2007. Derivatives It includes language offered by Senate Agriculture Committee Chairman Blanche Lincoln that would require commercial banks to wall off their trading operations, one of the most contentious and difficult issues of the Senate debate. The underlying legislation would push most of the $615 trillion in over-the-counter derivatives to be processed, or cleared, with a third party. The bill would push over-the-counter trades onto regulated exchanges or similar electronic systems, a measure that would raise margin costs on some transactions. Derivatives have taken a central role in the debate after losing bets on swaps tied to mortgage-backed securities pushed AIG, the New York-based insurer, to the brink of bankruptcy when the housing market collapsed in 2008. Derivatives are contracts whose value is derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in interest rates or the weather. To contact the reporters on this story: Alison Vekshin in Washington at avekshin@bloomberg.net . Phil Mattingly in Washington at pmattingly@bloomberg.net .

Read the full article →

U.S. Senate Approves Wall Street Financial Overhaul Bill After 59-39 Vote

May 20, 2010

By Alison Vekshin and Phil Mattingly May 20 (Bloomberg) — The U.S. Senate approved a sweeping overhaul of Wall Street regulation that would create a consumer protection agency, strengthen oversight of derivative trading and ban proprietary trading at banks. Senators voted 59-39 today in favor of the measure, which also creates a mechanism for liquidating failing financial firms and a council of financial regulators to monitor markets for threats to the economy. The move sends the legislation into negotiations designed to reconcile differences with the House bill approved in December. “We’ve got a very strong, good bill,” Senator Christopher Dodd , the Banking Committee chairman who offered the legislation, told reporters before the final vote. “There’s still a conference probably to go and we’re going to do some additional work,” the Connecticut Democrat said. Congressional Democrats moved to overhaul governance of U.S. financial companies in response to the 2008 financial crisis that followed the collapse of the subprime mortgage market. The Senate and House measures aim to prevent a repeat of the $700 billion taxpayer-funded bailout that helped firms including American International Group Inc. and Citigroup Inc . weather the worst recession since the 1930s. Republican Criticism Republicans criticized the Senate bill, saying it failed to deal with government-sponsored enterprises Fannie Mae and Freddie Mac, which were seized by the government in 2008. The Republicans also said the consumer financial protection bureau the bill would create at the Federal Reserve would establish a massive new bureaucracy. “The failure to address the GSEs is the most glaring omission in this legislation,” Senator Richard Shelby , the banking committee’s top Republican, said before the vote. “This bill will stifle innovation in consumer financial products and reduce small-business activity,” he said. The Senate measure adopts priorities Obama outlined last June for strengthening financial rules. It allows the Federal Deposit Insurance Corp. to take apart large failing financial firms in an orderly way if their collapse could threaten the economy. The regulatory bill would create a consumer financial- protection bureau at the Fed with powers to write and enforce rules banning abusive credit-card and mortgage lending practices. It calls for a one-time audit of the Fed’s emergency actions since December 2007. Derivatives It includes language offered by Senate Agriculture Committee Chairman Blanche Lincoln that would require commercial banks to wall off their trading operations, one of the most contentious and difficult issues of the Senate debate. The underlying legislation would push most of the $615 trillion in over-the-counter to be processed, or cleared, with a third party. The bill would push over-the-counter trades onto regulated exchanges or similar electronic systems, a measure that would raise margin costs on some transactions. Derivatives have taken a central role in the debate after losing bets on swaps tied to mortgage-backed securities pushed AIG, the New York-based insurer, to the brink of bankruptcy when the housing market collapsed in 2008. Derivatives are contracts whose value is derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in interest rates or the weather. To contact the reporters on this story: Alison Vekshin in Washington at avekshin@bloomberg.net . Phil Mattingly in Washington at pmattingly@bloomberg.net .

Read the full article →

Heathrow, Gatwick Airports Shut as Volcanic Ash Cloud Moves Across London

May 16, 2010

By Steve Rothwell May 17 (Bloomberg) — Heathrow, Gatwick and London City airports closed from 1 a.m. until 7 a.m. today, National Air Traffic Services Ltd. said, citing a “high density ash cloud” that continues to move further south. The U.K. no-fly zone, which is imposed by the Civil Aviation Authority, now includes Farnborough, Shoreham, Biggin Hill, all airfields in Northern Ireland, Scottish Western Isles, Oban, Campbeltown, Caernarfon and Aberdeen, as well as the three London airports. Stansted and Luton will remain open, NATS said. Airports across northern England, including Manchester and Liverpool, will reopen from 1 a.m. after being closed since 1 p.m. yesterday, NATS said. Cardiff remains open but operations “may be limited due to close proximity of the no-fly zone,” NATS said. British authorities are imposing a no-fly zone on the U.K.’s major transport hub as a cloud of volcanic ash disrupts travel for a third time in a month. Thousands of flights across Europe have been canceled in the past month since the eruption of the Eyjafjallajökull volcano on concern the resulting cloud of ash might damage aircraft engines and endanger passenger safety. British Airways Plc is “likely to experience significant disruption to our operations on Monday morning,” the London- based company said in an e-mailed statement. EasyJet Plc and Ryanair Holdings Plc both canceled flights yesterday because of the airspace restrictions. ‘Beyond a Joke’ The closure of Manchester airport was “beyond a joke,” Virgin Atlantic Airways Ltd. founder Richard Branson was cited as saying by the Guardian newspaper yesterday. “Over 1,000 flights took off from France last week in similar conditions to that which exist in Manchester,” Branson said. Airports in Northern England and Scotland including Carlisle, Norwich, Doncaster, Humberside and Birmingham and East Midlands will also reopen at 1 a.m. Edinburgh and Glasgow airports remain open. Dublin airport will remain closed until at least noon today, the Irish Aviation Authority said. Five-day ash prediction charts made available by the Met Office forecast a cloud containing ash concentrations that exceed engine manufacturer tolerance levels will remain over parts of the U.K. today. The ash will no longer pose a risk to U.K. airspace from tomorrow, the charts show. The ash, which is contaminating the air between 15,000 feet (4,572 meters) and 20,000 feet, is being pushed toward the U.K. capital by winds from the northwest, Met Office spokesman Barry Grommet said in an interview yesterday. The cloud will likely be pushed away from Britain later today as winds blowing from the southwest dominate the weather. Volcanic Dust The first wave of disruption began in mid-April, halting air travel across the U.K. for six days. Some airports closed again previously this month on concern the volcanic dust may clog engines and scar windscreens. Speed sensors, critical in flight, can also be disabled by the ash. “There is extensive cloud over the U.K. and that has been confirmed by a research aircraft,” Gromett said. “It’s a much shorter-lived prospect this time round. By lunchtime on Tuesday the charts show most of the ash should be well away from the U.K.” To contact the reporterS on this story: Steve Rothwell in London at srothwell@bloomberg.net

Read the full article →

BP Says It Will Have Oil-Capture System in Place Over Blowout in Few Days

May 13, 2010

By Jessica Resnick-Ault May 13 (Bloomberg) — BP Plc will in the next few days try to redirect the flow of oil from its leaking Gulf of Mexico well with a pipe to the surface, a spokesman said. “BP is not doing this on a fixed deadline,” David Nicholas , a spokesman in Houston, said today. “It will depend on engineering developments, operational developments and the weather. Right now, the weather is within operational limits.” The company hasn’t yet decided whether to deploy a 5-foot- tall (1.5 meter) containment dome or insert a line directly into the leaking pipe. The timeline for installing the dome is a delay from the schedule announced by Chief Executive Officer Tony Hayward, who said in Houston on May 10 it would be in place by today. BP’s well, about 40 miles (64 kilometers) off Louisiana’s coast, began leaking oil after the Deepwater Horizon drilling rig exploded on April 20 and sank two days later. The well, located in waters about a mile deep, is gushing at an estimated rate of 5,000 barrels a day. A first effort to capture oil near the seafloor and direct it to a ship on the surface using a 40-foot-tall containment structure failed on May 8 after it clogged with an icy gas mixture. The company has yet to decide whether to install the second, smaller dome, which Hayward calls a “top hat,” that will have methanol and warm water injected into it to counteract freezing. Another option is to put a smaller tube into the leaking pipe to redirect oil to the surface. BP shares rose for the first time in five days, gaining 6 pence, or 1.1 percent, to 547.60 pence in London trading. The stock has fallen 16 percent since the explosion. To contact the reporters on this story: Jessica Resnick-Ault in New York at jresnickault@bloomberg.net

