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Boehner Expresses Regrets Over Payroll Tax Cut Fight

by The Huffington Post on January 18, 2012

Huffington Post…

Speaker of the House John Boehner admitted Wednesday that his strategy in last year’s fight over extending the payroll tax cut was mistaken. “We were picking the right fight, but I would argue we probably picked it at the wrong time,” Boehner told reporters, referring to the House GOP’s decision to battle against the Senate’s two-month extension in favor of a yearlong measure in the waning days of the 2011 session. After a lengthy standoff, House GOP leadership eventually agreed to the Senate proposal. President Barack Obama later signed the bill , ensuring that a 2-percent tax break for about 160 million people didn’t expire on Jan. 1, while also extending emergency unemployment benefits and protecting Medicare payments to doctors. Despite Boehner’s concession that their timing had been regrettable, he maintained that House Republicans were correct to pursue the yearlong alternative. “Listen, we’ve got a lot of disparate voices in our conference. And the president wanted the payroll tax credit extended for a year. So did we. We didn’t think the Senate should leave. But it was pretty clear that the Senate wasn’t coming back,” Boehner said. Republicans and Democrats in Congress are set to return to the drawing board next week to navigate a course to build upon the earlier legislation, which is set to expire on Feb. 29. Tensions between Boehner and Tea Party-backed freshmen representatives are expected to be among the biggest obstacles to a solution. Some have speculated that the speaker’s desire for a quicker, less-exhausting negotiating process may prompt him to rebuff the more conservative, anti-spending branch of his caucus. “I think Boehner will seek a more accommodating approach to get a good percentage of Democrats to vote for it — even if it costs him a lot of House Republican freshmen,” one House Republican leadership aide recently told Reuters . Mike McAuliff contributed to this report.

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Boehner Expresses Regrets Over Payroll Tax Cut Fight

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Obama Considering Larry Summers For World Bank Chief

by The Huffington Post on January 18, 2012

Huffington Post…

President Barack Obama is considering naming Larry Summers, his former top economic advisor, as head of the World Bank, Bloomberg reports, citing “two people familiar with the matter.” Summers, a former U.S. Treasury Secretary, Harvard President and World Bank chief economist, has expressed interest in the job , according to Bloomberg. He has the backing of current Treasury Secretary Timothy Geithner and Obama’s current top economic advisor Gene Sperling. Still, the administration is considering other candidates, including Secretary of State Hilary Clinton, to head the World Bank when the term of the current chief, Robert Zoellick, expires later this year, according to Bloomberg. Summers has held a variety of positions both at elite levels of government and in other institutions, and at every move has seemed to engender controversy. Summers resigned as president of Harvard in 2006 after he battled with some faculty members was derided for comments he made in 2005 , saying that women didn’t have the genetic gifts to succeed in science and math. Summers has also faced criticism since leaving the White House for not doing enough to set the country on a path towards economic recovery while he was head of the National Economic Council — a position he held for nearly two years until the end of 2010. In addition, he engendered controversy for raking in millions from hedge funds and big banks before assuming his post. He’s also faced controversy at the World Bank. As the institution’s chief economist, Summers signed off on a memo in 1992 , which said, “I think the economic logic behind dumping a load of toxic waste in the lowest-wage country is impeccable and we should face up to that,” according to The New York Times . He later apologized. Under an unwritten agreement, the head of the World Bank has always been an American , while the IMF has always been headed by a European. Some emerging market leaders have questioned dividing the roles based on nationality in recent years, Bloomberg reports.

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Obama Considering Larry Summers For World Bank Chief

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Report: Pepco Spends More Money On Lobbying Than On Taxes

January 18, 2012

WASHINGTON — Pepco is not only the most hated company in America . According to a new report , the D.C.-area electric utility is also one of the “Dirty Thirty” — one of 30 Fortune 500 corporations that pay less in federal income taxes than it spends on federal lobbying. The report, put out by the U.S. Public Interest Research Group and Citizens for Tax Justice , finds that Pepco Holdings — the only D.C.-headquartered company on the list — has an effective federal tax rate of negative 57.6 percent. (Companies with negative tax balances are getting more in refunds, rebates and credits than they pay in a year.) The power company, fined $1 million by the Maryland Public Service Commission in December for its unreliable service, paid $3.8 million in lobbying expenses while paying negative $508 million in taxes, according to the report. The report contains some policy recommendations that are a little tenuously connected to the information about how much companies spend on lobbying versus how much they spend (or don’t spend) on taxes. Among the recommendations are that offshore tax “loopholes” be closed and that any company’s political spending be disclosed and/or approved by shareholders. Most Occupy-friendly of all is the recommendation that Citizens United v. FEC , decided two years ago today, be overturned. Citizens for Tax Justice put out another report about Pepco’s negative tax rate last November . Pepco’s response to that report was that the company paid all the taxes it owed, and that its tax rate relates to legitimate policy objectives designed “to encourage economic investment and create jobs.” Pepco’s lobbying disclosures, published on Opensecrets.org , show that Pepco lobbied on one tax issue in 2011: The ” Withholding Tax Relief Act of 2011 ,” which would have ended the requirement that government entities withhold 3 percent of payments due to vendors. That bill was filibustered in October . Flickr photo by Daquella manera, used under a Creative Commons license. RELATED VIDEO: An instructional video from Pepco on what to do in case of a power outage.

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Yahoo Co-Founder Calls It Quits

January 17, 2012

Yahoo co-founder Jerry Yang announced on Tuesday that he is stepping down from his position on the Yahoo! Board of Directors, as well as his other positions on the boards of Yahoo Japan Corporation and Alibaba Group Holding Limited. From Yang’s letter to the Yahoo! Board Chairman Roy Bostock, per a press release : My time at Yahoo!, from its founding to the present, has encompassed some of the most exciting and rewarding experiences of my life. However, the time has come for me to pursue other interests outside of Yahoo! As I leave the company I co-founded nearly 17 years ago, I am enthusiastic about the appointment of Scott Thompson as Chief Executive Officer and his ability, along with the entire Yahoo! leadership team, to guide Yahoo! into an exciting and successful future. Yang and David Filo founded the company in 1995. Yang has sat on the Yahoo board since March 1995 and served as CEO from June 2007 to January 2009, according to the press release. On January 4 the struggling web giant appointed PayPal chief Scott Thompson as its new CEO, filling the void left when the company directors ousted Carol Bartz in September . According to the AP, Thompson is Yahoo’s fourth CEO in less than five years. Thompson praised Yang on Tuesday. “I am grateful for the warm welcome and support Jerry provided me during my early days here,” said Thompson in a statement . “Jerry leaves behind a legacy of innovation and customer focus for this iconic brand, having shaped our culture by fostering a spirit of innovation that began 17 years ago and continues to grow even stronger today. Jerry has great confidence in the future of Yahoo!, and I share his confidence in the enormous potential of Yahoo! in the days ahead.” The New York Times refers to Yang’s tenure as CEO as “turbulent.” Writes the AP , “Although a popular figure among Yahoo employees, Yang had alienated the company’s shareholders by turning down a $47.5 billion takeover offer from Microsoft Corp. in 2008.” AllThingsD’s Kara Swisher speculates that more big changes may result if the company’s Q4 earnings, to be announced on January 24, fall into the lower end of the projected range. She foresees a possible shakeup of the board, as well as the possibility of selling some of its shares back Alibaba Group and Softbank, Yahoo’s major partners in Asia.

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TSA Made $400K Off Loose Change In 2010

January 14, 2012

You double checked you have your keys, but did you remember to take your loose change? Plenty of travelers seem to forget the couple of coins that were floating in their pockets, and it makes the Transportation Security Administration hundreds of thousands of dollars richer every year. In 2010, travelers left behind a whopping $409,085.56. That’s $376, 480.39 in pennies, nickels, dimes, quarters and dollar coins, plus $32,605.17 in foreign currency, according to USA Today . Hurried travelers should know the coins they leave in haste don’t become tips for the security agents, rather Nico Melendez, a spokesperson for the TSA told NBC San Diego , the money left in plastic bins is put in a jar and at the end of each shift they take it, count it, and send it to the finance office. The collected cash goes into the TSA’s general operating budget and is spent on general expenses — everything from technology to lightbulbs — since Melandez says they never know how much money people will leave behind each year. But surprisingly, the numbers have been fairly consistent with $364,000 left in 2008 and $399,000 left in 2009, reports NBC San Diego. Of course, the TSA does make the effort to get money back to travelers. On Jan. 11 a TSA screener turned in $5,000 cash that he found on the floor at Newark Liberty International Airport. Because the cash was found near the United Airlines Elite Access check-in desk and not left in a plastic bin, the screener handed it over to the airline, who said the money will go to charity if no one claims it. Still, there are those who aren’t happy with the TSA keeping your forgotten cash. The Los Angeles Times reported that legislation has been introduced by Rep. Jeff Miller (R-Fla.) to give the money to the USO — a non-profit that aids the country’s troops and their families — for its airport programs in support of the military. And the director of the Consumer Travel Alliance agrees. Charlie Leocha told the LA Times , “Any use of the money by the TSA seems distasteful. It’s not their money. In fact, it is money left by harassed passengers and should certainly not go to the TSA as a reward for invasive searches.”

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Occupy Wall Streeters ‘Mic Check’ Mitt Romney Over Bain Capital Job Cuts

January 7, 2012

NEW YORK — Supporters of Occupy Wall Street say they “mic checked” Mitt Romney in New Hampshire on Friday over the Republican frontrunner’s tenure at private equity firm Bain Capital . During a spaghetti dinner that Romney was hosting at the Tilton School in Tilton, N.H., protestors used the “human microphone,” a call-and-response tactic originally designed to get around New York’s ban on use of amplification equipment without a permit. As Rose Bookbinder, 28, addressed the former Massachusetts governor, her every phrase was echoed by her fellow protestors. Transcript: Romney: … the challenges that we have, and I intend to be one of those leaders, with your help. Thank you so much! Rose Bookbinder: Mic check! Romney says he creates jobs! Yet as the CEO! For Bain Capital! Romney made millions! From bankrupting companies! And laying off workers! The mic check was brief but protesters who were there said they got their point across. “I wanted to make sure that the voice of the 99 percent was present,” said Bookbinder, an organizer with the UAW in New York. “I’m a union worker. I come from a working-class background, and I don’t believe that Mitt Romney is going to be a voice for us.” Bookbinder said she, along with several other UAW members who accompanied her, had originally hoped to ask Romney a question directly but the candidate took only three questions from the crowd of several hundred. “I did interrupt him a little,” Bookbinder said. “He only took three questions but it was an audience of probably 400, so I don’t think that’s very polite either.” Mary Clinton, another Occupy Wall Street member, estimated about 20 protestors attended the event. “The mic check was LOUD,” she wrote in a text message. “It was awesome.” Afterward, the protestors were escorted out of the building — Clinton is not sure by whom — into the New Hampshire night, she said. Bookbinder said she may have changed a few minds. “Walking out, it was really interesting to me,” she said. “There was a group of people who were like, ‘What is the company that was responsible for laying off workers?’” The Romney campaign did not immediately return a request for comment.

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Sporadic Health Insurance As Bad As No Health Insurance: Study

January 5, 2012

When it comes to preventative care, having on-and-off health insurance might be as bad as not having it all. A study of diabetics by the Kaiser Permanente Center for Health Research found that patients with breaks in their health insurance coverage were less likely to receive annual preventative tests , according to NPR. The patients avoided getting the tests just as much as someone with no health insurance at all. One reason could be that Americans without health insurance have to pay a small co-pay of five dollars — a sum that could add up for patients that require a bevy of tests on a small income , one of the lead researchers told NPR. Health care costs have weighed on Americans for years now, with rising costs becoming an accepted part of everyday life for many with chronic conditions. By 2008, Americans’ spending on healthcare was more than triple what they spent in 1990 , according to a separate Kaiser report. Overall, health care spending accounted for more than 15 percent of the U.S.’s gross domestic product by that time — one of the highest rates of industrialized countries. The struggle to afford health care was especially evident in 2010 when the total number of Americans with health insurance fell for the first time in over two decades, according to CNNMoney. The number of Americans without health insurance rose to 49.9 million that year , according to data from the Census Bureau. And that number may only be poised to rise. Government analysts expect the health care industry to comprise a fifth of the total U.S. economy by 2020 , or $13,710 for “every man, woman and child.” Fewer California employers offered health insurance to workers last year, according to the California Employer Health Benefits survey. Employees also saw the costs of their insurance plans rise and one-third of employers are considering shifting more of the costs to workers next year, the survey found. Lacking health insurance means that patients skimp on more than just preventative care. Southern states are less likely to have good dental hygiene, according to a September Gallup poll. More than 70 percent of the residents of the top states for dental care have health insurance compared to 56 percent for the bottom 10 states, the poll found. Still, even Americans who have health insurance may end being charged high rates for preventive care. The health care law that President Obama signed into law in 2010 requires most insurers to pay for preventive care, according to USA Today , but some procedures, which are initially billed as preventative — such as colonoscopies — can turn into diagnostic procedures , saddling the patient with the bill.

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Steve Blank: Why the Movie Industry Can’t Innovate and the Result Is SOPA

January 4, 2012

This year the movie industry made $30 billion (1/3 in the U.S. ) from box-office revenue. But the total movie industry revenue was $87 billion . Where did the other $57 billion come from? From sources that the studios at one time claimed would put them out of business: pay-per view TV, cable and satellite channels, video rentals, DVD sales, online subscriptions and digital downloads. The Movie Industry and Technology Progress The music and movie business has been consistently wrong in its claims that new platforms and channels would be the end of its businesses. In each case, the new technology produced a new market far larger than the impact it had on the existing market. 1920′s – the record business complained about radio. The argument was because radio is free, you can’t compete with free. No one was ever going to buy music again. 1940′s – movie studios had to divest their distribution channel – they owned over 50% of the movie theaters in the U.S. “It’s all over,” complained the studios. In fact, the number of screens went from 17,000 in 1948 to 38,000 today. 1950′s – broadcast television was free; the threat was cable television. Studios argued that their free TV content couldn’t compete with paid. 1970′s – Video Cassette Recorders (VCR’s) were going to be the end of the movie business. The movie businesses and its lobbying arm MPAA fought it with “end of the world” hyperbola. The reality? After the VCR was introduced, studio revenues took off like a rocket. With a new channel of distribution, home movie rentals surpassed movie theater tickets. 1998 – the MPAA got congress to pass the Digital Millennium Copyright Act ( DCMA), making it illegal for you to make a digital copy of a DVD that you actually purchased. 2000 – Digital Video Recorders (DVR) like TiVo allowing consumer to skip commercials was going to be the end of the TV business. DVR’s reignite interest in TV. 2006 – broadcasters sued Cablevision (and lost) to prevent the launch of a cloud-based DVR to its customers. Today it’s the Internet that’s going to put the studios out of business. Sound familiar? Why was the movie industry consistently wrong? And why do they continue to fight new technology? Technology Innovation The movie industry was born with a single technical standard — 35mm film, and for decades had a single way to distribute its content — movie theaters ( which until 1948 the studios owned ). It was 75 years until studios had to deal with technology changing their platform and distribution channel. And when it happened (cable, VCR’s, DVD’s, DVR’s, the Internet), it was a relentless onslaught. The studios responded by trying to shut down the new technology and/or distribution channels through legislation and the courts. Regulation/Legislation But why does the movie business think their solution is in Washington and legislation? History and success. In the 1920′s individual states were beginning to censor movies and the federal government was threatening to do so as well. The studios set up their own self-censorship and rating system keeping most sex and politics off the screen for 40 years. Never again wanting to be at the losing side of a political battle they created the movie industry’s lobbying arm, MPAA . By the 1960′s, the MPPA achieved regulatory capture (where an industry co-opts the very people who are regulating it) when they hired Jack Valenti , who ran the studios’ lobbying efforts for the next 38 years. Ironically, it was Valenti’s skill in hobbling competitive innovation that negated any need for studios to develop agility, vision and technology leadership. Management of Innovation The introduction of new technology is always disruptive to existing markets , particularly to content/copyright owners whose sell through well-established distribution channels. The incumbents tend to have short-sighted goals and often fail to recognize that more money can be made on new platforms and distribution channels. In an industry facing constant technology shifts the exec staff and boards of the studios have lawyers, MBAs and financial managers, but no management skill in dealing with disruption. So they rely on lobbying ( $110 million a year), lawsuits, campaign contributions (wonder why the President won’t be vetoing SOPA? ) and Public Relations. Ironically, the six major movie studios have a great technology lab in Silicon Valley with projects in streaming rights , Video On Demand, Ultraviolet , etc. But lacking the support from the studio CEOs or boards, the lab languishes in the backwaters of the studios’ strategy. Instead of leading with new technology, the studios lead with litigation, legislation and lobbying. (Imagine if the $110 million/year spent on lobbying went to disruptive innovation .) Piracy One of the claims that studios make is that they need legislation to stop piracy. The fact is piracy is rampant in all forms of commerce. Video games and software have been targets since their inception. Grocery and retail stores euphemistically call it shrinkage. Credit card companies call it fraud. But none use regulation as often as the movie studios to solve a business problem. And none are so willing to do collateral damage to other innovative industries (VCRs, DVRs, cloud storage and now the Internet itself.) The studios don’t even pretend that this legislation benefits consumers. It’s all about protecting short-term profit. SOPA When lawyers, MBAs and financial managers run your industry and your lobbyists are ex-Senators , understanding technology and innovation is not one of your core capabilities. The SOPA bill (and DNS blocking ) is what happens when someone with the title of anti-piracy or copyright lawyer has greater clout than your head of new technology. SOPA gives corporations unprecedented power to censor almost any site on the Internet. History has shown that time and market forces provide equilibrium in balancing interests, whether the new technology is a video recorder, a personal computer, an MP3 player or now the Net. It’s prudent for courts and congress to e xercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude . What the music and movie industry should be doing in Washington is promoting legislation to adapt copyright law to new technology– and then leading the transition to the new platforms. The U.S. State Department has been championing the Internet Freedom initiative across the world. Secretary of State Clinton said, “…when ideas are blocked, information deleted, conversations stifled, and people constrained in their choices, the Internet is diminished for all of us.” It’s too bad the head of the MPAA — an ex-senator — made a mockery of her words when he wondered ” why our online censorship can’t be like China ?” We wonder, “Why can’t the film industry innovate like Silicon Valley?” Lessons Learned Studios are run by financial managers who have no corporate DNA to exploit disruptive innovation Studio anti-piracy/copyright lawyers trump their technologists Studios have no concern about collateral damage as long as it optimizes their revenue Studios110M/year lobbying and political donations trump consumer objections Politicians votes will follow the money unless it will cost them an election Steve Blank’s blog: www.steveblank.com