Read the full article →

BP to Try Pipe Injection, More Equipment to Stem Gushing Oil Well in Gulf

May 3, 2010

By Jessica Resnick-Ault May 3 (Bloomberg) — BP Plc , owner of the Gulf of Mexico Macondo well that has been spewing oil 5,000 feet below the water’s surface since April 20, outlined a battery of techniques it will use to attempt to stem the leak. Plans include chemical injections, containment domes and new pressure equipment, Bob Fryar, senior vice president of BP’s operations in Angola, said yesterday in Houston. U.S. President Barack Obama visited Louisiana yesterday and said the government would protect the natural resources of the region and rebuild the area. He said the U.S. had coordinated a “relentless response” to a “potentially unprecedented” disaster. Admiral Thad Allen , the Coast Guard commandant overseeing efforts to control and clean up the spill, described the dark, mile-deep region where the oil is leaking as “inner space” that can only be tackled using remotely controlled devices. “What we’re doing is closer to Apollo 13 than the Exxon Valdez,” Allen said, referring to the 1989 tanker spill that dumped 260,000 barrels of oil off Alaska. BP , based in London, said it has no way of knowing how much oil is leaking because it can’t get data from the well. It hasn’t been able to use the so-called blowout preventer, which may have become corroded with sand. Pressure is being applied to the apparatus to seal the leak, Fryar said. BP may also try to “snap on” a second blowout-preventer stack, he said. Domes on Leaks The first of two domes to contain the crude at the sea floor will be put on one of three leaks in six to eight days, BP said. The second dome will take eight to 12 days. A valve, which the company said may be in place in 24 hours, will be tried on the most significant leak. “I reiterated my commitment to the White House today that BP will do anything and everything we can to stop the leak, attack the spill off shore, and protect the shorelines of the Gulf Coast,” BP Chief Executive Officer Tony Hayward , who arrived in the Gulf area late May 1 to oversee containment efforts, said in an e-mailed statement yesterday. Admiral Allen said federal agencies are preparing for a sustained effort as BP technicians try to figure out how to stop the leaks. Allen said in an interview he is seeking to improve communications and supply chains for distributing equipment and chemicals used to disperse the oil. “I am looking over the horizon.” The spill has grown so large, Allen said, that he is concerned there may be a shortage of booms, such as those used on the open sea to help contain the slick. Weather Forecast The spill is 9 miles (14 kilometers) off the coast of southeastern Louisiana, Obama said at a press conference in Venice. BP said the weather forecast shows the slick won’t move over the next three days. Obama, who was briefed on BP’s efforts to cap the well, met with Louisiana Governor Bobby Jindal after getting off Air Force One. The Coast Guard has said it has been unable to get an accurate estimate of how much oil is leaking and is preparing for a worst-case scenario. More than 2,000 people have been deployed to protect the shoreline and coastal wildlife, according to a statement from the multiagency Joint Information Center coordinating the federal response. A so-called relief well is due to be completed in about 90 days, Michael Abendhoff , a company spokesman, said yesterday in a phone interview from Robert, Louisiana. ‘Thorough Review’ The oil spill followed an April 20 explosion on a drilling rig leased by BP. The rig, owned by Transocean Ltd. , sank two days later. Obama has ordered that no new offshore drilling leases be issued until a “thorough review” of the incident is completed. The attorneys-general from Alabama, Texas, Mississippi, Florida, and Louisiana met yesterday in Mobile, Alabama, to discuss legal options and strategies. Mississippi Attorney General Jim Hood said the uncertainty of the oil slick’s size is the biggest concern. Alabama Attorney General Troy King said the fund created after the Exxon Valdez tanker spill may need changes to meet the damages from the current incident in the Gulf. BP has released 156,012 gallons of dispersant so far to break up the oil, said Bill Salvin, a BP spokesman. The company hasn’t been able to fully assess the efficiency of the method, Abendhoff said. BP was unable to spray dispersants yesterday because of weather conditions, said Steve Rinehart , another spokesman. Strong Winds Strong winds and 7-to-10-foot waves make it impossible to measure whether the dispersants lowered the volume of oil emerging on the sea surface, Abendhoff said. The response teams opted against conducting flyovers yesterday due to continued foul weather, Rinehart said. Surface estimates of the size of the slick and skimming efforts were hindered as the Coast Guard ordered boats and aircraft back to port because of stormy weather. Salvin said 23,968 barrels of crude and other material has been picked up by skimming boats. The National Oceanic and Atmospheric Administration previously estimated the well is spewing 5,000 barrels of oil a day. At that rate, the volume of the spill would exceed Alaska’s Exxon Valdez accident by the third week of June. While BP has begun an investigation into the cause of the explosion and resulting leak, it hasn’t set out a timeline for the project, Rinehart said. ‘American Chernobyl’ About 6.2 million cubic feet of gas production was halted May 1 as environmental and safety concerns stopped operations at two offshore platforms and prompted one to be evacuated. That’s less than a 10th of 1 percent of U.S. output. “This is an American Chernobyl,” said Louie Miller, 55, senior representative for the Sierra Club in Mississippi, referring to the explosion at a Ukrainian nuclear reactor in 1986 that killed 56 people, destroyed wildlife and contaminated waterways. Oil “may not be radioactive, but it’s toxic.” The NOAA yesterday closed commercial and recreational fishing in parts of the Gulf affected by the spill for a minimum of 10 days, effective immediately. The agency said in a statement that it’s working with state governors to evaluate the need to declare fisheries a disaster to get federal aid to fishermen in the area. The Louisiana Department of Health and Hospitals advised residents not to swim or fish in affected waters and to prevent young children, pregnant women and pets from entering contaminated areas. Wildlife Impact The impact on wildlife “depends on the tides, weather and other factors beyond our control,” Jay Holcomb, director of the International Bird Rescue Research Center , said in a statement. The group has set up bird-rescue centers in Louisiana and Alabama. Commercial shipping on Mississippi River fairways hasn’t been significantly affected so far, though that may change if cleanup efforts are implemented, Admiral Allen said earlier yesterday. Traffic may be halted in contaminated areas or ships will have to be washed after passing through oily waters. St. Bernard Parish in Louisiana will employ local fishermen to deploy protective booms after training them on the procedure on May 1, the parish said in a statement. Defense Secretary Robert Gates approved a request by Jindal to mobilize as many as 6,000 National Guard troops to add security, medical support, engineers, communications capability and cleanup crews to the oil slick containment effort, spokesman Geoff Morrell said late April 30. To contact the reporters on this story: Jessica Resnick-Ault in New York at jresnickault@bloomberg.net

Read the full article →

Obama Surveys Operations to Stem Gulf Oil Spill `Impossible’ to Estimate

May 2, 2010

By Margot Habiby and Katarzyna Klimasinska May 2 (Bloomberg) — U.S. President Barack Obama arrived on the Gulf Coast today to review efforts to stem an oil-well leak with a flow rate that’s “impossible” to estimate, according to the U.S. Coast Guard. Obama, who was briefed on BP Plc’s efforts to cap the well, met with Louisiana Governor Bobby Jindal after getting off Air Force One. Press secretary Robert Gibbs said the leak was a “continued very serious situation.” The Coast Guard said it has been unable to get an accurate estimate of how much oil is leaking and is preparing for a worst-case scenario. Some of the crude has reached land in Louisiana, and “the more significant oil is coming” within two days, Jindal said at a news conference yesterday. More than 2,000 people have been deployed to protect the shoreline and coastal wildlife, according to a statement from the multiagency Joint Information Center coordinating the federal response. BP , the owner of the offshore well, is seeking ways to plug the leaks that are spewing crude 5,000 feet under the water’s surface. The company has two drill ships in place to bore a second well to take pressure off of the current gusher. The so- called relief well is due to be completed in about 90 days, Michael Abendhoff , a company spokesman, said today in a phone interview from Robert, Louisiana. Within seven to eight days, the company will put funnel- like caps in place to halt oil coming out of the well, said Steve Rinehart , a BP spokesman. Rig Explosion The oil spill followed an April 20 explosion on a drilling rig leased by BP. The rig, owned by Transocean Ltd ., sank two days later. Obama has ordered that no new offshore drilling leases be issued until a “thorough review” of the incident is completed. “Any exact estimation of what’s flowing out of those pipes right now is almost impossible because of the depth of the water,” said Admiral Thad Allen in a conference call with reporters yesterday. Allen, the U.S. Coast Guard commandant, was designated the national incident commander to coordinate efforts to control the oil spill and minimize the damage. “The focus has to be to stop it at the source,” Allen said. Obama is scheduled to make a statement at 2:30 p.m. local time today from Venice, Louisiana, after a briefing with response officials there. The attorneys general from five states bordering the Gulf are scheduled to meet today in Mobile, Alabama, to discuss legal options and strategies, Florida Attorney General Bill McCollum said in a statement today. Chemical Dispersant The London-based company has released 156,012 gallons of dispersant so far to break up the oil, said Bill Salvin, another BP spokesman. BP hasn’t been able to fully assess the efficiency of the method, Abendhoff said. The company has been unable to spray dispersants today because of weather conditions, said Steve Rinehart, a spokesman. Strong winds and 7-to-10-foot waves make it impossible to measure whether the dispersants lowered the volume of oil emerging on the sea surface, Abendhoff said. The response teams opted against conducting flyovers today due to continued foul weather, Rinehart said. Forecasts call for improved weather for the next four to five days starting tomorrow at the earliest, Salvin said. Skimming Operations Surface estimates of the size of the slick and skimming efforts were hindered as the Coast Guard ordered boats and aircraft back to port because of stormy weather. Salvin said 23,968 barrels of crude and other material has been picked up by skimming boats. The National Oceanic and Atmospheric Administration previously estimated the well is spewing 5,000 barrels of oil a day. At that rate, the volume of the spill would exceed Alaska’s 1989 Exxon Valdez accident by the third week of June. BP Chief Executive Officer Tony Hayward arrived in the Gulf area late last night to oversee efforts to combat the leak and will stay several days. BP has begun an investigation into the cause of the explosion and resulting leak, but has not yet set out a timeline for the project, Rinehart said. About 6.2 million cubic feet of gas production was halted yesterday as environmental and safety concerns stopped operations at two offshore platforms and prompted one to be evacuated. That’s less than a 10th of 1 percent of U.S. output. ‘American Chernobyl’ “This is an American Chernobyl,” said Louie Miller, 55, senior representative for the Sierra Club in Mississippi, referring to the explosion at a Ukrainian nuclear reactor in 1986 that killed 56 people, destroyed wildlife and contaminated waterways. Oil “may not be radioactive, but it’s toxic.” NOAA today closed commercial and recreational fishing in parts of the Gulf affected by the spill for a minimum of ten days, effective immediately. The agency said in a statement that it’s working with state governors to evaluate the need to declare fisheries a disaster to get federal aid to fishermen in the area. The Louisiana Department of Health and Hospitals advised residents not to swim or fish in affected waters and to prevent young children, pregnant women and pets from entering contaminated areas. The impact on wildlife “depends on the tides, weather and other factors beyond our control,” Jay Holcomb, director of The International Bird Rescue Research Center , said in a statement. The organization has set up bird-rescue centers in Louisiana and Alabama. Mississippi River Shipping Commercial shipping on Mississippi River fairways hasn’t been significantly affected so far, though that may change if cleanup efforts are implemented, Allen said. Traffic may be halted in contaminated areas or ships will have to be washed after passing through oily waters. St. Bernard Parish in Louisiana will employ local fishermen to deploy protective booms after training them on the procedure yesterday morning, the parish said in a statement. Defense Secretary Robert Gates approved a request by Jindal to mobilize as many as 6,000 National Guard troops to add security, medical support, engineers, communications capability and cleanup crews to the oil slick containment effort, spokesman Geoff Morrell said late April 30. To contact the reporters on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net . Katarzyna Klimasinska in Houston at kklimasinska@bloomberg.net .

Read the full article →

President to Visit Gulf Coast to Survey BP’s Efforts to Control Oil Spill

May 1, 2010

By Margot Habiby and Katarzyna Klimasinska May 2 (Bloomberg) — U.S. President Barack Obama will arrive on the Gulf Coast today to review efforts to mitigate a potential environmental disaster in Louisiana, Mississippi, Alabama and Florida as an expanding oil spill moves onshore. Some of the oil has reached land in Louisiana, and “the more significant oil is coming” within two days, Governor Bobby Jindal said at a news conference yesterday. More than 2,000 people have been deployed to protect the shoreline and coastal wildlife, according to a statement from the multiagency Joint Information Center coordinating the federal response. BP Plc , owner of the offshore well, is seeking ways to plug the leaks that are spewing crude 5,000 feet under the water’s surface. The U.S. Coast Guard said it has been unable to get an accurate estimate of how much oil is leaking and is preparing for a worst-case scenario. The oil spill followed a April 20 explosion on a drilling rig leased by BP. The rig, owned by Transocean Ltd ., sank two days later. Obama has ordered that no new offshore drilling leases be issued until a “thorough review” of the incident is completed. “Any exact estimation of what’s flowing out of those pipes right now is almost impossible because of the depth of the water,” said Admiral Thad Allen in a conference call with reporters yesterday. Allen, the U.S. Coast Guard commandant, was designated the national incident commander to coordinate efforts to control the oil spill and minimize the damage. “The focus has to be to stop it at the source,” Allen said. Stormy Weather Surface estimates of the size of the slick were hindered as the Coast Guard ordered boats and aircraft back to port because of stormy weather that swelled waves to 5 to 8 feet (1.5 to 2.4 meters) in the Gulf and prevented planes from flying. The vessels “weren’t able to do any work today,” said Coast Guard Petty Officer Matthew Schofield in an interview. “Because of the weather, there haven’t been any overflights.” The National Oceanic and Atmospheric Administration previously estimated the well is spewing 5,000 barrels of crude oil a day. At that rate, the volume of the spill would exceed Alaska’s 1989 Exxon Valdez accident by the third week of June. Production Halted BP Chief Executive Officer Tony Hayward was on his way to Louisiana to oversee efforts to combat the leak and will stay several days, said Toby Odone , a London-based spokesman. About 6.2 million cubic feet of gas production was halted yesterday as environmental and safety concerns stopped operations at two offshore platforms and prompted one to be evacuated. That’s less than a 10th of 1 percent of U.S. output. Responders have recovered more than 1 million gallons (3.78 million liters) of an oil-and-water mix from the Gulf. At the mouth of the Baptiste Collette, the easternmost pass from the Mississippi River to the Gulf, a flock of pelicans fed yesterday near oily black debris blowing inshore in long, thin strings. “This is an American Chernobyl,” said Louie Miller, 55, senior representative for the Sierra Club in Mississippi, referring to the explosion at a Ukrainian nuclear reactor in 1986 that killed 56 people, destroyed wildlife and contaminated waterways. Oil “may not be radioactive, but it’s toxic.” No Swimming The Louisiana Department of Health and Hospitals advised residents not to swim or fish in affected waters and to prevent young children, pregnant women and pets from entering contaminated areas. The impact on wildlife “depends on the tides, weather and other factors beyond our control,” said Jay Holcomb, director of The International Bird Rescue Research Center , in a statement. The organization has set up bird-rescue centers in Louisiana and Alabama. Commercial shipping on Mississippi River fairways hasn’t been significantly affected so far, though that may change if cleanup efforts are implemented, Allen said. Traffic may be halted in contaminated areas, or ships will have to be washed after passing through oily waters. Chemical Dispersant BP injected 3,000 gallons of a chemical dispersant 5,000 feet underwater in the Gulf of Mexico to break up the oil at the source of the leak before it can rise to the surface to form a slick, company spokesman Tom Mueller said by phone from Robert, Louisiana, yesterday. BP will be evaluating the effectiveness of the method before continuing, he said. St. Bernard Parish in Louisiana will employ local fishermen to deploy protective booms after training them on the procedure yesterday morning, the parish said in a statement. Defense Secretary Robert Gates approved a request by Jindal to mobilize as many as 6,000 National Guard troops to add security, medical support, engineers, communications capability and cleanup crews to the oil slick containment effort, spokesman Geoff Morrell said late April 30. To contact the reporters on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net . Katarzyna Klimasinska in Houston at kklimasinska@bloomberg.net .

Read the full article →

BP Oil Well Leaks Up to 5,000 Barrels a Day, Five Times More Than Estimate

April 28, 2010

By Jim Polson and Yee Kai Pin April 29 (Bloomberg) — A damaged BP Plc oil well in the Gulf of Mexico is leaking as many as 5,000 barrels of crude a day, five times more than previously estimated, the U.S. Coast Guard said. “There’s an additional breach in the well,” Coast Guard spokesman Erik Swanson said by telephone from Robert, Louisiana. The National Oceanic and Atmospheric Administration has increased its estimates of the flow of crude from 1,000 barrels a day, he said. The explosion and sinking of the Deepwater Horizon drilling rig about 130 miles (210 kilometers) southeast of New Orleans last week caused a slick that had drifted within 16 miles of the coast, according to a Coast Guard map released after a press conference yesterday. The spill is about 600 miles in circumference, the Coast Guard said. That’s about twice the land area of Maryland. The oil may reach land for the first time tomorrow in Louisiana, bringing tar balls and mousse-like hunks of emulsified oil later, Charlie Henry, the U.S. government’s lead forecaster for the spill, said yesterday at the press conference in Robert. BP burned a section of the slick yesterday, testing whether it may be used to reduce potential shoreline damage, Swanson said earlier. Results will be announced today, Doug Suttles , BP’s chief operating officer for exploration and production, said at the press conference. Daren Beaudo , a spokesman for BP, couldn’t immediately be reached for comment late yesterday. “The winds are going to be sustained out of the southeast for days and days and days,” Tom Downs , a meteorologist at Weather 2000 Inc. in New York, said yesterday in an interview. “That will push everything toward the coast.” Southeast winds may build to 40 miles an hour today, he said. Floating Boom A forecast map published after the press conference showed landfall possible by 6 p.m. local time tomorrow. Heavier oiling would occur should winds continue out of the southeast, Henry said. BP expanded placement of floating boom designed to block oil slicks to 100,000 feet (30 kilometers) today and has another 500,000 feet available, Suttles said. Louisiana’s marshy coastline extends 15,000 miles, according to its Department of Natural Resources. BP is trying to protect areas most sensitive to oiling from the delta to Mobile Bay, Alabama, he said. BP expects to clean up some oil off the shore, he said. “It’s probably not possible to collect all the oil offshore,” Suttles said. Hazed Birds Damage to birds in the Pass a Loutre and Delta Wildlife Refuges, both in the projected path of the spill, was “extremely low” after a pipeline spill caused by Hurricane Ivan in 2004 because wildlife officials hazed birds away from the oil with noise, Henry said. “We’re hoping for the same outcome,” he said. Currents and tides may change the trajectory as the oil nears shore, he said. BP expects to begin drilling tomorrow a new well to reach the damaged well and stop the flow. The well will be started a half mile away and stopping the flow through that method may take three months, he said. BP is spending $6 million a day trying to clean up the spill and stop the leak, according to Suttles. The application of chemical dispersant by airplanes, evaporation and other “natural processes” will dissipate most of the slick, which is thin enough to appear as a sheen on the surface, the Coast Guard said in a statement yesterday. The rig, owned by Geneva-based Transocean Ltd., exploded and sank last week, leaving 11 of the 126-member crew dead. The U.S. Interior Department’s Minerals Management Service and the Coast Guard are investigating the cause as they guide the cleanup. To contact the reporters on this story: Jim Polson in New York at jpolson@bloomberg.net ; Yee Kai Pin in Singapore at kyee13@bloomberg.net