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Why People LIKE The Kardashians

December 30, 2011

It’s no secret that not everyone is a Kardashian fan. Between attempts to boycott their shows , Kim Kardashian being named as PETA’s Celebrity Grinch of 2011 , the National League of Junior Cotillions’ “The Most Ill-Mannered Person of 2011″ , and ranking as one of the least desired celebs to have as a neighbor , the public has made it clear about how they feel about the Kardashians. Or have they? Believe it or not, but people like the Kardashians. They’re a family, but more importantly a business — at least to the companies they work with. The viewers that tune in keep them on the air. Shoppers who buy their clothes, perfumes, diet pills and books are sending a clear message to companies that the reality TV family means bringing in the big bucks. Yes, people like the Kardashians. “At their core, the Kardashians are an incredibly bonded, loving, large family who live an incredibly large life,” E! President Suzanne Kolb told The Wrap . “And if you actually look at the history of television, there’s a pretty large number of families with that blend that resonate with viewers … I think there’s something emotionally aspirational around that family dynamic and visually aspirational about the way that family lives.” Kolb added that from every piece of research she’s seen about the reality TV family, she says viewers “aspire to be them or to befriend them.” Aspiration is often the basis for most celebrity fandom. It’s the reason we read about their lives and look at photos of them doing everything from the most mundane errands to walking the red carpets. For the Kardashians — a family that has “no talent” as Barbara Walter brusquely put it — it’s easy to pinpoint what fans find aspirational; their over-the-top lifestyle combined with a plotline that still conveys the all-American values of a tight-knit family. That’s why despite their public missteps, Kolb told The Wrap , that the Kardashians’ fans don’t watch them for their bad behavior. “You watch for sort of over-the-top-situations and really a very soapy family dynamic,” she said. But what about those who don’t like the Kardashian family? What about the 180,049 people who signed an online petition asking the E! Network to boycott their shows? Kolb said the network takes every viewer comment seriously, but they never considered cutting their ties with the Kardashians. And why would they? Those 180,049 people that signed that petition are chump change compared to the 3.2 million viewers who tuned in for the season premier of “Kourtney & Kim Take New York,” or the combined 8.4 million viewers who watched the Kim’s two-part wedding special. The petitioners also don’t compare to Kim’s nearly 12.2 million Twitter followers , or even the two million people who watched her sex tape over her wedding weekend this summer. They are the reason the network has no plans to cancel the Kardashians. It’s been reported that the family made $65 million in 2010 — a figured that family matriarch and manager Kris Jenner wouldn’t confirm — but between the eldest sisters’ three Dash boutique locations, branded signature fragrances, self tanner, the online footwear site ShoeDazzle , multiple clothing lines and more shows in the works, it’s safe to say the family is profiting nicely and the companies they work with are making even more. The Kardashian family may not have “talent” but they know how to make money, and in this economy it’s easy to understand how that appeals to viewers who are dreaming of a better life.

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Seriously? Verizon To Charge Fee For Paying Bill Online

December 29, 2011

In a move that is sure to upset some customers, Verizon has announced on its website that it will start charging a $2 convenience fee “for customers who make single bill payments online or by telephone.” The $2 fee will apply to those who pay with credit or debit cards on a per-statement basis, either through the company’s website or by telephone, and the company says that the fee is designed to offset the cost that credit card companies charge Verizon for processing payments. On its website, Verizon is encouraging its customers to choose one of seven alternative payment options to avoid incurring the fee — those options include enrolling in an Auto-Pay system on the company’s website, paying via check or cash via mail, paying at a Verizon kiosk, or paying with a Verizon gift card. The new fee goes into effect on January 15. Here, from the Verizon website , is the complete list of your options to avoid the new $2 fee: Electronic check online (My Verizon Online, My Verizon Mobile/Handset). Fee waived. Electronic check via telephone. Fee waived. Enrollment in AutoPay using credit/debit/ATM card or electronic check; fee does not apply Online from the customer’s home-banking service provider website; fee does not apply. Credit/debit/ATM card, electronic check or cash at a Bill Payment Kiosk, Panel or with a representative at a Verizon Wireless Communications Store; fee does not apply. Use of a Verizon Wireless Gift Card or Verizon Wireless device Rebate Card to pay a bill in-store, online or by telephone; fee does not apply Paper check or money order mailed to the VZW remit address on customer’s bill; fee does not apply. Consumer advocacy blog Consumerist, meanwhile, offers an eighth option for avoiding the $2 fee: Switching to another wireless carrier. Public outrage over the new fee is mounting: A popular post in online message board Reddit’s “WTF” section has already attracted dozens of upset commenters , as have the comment sections on stories posted on CNet , Aol sister site Engadget and Geek.com . Typical of the frustration are calls to stop using Verizon , a proposed campaign to get everyone to send in paper checks and money in order to overwhelm Verizon’s billing department, and labeling the new fee as “another ridiculous cash grab.” Verizon customers can change their payment options on Verizon’s website .

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The Worst Holidays Since The Great Depression

December 23, 2011

From 24/7 Wall St.: Retail sales this holiday season are expected to rise 3.8 percent to a record of $469.1 billion, according to the National Retail Federation. While the increase is less than last year, it is a significant improvement from the slow holiday seasons the last few years. How does 2011 compare to other years? While probably not among the best, it’s also certainly not among the worst, according to 24/7 Wall St.’s analysis of the worst holidays since the Great Depression. People are tempted to spend less when times are tough. Fewer presents are exchanged and people travel less. Those without work often despair. And the joy that is supposed to accompany the end of each year does not exist for many people. 24/7 Wall St. compared 2011 against each holiday season since the Great Depression. We looked at unemployment, GDP expansion (or contraction), GDP per capita, and the Consumer Price Index. These are good indications of whether a holiday season was merry or not. High inflation erodes the ability of people to buy goods and services. Slow GDP expansion or contraction means that consumer spending is likely to be in retreat. The effects of unemployment are obvious. Not surprisingly, many of the worst holiday periods coincide with deep recessions. This is certainly true for the harsh times during the downturns of the early 1970s and early 1980s. The 1982/1983 recession had a record number of months in which unemployment was more than 10 percent. People may look back on 2011 as a difficult holiday season for a number of Americans, but it was not among the worst, as history shows. These are the Worst Holidays Since The Great Depression, according to 24/7 Wall St. :

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J.D. Roth: Learn More About Money From an Investment Group

December 21, 2011

I love to learn. That’s part of what makes me who I am. And so I spend large chunks of time pursuing passions like astronomy and Spanish… and investing. Sometimes I’m asked if I have a method for picking up new skills and new knowledge. “Not really,” I say. “I just try to keep an open mind and to absorb as much information as possible.” As you’ve probably noticed around here, I try to never say, “THIS IS THE WAY THINGS ARE!” Sure, at any give time I have a set of beliefs — I currently believe index funds are the best investment for me (and many others) for example — but I’m never so locked into any given belief that I’m unwilling to change my mind. So, I continue to explore opposing viewpoints. I listen to new ideas. And, every once in a while, one of these new ideas will stick, will change the way I think. That’s the way I learn. Passive investing — with an open mind For me, one of the best ways to learn about money is by listening to others who have been successful. I’ve found it profitable to seek out mentors, for instance. Plus, I like to gather with groups of like-minded folks to share ideas. So, once or twice a year, I attend the meeting of a local investment group — the Diehards. I’ve written about the Diehards a couple of times before ( 2008 , 2010 ). This is a report on the most recent meeting. Note: For those of you who aren’t familiar, Diehards (also called Bogleheads are fans of indexed mutual funds — funds that track the movement of stock market indexes — as popularized by John Bogle, the founder and retired CEO of The Vanguard Group. These Diehards discuss investing in the Bogleheads investment forum . From my experience, they’re friendly, smart, and knowledgeable people. As followers of John Bogle, you might expect most of these folks to be passive investors, but that’s just not the case. Many of these folks are actually active investors (though everyone seems to make decisions informed by the principles of passive investing). This group has a wide variety of approaches to investing based on their own goals, risk tolerance, and opinions about the economy. But each person comes to these meetings ready to learn more about investing, and to share their stories. Keeping a level head Most members of the group are retired. I’m not. I feel like this gives me an advantage. I’m able to pick the brains of people who are 20 or 30 years older than I am. For instance, at every meeting I learn something new from Bruce about preferred stock. Bruce teaches in the financial planning program at a local university. He’s a vocal advocate of preferred stocks, which are a sort of hybrid between bonds and common stocks. “I don’t need capital appreciation,” he says. “I want capital preservation . And income.” It’s all Greek to me, but it’s also intriguing. Now I want to learn more about preferreds. (To find out more about preferred stocks, check out Quantum Online – I’m going to!) At this meeting, I sat next to a woman named Kris (just like my wife). At the last meeting I attended, she stressed the importance of always being a saver. At this meeting, Kris said she no longer worries about market downturns. “I’ve been investing since 1968,” she said. “I’ve been through this three or four times now, depending on how you count. I don’t like when the market drops, but I also know that if I wait five years, then things will be fine.” Loren, too, tries to keep an even keel when it comes to investing. “I don’t try to make my rebalancing too accurate,” he said. “I’ve never been sure what the right balance is in the first place!” Andy says that he does his best to follow the investment mantra: “buy low, sell high.” “When something’s down, I buy it,” he told us. “It’s hard — it goes against human nature — but I do it. I try to stay broadly diversified.” This led the discussion back to Harry Browne’s permanent portfolio . There are many ways to approach safe, steady investing, but Brown has some specific recommendations for his own Permanent Portfolio: 25% in U.S. stocks, to provide a strong return during times of prosperity. 25% in long-term U.S. Treasury bonds, which do well during prosperity and during deflation. 25% in cash in order to hedge against periods of “tight money” or recession. 25% in precious metals (gold, specifically) in order to provide protection during periods of inflation. Because this asset allocation is diversified, the entire portfolio performs well under most circumstances. One of our members practices this investment philosophy, and has done well with it. He actually hopes to write a book providing a modern update of the technique. Near the end of the meeting, Bruce pointed out that a recent article in the Journal of Financial Planning once again showed the terrible, terrible drag of expenses on the returns of the average investor. Strength in numbers It’s certainly possible to learn about investing from books and blogs and magazines. But I think meeting and exchanging ideas with other people adds a new dimension to the subject. That’s why I think meetings like this are invaluable. They’re a chance to exchange ideas with fellow investors, and to profit from their success and mistakes. I highly recommend finding a similar group in your area. There’s no need to be intimidated. It’s fine to show up and just listen if you feel like you don’t have anything to contribute. I feel lost a lot of the time, but the more often I do things like this, the less lost I become. The original article can be found at GetRichSlowly.org.

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Jerry Chautin: Ideas, Inventions and Patents are Worthless Without Knowing Who Will Buy Your Product

December 21, 2011

Suppose you are sitting in your backyard on a lazy summer afternoon watching baseball. You open a cold beer, press a button and a section of the wall of your house spins around turning your backyard into an amphitheater with a large-screen TV. In fact, the entire entertainment module that was previously in your media room is now in your backyard. What is more, your guests are arriving just in time for the first pitch. If this scenario sounds like magic, it does not to Georgians Tim and Laura Pulver. That is because they invented and patented Mr. Spinwall , an entertainment center concept that is now available for purchase from their web site. Furthermore, they expect to sell it though distributors and have it available in stores. Tim Pulver, an architect, says that he initially installed Mr. Spinwall in his own house “as a cool space so my youngest daughter and her high school friends might desire to hang out at our home more often.” But after seeing the reaction of his daughter’s friends and his guests, he thought his invention might be marketable. “That’s when we found out about SCORE and starting getting some business advice,” he says. Dick Fenster, a business mentor with Atlanta SCORE met with the Pulvers at the nonprofit’s office. SCORE is an all-volunteer resource partner of the U.S. Small Business Administration. It has 385 offices and 13,000 members nationwide. The members come to SCORE with small business and corporate experience from a diverse array of industries and provide free mentoring, advice and coaching. Fenster has an accounting background. “I could counsel them on business concepts,” he said. But the Pulvers also needed help with forming a legal entity, advice on marketing and on protecting their product against knockoffs. So Fenster put together a team of SCORE volunteers that included a lawyer and two engineers with patent and marketing experience. The Pulvers were bootstrapping their start-up on a limited budget. “Due to our tight budget and the estimated cost of using a patent lawyer, which we could not afford at the time, I decided to do the provisional application myself,” Tim Pulver says. The filing fee for a provisional patent application is only $125, according to the U.S. Patent and Trademark Office . The PPA sets the filing date for 12 months, allowing you to research your product’s marketability before shelling out approximately $8,000 in filing and legal fees for the full, utility patent. But whether or not you should file for a PPA on your own depends upon whom you ask. So I asked Greg Hunt, a patent lawyer with Jenkins, Wilson, Taylor & Hunt in Durham, North Carolina. “Provisional patent applications are a way to save up front costs,” he says. But because there are statutory requirements to be met, “we do not recommend filing provisional patent applications without review by an attorney or patent agent.” After making application for the PPA on their own, the Pulvers ordered a marketability report for Mr. Spinwall from a new product research division of the University of Wisconsin. “We had the Wisconsin Innovation Service Center complete a new product feasibility assessment,” Tim Pulver says. The report confirmed that there is a lot of “money being spent on outdoor living spaces currently, and the trend for this is to increase in the long term future.” He added, “It is a $60 billion dollar plus industry.” Given their limited budget, I asked Tim Pulver if he is prepared for the high cost of defending his patent against copycats. “We will cross that bridge when the time comes,” he replied. “At least we have a chance to defend it (in court).” But lawyer Hunt warns, “Patent litigation is not for the faint of heart.” He continues, “Survey data from the American Intellectual Property Law Association indicates that the average cost for such litigation where the potential damages at stake are between $1 million and $25 million is $3.1 million through trial.” Hunt also notes that there is a human cost. “Key employees who spend their time innovating and/or managing your company’s business will be required to collect and provide documents, provide testimony and — worst of all — meet with company lawyers.” Ultimately the Pulvers hired an Atlanta-based patent lawyer for help with the final, utility patent. Their patent was approved in October three years after the process began. Jerry Chautin is a volunteer SCORE business counselor, business columnist and SBA’s 2006 national ” Journalist of the Year ” award winner. He is a former entrepreneur, commercial mortgage banker, commercial real estate dealmaker and business lender. You can follow him at www.Twitter.com/JerryChautin

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WATCH: Occupy Wall Street Says Thanks

December 21, 2011

Occupy Wall Street protesters got into the holiday spirit this week by releasing a video thanking the supporters. The 6-minute video catches viewers up on what the group has been up to. Various protesters share stories of how they got involved and explain the group’s daily routine. The video also features footage from New York City protests, arrests and meetings. At the end, text reading “Thank You For Support/Love, OWS” appears. Directed by David Sauvage, the video was officially approved by the New York City General Assembly on Tuesday night. WATCH:

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Why Finance Shouldn’t Be New York’s One-Trick Pony

December 21, 2011

Every December, New York’s salespeople dust off the Chateau Petrus and the Mercedes-Benz AMG Roadsters in the hope that St. Nicholas, erstwhile patron saint of the city, will drop big bonus checks into the stockings of local financiers. This year, the jolly old elf doesn’t seem to be spreading his largesse too widely on Wall Street. Yet the city as a whole seems to be weathering the financial decline better than one might have expected, and with luck, New York will emerge from this downturn as a more economically balanced city.