Read the full article →

Stocks in U.S. Advance as Treasuries, Dollar Decline on Economic Optimism

April 23, 2010

By Michael P. Regan April 23 (Bloomberg) — U.S. stocks and commodities gained, while Treasuries and the dollar fell, as the biggest jump in new U.S. home sales since 1963 fueled optimism the economic recovery is strengthening. The Standard & Poor’s 500 Index rose 0.7 percent to 1,217.28 at 4 p.m. in New York, wiping out losses triggered by the government’s April 16 lawsuit against Goldman Sachs Group Inc. An S&P gauge of 12 U.S. homebuilders extended this week’s rally to 13 percent, the biggest since July. Oil climbed 1.7 percent to $85.12 a barrel, while the dollar fell for the first time in seven days against the euro. Ten-year Treasury yields lost 0.04 percentage point to 3.81 percent. The 27 percent growth in new home sales coupled with an increase in orders for most durable goods added to evidence the economy is strengthening as S&P 500 companies top analysts’ earnings estimates at a record pace. In Europe, equities pared a weekly decline after Adidas AG raised its earnings forecast and Germany’s Ifo Institute said business confidence jumped to a two-year high. “The recovery is sustainable,” said Jack Ablin , chief investment officer at Chicago-based Harris Private Bank, who oversees $55 billion. “Things are starting to fall into place in different areas of the economy. It’s telling us a pretty good story.” 47 Years The S&P 500 climbed 2.1 percent during the past five days, its seventh weekly rally in the past eight weeks. Pulte Group Inc. and D.R. Horton Inc. paced a rally in all 12 shares in a gauge of homebuilders. The gain in new-home sales was the biggest in 47 years as buyers rushed to qualify for a government tax credit and the weather improved, a Commerce Department report showed. Bookings for goods meant to last at least three years, excluding cars and aircraft, climbed 2.8 percent. American Express Co. advanced 2.7 percent today on earnings that beat analysts’ estimates, and Merck & Co. surged 5 percent as the drugmaker said the U.S. health-care overhaul won’t hurt long-term growth. Energy companies rallied on the jump in oil. More than 80 percent of S&P 500 companies that have reported first-quarter results beat the average analyst earnings estimate, according to data compiled by Bloomberg. That would be the highest full-quarter proportion in data going back to 1993. The improving economic data spurred speculation the recovery is gaining enough momentum for the Federal Reserve to begin considering plans to boost interest rates. Trading in Fed funds futures showed a 25 percent chance the central bank will lift rates by its August meeting, compared with 16 percent odds a week ago. Futures trading still prices in no chance of a boost at the policy meeting next week. Europe’s Weekly Drop The Stoxx Europe 600 Index rose 0.8 percent. The benchmark gauge for European shares declined 0.2 percent since April 16, its second straight weekly loss. Adidas, the world’s second-biggest sporting-goods maker, advanced 3.9 percent in Frankfurt and Volvo AB, the second- largest truckmaker, soared 10 percent in Stockholm, the most in 14 months. Akzo Nobel NV rallied 4.6 percent after posting increased earnings and receiving expressions of interest for its food additives unit. Taylor Wimpey Plc, the homebuilder that gets 32 percent of revenue from North America, soared the most in almost a year as U.S. home sales jumped. Greek two-year notes fell, capping the biggest weekly increase in yields on record, after a government request for aid failed to assuage concern that bondholders will be asked to accept delayed or reduced payments. Yields Jump The declines pushed up the yield to near yesterday’s 11- year high. The notes rose earlier, driving the yield down as much as 1 percentage point before the announcement. Prime Minister George Papandreou said he gave the Finance Ministry a mandate to ask the European Union today to release the aid. The Greek request needs approval from all 15 other euro-area countries including Germany, where surveys have shown public opposition to aiding Greece. Greece’s ASE equities index slipped 0.2 percent, erasing a rally of 4.6 percent from earlier in the day. The premium investors demand to hold bonds of developing nations instead of Treasuries fell by five basis points to 240 basis points, according to JPMorgan Chase & Co. data. Emerging market bond funds took in $1.28 billion in the third week of April, a tally second only to the previous week’s record $1.8 billion of inflows, ahead of debt offerings from Egypt and Russia, EPFR Global said. Emerging-market stocks rose for a third time this week. The MSCI Emerging Markets Index of shares in 22 countries climbed 0.3 percent. Russia’s Micex index rose 1.7 percent after Goldman Sachs said there’s 28 percent “upside potential” in the equity market this year and stock funds posted a 10th week of inflows. The Shanghai Composite Index dropped 0.5 percent on concern government measures to curb the property market will reduce spending. Brazil’s Bovespa index fluctuated. Copper futures for July delivery rose 0.7 percent to $3.5305 a pound in New York. Gold futures rose 0.9 percent to $1,153.70 an ounce. To contact the reporter on this story: Michael P. Regan in New York at Mregan12@bloomberg.net .

Read the full article →

Video: Zandi Sees `Weaker’ Home Sales After Tax Credit Expires: Video

April 23, 2010

April 23 (Bloomberg) — Mark Zandi, chief economist and co-founder of Moody’s Economy.com, talks with Bloomberg’s Lori Rothman about the outlook for the U.S. housing market. Sales of new homes surged 27 percent in March, the biggest gain in 47 years, as buyers rushed to qualify for a government tax credit and the weather improved. (Source: Bloomberg)

Read the full article →

Existing U.S. Home Sales Rise 6.8% as Buyers Take Advantage of Tax Credit

April 22, 2010

By Courtney Schlisserman April 22 (Bloomberg) — Sales of U.S. previously owned homes rose in March for the first time in four months as buyers took advantage of a government tax credit and the weather improved. Purchases climbed 6.8 percent to a 5.35 million annual rate, more than anticipated, from a 5.01 million pace in February, figures from the National Association of Realtors showed today in Washington. The median prices climbed 0.4 percent from March 2009. The thawing out from February’s blizzards probably helped the market last month, while the Obama administration’s credit worth up to $8,000 may keep underpinning demand through June, when it’s next due to lapse. The outlook for the second half of the year depends on the speed and magnitude of the recovery in the job market, indicating the housing rebound may be slow to develop. “You have some fundamental improvement in housing,” said Stuart Hoffman , chief economist at PNC Financial Services Group. Inc. in Pittsburgh. “Housing is coming back. It’s still got a long way to go.” Existing home sales were forecast to rise to a 5.29 million annual rate, according to the median estimate of 76, economists in a Bloomberg News survey, from a previously reported 5.02 million rate in February. Projections ranged from 5.05 million to 5.5 million. Fewer Claims Other reports today showed the number of claims for jobless benefits dropped last week and whole prices climbed in March. Stocks held earlier looses after the report on concern of rising government debt levels in Europe and disappointing forecasts at Nokia Oyj, EBay Inc. and Qualcomm Inc. The Standard & Poor’s 500 Index dropped 0.9 percent to 1,194.85 at 10:24 a.m. in New York. Purchases of existing homes were up 20 percent compared with a year earlier, before adjusting for seasonal variations. The median price creased to $170,700 from $170,000 a year ago. The number of previously-owned homes on the market increased 1.5 percent to 3.58 million. At the current sales pace, it would take 8 months to sell those houses compared with 8.5 months at the end of the prior month. First-Time Buyers The share of homes sold to first-time buyers increased to 44 percent, from 42 percent in February and 40 percent in January, Lawrence Yun , the Realtors’ group’s chief economist said, showing the influence of the tax incentive. “The tax credit has done its job,” Yun said at a press conference. It’s brought more buyers into the market and has helped stabilize prices, he said. Today’s report showed sales of existing single-family homes increased 7.3 percent to an annual rate of 4.68 million. Sales of multifamily properties, including condominiums and townhouses, rose 3.1 percent to a 670,000 pace. Purchases climbed in all four regions of the country. Demand increased 7.2 percent in the Midwest, 7.1 percent in the South, 6.6 percent in the West and 6 percent in the Northeast. The Commerce Department may report tomorrow that new home sales , which are recorded at the time contracts are signed, rose last month after falling to a record low in February. Reports last week showed builder confidence climbed in April and housing stars in March reached the highest level in more than a year, while building permits increased to the highest point since October 2008. Tax Credit The Obama administration extended a tax credit for first- time homebuyers in November and expanded it to include some current owners. The deadline for signing contracts is the end of this month, and the transactions must be completed by June 30. Sales of existing houses, which account for 90 percent of the housing market, are tabulated at contract closings, meaning demand may remain elevated through June. Purchases of new houses, due from the Commerce Department tomorrow, reflect signings, indicating the credit’s maximum influence will be evident in the March and April data. Foreclosures may also dictate the direction of the housing market after the tax incentive is over. Filings rose 16 percent in the first quarter from a year earlier and bank seizures reached a record, according to Irvine, California-based RealtyTrac Inc. More Affordable While hurting household finances by driving property values, foreclosures are also making the market affordable to more buyers. At the same time, they create increased competition for builders, hurting profits. Some builders are finding ways to protect earnings. Lennar Corp. , the third-biggest U.S. homebuilder by revenue, last month said its quarterly loss narrowed after it cut administrative costs and trimmed incentives to buyers. The Miami-based company also is investing in failed bank loans and distressed real- estate assets to boost revenue. Lennar also benefited from selling in communities with less competition from foreclosures, Chief Executive Officer Stuart Miller said March 24. To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

Read the full article →

Parched Kansas Is Battlefield in $2.7 Billion Monsanto, DuPont Corn Fight

April 21, 2010

By Jack Kaskey and Antonio Ligi April 21 (Bloomberg) — Lance Russell’s neighbors aren’t used to seeing corn growing in the fields around Hays, Kansas, where the plants tend to wither and keel over in the hot, dry summers. They may be in for a surprise this summer. Russell is planting DuPont Co. ’s drought-tolerant corn, one of the seeds heading to market next year that’s designed to thrive where water is scarce. An experimental plot in 2009 improved on the economics of the sorghum crop “by a landslide,” Russell said. Monsanto Co. , DuPont and Syngenta AG are vying for a similar windfall. After battling for a decade to corner the $11 billion market for insect-resistant and herbicide-tolerant technologies, the world’s biggest seed companies are vying to develop crops that can survive drought. At stake is a new global market that may top $2.7 billion for the corn version alone. “It’s a race at the moment,” said Juergen Reck , a Frankfurt-based analyst at Macquarie Group Ltd. “They must see market potential.” The technology will have wide-ranging effects, from helping farmers draw less irrigation water to lowering insurance premiums and boosting land values in drought-prone regions, agricultural economists say. The seeds also may increase corn plantings in the U.S. Great Plains at the expense of wheat and sorghum while altering the market for biofuels. Higher Yields Perhaps most importantly for farmers, corn yields may climb. DuPont says seed being tested on 5,000 acres (2,023 hectares) this year is expected to boost yields in dry environments by at least 6 percent. Syngenta is targeting yield increases of at least 10 percent for its corn. Both companies used conventional breeding to develop the seeds for sale next year, with biotech versions due later in the decade. The seeds will be a “big market” for Basel, Switzerland- based Syngenta, Chief Executive Officer Michael Mack said in a telephone interview. “Farmers around the world are going to pay hundreds of millions of dollars to technology providers in order to have this feature.” Monsanto is moving directly to a biotech version that it says will increase corn yields 6 percent to 10 percent. The company’s seed, developed with BASF SE , may be put on sale in 2012 and become the first product genetically engineered to tolerate drought. The Monsanto-BASF partnership, created in 2007, aims to have its drought genetics in 55 million acres of U.S. corn by 2020. In comparison, St. Louis-based Monsanto had at least one biotech trait in 82 percent of the nation’s 86.5 million acres of corn last year. Insurance for Growers Monsanto and BASF are also developing drought-resistant versions that can serve as insurance for growers who normally have adequate rainfall or access to irrigation. The seeds may generate annual sales of almost $1 billion assuming the trait retails on average for $18 an acre , according to Ludwigshafen, Germany-based Germany BASF, the world’s largest chemicals company. “All players expect blockbuster potential,” said Patrick Rafaisz , a Zurich-based analyst at Bank Vontobel AG. The global market for drought-tolerant corn may reach 150 million acres, Wilmington, Delaware-based DuPont said in a February presentation , without providing a timeframe. That implies a market of $2.7 billion, based on BASF’s $18-per-acre projection. In comparison, global sales of all seeds in 2008 were $26 billion, including $9 billion of corn, Edinburgh-based industry consultant Phillips McDougall said in a December report. ‘Game Changer’ Agriculture accounts for 70 percent of global fresh-water use, Monsanto Chief Executive Officer Hugh Grant said in an interview. Reducing irrigation not only contributes to more sustainable farming, it’s a “game changer” that will boost profits and help feed a rising world population, he said. “The biggest single issue in farming going forward is water, use of water, water availability in many parts of the world, so I think it will be a significant product,” Grant said. Monsanto also is engineering crop seeds including cotton, wheat and sugar cane for drought tolerance, and the company and BASF are donating drought-resistant corn technologies to farmers in sub-Saharan Africa through the Nairobi-based African Agricultural Technology Foundation . The prospect of drought-resistant seeds isn’t winning over opponents of genetically modified foods, who say the latest technology may taint conventional corn supplies and allow large companies to perpetuate an industrial agricultural system that harms water resources. ‘System of Expansion’ “Their approach is that the market system of expansion we have is just fine and we can use technology to adapt to any problems and make money at the same time,” Maude Barlow , chairwoman of Washington-based Food and Water Watch , said in e- mailed responses to questions. “We are also very concerned about the possibility of this genetically engineered corn contaminating the stock.” The technology will expand the U.S. corn-growing region westward while helping the country’s farmers cut their irrigation bill, said Kevin C. Dhuyvetter , an agricultural economist at Kansas State University. The trait may reduce farmers’ insurance premiums and ultimately boost land values in water-starved regions of Nebraska, Kansas and Oklahoma, he said. “If we can apply 2 inches less water, that would be a huge benefit because the groundwater supplies are always diminishing,” Dhuyvetter said in a telephone interview. Effect on Markets By expanding the corn-growing region, the technology can help grow more grain to meet government targets that call for tripling use of biofuels including ethanol, which is made from corn in the U.S, by 2022, said Art Barnaby , an agricultural economist at Kansas State University. Growing more corn may lower prices, benefiting grain- importing countries, Barnaby said in a telephone interview. The biggest buyers of U.S. corn last year were Japan, Mexico and South Korea, according to the U.S. Department of Agriculture. Still, price changes won’t be significant because increased supply may be consumed by rising ethanol production and a growing world population, he said. Climate change may affect all of the variables. Global warming will increase vulnerability to drought in many U.S. regions, according to the Geological Society of America , and that may increase the need for drought-resistant seeds. “If you are in the drylands, this is a big deal,” Mark Gulley , a New York-based analyst at Soleil Securities, said in a telephone interview. It certainly is for Russell, the Kansas farmer. He said DuPont’s drought-tolerant corn outperformed other varieties by 15 percent last year when the weather was relatively moderate. “Honestly, I wouldn’t mind a dry, hot year where I can really test these varieties,” Russell said. To contact the reporters on this story: Jack Kaskey in New York at kaskey@bloomberg.net ; Antonio Ligi in Zurich at aligi@bloomberg.net .

Read the full article →

Patricia Handschiegel: The New Power Girls: What A Power Girl Needs To Know About… Getting Your Point Across

April 17, 2010

It’s a chilly weekday morning as I zip across San Francisco’s Union Square, dressed head to toe in a new outfit purchased to combat the unexpected weather. A Southern California resident, I left 80 degree temperatures two days earlier, only to find it nearly 50 degrees as I arrived in town. In all the many trips I’ve made to the Bay Area, I don’t think I’ve gotten the weather right once. As I duck into the hotel for the conference I’ll be speaking at that morning, I have two things on my mind: Getting to my scheduled speaking event on time and getting warm. An hour later, I’ve accomplished both and we’re well into a discussion with a packed room of mostly women writers and entrepreneurs. The energy is like nothing I’ve experienced at past speaking events like South by Southwest Interactive and MIT’s Futures of Entertainment 4. For the first time in my career, I’m addressing a room full of women entrepreneurs and executives versus one that’s predominantly male. More than once, people compliment me on my bright pink shirt just before going into a highly technical discussion about some aspect of their business or blog. At one point, the conversation shifts to attracting investor interest and ultimately raising money. Outcry fills the room as people describe being ignored by the Silicon Valley VC and investors. “They don’t ‘get’ women, they don’t understand the women’s market,” one said. Another added that the investment community is an “Old boy’s club.” As a person who has never had any issues with VC or investors taking interest in my work, networking with me, etc, I knew first hand what might be wrong. I share the warm reception I’ve received from some of the top firms in the country, and point to the many firms that specifically exist to support women entrepreneurs, like Golden Seeds. Most of all, I am reminded of the importance of understanding how to convey the message to investors and venture capitalists. “The thing with VC and investors,” I start, “Is that you’ve got to speak their language not the other way around.” It’s something that I’ve learned in my own work as well as in advising startup companies. I talk about the type of things investors like to hear, what key points a company needs to get across. I share anecdotes and examples based on my own experiences, including concrete areas where I made mistakes, many of which were being described by others who have made them as well. I share that I see the same issues among the male entrepreneurs I mentor as much as the women. It’s also something I constantly learn myself. “The key is to always know how to speak to what’s of value to the listener. It changes all the time depending on who you’d like to listen to you.” Here are my three go-to points: 1. Understand your value in their world, not yours. 2. Create concrete message points specific to that value and practice speaking them until you deliver them like a pro. 3. Always, always bullet proof your ideas – take your time and make sure you have every base, every gray area, etc. covered. Getting your point across can be as easy as that. As I head to the airport in the car awaiting outside, I realize it doesn’t just work in business but everywhere in life. My three favorite VC blogs: Fred Wilson, Union Square Ventures Guy Kawasaki, Garage Ventures Jeremy Liew, Lightspeed Ventures This is the start of a new fun series where we’ll be tapping past experiences, experts and all kinds of other cool sources on trends and topics women entrepreneurs face and can benefit from