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Yahoo Wants Better Terms, Buyers Want Better CEO

December 17, 2011

(Reuters) – A consortium of private equity group Silver Lake, software giant Microsoft Corp and venture capital firm Andreessen Horowitz are reworking their bid for a minority stake in Internet company Yahoo Inc, a source familiar with the matter said on Friday. Silver Lake’s consortium is working on a new offer for a stake of 10 to 15 percent in Yahoo after the company asked for improved terms, the source said. The new offer would be predicated on Yahoo finding a new, world-class chief executive that the consortium would support, the source added. Yahoo’s board fired CEO Carol Bartz in September and has yet to hire a permanent replacement. The Wall Street Journal reported earlier on Friday, citing people familiar with the matter, that private equity firms seeking to acquire just under 20 percent of Yahoo were working on new offers for a smaller stake at a higher per-share valuation. TPG Capital, which sources previously told Reuters had also bid for a minority stake, did not respond to a request for comment. Representatives of Silver Lake and Microsoft declined to comment while an Andreessen Horowitz spokeswoman could not immediately be reached for comment. “As previously announced, the board is evaluating various alternatives as part of its comprehensive strategic review process, all of which are designed to enhance shareholder value and promote growth and innovation at Yahoo,” a Yahoo spokesman said. “The board’s process is open to all alternatives and has not restricted the range of various options or proposals in any way,” he added. The first offer by Silver Lake’s consortium valued Yahoo at $16.6 per share, about $1 per share less than what TPG proposed, people familiar the matter had previously told Reuters. Yahoo shares closed down 1.3 percent at $14.96 on Friday. Yahoo has several available options. Chinese e-commerce giant Alibaba, in which Yahoo has a 40 percent stake, is preparing a $4 billion bank loan to buy back that stake, Thomson Reuters publication Basis Point reported on Thursday, citing sources. But Alibaba could choose to partner with buyout groups Blackstone Group LP and Bain Capital and Japan’s Softbank Corp for a full-out bid for Yahoo, sources familiar with the matter have previously told Reuters. Private equity firm Thomas H. Lee Partners is interested in buying the U.S. operations of Yahoo, people familiar with the matter have also told Reuters previously. Yahoo’s difficulty in competing with Internet heavyweights such as Google and Facebook have forced it to explore proposals to revamp its business. Yahoo has a market capitalization of $18.5 billion. (Reporting By Greg Roumeliotis in New York, Alexei Oreskovic in San Fransisco and Bill Rigby in Seattle; Editing by Gary Hill)

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Supreme Court Debates Again Whether Corporations Are People

December 15, 2011

This article is in collaboration with The Dylan Ratigan Show’s “Mad As Hell” series. WASHINGTON — A multinational oil company will be coming to the Supreme Court this winter to argue that corporations are not “natural persons” and therefore cannot be held liable for committing international human rights violations such as torture, extrajudicial killings and crimes against humanity. The case, Kiobel v. Royal Dutch Petroleum , began far from Washington in the Ogoni region of the Niger Delta. About a dozen Nigerians contend that Shell Oil’s parent company aided and abetted the Nigerian government in its violent suppression of environmental and human rights protesters resisting Shell’s operations there in the 1990s. In September 2010, the U.S. Court of Appeals for the 2nd Circuit accepted the oil company’s argument that as a corporation it’s immune from being sued in the United States for the overseas conduct. Since then, three other appeals courts, looking at the same law, have held otherwise — in cases brought against Exxon , Firestone and Rio Tinto for similar alleged atrocities. At first blush, the idea that corporations are not people under the law sounds perplexing. Didn’t the Supreme Court decide almost two years ago in Citizens United v. Federal Election Commission that corporations have the same First Amendment right to fund political speech as natural persons? If consistency counts for anything, shouldn’t corporations take the same responsibility for their wrongdoings? At least in theory, they do: Under Anglo-American law, corporations have long been considered legal persons subject to suit. But the 2nd Circuit in Kiobel held that this country’s history of corporate liability is irrelevant when it comes to a founding fathers-era statute that allows foreign nationals injured by “a violation of the law of nations” to sue in U.S. courts. The Alien Tort Statute , passed by the first Congress in 1789, says the federal trial courts can hear any civil suit brought by a foreign national “for a tort only, committed in violation of the law of nations or a treaty of the United States.” But for two centuries, the ATS lay virtually dormant, its text ambiguous on which torts constitute those committed in violation of the law of nations and what types of defendants — individual, corporate, state — can be sued. It was not until 2004, several decades after the emergence of ATS-related human rights litigation in the lower courts, that the Supreme Court clarified one ambiguity , holding that the ATS can only be invoked for violations of a “narrow class” of international norms that are as “specific, universal and obligatory” as those that existed when the statute was written. The Court gave as examples of those long-recognized abuses the “violation of safe conducts, infringement of the rights of ambassadors, and piracy.” It suggested that torture and genocide clear that high bar, but ruled that arbitrary arrest and detention do not. In a footnote to that same decision, Sosa v. Alvarez-Machain , the Court noted, but did not answer, the question of whether “international law extends the scope of liability … if the defendant is a private actor such as a corporation or individual.” Now that issue is before the justices. Problem is, the Sosa footnote is nearly all they have from their own decisions to work with — that and a throwaway line in a 1989 case acknowledging that the ATS “by its terms does not distinguish among classes of defendants.” What the justices have instead are the sharply divided opinions from the lower courts — to which the Court owes no deference — and their own policy preferences. In essence, the justices will be making new law no matter how they rule. Moreover, the appeals courts’ reasoning show how one looking glass can present two opposing realities, with three of the four panels that took on the issue fracturing along the liberal-conservative divide. Refracting the ATS through the high court’s Sosa decision, the 2nd Circuit majority asked whether there was a “customary international law norm” of corporate liability and found none. Senior Judge Pierre Leval, a Clinton appointee, dissented, arguing that the inquiry in Sosa into customary international law pertained to violations, not violators. Leval, like the subsequent majorities in three other appeals courts, held that “international law generally takes no position” on corporate liability and “leaves that question to each nation to resolve.” “The United States, through the ATS, has opted to impose civil compensatory liability on violators and draws no distinction in its laws between violators who are natural persons and corporations,” Leval concluded. In a decision this past July, the D.C. Circuit came to a mirror-image conclusion . Its two-judge majority agreed with Judge Leval. Dissenting Judge Brett Kavanaugh, a former clerk to Justice Anthony Kennedy and a George W. Bush appointee whose opinions hold some influence among the Court’s conservatives, endorsed the 2nd Circuit majority’s test. “It would be quite odd for a U.S. court to allow a customary international law-based ATS claim against a corporation when no international tribunal has allowed a customary international law claim against a corporation,” wrote Kavanaugh. Kiobel has so far flown under the radar in a term stacked with cases on the hottest political topics of the 2012 election cycle . In a sense, the posture of Kiobel resembles the health care cases, which also come with a 3-1 circuit court split in favor of the more typically “liberal” position. Unlike the long history of the Court’s commerce-clause case law relevant to the health care debate, however, there is paltry ATS precedent to check the justices’ political prejudices, be they for big business or international human rights. Should the Court break down on ideological lines with a narrow right-wing majority limiting ATS defendants to natural persons, no casual observer will be able to avoid the conclusion, rightly or wrongly, that the Court’s conservatives are eager to grant corporations powerful political rights while exempting them from the consequences of their most egregious behavior. Sure, such a divergence could be explained by pointing to distinctions between the First Amendment and a law that fuses federal and international tort law. But a decision for Shell Oil would still send the crude message that the Court believes corporate coffers are better spent influencing elections than compensating torture victims.

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Eli Pariser On ‘Filter Bubbles’

December 14, 2011

In this special year-end collaboration, TED and The Huffington Post are excited to count down 18 great ideas of 2011, featuring the full TEDTalk with original blog posts that we think will shape 2012. Watch, engage and share these groundbreaking ideas as they are unveiled one-by-one, including never-seen-before TEDTalk premieres. Standby, the countdown is underway! Watch author Eli Pariser discuss secret censorship on the Internet, and read is accompanying blog post below following up on his talk. People love sharing lists — the list is one of the formats that fare well in a Filter Bubble world. So here’s a list of five of the most interesting ideas I’ve come across since I gave my presentation at TED and published The Filter Bubble: What The Internet is Hiding from You . 1. Who owns the right to infer things about you? According to Marissa Meyer at Google, some credit card companies can now use your purchasing decisions to predict whether you’re going to get a divorce with 95% accuracy — two years out. This raises some interesting ethical questions: do companies have an obligation to reveal to us the inferences they make about us? Should you be able to gain access to the fact that your credit card company is betting against your relationship? What about in the health sphere — if Acxiom infers that you’re at high risk of suicide, based on your purchases, does it have an obligation to let you or someone else know? I haven’t found any satisfying answers to these questions — but we ought to start thinking about them more seriously. 2. Transparency’s moving in the wrong direction. Imagine a company where every communication is transparently available to every employee. While corruption at the top is harder, overall, the effect would be to empower the bigwigs — because the kind of private coordination that people use to organize and aggregate power would be impossible. Speak ill of the boss, and you get laid off — that’s how power works. In an ideal world, I’d argue, transparency would vary with power — the more powerful you are, the brighter the spotlight on your activities. But what we’re seeing now is the opposite: the details of most folks’ lives have never been more available to more corporate, governmental or even private citizens. But thanks to the Citizens United Supreme Court decision, the wealthy and powerful are able to cloak their political activities, and there are a variety of services available to scrub private information from the web for a price. We have transparency for the 99%, but not the 1%. 3. Robot journalism. Mostly, I’ve been focused on the impact of code-based editors on how we consume news. But it’s worth noting that drone-like mini-robots are beginning to do some real news gathering as well. Check out this footage from a tiny helicopter piloted by folks at The Daily , or this stunning video from a protest in Poland . It won’t be long before every news bureau — and more than a few amateurs — are using these things to push past military lines, look in celebrities’ windows and generally change all of our assumptions about how video news is gathered — for better or worse. 4. The difference between curiosity and value. Recently, The Huffington Post tweeted about an article with the headline to the effect of “Guess Which Celebrity Got Into a Horrible Accident Today?” I’ll cop to clicking — HuffPost did an excellent job piquing my interest. But I couldn’t tell you which celebrity it was, because I’ve forgotten — there was very little lasting value in that article. These kinds of curiosity-driven clicks are one of the primary signals that sites use to personalize content. But unless they’re paired with something that measures the amount of value we take away from a media experience, they’re only so useful. And they lead toward a world with curiosity-baiting headlines and no payoff. What if, in addition to click signals, personalizing websites also sent folks a list of the 50 articles they’d recently visited and asked them to mark the three that gave them some lasting value? A personalized feed that took into consideration not just what we click on but what we take away from it could help us build information diets that are both delicious and substantive. 5. Seven Things Algorithms Do That Humans Don’t. As we move toward an algorithmically-edited world, there are still a bunch of things that human editors do better. This Harvard Business Review piece has a bit more detail, but here’s the short list: Anticipating what people will be interested in, taking risks in recommendations, giving folks a sense of the whole picture, pairing stories together in a way that adds value, highlighting stories of social importance, valuing content that blows folks’ minds and building the kind of trust that leads audiences to topics beyond their core zone of interest. Oh, and one more thing: As I’ve been discussing The Filter Bubble , the aspect of the problem I’ve become most focused on is the Information Junk Food problem. In many ways, the important question isn’t just whether you see a diverse set of political viewpoints, but whether most people see anything from the political or civic realm at all. I’m working on a new media project aimed at getting ideas that matter in front of millions of people — if that sounds like fun to you, maybe you should come work with us.

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U.S. Worried About IMF Loans To Europe

December 10, 2011

WASHINGTON (Lesley Wroughton) – The prospect of European heavyweights like Italy or Spain turning to the IMF for rescue loans is worrying the United States and other nations that fear they could suffer losses on funds they have extended to the IMF. The International Monetary Fund cannot be expected to step in as a substitute for a stronger commitment by Europe which needs to assume the brunt of any losses on emergency loans, a senior US official said on Friday. Despite the International Monetary Fund’s stable record – no borrower has ever defaulted on an IMF loan and no country has ever lost money lending to the IMF – there are concerns about the IMF’s growing exposure to the euro zone. That exposure could take a quantum leap if Italy and Spain need bailouts, a level of assistance that would almost certainly dwarf the loans already approved for Greece, Ireland and Portugal in deals engineered with the European Union. Emerging markets, which are contemplating lending more money to the IMF — which couples monetary assistance with tough conditions that seek to ensure a country does not default — have also raised concerns in the IMF about the risks to the fund’s capital, officials from emerging nations told Reuters. A crucial European Union summit ended on Friday with a historic agreement to draft a new treaty for deeper integration in the euro zone in an effort to rein in a debt crisis that started in Greece two years ago and has continued to spread. Worries about the IMF’s risk are also brewing among congressional lawmakers. Four U.S. lawmakers who met with IMF chief Christine Lagarde this week expressed unease over the risk the fund would take on with a bigger role in Europe. A request for a big IMF loan for Italy or Spain would put the United States, which holds veto power over most IMF lending decisions, in an uncomfortable spot. The American public is still stung by the U.S. government’s big bailouts for banks during the 2007-09 financial crisis and fears that mounting U.S. debts imperil the nation’s future. With President Barack Obama facing a tough battle for re-election in November, the White House is not keen to appear as Europe’s savior, and the administration’s message to Europe has consistently been: Put more of your own money on the line. Indeed, Republican lawmakers are seeking to yank a $108 billion loan the United States approved for the IMF in 2009, a move that would undercut Washington’s ability to influence the conditions attached to IMF loans. “If the United States wants to help Europe find a way out of its current debt crisis, we must be a strong, world economic leader, not merely the lender of last resort,” Republican Senator Jim DeMint wrote in The Wall Street Journal on Friday. “Members of the Obama administration must focus all of their efforts on strengthening the U.S. economy and balancing our budget, rather than on continuing to borrow from China to pay for Europe’s out-of-control debts,” he added. DeMint said he would seek to force another vote to stop U.S. Treasury Secretary Timothy Geithner from supporting more European bailouts. The Senate voted 55-44 in June against a proposal by DeMint to repeal IMF loan authority. Domenico Lombardi, a former IMF board official now at the Brookings Institution in Washington, said even if the U.S. Congress rescinded the loan, it would not prevent the IMF from lending to Europe. He said the international community has a stake in ensuring the euro zone crisis does not spread further. PREFERRED CREDITOR The IMF enjoys an understanding among its members that borrowing nations will always pay the IMF back ahead of private creditors. However, the scale of borrowing troubled euro zone countries might need raises the specter that one of the nation’s could default on an IMF loan. The IMF has about $380 billion available for lending, a figure outstripped by Italy and Spain’s debt refinancing needs. Italy needs to roll over 340 billion euros (290.5 billion pounds) in debt next year, while Spain needs to refinance 120 billion euros. “The problem with some of these countries now is you’re getting to a point where (debt) is large enough that defaulting on the IMF is attractive enough if you want to reduce your debt,” said Raghuram Rajan, a former IMF chief economist now at the University of Chicago’s Booth School. “I’m not saying the euro area will act at cross purposes with the fund. But when it comes to writing down the debt, will the euro area respect the (preferred) status of the IMF?” European leaders agreed at a summit on Friday to provide 150 billion euros in bilateral loans to the IMF to tackle the crisis, with another 50 billion euros coming from non-European countries. National central banks in the euro zone would pump the capital into the IMF. The funds would not count as a contribution toward Europe’s IMF quotas, which determine its voting power in the fund. WHOSE MONEY IS THIS ANYWAY? There are two ways of channeling the money to the IMF, either through the fund’s general resources or a so-called IMF-administered account. Any lending from the IMF’s general resources would spread the risk across the entire IMF membership. In an administered account, the countries contributing would take the losses in the case of default. Thus far, Europe has indicated it is legally easier for its funds to be part of general resources. When it comes to additional resources to battle the euro zone debt crisis, the United States prefers the second option, which would put most of the risk on Europe and none on the United States. The Obama administration has argued for months that Europe needs to put more capital on the line. “The key point is that official funding must also bear losses if necessary,” Rajan wrote in a recent column. “Consequently, if support is channeled through the IMF, the fund will need a guarantee from the euro zone that it will be indemnified in case of a (debt) restructuring.” Mario Blejer, a former Argentine central bank governor, argues that Europe should take care of its own and bear the full risk of any default. “The IMF’s seniority is an unwritten principle, sustained in a delicate equilibrium, and high-volume lending is testing the limit,” Blejer and Eduardo Levy Yeyati, a senior fellow at the Brookings Institution, wrote recently. “From this perspective, the proposal to use the IMF as a conduit for ECB resources — thereby circumventing restrictions imposed by European Union’s treaties — while providing the ECB with preferred-creditor status, would exacerbate the Fund’s exposure to risky borrowers,” Blejer and Yeyati said. “This arrangement could be seen as an unwarranted abuse of Fund seniority that, in addition, unfairly frees the ECB from the need to impose its own conditionality on one of its members.” ($1 = 0.7482 euros) (Editing by Tim Ahmann, Leslie Adler and Andrew Hay) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Uh-Oh! Huge Yahoo Partner Reportedly Wants Out

December 8, 2011

By Stephen Aldred and Prakash Chakravarti HONG KONG (Reuters) – Alibaba Group is seeking up to $4 billion in debt financing, sources said on Thursday, in a deal expected to help the Chinese e-commerce giant buy back a 40 percent stake in the company owned by Yahoo Inc. As Alibaba Group is private, there is no public figure on what Yahoo’s stake is worth, though some analysts say its worth at least $9 billion. Sources close to the matter said Rothschild, which is acting as debt adviser to Alibaba, had sent out term sheets to banks requesting underwritten proposals for the debt financing. The tenor of the debt is expected to be up to three years. Reuters was unable to obtain a copy of the term sheets. Alibaba Group, founded by billionaire entrepreneur and former English teacher Jack Ma, declined to comment. Alibaba, which counts a hugely popular business-to-business platform among its services, has long signalled its intention to buy back the Yahoo stake. Ma’s feud with Yahoo and his plans for the stake gained renewed attention lately with Yahoo the subject of takeover interest. Blackstone Group and Bain Capital are preparing a bid for all of Yahoo Inc, Reuters reported earlier this month, with Alibaba among its partners for the roughly $25 billion deal. Japan’s Softbank Corp is also part of that consortium. A source familiar with the matter cautioned on Thursday that the entire situation between the consortium and Yahoo remains fluid, and that no final decision has been made on any move that Alibaba or the other corporates plan to make. For the Alibaba debt financing, banks have been asked to provide underwritten commitments of $1 billion with an expected final hold of $400 million, according to one of the sources on Thursday. In November, Yunfeng Capital — co-founded by Alibaba’s Ma — Silver Lake and other investors completed the purchase of a 5 percent stake in Alibaba Group worth $1.6 billion. Alibaba, as a parent company, holds a 73.12 percent stake in Hong Kong listed Alibaba.com Ltd. A Rothschild representative was not immediately available for comment. (Reporting By Stephen Aldred and Prakash Chakravarti; Additional reporting by Lee Chyen Yee; Editing by Michael Flaherty and Chris Lewis)

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Poor Looking For Bargains, Rich Opting For Luxury As Christmas Nears

December 7, 2011

Adriana Garcia won’t be buying her family Christmas gifts this year. The 26-year-old from Huntington Park, California lost her job as a teacher’s assistant last year and now works part-time at a Jamba Juice near Los Angeles. Her husband, a security guard unable to work since hurting his hand three months ago, is not yet getting his disability checks. The couple spends on the basics: food and rent. “I don’t really care about the presents,” said Garcia. Kelly Lenehan, a 40-year-old ultrasound technician and former paparazzo from Los Angeles, lost her job in her new field in early November, and is also planning a low key holiday. “It can’t be the way I want it to be, and that’s the difficult thing about it,” she said. A record turnout two weeks ago on Black Friday, the day after Thanksgiving, when tens of millions of Americans, lured by bargains, hit stores to kick their holiday shopping into high gear, belied how much many Americans still struggle. Stores such as Kohl’s Corp and Gap Inc’s Old Navy and J.C. Penney Co Inc all reported sales declines in November, as shoppers proved more frugal than television images of in-store bedlam would have suggested. Meanwhile, bargain basement chains like Dollar General have been on a tear. The National Retail Federation expects holiday retail sales to be up 2.8 percent, below last year’s 5.2 percent increase. In contrast, sales at luxury stores like Saks Fifth Avenue and Nordstrom Inc have soared all year and their November sales — Saks’ same-store sales rose 9.3 percent — show holiday sales are off to a strong start. “I’ve been fortunate to have a good year, so I am feeling good. Trying to kick start the economy,” said Andrew Rothstein, a 40-year-old investment banker with TD Waterhouse shopping at Saks Fifth Avenue’s flagship store in Manhattan last week. Unemployment slipped last month to 8.6 percent, in part because many job seekers simply gave up looking. The rising cost of food and fuel is adding to the pinch, curbing the spending power of millions and delaying a meaningful recovery in consumer spending. Adam Morales, a 64-year-old retiree from Louisiana on a fixed income, said he’ll spend less on gifts for his five children and seven grandchildren. “The price of living went up so much,” he said. “Last year, I spent $25 on each one. This year I will have to spend $10,” he said. Retailers know how hard it is for shoppers this year: Wal-Mart Stores Inc brought back its layaway program after a five-year break. Even people making decent money are being cautious. Aldo Inoster, a stock broker from Queens, New York, will limit his Christmas gifts to family members. “It has to be a very sweet deal to get us out shopping,” said Inoster, 50, while shopping at an Old Navy in New York’s Herald Square on Thanksgiving. FOR THE RICH, GETTING BACK TO NORMAL At the high end of the widening income gap, many Americans are shopping like it’s 2007 again. On Friday night, stores on Manhattan’s luxury avenues were packed, with people waiting several turns before being able to use the elevator at Tiffany’s store on Fifth Avenue. Luxury chain Neiman Marcus said last week it has sold out of the ten 2012 Ferrari sports cars it offered in its Christmas book of fantasy gifts for $395,000 each. Yet for all the talk of luxury’s rebound, sales at chains like Saks remain below levels prior to the 2008 financial crisis, which stopped high end shopping in its tracks. Many wealthy Americans don’t think the economy is out of jeopardy. Peter White, principal of a technology staffing company in Houston, said business is picking up though he is still not going gangbusters with shopping this year. “One of the reasons we’re up here is because things are starting to slowly turn around,” said White, who took his family to New York for a Christmas shopping trip that included a visit to Tiffany on Friday. “I would never have made this trip two years ago.” Nonetheless, the wealthy don’t pull back much on luxury even when markets are rough, as they have been, because their “spending money” is not tied up in the stock market, said Jonathan Bergman, a vice president at Palisades Hudson Financial Group, whose clients include CEOs and have median accounts of $5 million. Millionaires, who account for nearly half of U.S. luxury sales, have enough cash to keep up their spending habits even if their income droops for a year, said Boston Consulting Group senior partner Jean-Marc Bellaiche. “The fact that you make a little bit less this year will not affect your ability to buy a $3,000 watch,” he said. (Reporting by Phil Wahba and Dhanya Skariachan in New York, Lisa Baertlein and Martha Sanchez-Avila in Los Angeles; Editing by Steve Orlofsky) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Romney’s Payroll Tax Cut Position Takes Another Turn

December 6, 2011

GOP presidential hopeful Mitt Romney’s position on payroll tax cuts took another turn on Monday. The New York Times reports that Romney came out in favor of a one-year extension, lending support to a policy that has been a President Obama staple. “I would like to see the payroll tax cut extended just because I know that working families are really feeling the pinch right now,” he said on a conservative radio talk show. The former Massachusetts governor’s ideas on this issue have lacked consistency at times . Back in October, he dismissed the notion of an extension as a “temporary little Band-Aid”, saying that he wanted to “fundamentally restructure America’s foundation economically.” In November, Romney’s stance started to waver . When asked during a GOP debate if he would extend the payroll tax cuts, he had a more positive lean, telling viewers “I want to keep our taxes down. I don’t want to raise any taxes anywhere. I’m not looking to raise taxes. What I’m looking to do is to cut spending.” Monday marked a new segment in the payroll tax talks , as Democrats offered a second plan for an extension. This version included a smaller tax on the wealthy to help pay for the middle-class tax cut. On the other side of partisan lines, a prominent GOP face gave some clues as to what it might take for the payroll tax break to go through. Sen. Jon Kyl (R-Ariz.), the No. 2 Republican in the Senate, hinted on Monday toward an extension of wealthy tax breaks to offset the middle-class initiative. Kyl pointed to last year’s scenario when Democrats extended the Bush-era and estate tax cuts to ensure that the payroll tax cuts went through. “As I said a year ago, I was willing to support the extension of it because we extended the other tax rates as well,” Kyl said. “[If] we do that again, obviously it’s something that I would be supportive of.”

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China Concerned U.S. Ruling Underscores ‘Inclination To Trade Protectionism’

December 4, 2011

SHANGHAI – China said it was “deeply concerned” about a preliminary ruling by a U.S. trade body that trade practices by Chinese solar makers are hurting U.S. producers and said the decision underscored a U.S. “inclination to trade protectionism.” Such protectionism measures would hurt bilateral trade and jeopardize mutual cooperation on new energy issues, the Commerce Ministry said in a statement on its website. The statement came after the U.S. International Trade Commission approved an investigation into charges of unfair Chinese trade practices in the solar energy sector, setting the stage for possible steep U.S. duties and ratcheting up tensions with Beijing on the green trade front. The U.S. commission voted 6-0 that there was a reasonable indication that SolarWorld Industries America and other U.S. producers had been harmed by the imports or could have been. “The ruling was made without sufficient evidence showing U.S. solar panel industry has been harmed and ignored defenses from Chinese firms as well as opposition from the U.S. domestic industries and other stakeholders,” the ministry said. “China is deeply concerned with the decision, which does not tally with facts and highlights the United States’ strong tendency for trade protectionism.” China also hit back by saying that the U.S. should “objectively analyze why some of its solar panel firms lack competitiveness.” The vote allows the Commerce Department to continue an investigation that could lead to both countervailing and anti-dumping duties on solar cells and panels from China. The dispute is one of several to have broken out on the environmental front, as governments seek to reduce dependence on carbon-emitting fossil fuels blamed for global climate change. Chinese solar manufacturers most affected by the petition include Suntech Power Holdings, Yingli Green Energy Holding and Trina Solar. U.S. imports of the solar products from China totaled $1.5 billion in 2010, up from $640 million in 2009. (Reporting by Fayen Wong and Samuel Shen; Editing by Nick Macfie) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Apple Loses Battle To iPad Rival

December 4, 2011

Score one for Samsung. A U.S. judge has denied Apple’s request for a preliminary injunction against several Samsung Electronics products. A ruling in Apple’s favor would have blocked Samsung from selling some of its products in the U.S.. While Apple has maintained that several devices from Samsung’s Galaxy line of smartphones and tablets are “slavishly” copying Apple iPhone and iPad devices, U.S. District Judge Lucy Koh in San Jose, California, didn’t think Samsung’s gadgets posed enough of a threat that they should be immediately banned. “It is not clear that an injunction on Samsung’s accused devices would prevent Apple from being irreparably harmed,” Koh wrote, according to Reuters . However, Koh’s ruling doesn’t reject Apple’s patent infringement claims against the South Korea-based electronics giant. “It’s possible that Apple will get a more favorable outcome on some of the asserted rights in the main proceeding,” Foss Patents speculates . On Friday, Australia’s highest court extended a ban on Samsung’s Galaxy Tab in that country, Reuters reported . Though the injunction blocking sales of the device had been overturned on Wednesday , Apple managed to win a weeklong extension of the ban. “It’s no coincidence that Samsung’s latest products look a lot like the iPhone and iPad, from the shape of the hardware to the user interface and even the packaging,” an Apple rep told All Things D back in April , shortly after filing suit against Samsung. “This kind of blatant copying is wrong, and we need to protect Apple’s intellectual property when companies steal our ideas.” Take a look at our slideshow (below) to see a side-by-side of Apple’s iDevices and Samsung’s various Galaxy gadgets.

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MF Global Mixed Customer Accounts, Transferred Funds Abroad

December 3, 2011

WASHINGTON (Reuters) – Regulators investigating the collapse of MF Global have determined that the firm combined money between securities and futures accounts owned by customers, and transferred funds outside the country to at least one entity, a source said on Friday. “The further we get into (the investigation) the more complex it is … but we’re making progress,” the source said, adding that the commingling and transferring of money is making it harder for regulators to determine what money belongs where. MF Global took futures segregated money and put it into the account for customer securities, essentially mixing futures and securities that were both owned by customers, said an official familiar with the matter. Until now, it was believed that only customer futures accounts were affected. The source also told Reuters that MF Global had been using customer funds for “several days if not weeks” rather than just a few days before the firm collapsed. Regulators had previously thought the firm was using customer funds on the Thursday and Friday before it filed for bankruptcy on October 31. CME Group, the Chicago exchange where MF Global traded, said it had reviewed the company’s books a week before the bankruptcy and found no issues with the customer money. If MF Global started improperly dipping into its customers’ accounts long before the firm’s collapse, the allegation would raise questions of why the regulators and auditors failed to spot such behavior. Congress has already started asking questions about potential lapses in regulatory oversight of MF Global. The pressure on regulators would only increase if MF Global turns out to have misused customer funds over an extended period of time. “Establishing the specifics of what happened is key to figuring out how the system failed and how to fix it going forward,” Republican Senator Chuck Grassley of Iowa said in a statement on Thursday. “Congress will need to keep drilling down.” MF Global collapsed in late October after the firm was forced to reveal that it had made a $6.3 billion bet on European sovereign debt. An effort to sell the firm failed, partially due to the revelation that hundreds of millions of dollars in customer money were not where they should have been. Investigators such as the Commodity Futures Trading Commission have been scouring the company’s books, described as messy and unorganized, for the fund shortfall that has been estimated as much as $1.2 billion by the liquidating trustee. However, regulators have been at odds with the trustee, believing that figure is too high. (Additional reporting by Philip Shishkin; Editing by Gary Hill) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Facebook Announces Big New Plans

December 2, 2011

Facebook’s engineering team is branching out to the Big Apple. During an event at Facebook’s New York City office on Friday, the company’s COO Sheryl Sandberg joined Mayor Michael Bloomberg, Facebook engineering heads and other New York politicians to announce the social network’s new move. The Palo Alto-based company plans to establish its first engineering office in New York by early 2012 and is currently accepting applications for local talent. “Building an engineering presence outside the West Coast is a big step for us, one we would take only if we found the right combination of talent and community support,” said Sheryl Sandberg, Facebook’s Chief Operating Officer, according to a press release . “Silicon Valley companies are realizing that New York is the place that they have to be,” Mayor Bloomberg said, as quoted by Business Insider . “We are home to success stories like Etsy, Gilt Groupe, Foursquare, and more… We want the next Facebook to start in New York City.” Venture Beat notes that the social network maintains two other engineering offices, both on the west coast of the U.S., one in Palo Alto, California, and the other in Seattle, Washington. “It’s a smart move on Facebook’s part,” TechCrunch wrote of Facebook’s plan. “The company will have competition for engineering — including the financial sector, Google (which has a large office in NYC) and the growing startup scene. But it shouldn’t have any trouble attracting top talent, as it still has its valuable pre-IPO stock to give out. In the longer term, it’s also good news for the New York tech scene as a whole.” Facebook is expected to file for an initial public offering before the end of 2011. According to a recent report , the company could seek to raise as much as $10 billion and may be valued as high as $100 billion. Check out our slideshow (below) to see how a Facebook IPO might stack up to IPOs from Netflix, LinkedIn, Dream Works and other notable companies that went public in the last decade.