Read the full article →

Icelandic Eruptions May Disrupt Air Travel for Months

April 17, 2010

By Alex Morales and Steve Rothwell April 17 (Bloomberg) — Volcanic eruptions in Iceland which this week caused thousands of flights to be canceled may continue for months, disrupting European air traffic as ash is sporadically blown above the continent’s busiest airports. More than 20,000 flights have been grounded after an April 14 eruption of the 1,666-meter (5,466-foot) Eyjafjallajökull volcano sent dust billowing across thousands of miles of European airspace and closed terminals from Dublin to Moscow. “It could go on for months,” Sigrun Hreinsdottir, a geophysicist at the University of Iceland, said in a telephone interview from Reykjavik. “From what we’ve seen, it could erupt, pause for a few weeks, and then possibly erupt again.” Canceled flights are costing carriers about $200 million a day, the International Air Transport Association estimates. Restrictions over most of the U.K. will remain in place until 7 p.m. at least, shutting London Heathrow, Europe’s busiest airport, flight-control authority National Air Traffic Services said today. “Following the latest information from the Met Office, NATS advises that restrictions across U.K. controlled airspace have been extended until at least 19:00 today and that restrictions to Scottish and Manchester airspace have been re-applied until the same time,” NATS said in a statement on its Web site. “Current forecasts show that the situation is worsening throughout Saturday.” Fine Material Carriers throughout the Asia-Pacific region canceled flights on the routes to Europe, with Australia’s Qantas Airways Ltd. saying it didn’t know when service might resume. Cathay Pacific Airways Ltd., based in Hong Kong, canceled departures to London, Paris, Frankfurt and Milan and said it wouldn’t accept new bookings for the next few days. Europe-bound flights from Japan, South Korea, China and India were stopped because of danger from the ash, with Air India and Singapore Airlines Ltd. also canceling some routes to North America. “At this stage it’s highly unlikely things are going to return to normal for several days at least,” David Epstein , a Qantas spokesman in Melbourne, said today at a press briefing. “It may well be a week.” Flights have been halted amid concern that the ash plume could damage engines or parts such as speed sensors. The finest material from the blast is formed of dust akin to glass, which can melt and congeal in a turbine, causing it to stop, said Sue Loughlin , head of vulcanology at the British Geological Survey. Current Blast Eyjafjallajökull last erupted in December 1821, with the event lasting until January 1823. The current blast has sent ash to as high as 7 kilometers (4.5 miles), according to Gudrun Larsen, a vulcanologist at the University of Iceland. The magma had to pierce 200 meters of ice before erupting, she said. “We really don’t know if this eruption is going to last as long as the previous one, but we can’t say it’s not a possibility,” Larsen said by telephone. Prevailing winds may provide some respite for travelers. Air streams over Britain come from the west or southwest 70 percent of the time and would carry ash away from the major hubs such as Heathrow and Amsterdam Schiphol, said Barry Grommett , a meteorologist at the U.K. Met Office , the government forecaster. Westerly Winds “We normally look to the Atlantic for our weather, so that’s going to move anything emitting from a volcano in Iceland away from us,” he said by telephone. “The predominant pattern would take the plume north-eastward from the eruption site.” The outlook this weekend is for westerly winds to pick up over northern Britain, shifting ash away from Scotland, while a blocking pattern may continue to keep it over England. The edge of the ash cloud was forecast to reach as far south as northern Italy and Romania and as far east as the borders of Kazakhstan as of 6 a.m. today London time, according to the Met office. Because of the wind direction Iceland’s Keflavik remains open, with North American flights operating on schedule. Hubs serving 2 million people and 48 percent of Europe’s air traffic have been affected by the disruption, the Airports Council International industry group said yesterday in a statement. The situation was changing “every few hours,” it said. British Airways Plc , which halted flights from the U.K. from midday on April 15, said last night that no services to and from London will operate today. Its shares tumbled 3.1 percent in the U.K. capital yesterday, the most since Feb 12. ‘New Situation’ Ryanair Holdings Plc , the region’s largest discount carrier, canceled all flights to and from the U.K., Ireland, Scandinavia, Belgium, the Netherlands, northern France and Germany until 1 p.m. on April 19. The stock fell 2.5 percent in Dublin, the steepest drop since Feb. 5. “This is a new situation for us,” Joe Sultana , director of airspace, network planning and navigation at Eurocontrol, which oversees the region’s flight paths, told reporters in Brussels yesterday. “We understand the economic impact to both the airlines and the European economy, but safety comes first.” Air France-KLM Group , the region’s biggest carrier, canceled all services from both Roissy-Charles de Gaulle and Orly airports near Paris until 8 a.m. today and asked passengers not to travel to the terminals. Deutsche Lufthansa AG scrapped all flights scheduled to take off or land in Germany before midday, said spokesman Jan Baerwalde by telephone. Switzerland and Belgium today extended closure of their respective airspaces to 8 p.m. local time, Agence France-Presse reported. Lava Flow The Icelandic eruption began on March 20 with a lava flow on the eastern flank of the Eyjafjallajökull volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it erupted again early on April 14, directly under the icecap that covers most of the mountain. “The problem here is we have magma interacting with glacier ice and that leads to explosions,” Hreinsdottir said. “That causes the material to go much higher in the air.” Mike Burton, a researcher at the Italian National Vulcanology Institute who has studied the ash from the latest explosion, said it presents more of a threat to aircraft than would the dust from a typical eruption. “It’s likely that ash production will continue long after all the ice is melted in the volcano as this kind of magma can produce ash without water,” Burton said by telephone. “Fine ash is easier to transport long distances and goes higher into the atmosphere, so this is not good news for flights.” To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net ; Steve Rothwell in London at srothwell@bloomberg.net

Read the full article →

New York Will Approach Daily High Temperature Record Tomorrow

April 5, 2010

By Brian K. Sullivan April 5 (Bloomberg) — New York City may flirt with record warmth tomorrow as temperatures remain about 20 degrees above normal until late this week, the National Weather Service said. Temperatures tomorrow are expected to reach 78 degrees Fahrenheit (25.5 Celsius), 1 degree shy of the 1947 record for the date, said Matt Scalora, a weather service meteorologist in Upton, New York . While the temperature will rise into the 80s the day after tomorrow, the Central Park record for the date of 89, set in 1929, isn’t likely to fall, Scalora said. “Tomorrow there is a chance we could tie or beat a record there,” Scalora said by telephone. “I wouldn’t bank on a record for Wednesday.” Readings across the eastern half of the U.S. have ranged about 20 degrees above normal since the end of last week, and that warmth is expected to continue through this week, according to forecasters. New York is likely to have a high of 75 degrees today, 5 degrees short of the 1928 record. A record high temperature for the day of 77 was set in Boston yesterday, while Providence, Rhode Island, had 76, breaking marks set in 1950, according to the weather service. The temperature reached 82 degrees in Concord, New Hampshire, two days ago breaking a 1981 record for the day. Scalora said a cold front will send high temperatures plummeting in New York by almost 20 degrees later this week, putting them closer to normal for this time of year. The average high temperature for today at Central Park is 57, according to the weather service. The cold front will also bring a chance of rain and the season’s first opportunity for thunderstorms, Scalora said. The warm weather comes on the heels of the wettest March on record at Central Park and flooding in Massachusetts and Rhode Island that drove hundreds from their homes, cut Amtrak service to Boston and swelled rivers across the region. Central Park received 10.68 inches of rain in March, breaking the record of 10.54 inches set in 1983, according to the weather service. To contact the reporter on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net .