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Take My Wealth, Please: One Percenters Who Fight For The 99 Percent

December 1, 2011

By Bruce Watson AOL Daily Finance Occupy Wall Street is slowing down a bit as winter sets in, but the conversation it inspired is still gaining momentum. Millions of Americans who once viewed themselves in general terms like “middle class,” “struggling” or “comfortable” now see the world more sharply divided into two groups: the 99 percent and the 1 percent. But even in the middle of the protests, the division isn’t as stark as one might think. From the beginning, some of Occupy Wall Street’s strongest supporters have come from America’s richest families. Who are these wealthy few who have crossed the boundary, and what are they doing to help the other 99 percent? Among the first 1 percent rebels was Robert S. Halper, a former vice chairman of the New York Mercantile Exchange — and an early enabler of Occupy Wall Street. A friend of OWS mastermind Kalle Lasn, Halper was one of the first to hear about the decision to take over Zuccotti Park. When Lasn unveiled his plans, Halper gave him $20,000 to set things in motion. But while Halper was quick to pull out his checkbook, he chose to remain mostly on the outside of the occupation, only visiting occasionally to see what his money had helped ignite. By comparison, some 1 percent rebels have dived in to work more closely with the 99 percent. Afraid and Isolated Critics of the 1 percent tend to paint the wealthy as arrogant and self-centered, convinced that they deserve their wealth, and blind to their own good luck and the societal support that allowed them to prosper. But Chuck Collins, director of the Institute for Policy Studies’ Program on Inequality and the Common Good, suggests that the relationship between rich people and their money isn’t quite so clear-cut. “Sure, some buy into the idea of wealth creation and claim that they are completely responsible for their money,” says Collins, “but most realize that their wealth has to do with the society that we live in.” Once they reach that conclusion, he argues, it often informs their decisions. “Many people in the 1 percent for one reason or another have realized that the economy should not be organized to keep funneling wealth to the top.” For Collins, the relationship between the 1 percent and the rest of the country isn’t theoretical. A great-grandson of Oscar Meyer, he is an heir to the family’s extensive meatpacking fortune. He argues, however, that his wealth doesn’t shield him from economic inequity. “As a parent, do I want my child to grow up in an apartheid society? Do I want to live in Brazil, where I have to surround my family with bodyguards as we take armored cars from one rich enclave to another? That’s kind of where we’ve been heading for the last 30 years. Do this for another 20 years and you’ve got another Sao Paolo.” Karen Pittelman (pictured above, and right, with Elspeth Gilmore), a philanthropist and author of Classified: How to Stop Hiding Your Privilege and Work for Social Change, echoes this sense of exclusion: “Class privilege often comes with a lot of isolation and fear, and that can be passed down through the generations along with an inheritance.” Part of the problem, she argues, lies in upper-class discomfort about the benefits they enjoy. “Being open and honest about how so much is rigged in our favor is a threat to the way things run. That stuff is supposed to stay quiet, behind the scenes. That’s the real reason why people who grow up with class privilege are taught never to talk about money.” The Broader Community Part of the solution, Collins claims, is for rich people to recognize that wealth cannot shelter them indefinitely. “We don’t live on islands. Well–some of us do,” he says with a laugh. “But most of us live in communities where we can see the results of 30 to 40 years of public policy that have increased inequality.” Jessie Spector (right), the program director at Resource Generation, a organizing group for young philanthropists, argues that the best tool for developing a more equitable society is tax reform. “I am focused on taxation as one key tactic for creating economic justice. It’s the best system we have on a scale large enough to create a more equitable society.” The burden, she notes, rests on the rich: “We need to pay our fair share. The wealthy need to pay much more if we hope to maintain opportunities for everyone in our society.” Collins echoes the idea that higher tax rates broadly benefit society. “In the 1950s and 1960s, we taxed ourselves at a high level and used the money to pay for public investments that made our generation’s prosperity possible. Now, however, we’re stripping those investments in order to benefit a very small portion of the populace. Are we leaving anything for the next generation?” In addition to hollowing out the middle class and crucifying the lower class, Collins argues, this sort of thinking is devastating for the upper classes. “We also need to think about the health of the economy. Too much inequality undermines the basis of prosperity.” Helping Others Find a Voice Lobbying for tax reform isn’t the only way that wealthy people can help their communities. Spector has worked with Occupy Wall Street, and has used a large part of her inheritance to help fund small grass-roots organizations: “My priorities have been to give money to work led by the people who are most directly affected by injustice. I work with Poor Magazine, a media group that is organized around economic injustice.” When Karen Pittelman protested at Occupy Wall Street, she carried a sign that poked fun at her own wealth: “Another Trust Fund Baby for the Radical Redistribution of Wealth. She stresses that philanthropy isn’t just about giving away money; it’s also about giving away power. With part of her inheritance, she endowed the Chahara Foundation, which funded grass roots groups in Boston that were run by and for low-income women of color. She quickly learned, however, that the privilege that she was taught to take for granted could get in the way of her own philanthropy. “Part of the thing about being raised with class privilege is that you are always taught that you know best, that you have the solution to everything,” she says. “After the foundation’s first round of giving, it was so clear to me that, had I been making the decisions, I never would have even known about so many of these amazing, small, grassroots groups they were supporting because I wasn’t from those communities. The women making the grant decisions had been working as activists in their communities their whole lives, so they knew what was going on in a way I never would.” Giving away power not only taught Pittelman about her own expectations, but also about her ability to change the world. Looking back, she says: “When you have a lot of resources and are willing to put them behind radical causes, it can make some people nervous.”

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The Good Times May Be Over For U.S. Defense Industry

December 1, 2011

U.S. weapons makers told investors this week they are doing all they can to prepare for leaner and more uncertain U.S. defense budgets, including redoubling their efforts to cut costs, drum up export sales and sell more goods to commercial clients. Industry executives and Pentagon officials say they are still sorting out the potential impact of an additional $600 billion in defense cuts over the next 10 years, on top of some $489 billion in cuts already being absorbed. Even if those additional cuts can be averted, as Republicans hope, the industry is facing pressure on profit margins and a dearth of new programs after more than a decade of strong growth, industry executives and analysts agreed. The Pentagon’s No. 2 budget official, Mike McCord, told a conference hosted by Credit Suisse and Aviation Week that the fiscal 2013 defense budget proposal now being finalized already included cuts in the $40 billion-range from previous plans, following a cut of around $25 billion in fiscal 2012. He said the White House had not ordered the Pentagon to revamp that plan to reflect another $50 billion in cuts, and it would be difficult, if not impossible, to do that in the few weeks before the budget documents must be completed. “We’re a little bit in the dark like everybody else is about the future of sequester,” McCord said. Clay Jones, chief executive of Rockwell Collins Inc (COL.N), a flight-controls supplier and subcontractor on many key weapons programs, said commercial sales would account for a growing share of his company’s revenue as government orders declined. “It’s been a great ride,” he told the conference. “The ride’s over.” Rockwell Collins expects sustained double-digit growth in its commercial business but says its outlook for government sales is clouded by lingering uncertainty about the U.S. defense budgets for fiscal 2012 and beyond. Bill Swanson, chief executive of Raytheon Co (RTN.N), said he was hopeful that Washington could avert the additional $600 billion in defense cuts but said his company had studied the potential impact of such cuts. “We’ve got to be smaller, we’ve got to be more efficient. We’ll get the job done,” he said. Raytheon, he said, was well positioned, given prospects for continued sales in the missile defense, intelligence, surveillance and reconnaissance, and cyber security areas. International sales — likely to account for 30 percent of Raytheon’s bookings in 2011 — would help the company offset the downturn in U.S. defense spending, he said. Swanson cited arms sales already in the works or soon to be completed, naming Saudi Arabia, Taiwan, Kuwait, Turkey and Oman. “We got a lot of activity in the pipeline,” he said, noting that in addition to solid demand from the Middle East and Asia, Raytheon was also eyeing new orders from India, Brazil and other countries in South America. The Navy’s No. 2 acquisition official said the service had not yet been asked to plan for additional budget cuts, and there was no “convergence” within the Pentagon on how to deal with the possible additional cuts. Vice Admiral Mark Skinner, principal military deputy to the Navy’s acquisition chief, said budget plans submitted by the Navy and other military services to Pentagon leaders addressed only the initial round of cuts, not the additional $600 billion now on the table. The Navy’s share of the initial cuts is $9 billion to $10 billion in fiscal 2013, Skinner said. “Sequestration is bad,” he said, referring to the additional budget cuts required because a congressional “super committee” failed to agree on at least $1.2 trillion of deficit reduction over 10 years. The cuts would affect all Pentagon programs across the board and could result in violations of existing multi-year contracts, he said. “We’re going to break a lot of china,” he told conference participants. Shay Assad, the Pentagon’s director of pricing, said the department was continuing its efforts to trim waste and improve oversight of billions of dollars of contracts. He emphasized that the effort was not aimed at squeezing corporate profit margins, but said well-run companies deserved better results than those whose programs were over budget and behind schedule. “We’re raising the bar and the expectations of our workforce, and we expect the companies to do the same on their side of the table,” Assad told the conference. Swanson welcomed Pentagon efforts to reform the way it buys weapons and said Raytheon was continually trying to reduce its costs and safeguard its healthy profit margins. But he said industry was also vigilant about taking on too much risk on new development programs, especially on bigger programs. (Reporting by Andrea Shalal-Esa and Karen Jacobs; Editing by John Wallace and Gunna Dickson) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Huge Announcement Coming From FarmVille Maker

November 30, 2011

By Anthony Hughes and Robert Sherwood NEW YORK, Nov 30 (IFR) – Zynga is expected to price its shares on December 15 in one of the most highly anticipated IPOs of the year. The IPO is expected to value the fast growing social gaming company at around $10bn, below some earlier estimates of as much as $20bn. The company is targeting a pricing range of $8-$10 per share, according to the source. Though the details are still being finalized, Zynga is likely to sell around 10% of its shares, including both new and existing shares, to the public. Having risen to prominence on viral games such as “FarmVille” and “Mafia Wars”, Zynga is widely expected to file terms on Friday for an IPO that would generate around $900 million in proceeds at the midpoint of the price range, the source said. Underwriters could ultimately upsize the deal based on demand. The timetable suggests the banks will opt for a standard nine-day roadshow, paving the way for a Nasdaq debut on December 16, a Friday. Zynga spokesman Adam Isserlis declined to comment. Another source familiar with the matter told Reuters on Wednesday that Pincus, the CEO, will not sell shares and neither will Kleiner Perkins, one of Zynga’s main venture capital backers. In its latest filing with the Securities and Exchange Commission on November 17, the company said a third party performed an analysis that valued the company at $14.05 billion. Zynga first filed plans to go public on July 1, flagging an offering in the order of $1 billion at that time. Morgan Stanley and Goldman Sachs are lead bookrunners on the deal, with Bank of America Merrill Lynch, Barclays Capital, JP Morgan and Allen & Company also named in the syndicate. Their underwriting committees at the banks involved are finalizing their participation in the offer. Sources told Reuters on Tuesday that Chief Executive Officer Mark Pincus will lead presentations to investors, along with Chief Operating Officer John Schappert and Chief Financial Officer David Wehner. Zynga’s games have 54 million daily active users and 227 million monthly active users in 175 countries, mostly via games on Facebook. The company is on track to become one of the fastest Silicon Valley companies ever to turn over more than $1 billion a year in revenue. Founded in 2007, the company increased its annual revenue from $19.4 million in 2008 to $597.5 million in 2010, and generated revenue of $828.9 million in the nine months to September 30, 2011. Over the same period, net income was $30.7 million and adjusted EBITDA $235.5 million. (Reporting by IFR’s Anthony Hughes and Robert Sherwood; Additional reporting by Reuters reporter Liana Baker) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Jon Huntsman: Mitt Romney ‘Is In The Hip Pocket Of Wall Street’

November 29, 2011

During a New Hampshire campaign event on Monday, Republican presidential candidate Jon Huntsman had some harsh words for fellow contender Mitt Romney. As CNN reports, Huntsman said of the former Massachusetts governor , “Anyone who is in the hip pocket of Wall Street because of all the donations they are picking up, like Mr. Romney, is in these days not going to be the change agent who is going to fix the too-big-to-fail banking system.” Per MSNBC, Huntsman’s comments were delivered to an audience of about 80 people . Huntsman went even further in his attack on Romney . Presumably referring in part to endorsements that Romney has received from Senator Kelly Ayotte (R-N.H.) and Congressman Charlie Bass (R-N.H.), Huntsman said, “You should be wary of any candidate who carries the endorsements of every member of Congress, because it means they’re going to be a status quo president.” This is not first time Huntsman has gone after Romney. During a Republican presidential debate last week in Washington, D.C., the two candidates sparred over Afghanistan policy . HuffPost’s Sam Stein reports: In one of his sharper moments in Tuesday night’s debate, Jon Huntsman pressed Mitt Romney specifically over his willingness to defer to military commanders when it comes to U.S. policy in Afghanistan. “At the end of the day the President of the United States is Commander in Chief, Commander in Chief. Of course you are going to listen to the generals… but the president is Commander in Chief,” Huntsman declared, underscoring the argument that Romney was outsourcing policy to the Pentagon. To bolster his point, Huntsman pointed to the Vietnam War as an instance in which military command dictated U.S. policy too far. The invocation of Vietnam as a nadir in U.S. history may not win over the GOP crowd. But it certainly got Romney a bit piqued. “Of course the Commander in Chief makes the final decision,” he replied. “But the Commander in Chief makes that decision based upon that input of people closest to the ground.” In addition to criticizing his opponent’s ties to Wall Street, the former Utah governor announced on Monday a plan to prevent future bank bailouts. Per Bloomberg Businessweek , “Huntsman’s priorities include ending ‘too big to fail’ by setting a ‘hard cap’ on bank size based on assets as a percentage of gross domestic product.” As the Associated Press reports , “Huntsman also wants to shut mortgage giants Freddie Mac and Fannie Mae and repeal the law, known as Dodd-Frank, that overhauled the financial system.” The candidate’s plan to “end too-big-to-fail” is outlined on his official campaign website . Huntsman is quoted on the site as saying, “Capitalism without failure isn’t capitalism. We need banks that are small and simple enough to fail, not financial public utilities.” Huntsman, whom MSNBC reports is polling at 8% in New Hampshire, has been aggressively courting the state’s primary voters. He even made an appearance on a recent episode of “Saturday Night Live,” heaping praise on the Granite State during the show’s “Weekend Update.”

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European Bank Using Emergency Facilities To Tackle ‘Very Dramatic’ Problem

November 24, 2011

BRUSSELS (Ben Deighton) – Franco-Belgian bank Dexia (DEXI.BR) is accessing emergency liquidity facilities in Belgium, France, Spain and Italy, a banking source said on Thursday, as analysts described its liquidity situation as “very dramatic.” The source said the bank was making use of the Emergency Liquidity Assistance (ELA) facility of the Belgian central bank as well as “national central banks in France, in Spain, in Italy,” where Dexia has units. One analyst said the fact Dexia was tapping national central banks’ liquidity via the European Central Bank network showed how bad the situation had become for the lender. “The emergency window of the ECB … is very expensive, so it shows that the liquidity situation is very dramatic,” the analyst said, speaking on condition of anonymity. “At some point you run out of unencumbered assets to post at the ECB, and then the only way to fund yourself is via the ELA, which is clearly not a good sign,” the analyst said. Dexia and the central banks of France and Belgium both declined to comment. The source added that Dexia would try to raise money on markets again after the finalization of a 90 billion euro ($120 billion) guarantee scheme agreed in October by France, Belgium and Luxembourg. Belgian Finance Minister Didier Reynders said Wednesday that he hoped to reach an agreement with the European Commission about the restructuring plan for Dexia (DEXI.BR) in the coming days. ($1 = 0.7490 euros) (Additional reporting by Dan Flynn in Paris; Editing by Luke Baker and Will Waterman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Futures Industry Reconsiders Customer Bailout After MF Global Disaster

November 24, 2011

CHICAGO (Ann Saphir) – In November 1986, shaken by traders’ losses after a brokerage went bust, the U.S. futures industry considered, and then rejected, the notion of insuring customer funds in a broker default. The collapse last month of MF Global Holdings Inc, and hundreds of millions of dollars of still-missing customer money, is forcing a rethink of that 25-year-old decision. Executives at the National Futures Association have been talking with senior management at CME Group Inc and other market participants about how best to safeguard customer funds in future broker bankruptcies, Dan Driscoll, NFA’s chief operating officer, told Reuters in an interview. Under discussion is the feasibility of a government-sponsored insurance fund modeled after the Securities Investors Protection Corporation (SIPC). Another option is an industry-sponsored bailout fund, Driscoll said. Neither response would prevent a broker’s misuse of customer funds, as CME has said happened with MF Global, but some type of insurance could help restore shattered faith in the industry, helping allay growing fears that money parked at futures brokerages simply is not safe. “In the past, one reason there hasn’t been a SIPC is there hasn’t been a clearing firm that went bankrupt and lost customer funds,” Driscoll said. “Now there is. It’s a big amount of money, and it really has an impact on customer confidence.” But questions about how to pay for such insurance hang over the debate. Both schemes could make trading more expensive, forcing brokers — many of whom have seen profit margins shrivel — to push more costs down to customers. MF Global was one of the biggest U.S. futures brokerages until it filed for bankruptcy protection on Oct 31, after revelations it had made a bad $6.3 billion bet on European sovereign debt, sparked a liquidity crunch. Customers are still struggling to get their frozen funds back, and the bankruptcy trustee estimates that as much as $1.2 billion in customer funds has simply disappeared. CME, which puts the estimate of lost money significantly lower, has offered $50 million to repay customers stuck with losses after the final accounting. A CME spokeswoman declined to comment on whether CME would support an industry-wide bailout fund for customers. “Could there be a SIPC-type approach for futures? Yes,” said Don Horwitz, of Oyster Consulting in Chicago. “It’s not as if they could just overlay it, there are some costs, but this will be one of the things I’d think would be considered.” After the collapse of the Bernie Madoff ponzi scheme in late 2008, SIPC raised its broker assessments from a flat $150 per firm per year to a quarter of a percent of yearly operating revenues, costing bigger firms hundreds of thousands of dollars, Horwitz said. All told SIPC collected $410 million last year. Talks among industry leaders so far have been one-on-one, Driscoll said, but in “coming days” there would be an effort to bring participants around a table to hash out a formal set of proposals. TOW TRUCK? Adopting an insurance scheme, particularly one modeled after that used to backstop securities markets, would be an about face for the futures industry, which has long said its customer funds are safer and its markets more reliable and transparent than the highly regulated world of stock trading. Created in 1970 to help restore confidence to the securities markets, SIPC has authority to use its funds to pay back securities customers up to $500,000 per account when brokerages fail. The insurance, which is funded by member brokers, does not cover futures accounts. The futures industry seeks to protect customers by requiring brokers to wall off customer accounts from their own funds. The system is an important selling point for CME, which touts the stringency of fund segregation in materials aimed at winning business from fund managers. The safety of customer fund segregation was also among the reasons that NFA cited when it recommended against adopting a bailout fund 25 years ago, in the wake of the collapse of Volume Investors, a brokerage on New York’s Commodity Exchange. With $13.7 million in customer funds, it was one of the largest futures brokerage failures of its time. By contrast, MF Global had about $5.5 billion in funds when it went under. COMEX — which is now owned by CME — in the end spent $3.6 million repaying traders who lost money in the bankruptcy. The payout equaled about 12 percent of the average customer funds held by a futures broker at the time. Futures trading has skyrocketed since then; an equivalent payout today would come to $170 million, based on the latest figures on futures customer funds published by the Commodity Futures Trading Commission. In a 122-page report entitled “Customer Account Protection Study,” dated November 20, 1986, the NFA concluded that insolvencies were so rare and fund segregation and other protections so strong that “it does not appear that even retail customers would require a public commitment to account insurance to maintain participation in the futures industry.” Post MF Global, that argument no longer passes muster. Trader anger at the brokerage and its regulators is mounting, and many smaller market participants are pulling or threatening to pull their money from futures markets. Volume Investors’ 1985 failure affected fewer than 100 traders. MF Global had tens of thousands. Industry executives say that if industry does not come up with its own solutions, change will be foisted on it. “I don’t think they’ll get off without a fix,” Horwitz said. Not all market participants support the idea. John Roe, a Chicago broker and former MF Global customer, said he fears an insurance scheme would only encourage risk taking by assuring traders there will always be a savior ready to pick up the pieces should something go wrong. “When there’s a car wreck, do you look for a better tow truck?” Roe asked. “Let’s build a better car.” (Reporting by Ann Saphir; Editing by Alden Bentley) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Delaware River Basin Fracking Decision Delayed For Now

November 23, 2011

Environmentalists are cheering after a meeting on the future of hydraulic fracturing, or fracking, for natural gas in the Northeast has been postponed. The Delaware River Basin Commission , consisting of the governors of Pennsylvania, New Jersey, New York, Delaware and a representative from the Army Corp of Engineers, was set to meet this week and vote on regulations for natural gas drilling in regions near the Delaware River. Three days ahead of the meeting, the DRBC commission’s website announced the meeting was postponed with no rescheduled date listed. The announcement came after Delaware withdrew its support, threatening the draft regulations ‘ chances of receiving a majority vote from the five-member commission. Last week, Delaware Governor Jack Markell sent a letter to the commission’s other members , announcing that he would not vote for the currently-proposed fracking regulations, joining New York in opposition. Despite the postponement, a planned protest rally still took place Monday at the meeting site in Trenton, N.J. The Wall Street Journal reports that the hundreds of activists in attendance shared a celebratory mood . Yet their victory only means an extension of a fracking moratorium for the time being. Filmmaker Josh Fox, the director of ” Gasland ” and one of the rally’s organizers, told HuffPost, “I think that what we’re dealing with here is obviously a very practical issue, 15.6 million people’s water, but also something symbolic, because we’re there with an enormous amount of strength on the ground.” An important concern for activists is fracking’s history of groundwater contamination . Earlier this year, a peer-reviewed study from Duke University linked “natural gas drilling and hydraulic fracturing with a pattern of drinking water contamination so severe that some faucets can be lit on fire.” The Delaware River Basin provides drinking water to over 15 million Americans — roughly five percent of the country’s population. This includes the city of Philadelphia and about half of New York City’s water supply. While the DRBC claims its proposed regulations are intended to ” protect the water resources of the Delaware River Basin ,” during natural gas extraction, others aren’t so sure. Actor Mark Ruffalo , who also attended Monday’s rally, said in a statement , “I applaud Governor Markell for admitting that there is no science to justify opening up one of North America’s important River Basins to industrialization and greed. Now the rest of the commission will hear from us, the people who speak for this beautiful river not for short term profits.” Fox said he was also pleased with the meeting’s postponement and the show of support in Trenton on Monday. “This was a huge victory,” Fox told HuffPost. “We were on the brink of disaster. We were on the brink of having the gas industry move into the Delaware River Basin without any assessment of what impact [fracking] would have on it.” According to Fox, an official count put an estimated 850 people at the gathering in front of the New Jersey Statehouse, with around 1,000 at the earlier rally at the site of the cancelled DRBC meeting. He said, “It was an amazing rally. I really think it was a turning point.” A federal advisory panel recently reported that if steps aren’t taken to reduce the impact of fracking, ” serious environmental consequences ” could occur. The Associated Press reports that there has not been much progress on 20 recommendations given to the federal government and the oil and gas industry by the committee. Supporters of natural gas drilling cite its abundance in the U.S. and its ability to create jobs in struggling areas of the Midwest and Northeast. For more information about the campaign against natural gas drilling in the Delaware River Basin, visit the Save The Delaware website . To learn more about the disputed pros and cons of fracking, click here .

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House Republicans Agree On Burdens Of The Rich

November 23, 2011

The debate about taxing the super-rich is as pertinent and contentious as it has ever been, thanks to the Occupy Wall Street movement pushing the issue of income inequality to the forefront of American politics. Myriad reports demonstrate the low real tax rates for millionaires and billionaires in the United States. Bloomberg wrote this month that the top bracket of taxpayers have seen their effective tax rate decrease since 1995. Another recent report from the Internal Revenue Service shows that 1,500 millionaires paid no income tax at all in 2009. The snowball effect — the wealthy tend to become even more wealthy — has caused the income gap in America to widen dramatically. It’s not just protesters on the street voicing frustration with this. Last week, a group of millionaires lobbied Congress to have their federal taxes raised. Still, many in the Republican Party strongly oppose any tax hike on wealthy Americans or corporations, arguing that these individuals and organizations are the “job creators” and that raising their taxes would stunt job growth throughout the nation. It’s worth noting that an icon among the trickle-down economic believers, President Ronald Reagan, said in a 1985 speech that loopholes enabling millionaires to avoid taxes were “crazy” because they allowed the “truly wealthy to avoid paying their fair share.” But here’s a look at what Republicans are saying these days:

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WATCH: Faces of Zuccotti Park: The PR Guy

November 9, 2011

This is the fourth part in a series profiling the protesters of Occupy Wall Street. At certain times of day the number of cameras and recording devices in Zuccotti Park appear to rival the protester signage. The press table attracts them all. Here, reporters can glean information on story ideas, learn about scheduled events and strike up friendly conversation with members of the press relations working group. Freelance public relations consultant Bill Dobbs has been donating his time at the table since the protest began on Sept. 17. You may find him there, peaking out from under a copy of the Occupied Wall Street Journal , or passing a phone number to a frazzled reporter. “I’ve been around a lot of activism — anti-war organizing, gay organizing, AIDS organizing — and I’ve never seen anything remotely like this,” he said. Watch the video below to hear more of Bill’s perspective and anecdotes from his experiences at OWS.

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Poll Shows The ‘State Of Young America’ Is Indebted And Dubious Of Attaining American Dream

November 9, 2011

NEW YORK — Five years ago, when TiffanyAnn Johnson first embarked on her dream of a college education, her parents agreed to shoulder a majority of the costs associated with getting a degree. But soon after, the financial collapse decimated her father’s mortgage business, forcing her family of four to learn to subsist on her mother’s meager salary. With two college-aged children, the added cost of higher education quickly proved more than her one-income family could afford. Johnson, 23, who graduated in 2010 from Virginia Commonwealth University with a degree in mass communications, took out a combination of public and private loans to pay for school. All told, she’s now on the hook for nearly $65,000. “I always thought that if I worked hard and created opportunity for myself, that I would be in a pretty favorable position,” said Johnson. She now works in a temporary administrative position doing data entry at Yale University. “I thought I did everything right. But when this gig is up, I’ll be lucky to even get a job doing seasonal retail.” According to a national poll released Wednesday afternoon, many young Americans share the frustration felt by Johnson . A majority of the 18-to-34-year-olds surveyed perceived a college degree as a more vital component of their own chances for success than it was for their parents . But, many are also simultaneously finding the cost of college increasingly burdensome . “Young adults today are the first generation facing downward economic mobility compared to their parents’ generation,” said Tamara Draut, vice president of policy and programs for Demos. “As job quality has declined for all but those with college degrees, higher education is too often a debt-for-diploma system that puts an immediate obstacle in front of new graduates as they start their working lives.” The Institute for College Access & Success, Demos and Young Invincibles commissioned Wednesday’s national, bipartisan survey, conducted by Lake Research Partners and Bellwether Research and Consulting. Between Sept. 25 and Oct. 4, the survey sampled 872 young adults between the ages of 18 to 34 . The Institute for College Access and Success is a nonprofit working to make higher education more affordable; Demos is a non-partisan research and advocacy organization working for greater levels of civic engagement; and Young Invincibles is a national youth organization working to mobilize and expand opportunity for young Americans. Of the survey’s respondents, 81 percent said it is now harder to afford a college education than it was five years ago, and nearly three-quarters said they graduated with too much debt. “This shows that there’s this widespread recognition that college is getting harder to afford,” said Lauren Asher, president of the Institute for College Access and Success. Last week, the Institute for College Access and Success released an annual report finding that the average debt load for 2010 graduates had again risen. Amidst a difficult job market, it found that last year’s graduates owed an average of $25,250 . The questions used in Wednesday’s poll were included in the ” State of Young America ,” a large, multi-issue survey also released last week. Besides the immediate worry of paying loans back, Draut found that high amounts of education-related debt often impacts other decisions later on in life. “They’re buying homes and starting families with their loan debt still around,” said Draut. “It makes it more difficult to save for their own retirement and save for their own child’s education — and it’s one of the reasons why we see such strong agreement that the amount of debt required to get a degree is too high.” Despite overwhelming concerns about their personal pocketbooks, nearly a majority of respondents — 48 percent — believed their generation would be worse off than their parent’s generation. Even still, 69 percent believed the American Dream was still attainable in their lifetime. Aaron Smith, co-founder of Young Invincibles, sees a generation largely straining under the added burden of college-related debt. “If I have a job and can make my student loan payments, that’s fine. But I’m still stuck with that debt for years, if not decades,” told Smith to HuffPost. “This is going to have a longer-term psychological impact affecting not only young people’s concern about the current cost of higher education, but about the spiraling cost of college for their own children.” Since graduating from Virginia Commonwealth University more than a year ago, Johnson has struggled to find work. Even with a job, her monthly loan payments are nearly impossible to afford. Lately, Johnson dodges as many as six calls per day from Wells Fargo, Sallie Mae, Discover and Direct Loans inquiring about combined total of nearly $65,000 in past-due loan payments. “With my Dad’s additional income, we weren’t upper middle class, but we definitely had a firm footing in middle-class life,” Johnson said. “Now, we’re definitely lower-middle class. It’s all become one huge juggling act and I’m not quite sure how to get back on track.”

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Toyota Recalls Over Half A Million Vehicles For Possible Steering Problems

November 9, 2011

TOKYO — Toyota Motor Corp. said Wednesday it is recalling about 550,000 vehicles worldwide – mostly in the United States – for problems that could make it harder to steer. The recall affects 447,000 vehicles in North America, as well as 38,000 in Japan and another 25,000 in Australia and New Zealand, said Toyota spokesman Dion Corbett. In Europe some 14,000 vehicles are being recalled along with 10,000 in the Middle East and 14,000 in Asia outside Japan. There have been no reports of accidents or injuries related to the problems, Corbett said. Toyota’s reputation has taken a hit over the last two years due to a string of huge recalls that have ballooned to 14 million vehicles over that time, including millions recalled last year for acceleration problems. It faces damage lawsuits and lingering doubts in the U.S. about whether it had been transparent enough about the recall woes. Japan’s largest automaker has been trying to communicate better with customers and empower regional operations outside Japan to make safety decisions. The news comes a day after Toyota said its July-September profit slid 18.5 percent to 80.4 billion yen ($1 billion) on plunging sales caused by parts shortages from the tsunami disaster in northeastern Japan. It now faces such uncertainties from flooding in Thailand, where it has many suppliers and three assembly plants, that it declined to release an earnings forecast for the full year through March. The latest recall is due to the possibility that the outer ring of the engine’s crankshaft pulley may become misaligned with the inner ring, causing noise or a warning signal to light up, the company’s U.S. sales unit said in a press release. If the problem isn’t corrected, the belt for the power steering pump may become detached from the pulley, making it suddenly more difficult to turn the driving wheel. In the United States, the automaker is recalling 283,200 Toyota brand cars, including the 2004 and 2005 Camry, Highlander, Sienna and Solara, the 2004 Avalon and the 2006 Highlander HV. Its recall of 137,000 Lexus vehicles includes the 2004 and 2005 ES330 and RX330 and 2006 RX400h. The recall notification process varies from country to country. In the U.S., Toyota will mail owners a notification to make an appointment with an authorized dealer to have their car inspected once replacement parts have been produced in sufficient quantities. If needed, parts will be replaced for no charge, the company’s American sales unit said. Notifications will be mailed starting in January. In the meantime, if an abnormal noise is heard coming from the engine compartment, the owner is asked to make an appointment with any Toyota or Lexus dealer to have the vehicle inspected for this condition, the release said.

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The Most Mentioned Wall Street Firm In Media This Year

November 8, 2011

The story is just one of many the media stories published about Goldman Sachs this year. For the third time in a row, the investment bank was mentioned more than any other Wall Street firm by global media outlets this year, according to a study by HighBeam Research, cited in DealBook. Goldman netted nearly 16 percent of all media mentions of Wall Street firms during the first 10 months of 2011, followed by HSBC, Deutche Bank and Morgan Stanley, the survey found. With so much controversy surrounding the financial industry, Goldman’s top ranking may not be such a good thing for the investment bank. Goldman may have received the bulk of media mentions because it’s often targeted as a major symbol of Wall Street’s worst tendencies . Regardless of reputation, Goldman has been associated with some notable media stories this year. A former director at the investment bank, Rajat Gupta surrendered last month in a high-profile insider trading case. The bank also suffered its second loss ever as a public company last quarter , posting a total revenue decline of 60 percent since the same period last year. Jon Corzine, former CEO of MF Global — the securities firm that’s come under scrutiny after filling for bankruptcy — also used to head Goldman . Another big story that may have boosted Goldman’s presence in the media: Occupy Wall Street. The investment bank reportedly told its employees last month to stay away from the protests in Zuccotti Park. In addition, Goldman dropped out of backing and attending a credit union fundraiser after finding out that Occupy Wall Street would be an honoree. Coverage of the Occupy movement reached the same level as that of the Tea Party in early October, according to a study by the Pew Research Center cited in The New York Times . In addition, the protests took up 7 percent of national media coverage during the first week of October. Though Goldman ranked number one of Wall Street firms in mentions in traditional media, another bank has been getting slammed on social media recently. Eighty-seven percent of Bank of America mentions on social media in the past year were negative, according to Marketwire. BofA was roundly criticized by consumers and law makers after announcing that it would charge customers $5 per month to use their debit cards starting in 2012. The bank ultimately back-tracked from the fee earlier this month.