Read the full article →

Factory Jobs Lead U.S. Employment Growth as Investment, Exports Increase

April 4, 2010

By Timothy R. Homan April 4 (Bloomberg) — Factories kick-started the U.S. economy from its worst recession in seven decades. Now they’re taking the lead in reviving the labor market. Manufacturers so far this year have added 45,000 workers to payrolls , the biggest three-month gain in the industry since March-May 2004. A 17,000 increase at factories last month was part of a 162,000 rise in employment, the most in three years, Labor Department figures showed April 2. The gains in factory employment underscore recent data that show manufacturers are ramping up production as companies invest in equipment, replenish inventories and export more goods. Caterpillar Inc. is among those adding staff, showing the recovery that began last year is beginning to add the jobs needed to lift consumer spending and sustain the expansion. Manufacturing is “now adding jobs directly and probably indirectly as well since some service-sector workers are doing work for manufacturers,” said Nigel Gault , chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “If they’re doing work for a manufacturer then really that job was created by manufacturing.” Health-care companies and temporary-help service providers joined manufacturers in adding 123,000 jobs to private payrolls last month, the third consecutive increase and the biggest since May 2007, a sign that the expansion is becoming more entrenched. The increase in payrolls in March was the third in the past five months and the biggest since March 2007, the Labor Department figures showed last week. The increase included 48,000 temporary workers hired by the government to conduct the census. The government revised the January and February job count up by a combined 62,000, putting the March gain at 224,000 after including the updated data. Census Hiring “The federal government didn’t hire nearly as many Census workers as thought,” Joel Naroff , president of Naroff Economic Advisors Inc. in Holland, Pennsylvania, said in an e-mail to clients. “It was the private sector that stepped up to the plate. The growth was broad-based as well.” Hiring at the Census Bureau for the population count may have the biggest impact on payroll figures in April through June, when the bulk of the additions will take place. The program will then subtract from the job count the following months as employees are dismissed after the work is done. For that reason, economists will focus on the employment figures excluding the government. By that measure, job prospects are brightening. “The expectation going in was that overall we’d have more census jobs,” Gault said. “It signals that there are going to be some big gains in April and May.” Government Jobs Employment at government agencies climbed by 39,000 workers, reflecting the increase in census staff. Budget- constrained state and local governments reduced headcount last month. Construction companies, which may have been most influenced by the weather, boosted payrolls by 15,000 workers, the first increase since June 2007. The jobless rate was unchanged even after Americans who had previously dropped out of the workforce decided to resume the job search, pointing to growing confidence that the world’s largest economy will continue to grow. Still, unemployment may be slow to recede as more people enter the job market, giving the Federal Reserve scope to hold its benchmark interest rate near zero in coming months. Treasury securities dropped after the increase in employment showed the expansion was becoming self-sustaining. The yield on the benchmark 10-year note climbed to 3.94 percent on April 2 in New York, the highest since June. The stock market was closed that day in observance of Good Friday. ‘Work to Do’ “We have some more work to do, but I think the economy is definitely getting stronger,” Treasury Secretary Timothy F. Geithner , 48, said in an April 2 interview with Bloomberg Television in New York after the Labor Department report. “We’ve made a lot of progress, we’ve got some work to do still and it’s going to take some time to heal the damage.” Caterpillar, the world’s largest maker of construction equipment, in March said it plans to hire 500 workers this year to expand a generator plant in Newberry, South Carolina. Not all the data in the employment report was positive. The figures showed average earnings per hour dropped last month and the number of people working part time because they couldn’t find full-time work increased. The so-called underemployment rate — which includes the part-timers and people who want work but have given up looking – - increased to 16.9 percent from 16.8 percent. The report also showed an increase in long-term unemployed Americans. The number of people unemployed for 27 weeks or more rose to a record 44.1 percent of all jobless. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

Read the full article →

Increase in Employment in March a Signal That U.S. Recovery Is Broadening

April 3, 2010

By Timothy R. Homan April 3 (Bloomberg) — Employment in March grew by the most in three years, representing a turning point for the labor market that will help broaden the U.S. economy as it recovers from the deepest recession in seven decades. Payrolls rose by 162,000 workers, the third gain in the past five months and the most since March 2007, figures from the Labor Department showed yesterday in Washington. The increase included 48,000 temporary workers hired by the government to conduct the census. Unemployment was 9.7 percent for a third month. Manufacturers, health-care companies, temporary-help service providers and warehouses were among those adding jobs in a sign the expansion is becoming more entrenched. The jobless rate was unchanged even after Americans who had previously dropped out of the workforce decided to resume the job search, pointing to growing confidence that the world’s largest economy will continue to grow. “The labor market has turned,” said John Silvia , chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who predicted a job gain of 177,000. “We’ll see steady hiring in coming months. There is momentum in the recovery.” Caterpillar Inc. is among companies adding staff, indicating the economic recovery that began in the second half of 2009 is starting to produce the jobs needed to lift consumer spending and sustain the expansion. The unemployment rate may be slow to recede as more people enter the job market, giving the Federal Reserve scope to hold its benchmark interest rate near zero in coming months. It’s Progress “We have some more work to do, but I think the economy is definitely getting stronger,” Treasury Secretary Timothy F. Geithner , 48, said in an interview yesterday with Bloomberg Television in New York. “We’ve made a lot of progress, we’ve got some work to do still and it’s going to take some time to heal the damage.” Payrolls were forecast to increase by 184,000, according to the median estimate of 83 economists surveyed by Bloomberg News. Estimates ranged from a decline of 40,000 to a gain of 360,000. The jobless rate was projected to hold at 9.7 percent. Treasury securities dropped after the increase in employment showed the expansion was becoming self-sustaining. The yield on the benchmark 10-year note climbed to 3.94 percent yesterday in New York, the highest since June. The stock market was closed in observance of Good Friday. Weather Rebound Part of the payroll gain last month likely reflected a rebound from the February blizzards that set seasonal snowfall records in cities including Washington and Philadelphia, shuttering some businesses during the week of the government survey. Any hiring that would have taken place that week is figured into the March job count instead. Hiring at the Census Bureau for the population count may have the biggest impact on payroll figures in April through June, when the bulk of the additions will take place. The program will then subtract from the job count the following months as employees are dismissed after the work is done. For that reason, economists will focus on the employment figures excluding the government. By that measure, job prospects are brightening. Private payrolls increased by 123,000 in March, the third consecutive increase and the biggest since May 2007. Employment at government agencies climbed by 39,000 workers, reflecting the increase in census staff. Budget-constrained state and local governments reduced headcount last month. Private Employment “The federal government didn’t hire nearly as many Census workers as thought,” Joel Naroff , president of Naroff Economic Advisors Inc. in Holland, Pennsylvania, said in an e-mail to clients. “It was the private sector that stepped up to the plate. The growth was broad-based as well.” Manufacturers increased staff for a third month, adding to evidence factories are at the forefront of the recovery. Construction companies, which may have been most influenced by the weather, boosted payrolls by 15,000 workers, the first increase since June 2007. Leggett & Platt Inc., a 127-year-old manufacturer based in Carthage, Missouri, has hired a few hundred employees this year to meet rising demand for its car-seat parts and home-furniture components, according to Chief Executive Officer David Haffner . “Things are better,” Haffner, 57, said in a March 16 interview. “We are reluctant to get too optimistic too quickly, but things are relatively better.” Warehouses and Hospitals Transportation and warehousing companies added 7,800 jobs , the most since September 2007, and providers of health care and social services payrolls increased 37,000 in March, the biggest gain since April 2008. Employment of temporary workers, which are considered a harbinger of permanent hiring, climbed in March for a sixth consecutive month. Their share in the payroll count is diminishing, showing companies are becoming more optimistic, said Christopher Low , chief economist at FTN Financial in New York. “The quality of jobs is improving, and it is a clear sign of improving CEO confidence,” Low said in a note to clients. “Cautious CEOs hire temps, optimists make permanent hires.” Not all the data in the employment report was positive. The figures showed average earnings per hour dropped last month and the number of people working part-time because they couldn’t find full-time work increased. The so-called underemployment rate — which includes the part-timers and people who want work but have given up looking – - increased to 16.9 percent from 16.8 percent. The report also showed an increase in long-term unemployed Americans. The number of people unemployed for 27 weeks or more rose to a record 44.1 percent of all jobless. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