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Innovators Over 60 Win $100,000 For Contributions To Communities

November 7, 2011

Each year, social think tank Civic Ventures awards the Purpose Prize to individuals over 60 who are combining their passion and experience for social good. The only grant of its kind in the nation, the prize awards up to $100,000 each to five older adults that advocate for new ways to tackle tough social problems. This year’s winners – made up of entrepreneurs, advocates and philanthropists spread across the country from California to D.C – used their talents and unique perspectives to work towards addressing and remedying issues of importance to each of them. After accepting more than 1,000 nominations from the public, a diverse group of 28 jurors– including religious leader Bob Buford, former movie executive Sherry Lansing and Harvard Professor Sara Lawrence-Lightfoot–look for winners “who can inspire other boomers to leverage their experience and passion into big solutions for our most pressing social problems,” said Alexandra Céspedes Kent, who directs the Purpose Prize program. “People decide to pursue encore careers for a variety of reasons. Some face a set back or loss– either financial or personal– and decide to prioritize purpose and helping others; some are faced with an injustice they simply can’t ignore; others decide a careful career transition might be best and they volunteer, go back to school, save or cut back on expenses, or carve out time to learn new skills or moonlight; of course, a few simply say they heard a calling and responded without looking back,” Kent said. Jenny Bowen, a 2011 Purpose Prize winner, was inspired by the adoption of her daughter to start a non-profit to help provide care and opportunity to other Chinese orphans. She now works directly with the country’s government as a childcare advisor. Winner Nancy Sanford Hughes was moved by the conditions endured by women in the developing world that have to spend their days cooking over open-stoves to start a non-profit dedicated to bringing safer, fuel-efficient stoves into those communities. She, like her fellow prizewinners, refused to bear witness to injustice – be it societal, economic or environmental – and sit idly by. “All of them have an entrepreneurial spirit, knowing their most significant accomplishment is yet to come,” Kent told The Huffington Post. “Whether they realize it or not, they are trailblazers, showing what’s possible in an aging society when we leverage experience.” For their noble, brave and unfinished work, we salute them: The Purpose Prize is a registered trademark of Civic Ventures. Copyright Civic Ventures. Reprinted with permission. All rights reserved.

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Major Yahoo Investor Demands Massive Shakeup

November 5, 2011

SAN FRANCISCO — A major Yahoo shareholder believes the slumping Internet company would be better off without Jerry Yang on its board as it mulls a possible sale. In a Friday letter to Yahoo’s board, hedge fund manager Daniel Loeb asserts Yang has too many conflicts of interest to keep the board seat he has held since starting the company more than 16 years ago. Loeb, who owns a 5.2 percent stake in Yahoo Inc. through a fund called Third Point LLC, based his conclusion on published reports that Yang has been talking to several buyout firms about joining forces to buy a controlling stake in the company. The letter lists the Texas Pacific Group, Providence Equity Partners, Silver Lake, KKR & Co. and the Blackstone Group as the firms talking to Yang. In a statement, a Yahoo reiterated its board has been exploring various ways to boost the company’s stock price and brushed off the reports cited in Loeb’s letter as “rumor and speculation.” “Mr. Yang is one of nine directors with the exact same fiduciary duties and motivation as all of his fellow directors – to serve the best interests of all the company’s shareholders,” Yahoo said. Loeb questioned whether Yang is more interested in selling Yahoo to the highest bidder or negotiating a deal that keeps the company in “friendly hands.” The letter also refers to Yang’s “ineptitude” in 2008 when he squandered an opportunity to sell Yahoo to Microsoft Corp. for $47.5 billion, or $33 per share – more than twice the company’s current market value. “It is now clear that (Yang) is simply not aligned with shareholders,” Loeb wrote. Yang holds a 3.6 percent stake in Yahoo, meaning he no longer owns as much of the company as Loeb does. The attack on Yang is the latest bit of drama at a company that has been immersed in a soap opera since former movie mogul Terry Semel resigned as CEO to placate frustrated shareholders in mid-2007. Yang then took a stab at being CEO, only to spend much of his time at the top fending off Microsoft’s unsolicited takeover bid and jousting with another brash shareholder, Carl Icahn. Microsoft eventually withdrew its offer in exasperation and Icahn gained three seats on the company’s board before Yang turned over the CEO job to Carol Bartz in January 2009. Loeb entered the picture two months ago after Yahoo Chairman Roy Bostock fired Bartz in a brusque phone call. In an in initial attempt to shake up the board, Loeb urged Yang in a Sept. 14 letter to work with him to oust Bostock, who has been lambasted by other unhappy shareholders during the past three years.. Now Loeb wants both Yang and Bostock to be tossed from the board so he can be awarded two director seats. If he doesn’t get his way, Loeb indicated he is prepared to finance a shareholder rebellion against the board – a tactic that Icahn used in 2008 to muscle his way into the company’s boardroom. Icahn stepped down from the board two years ago. Besides discussing a possible sale to buyout firms, Yahoo is also believed to be considered selling its holdings in China’s Alibaba Group and Yahoo Japan. Those Asian stakes could fetch as much as $16 billion before taxes, based on analyst estimates. Yahoo shares fell 24 cents Friday to close at $15.24.

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Occupy Oakland Protesters Force Halt To Operations At Busy Port

November 3, 2011

By TERENCE CHEA, LISA LEFF and TERRY COLLINS, The Associated Press OAKLAND, Calif. (AP) — Several thousand Occupy Wall Street demonstrators gathering in Oakland forced a halt to operations at the nation’s fifth busiest port Wednesday evening, escalating a movement whose tactics had largely been limited to marches, rallies and tent encampments since it began in September. (CLICK HERE OR SCROLL DOWN FOR LATEST UPDATES) Police estimated that a crowd of about 3,000 had gathered at the Port of Oakland by about 5 p.m. PDT. Some had marched from the city’s downtown, while others had been bused to the port. Port spokesman Isaac Kos-Read said maritime operations had effectively been shut down, and interim Oakland police chief Howard Jordan warned that protesters who went inside the port’s gates would be committing a federal offense. In Philadelphia, protesters were arrested earlier Wednesday as they held a sit-in at the headquarters of cable giant Comcast. Military veterans marched in uniform in New York, angry at their dim job prospects. And parents and their kids, some in strollers, formed a “children’s brigade” to join the Oakland, Calif. rallies. “There’s absolutely something wrong with the system,” said Jessica Medina, a single mother who attends school part time and works at an Oakland cafe. “We need to change that.” In Los Angeles, New York and other cities, demonstrators held their own rallies in solidarity with the Oakland protesters, who called for Wednesday’s “general strike” after the city became a rallying point last week when an Iraq War veteran was injured in clashes with police. Protesters, city officials and business leaders were optimistic the strike would be peaceful, and there was little to no visible police presence all day. Although windows at two bank branches and a Whole Foods store were broken and graffiti was painted inside one of the banks, officials described the protests as peaceful and orderly and said no arrests had been made. “It is important to acknowledge the word is watching Oakland tonight,” city administrator Deanna Santana said as demonstrators began to gather at the port. “And we need to ensure it remains a safe place for everyone.” Potentially minimizing any significant disruptions at the port, leaders of the longshoremen’s union said they could not call for members to join the protests under their contract with the port. Organizers say they want to stop the “flow of capital.” The port sends goods primarily to Asia, including wine as well as rice, fruits and nuts, and handles imported electronics, apparel and manufacturing equipment, mostly from Asia, as well as cars and parts from Toyota, Honda, Nissan and Hyundai. Craig Merrilees, spokesman for the International Longshore and Warehouse Union, said its members were not being called to strike, but that they supported the protesters. The members “are supporting the concerns raised by Occupy Oakland and the Occupy movement to speak up for the 99 percent and against the corporate greed that is wrecking America,” Merrilees said. Elsewhere, police in Philadelphia arrested nine protesters who staged a sit-in inside the Comcast lobby. Officers handcuffed them and led into police vans as supporters cheered. One protester, Bri Barton, said she was there because the gleaming Comcast tower represents excessive wealth in a city with many blighted neighborhoods. “It’s hard for me to see this and that existing in the same city,” she said. In New York, about 100 military veterans marched in uniform and stopped in front of the New York Stock Exchange, standing in loose formation as police officers on scooters separated them from the entrance. On the other side was a lineup of NYPD horses carrying officers with nightsticks. “We are marching to express support for our brother, (Iraq war veteran) Scott Olsen, who was injured in Oakland,” said Jerry Bordeleau, a former Army specialist who served in Iraq through 2009. The veterans were also angry that returned from war to find few job prospects. “Wall Street corporations have played a big role in the wars in Iraq and Afghanistan,” said Bordeleau, now a college student. He said private contractors have reaped big profits in those countries. In Boston, college students and union workers marched on Bank of America offices, the Harvard Club and the Statehouse to protest the nation’s burgeoning student debt crisis. They say total outstanding student loans exceed credit card debt, increase by $1 million every six minutes and will reach $1 trillion this year, potentially undermining the economy. “There are so many students that are trying to get jobs and go on with their lives,” said Sarvenaz Asasy of Boston, who joined the march after recently graduating with a master’s degree and $60,000 in loan debt. “They’ve educated themselves and there are no jobs and we’re paying tons of student loans. For what?” The day’s events in Oakland began with a rally outside City Hall that drew more than 3,000 people who spilled into the streets and disrupted the downtown commute. Protesters hung a large black banner that read: “Occupy Everything, DEATH TO CAPITALISM.” The crowd included students, families with young children and many people wearing labor union T-shirts. “Shut down the 1 percent. We are the 99 percent,” they chanted. Oakland let city workers use vacation or other paid time to take part, and officials said about 5 percent took the day off. About 360 Oakland teachers didn’t show up for work, or roughly 18 percent of the district’s 2,000 teachers, officials said. The district has been able to get substitute teachers for most classrooms, and where that wasn’t possible children were sent to other classrooms, he said. “I came here because the schools are in the (same) boat as everyone else,” said Steve Neat, a fifth-grade teacher. “We have five schools being closed here in Oakland. We have class sizes skyrocketing. We have cuts, cuts, cuts, just like everyone else. And the 1 percent, their share of the wealth is growing, and it’s time for that to stop. It’s time for some of that wealth to be shared out to all of society,” he said. Some protesters broke off from the rally to picket at nearby banks. All three banks located within blocks of the plaza were closed, though that didn’t stop protesters from chanting and waving signs outside. At a Citibank branch, more than a dozen protesters blocked the entrance, some with fake $100 bills taped across their faces. They held signs with messages such as “Share the Billions with the Millions.” About 200 people chanted outside a Wells Fargo branch, where graffiti was scrawled on the wall. The messages read “The 1 percent won’t back down” and “Who’s robbing who?” Further away from the rally, vandals shattered a Chase bank branch and splattered ink all over an ATM. Someone later taped a note to the shattered glass that read: “We are better than this. … Sorry, the 99 percent.” In front of the Oakland Public Library, about three dozen parents brought toddlers and school-age children for a stroller march in a “children’s brigade.” Demonstrators handed out signs written as if in a children’s crayon that read “Generation 99% Occupying Our Future.” People attached the signs to their baby backpacks and their strollers. By the time the group made its way to the main rally, it numbered about 200 adults with their children. Like others, Marisol Curiel, an Oakland residents who brought her two sons, ages 2 and 4, in a double stroller, said there was a need to tax the wealthy to benefit families and schools and to make sure there are opportunities and jobs for children when they grow up. “Normally I would be the type of person who would watch it from the sidelines,” she said. “But being able to have a presence and also a chance to be more educated seemed really important. All of this will affect not just now, but our future.” ___ Associated Press writers Garance Burke and Marcus Wohlsen in San Francisco, Beth Duff-Brown in San Francisco, Mark Pratt in Boston, JoAnn Loviglio in Philadelphia, Jon Fahey and Verena Dobnik in New York and Christina Hoag in Los Angeles contributed to this report.

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Hedge Fund Sues Goldman Sachs For Fraud

October 29, 2011

A new lawsuit accuses Goldman Sachs of purposely unloading $93 million in mortgage-backed securities it knew to be junk onto a client, then betting against those same securities in the lead-up to the financial crisis. Basis Yield Alpha Fund, an Australian hedge fund, filed the lawsuit against Goldman Sachs on Thursday, asking for more than $1 billion in damages. The lawsuit alleges that Goldman Sachs overcharged for two sets of mortgage-backed securities that it sold to Basis; lied about the securities’ expected performance; did not provide timely, accurate information about the securities’ true value; and failed to disclose that the firm was actively betting against the securities at the time of the transaction — all which the hedge fund says contributed to its collapse. “They were lying to clients in order to get junk off their books,” said Eric Lewis, the Washington-based attorney who is leading the Basis Fund’s lawsuit against Goldman. “They were basically selling a time bomb … and what they sold blew up in our face, but what they couldn’t sell blew up in their face.” Goldman Sachs declined to comment on whether they believed at the time that the securities in question were a legitimately good investment. In a statement, they denied any wrongdoing and noted that Basis was an experienced hedge fund. “We believe that we acted appropriately and refute in the strongest possible terms any suggestion that Basis Capital was misled in any way,” Goldman Sachs said in the statement. “Goldman Sachs was also an investor in Timberwolf securities and lost several hundred million dollars.” Asked specifically for details on Goldman’s net position on the Timberwolf deal, Goldman Spokesman Michael DuVally declined to comment. But the firm did short about 35 percent of the security, according to an April report by the Senate’s Permanent Subcommittee on Investigations that details Goldman’s development of the now infamous Timberwolf securities , a bet that would reap Goldman significant gains. And the firm had been shorting the housing market long before selling Basis the two mortgage-backed securities. By February 2007, it had a $10 billion net short position on the housing market, according to the Senate report. Lewis said that Goldman lost money on the Timberwolf securities only because they eventually were unable to find customers. And Goldman’s bet on the failure of the securities suggests, Lewis said, the firm had designed the securities to fail. Goldman sought to sell the Timberwolf security at inflated prices as quickly as possible, the Senate report suggested, because they knew that the vehicle’s assets would plummet in value as the housing market crumbled. And just as Goldman promised Basis that the Timberwolf mortgage-backed security would provide a 60 percent return on the investment, according to the report, a Goldman executive privately called the investment “one shitty deal.” The Senate report also found that Goldman didn’t disclose the poor performance of the Point Pleasant vehicle, which it had sold to Basis a few months before the Timberwolf deal, so that it could successfully peddle the Timberwolf securities to the Australian firm. According to the Senate report, Goldman sold Timberwolf to Basis at significantly higher prices than they were internally valuing the securities. Soon after selling the securities, Goldman demanded collateral from Basis several times in order to cover for the securities’ plummeting price. The Basis Fund filed a similar suit against Goldman in June 2010, but a U.S. district court dismissed the suit in July since the Australian hedge fund was not able to prove that its purchases from Goldman were made in the United States. Basis filed its lawsuit on Thursday to the New York County Supreme Court, rather than in the federal court system, in order to sidestep that complaint. Basis lost $67 million in its dealings with Goldman Sachs in 2007, according to Lewis: Eleven million dollars from a $12 million investment in Point Pleasant and another $56 million out of a subsequent $81 million investment in Timberwolf. The hedge fund is suing for an additional $1 billion in punitive damages, because they say Goldman practiced systemic fraud as it tried to unload $1 billion in Timberwolf on unsuspecting customers. Lewis said that Basis plans to use the discovery process in order to dig up more information about Goldman’s development and marketing of the Point Pleasant and Timberwolf securities. They said they plan to look at internal emails; investigate Goldman’s dealings with Greywolf, a firm with Goldman ties that helped selected Timberwolf’s underlying assets; probe the ratings agencies that stamped Timberwolf with a AAA rating; and ask Goldman executives to testify in court. In the end, Lewis said, Goldman failed to fulfill its role as an underwriter, and instead opted to act as a market-maker. “They were giving different prices based on what would make them the most money,” Lewis said. “Goldman had information that we didn’t have. We asked the right questions, and [as an underwriter] you can’t lie when you’re asked a direct question.” Read the lawsuit:

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College Dropouts and Students Occupy Wall Street

October 25, 2011

NEW YORK — This past May, Audrey Hollingsworth had finally reached her limit. The rising debt and chronic joblessness among her friends, combined with the thought of personally plunking down $35,000 for another year at Warren Wilson College, was more than Hollingsworth could stomach. So, the 19-year-old, Lexington, Va., native dropped out. After a summer spent waiting tables, Hollingsworth boarded a bus to midtown Manhattan in mid-September with $4 in her pocket and no clear plan for what came next. On a whim, she ventured into lower Manhattan’s Zuccotti Park and set her sleeping bag down alongside dozens of other Occupy Wall Street protesters. And in the four weeks since, Hollingsworth hasn’t really left. “This is exactly the kind of experience I left school to go in search for,” said Hollingsworth, who doesn’t plan to venture home again until Thanksgiving. “In the past month, I’ve learned more about the world than I ever learned during an entire year of college.” Citing increasing amounts of student loan debt and rising rates of underemployment among their classmates, many college students have gravitated toward the Occupy Wall Street movement . While an estimated 150 campuses nationwide have staged formal protests and walkouts , another contingent also occupies Zuccotti Park — college dropouts who are voicing similar frustrations and worries about their own uncertain futures. George Machado, 20, is one. Machado, a philosophy and international relations major, dropped out of American University last spring with $53,000 in debt. If headed in a similar trajectory, Machado reasoned he would owe more than $200,000 in student loans come graduation day. Three weeks ago, Machado started sleeping in Zuccotti Park. At first, he wondered if it was merely a bunch of privileged kids posing as activists. But something about the sense of community quickly convinced him otherwise. “I’ve been waiting for this my whole life,” said Machado, who grew up in New York and believes that higher education should be free. “This is a revolution that’s been needing to happen and has finally begun. I’ve joined the revolution,” he said with a smile. Machado stood alongside his friend, Nicole Carty, who graduated from Brown University in May of 2010. The sociology major now works as an independent contractor, a position that includes neither benefits nor health insurance. Carty worries for the millions of well-educated young Americans unable to find decent-paying jobs. While Carty, 23, owes $14,000 in student loans, she can only afford $50 monthly payments. At that rate, including interest, she said she envisions paying off her student loans until she’s well into her eighties. Standing in the middle of Zuccotti Park on Tuesday morning, Jorden Eck and his friend passed out free slices of apple and pumpkin pie to passersby. Eck, a 20-year-old from upstate New York, dropped out of the State University of New York, Binghamton earlier this year after not being able to come up with enough tuition money to continue. Since dropping out of college, the only job Eck could find consisted of selling knives for Cutco, a cutlery vendor. Yesterday marked his 25th day of sleeping in the park. Despite the chillier temperatures that soon await, Eck vows to remain in Zuccotti Park until his demands are met. As for Hollingsworth, who plans to stay on until the end of November at least, she’s still weighing her future options. Finding a job figures prominently, as does the question of whether or not to reenroll in college at some point. Hollingsworth describes her upbringing as “solidly middle class,” with a father who worked as a financial planner. Her mother’s family operates a yarn shop and a blackberry farm on the outskirts of Lexington, Va. While her parents have expressed concern for their daughter’s safety, they’ve been generally supportive of her participation in the movement. For Hollingsworth, the fight over the affordability of higher education is one of the main reasons why she rearranges her sleeping bag each night. “Our parents always told us to go to college and that if we went to college, we’d get good jobs,” said Hollingsworth, who said she is anxiously awaiting the arrival of new tents later this week. “I’m guess I’m really just not so sure that’s going to happen anymore — and that’s why I’m still here.”