Read the full article →

Increase in Employment in March a Signal That U.S. Recovery Is Broadening

April 3, 2010

By Timothy R. Homan April 3 (Bloomberg) — Employment in March grew by the most in three years, representing a turning point for the labor market that will help broaden the U.S. economy as it recovers from the deepest recession in seven decades. Payrolls rose by 162,000 workers, the third gain in the past five months and the most since March 2007, figures from the Labor Department showed yesterday in Washington. The increase included 48,000 temporary workers hired by the government to conduct the census. Unemployment was 9.7 percent for a third month. Manufacturers, health-care companies, temporary-help service providers and warehouses were among those adding jobs in a sign the expansion is becoming more entrenched. The jobless rate was unchanged even after Americans who had previously dropped out of the workforce decided to resume the job search, pointing to growing confidence that the world’s largest economy will continue to grow. “The labor market has turned,” said John Silvia , chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who predicted a job gain of 177,000. “We’ll see steady hiring in coming months. There is momentum in the recovery.” Caterpillar Inc. is among companies adding staff, indicating the economic recovery that began in the second half of 2009 is starting to produce the jobs needed to lift consumer spending and sustain the expansion. The unemployment rate may be slow to recede as more people enter the job market, giving the Federal Reserve scope to hold its benchmark interest rate near zero in coming months. It’s Progress “We have some more work to do, but I think the economy is definitely getting stronger,” Treasury Secretary Timothy F. Geithner , 48, said in an interview yesterday with Bloomberg Television in New York. “We’ve made a lot of progress, we’ve got some work to do still and it’s going to take some time to heal the damage.” Payrolls were forecast to increase by 184,000, according to the median estimate of 83 economists surveyed by Bloomberg News. Estimates ranged from a decline of 40,000 to a gain of 360,000. The jobless rate was projected to hold at 9.7 percent. Treasury securities dropped after the increase in employment showed the expansion was becoming self-sustaining. The yield on the benchmark 10-year note climbed to 3.94 percent yesterday in New York, the highest since June. The stock market was closed in observance of Good Friday. Weather Rebound Part of the payroll gain last month likely reflected a rebound from the February blizzards that set seasonal snowfall records in cities including Washington and Philadelphia, shuttering some businesses during the week of the government survey. Any hiring that would have taken place that week is figured into the March job count instead. Hiring at the Census Bureau for the population count may have the biggest impact on payroll figures in April through June, when the bulk of the additions will take place. The program will then subtract from the job count the following months as employees are dismissed after the work is done. For that reason, economists will focus on the employment figures excluding the government. By that measure, job prospects are brightening. Private payrolls increased by 123,000 in March, the third consecutive increase and the biggest since May 2007. Employment at government agencies climbed by 39,000 workers, reflecting the increase in census staff. Budget-constrained state and local governments reduced headcount last month. Private Employment “The federal government didn’t hire nearly as many Census workers as thought,” Joel Naroff , president of Naroff Economic Advisors Inc. in Holland, Pennsylvania, said in an e-mail to clients. “It was the private sector that stepped up to the plate. The growth was broad-based as well.” Manufacturers increased staff for a third month, adding to evidence factories are at the forefront of the recovery. Construction companies, which may have been most influenced by the weather, boosted payrolls by 15,000 workers, the first increase since June 2007. Leggett & Platt Inc., a 127-year-old manufacturer based in Carthage, Missouri, has hired a few hundred employees this year to meet rising demand for its car-seat parts and home-furniture components, according to Chief Executive Officer David Haffner . “Things are better,” Haffner, 57, said in a March 16 interview. “We are reluctant to get too optimistic too quickly, but things are relatively better.” Warehouses and Hospitals Transportation and warehousing companies added 7,800 jobs , the most since September 2007, and providers of health care and social services payrolls increased 37,000 in March, the biggest gain since April 2008. Employment of temporary workers, which are considered a harbinger of permanent hiring, climbed in March for a sixth consecutive month. Their share in the payroll count is diminishing, showing companies are becoming more optimistic, said Christopher Low , chief economist at FTN Financial in New York. “The quality of jobs is improving, and it is a clear sign of improving CEO confidence,” Low said in a note to clients. “Cautious CEOs hire temps, optimists make permanent hires.” Not all the data in the employment report was positive. The figures showed average earnings per hour dropped last month and the number of people working part-time because they couldn’t find full-time work increased. The so-called underemployment rate — which includes the part-timers and people who want work but have given up looking – - increased to 16.9 percent from 16.8 percent. The report also showed an increase in long-term unemployed Americans. The number of people unemployed for 27 weeks or more rose to a record 44.1 percent of all jobless. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

Read the full article →

U.S. Payrolls Rise Most in Three Years

April 2, 2010

By Timothy R. Homan April 2 (Bloomberg) — Employers in the U.S. created more jobs in March than at any time in the past three years, showing the recovery from the worst recession since the 1930s is broadening and becoming more entrenched. Payrolls rose by 162,000 workers, the third gain in the past five months and the most since March 2007, figures from the Labor Department showed today in Washington. The increase included 48,000 temporary workers hired by the government to conduct the census. Unemployment was 9.7 percent for a third month. The government revised the January and February job count up by a combined 62,000, putting the March gain at 224,000 after including the updated data. The jobless rate was unchanged even after Americans who had previously dropped out of the workforce decided to resume the job hunt, pointing to growing confidence that the world’s largest economy will continue to expand. “There’s a lot of good news in this report,” said Scott Brown , chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, whose payroll forecast was the closest among the economists surveyed by Bloomberg News. “We’re clearly on the recovery path. We expect to see this continue to build. We’re on our way.” Caterpillar Inc. is among companies adding staff, indicating the economic recovery that began in the second half of 2009 is starting to produce the jobs needed to lift consumer spending and sustain the expansion. Nonetheless, unemployment may be slow to recede as more people enter the job market, giving the Federal Reserve scope to hold its benchmark interest rate near zero in coming months. Survey Results Payrolls were forecast to increase by 184,000, according to the median estimate of 83 economists surveyed by Bloomberg News. Estimates ranged from a decline of 40,000 to a gain of 360,000. The jobless rate was projected to hold at 9.7 percent. Forecasts ranged from 9.5 percent to 9.9 percent. Treasury securities dropped after the increase in employment showed the expansion was becoming self-sustaining. The yield on the benchmark 10-year note climbed to 3.94 percent at 12:14 p.m. in New York, the highest since June. The stock market was closed in observance of Good Friday. Treasury Secretary Timothy F. Geithner said the U.S. economy is showing signs of entering a period of sustainable growth as companies begin to hire. ‘Time to Heal’ “We have some more work to do, but I think the economy is definitely getting stronger,” Geithner, 48, said in an interview today with Bloomberg Television in New York. “We’ve made a lot of progress, we’ve got some work to do still and it’s going to take some time to heal the damage.” Part of the payroll gain last month likely reflected a rebound from the February blizzards that set seasonal snowfall records in cities including Washington and Philadelphia, shuttering some businesses during the week of the government survey. Any hiring that would have taken place that week is figured into the March job count instead. Hiring at the Census Bureau for the population count may have the biggest impact on payroll figures in April through June, when the bulk of the additions will take place. The program will then subtract from the job count the following months as employees are dismissed after the work is done. For that reason, economists will focus on the employment figures excluding the government. By that measure, job prospects are brightening. Private Hiring Private payrolls increased by 123,000 in March, the third consecutive increase and the biggest since May 2007. Employment at government agencies climbed by 39,000 workers, reflecting the increase in census staff. Budget-constrained state and local governments reduced headcount last month. “The federal government didn’t hire nearly as many Census workers as thought,” Joel Naroff , president of Naroff Economic Advisors Inc. in Holland, Pennsylvania, said in an e-mail to clients. “It was the private sector that stepped up to the plate. The growth was broad-based as well.” Manufacturers increased staff for a third month, adding to evidence factories are at the forefront of the recovery. Construction companies, which may have been most influenced by the weather, boosted payrolls by 15,000 workers, the first increase since June 2007. One company adding to payrolls is Leggett & Platt Inc., the 127-year-old manufacturer. The Carthage, Missouri-based company has hired a few hundred employees this year to meet rising demand for its car-seat parts and home-furniture components, according to Chief Executive Officer David Haffner . ‘Relatively Better’ “Things are better,” Haffner, 57, said in a March 16 interview. “We are reluctant to get too optimistic too quickly, but things are relatively better.” Employment of temporary workers, which are considered a harbinger of permanent hiring, climbed in March for a sixth consecutive month. Their share in the payroll count is diminishing, showing companies are becoming more optimistic, said Christopher Low , chief economist at FTN Financial in New York. “The quality of jobs is improving, and it is a clear sign of improving CEO confidence,” Low said in a note to clients. “Cautious CEOs hire temps, optimists make permanent hires.” Not all the data in the employment report was positive. The figures showed average earnings per hour dropped last month and the number of people working part-time because they couldn’t find full-time work increased. The so-called underemployment rate — which includes the part-timers and people who want work but have given up looking – - increased to 16.9 percent from 16.8 percent. The report also showed an increased in long-term unemployed Americans. The number of people unemployed for 27 weeks or more rose to a record 44.1 percent of all jobless. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

Read the full article →

Obama Makes Unannounced Stop in Massachusetts to Survey Northeast’s Floods

April 1, 2010

By Nicholas Johnston and Kate Andersen Brower April 1 (Bloomberg) — President Barack Obama made an unannounced visit to Framingham, Massachusetts, today to get an update on the flooding caused by record rains in the area and to meet with Massachusetts Governor Deval Patrick . Obama made the stop at the Massachusetts Emergency Management Agency after giving a speech about health care in Portland, Maine. Patrick declared an emergency today in the state. About 850 National Guard troops are fighting the flood, said Peter Judge , spokesman for the Massachusetts Emergency Management Agency. Record rain fell on the U.S. Northeast earlier this week, following two storms that had already left the ground saturated and rivers and streams on the verge of flooding, according to the National Weather Service . This week’s rain set records in Boston, New York and Providence. The president has pledged federal aid for Massachusetts and Rhode Island, including grants for temporary housing and low- cost loans to help cover uninsured property losses. The Red Cross estimates 180,000 to 200,000 people are affected by flooding in Rhode Island. Secretary of Homeland Security Janet Napolitano is scheduled to tour Rhode Island tomorrow. After the visit Obama will head to Boston tonight to speak at two fundraisers for the Democratic National Committee. To contact the reporters on this story: Nicholas Johnston in Framingham, Massachusetts, at 1264 or njohnston3@bloomberg.net ;

Read the full article →