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Google Weighs Huge Acquisition

October 22, 2011

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

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German Central Bank Head: Repeatedly Expanding Bailout Fund Won’t Solve Crisis

October 22, 2011

BERLIN (Reuters) – Bundesbank president Jens Weidmann said in a newspaper interview released on Saturday that repeatedly expanding the euro zone rescue fund won’t resolve the euro zone crisis. In an interview with Bild am Sonntag released ahead of publication, Weidmann also warned against giving the European Financial Stability Facility (EFSF) a banking license. He said that would be a fatal path to take if states were able to switch on the printing presses. Weidmann also said that raising the leverage of the EFSF would raise risks for German taxpayers. He said there were “good reasons” that EU treaties prevent the EFSF from obtaining a bank license. “The crisis won’t be resolved by permanently increasing the size of the euro zone rescue fund,” Weidmann said. Weidmann warned giving the EFSF a banking license would be tantamount to “turning on the printing presses for state finances and that would be in my view a fatal path to take. And there are good reasons that is forbidden by EU treaties.” He appealed to euro zone governments, saying they “must make a clear decision about which direction to go, how the future of the monetary union should continue.” Weidmann said it should also be remembered that there were also risks associated with increasing the leveraging the EFSF. “With the size of the leveraging obviously the size of the risk rises,” he said. “The fundamental question is how long will it work in the euro zone that countries continue to operate their policies independently while at the same time increasingly collectivising the risks.” He warned against subordinating the central bank beneath financial policy. “Its mission to ensure monetary stability and low inflation rates could then no longer be ensured.” (Reporting By Erik Kirschbaum) Copyright 2011 Thomson Reuters. Click for Restrictions .

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World Economic Forum: Arab Spring Slowed Economies

October 22, 2011

DEAD SEA, Jordan (Reuters) – The popular uprisings that have swept the Arab world this year have slowed economies across the region, and jobs, better governance and investment are needed, speakers at the World Economic Forum (WEF) in Jordan said on Saturday. Jordanian King Abdullah said at the opening of the forum on unemployment, economic stagnation and other problems — some of which sparked the uprisings across the Middle East and north Africa — that the region needs to create 85 million jobs soon. “This year’s events have opened the way to positive change, but in many places, also created painful economic dislocations. Strategies are urgently needed, and they must take place across the board – in economic life, in politics and policies, in social life and cultural values,” he said. In Yemen, for example, where two in three people survive on less than $2 per day, 40 percent of the population suffer from illiteracy and high unemployment. “The biggest challenge facing the Arab world.. is better governance and investing in education that allows us to compete and raise living standards,” said Mohamed al-Shaya chairman of Kuwaiti Shaya group. The International Monetary Fund (IMF) recently said that the uprisings have cost the most affected countries more than $55 billion, but the resulting high oil prices have strengthened other producing countries. It said countries that had seen the bloodiest confrontations — Libya and Syria — were bearing the economic brunt, followed by Egypt, Tunisia, Bahrain and Yemen. “In the short term it is like major surgery and then recuperation, but in the long term it will lead to stability and it will make the region attractive to investors,” Ismail Tahboub, CEO of Jordan Dubai capital investment firm, told Reuters. The unrest has badly damaged tourism and foreign investment in the Middle East, undermining economic growth. But investors said the region would eventually prosper. “We are witnessing a period of transition but it is mainly positive,” said Danny E.Sebright president of the US-UAE Business Council. “Anytime you have a reform movement looking for transparency and openness, the outcome will be positive at the end of the day,” he told Reuters on the sidelines of the conference. In Egypt, nine months of turmoil has knocked some 4.2 percent off gross domestic product with public expenditure rising to $5.5 billion as public revenues fell by $75 million. The impact of unrest is hard to ascertain in Syria, but the IMF report suggested a total cost to the Syrian economy of some $6 billion or 4.5 percent of GDP. Tunisia has lost some $2.0 billion from its GDP, roughly 5.2 percent, and the government has increased expenditure, pushing its fiscal balance into the red. “In the long term the Arab spring is good, but in the short and medium term its effect is very negative,” said Iman Bibars, head of the Cairo-based Association for the Development and Enhancement of Women, citing record-high unemployment as well as inflation. “Democracy takes time.” Copyright 2011 Thomson Reuters. Click for Restrictions .

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‘Occupy George’ Activists Stamp Income Inequality Graphics Onto Dollar Bills (PHOTOS)

October 17, 2011

Instead of broadcasting their views on a sign, Facebook group or Twitter, some supporters of the Occupy Wall Street protests are illustrating their frustrations on dollar bills. The group, calling itself Occupy George , is circulating dollar bills featuring infographics with facts about income inequality. One graphic includes a dotted line drawn through George Washington’s face with the words “Richest 400 Americans” on one side and “Bottom 150,000,000 Americans” on the other, indicating that the top 400 earners in America make as much as the bottom 150,000,000. In actuality, the disparity in incomes may even be worse than the graphic let on: The total net worth of the bottom 60 percent of Americans is less than that of Forbes 400 richest Americans . Another dollar bill drawing features pie charts illustrating the income growth disparity in the 1920s, 1960s and 2000s. The picture indicates the gap is wider now than it was during the Great Depression. The top one percent of earners netted two-thirds of the nation’s income gains from 2002 to 2007, which put income concentration at the highest level since 1928, according to the Center on Budget and Policy Priorities . The U.S. median income declined 7 percent in the last decade and though economists predict incomes will rise in the next 10 years it won’t be enough to get incomes back to pre-recession levels, the Wall Street Journal reports. At the same time, tax cuts for the wealthiest five percent of Americans are costing the U.S. government 11.6 million every hour , according to the National Priorities Project. Famed billionaire investor Warren Buffett advocated in an op-ed in The New York Times to end tax breaks for the “mega rich” as one way to close the income gap . The goal of Occupy George is to inform “the public of America’s daunting economic disparity one bill at a time,” according to its website . Here are dollar bill infographics from Occupy George :

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LATEST UPDATES: Protesters Arrested In Multiple U.S. Cities

October 16, 2011

By CHRIS HAWLEY, The Associated Press NEW YORK (AP) — Protesters in at least four U.S. cities who were part of a growing anti-Wall Street sentiment were arrested after refusing to obey police orders to leave public areas, including 175 people in Chicago, where the arrests brought about a new phase of civil disobedience, organizers there said Sunday. (CLICK HERE OR SCROLL DOWN FOR LATEST UPDATES ) The arrests were mostly peaceful and came as somewhat of a contrast to earlier demonstrations, where protesters took care to follow laws in order to continue protesting Wall Street’s role in the financial crisis and other grievances. The arrests came after a day of protests in cities around the world where thousands gathered to rally against what they see as corporate greed. Most of those marches Saturday were largely nonconfrontational, though dozens were arrested in New York and elsewhere not for refusing to obey orders but when police moved to contain overflowing crowds or keep them off private property. Two officers in New York were injured and had to be hospitalized. At least one protest overseas grew violent. In Rome, rioters hijacked what had been a peaceful gathering and smashed windows, tore up sidewalks and torched vehicles. Repair costs were estimated at $1.4 million, the mayor said Sunday. In addition to the arrests in Chicago, 46 people in Phoenix were arrested for misdemeanor criminal trespass after refusing to leave a park, Phoenix police spokesman Sgt. Trent Crump said. And police said some protesters were arrested after they remained in a Tucson, Ariz., park past the 10:30 p.m. closing time. An exact number wasn’t available Sunday. At least two dozen people were arrested at a rally that attracted hundreds to downtown Denver for refusing to move out of the street, police said. In Chicago, about 500 people had set up camp at the entrance to Grant Park on Saturday evening after a protest earlier in the day involving about 2,000. Police said they gave protesters repeated warnings after the park closed at 11 p.m. and began making arrests when they refused to leave. Officers also asked protesters to take down their tents before beginning to cut them down to clear the area, police said. Protesters were release Sunday and face court dates. The decision to stay in the park “was very much a choice and calculated,” said Randy Powell, a 27-year-old student at the School of the Art Institute of Chicago who was arrested. “I feel like I had to.” The tactic to occupy a city park has been used in other places with city officials often working to accommodate them. For example, protesters in Iowa reached a deal with Des Moines’ mayor to move from the state Capitol to a city park, avoiding arrests. Plans to temporarily evict New York protesters from a park so the grounds could be power-washed were postponed at the request of political leaders Friday. But Chicago protesters said they’ve come up short. Some organizers said conversations with city officials weren’t encouraging, but they also have yet to apply for permits. A message left Sunday for Chicago Mayor Rahm Emanuel’s office wasn’t immediately returned. And in Minneapolis, sheriff’s deputies tore down makeshift tents at a county government plaza but made no arrests, Minnesota Public Radio reported. Though the protesters are allowed to stay on the plaza all night, tents are banned. In New York, two dozen were arrested when demonstrators entered a Citibank branch and refused to leave, police said. They asked the branch to close until the protesters could be taken away. Earlier, as many as 1,000 demonstrators also paraded to a Chase bank branch, banging drums, blowing horns and carrying signs decrying corporate greed. A few went inside the bank to close their accounts, but the group didn’t stop other customers from getting inside or seek to blockade the business. Lily Paulina of Brooklyn said she was taking her money out because she was upset that JPMorgan Chase was making billions of dollars, while its customers struggled with bank fees and home foreclosures. “Chase bank is making tons of money off of everyone … while people in the working class are fighting just to keep a living wage in their neighborhood,” the 29-year-old United Auto Workers organizer said. Police told the marchers to stay on the sidewalk, and the demonstration seemed fairly orderly as it wound through downtown streets. The day culminated in an event in the city’s Times Square, where thousands of demonstrators mixed with gawkers, Broadway showgoers, tourists and police to create a chaotic scene in the midst of Manhattan. “Banks got bailed out, we got sold out!” protesters chanted from within police barricades. Police, some in riot gear and mounted on horses, tried to push them out of the square and onto the sidewalks in an attempt to funnel the crowds away. Throughout the country – from several dozen people in Jackson, Miss., to some 2,000 each in Pittsburgh and Chicago – the protest gained momentum. Nearly 1,500 gathered for a march past banks in downtown Orlando, Fla. Hundreds marched on a Key Bank branch in Anchorage and declared it should be foreclosed. In Arizona, reporters and protesters saw an estimated 40 people detained around midnight at a park in Phoenix. In Colorado, about 1,000 people rallied in downtown Denver to support Occupy Wall Street and at least two dozen were arrested. Rallies drew young and old, laborers and retirees. In Pittsburgh, marchers included parents with children in strollers. The peaceful crowd stretched for two or three blocks. “I see our members losing jobs. People are angry,” said Janet Hill, 49, who works for the United Steelworkers, which she said hosted a sign-making event before the march. Retired teacher Albert Siemsen said at a demonstration in Milwaukee that he’d grown angry watching school funding get cut at the same time banks and corporations gained more influence in government. The 81-year-old wants to see tighter Wall Street regulation. Around him, protesters held signs reading: “Keep your corporate hands off my government,” and “Mr. Obama, Tear Down That Wall Street.” In Canada, demonstrators gathered in cities across the country, and overseas, tens of thousands nicknamed “the indignant” marched in cities across Europe, as the protests that began in New York linked up with long-running demonstrations against government cost-cutting and failed financial policies in Europe. Protesters also turned out in Australia and Asia. ___ Associated Press writers Sophia Tareen in Chicago, Bob Seavey in Phoenix, Kevin Begos in Pittsburgh, Dinesh Ramde in Milwaukee, Charmaine Noronha in Toronto, Jack Elliott Jr. in Jackson, Miss., and Colleen Long, David B. Caruso and AP Radio correspondent Martin Di Caro in New York contributed to this report.

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Is This The Next Michigan?

October 15, 2011

ANN ARBOR, Mich. — When Rich Sheridan lost his job in the dot-com bubble about a decade ago and decided to start his own company, he had some trouble explaining the idea to his wife. “I came home and told Carol I had lost my job and she went, ‘So you’re unemployed,’” he said. “And I said, ‘No, I’m an entrepreneur now.’” Even after weeks of working in his basement with friends on the business plan, when it came time to invest some $15,000 of the family’s money in the nascent firm, Carol was confused. “I was just thinking, what business?” she recalled, adding that she thought her husband and his friends had been applying for jobs together in the basement. What they had been plotting instead was Menlo Innovations , a software-design outfit that now has 42 employees and that Sheridan and his partners expect will bring in about $5 million in revenue this year. And they weren’t alone. While Michigan’s economy is distressed overall, the emergence of countless small technology start-ups here in recent years gives some hope that there are better days ahead. But even as a report issued this month showed that, for all the state’s challenges, Michigan gained more tech jobs than any other state in 2010, there is still some lingering uncertainty about a brand of business that is much different from automobile manufacturing. Take Carol Sheridan’s father, for one. He worked for Chrysler for 10 years and was later a tool and die maker for an auto parts manufacturer. When Rich Sheridan wanted to start Menlo, his father-in-law “looked at him funny,” as James Goebel, another of the founders, remembered. The state as a whole has had to wrap its mind around these new kinds of companies, which are among the fastest growing in Michigan. Even as GDP growth struggles here, the high concentrations of students and engineers have made it an attractive place to start new companies. Many of these have been founded by graduates of the University of Michigan, which recently announced that it would begin investing in companies that begin on its campus. Still, Goebel said that Michigan investors in general are more risk-averse than venture capitalists in other states. “People here only want to start the next HP or Apple,” he said. “But you have to start 10,000 firms to end up with HP and Apple. It’s a new idea here that you would start companies knowing so many would fail.” Menlo certainly hasn’t failed, and nobody is looking at its founders with anything except admiration anymore. The company has been named a “Michigan Economic Bright Spot” and one of the fastest-growing private companies in America. Software they developed for a cytometer manufacturer helps count cells in fluid and has been one of the firm’s biggest successes. Now they’re ready to branch out into even riskier territory. Nontraditional business arrangements, such as deferring design fees in exchange for an equity stake or royalties in the final product, have always been central to what Menlo does, and was central to getting the firm off its feet in its earliest days. Now the founders are considering making this kind of “leveraged play” almost their entire business. “It’s a completely new model,” as Goebel put it, “and that’s true for us and also for the state in general.” This post is part of Patch: The Road Trip . Read Arianna Huffington’s introduction to the project , and be sure to follow Paul on Twitter and MapQuest .

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