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Unless you have been living under a rock this week, you have probably heard about the awesome CM Punk "shoot" promo from RAW Roulette. After some censoring and editing, the WWE has finally made the video of the promo available on You Tube and WWE.com. The WWE does a great job of uploading all of the matches and angles from their broadcasts to You Tube fairly quickly following the shows. That is why I was surprised to see everything from RAW on You Tube Tuesday except the now infamous CM Punk promo. Thanks to a tweet from Joey Styles, I was alerted that the promo is now available online. I can certainly understand why the promo wasn't on You Tube or the WWE website on Tuesday. If the whole idea was to believe that the WWE had suspended Punk over the promo, why would they make it available? At the same time this is a business and you are really just shooting (no pun intended) yourself in the foot by burying the key moment in building your upcoming WWE Money in the Bank 2011 event. Continue reading & watch the CM Punk Shoot Promo video at Camel Clutch Blog → Please follow Sports Page on Twitter and Facebook. Join the conversation about this story »
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Information impacting business operations is diverse, complex and growing at staggering rates. Due to unrelenting competition, changing markets, and accelerating rates of adoption for new technology, there is a tremendous strain on IT and business infrastructures. Accessibility to actionable knowledge continually sparks the debate between business intelligence (BI) and analytics, questioning the roles each of them plays in making informed decisions. In the past, organizations have struggled to find people willing to sift through mountains of data in order to properly analyze the information needed to make smart decisions. BI made this process easier by introducing analytics as part of the company’s strategic decision making process. Unfortunately, many companies striving to run their entire organization based on BI alone have fallen short for a number of reasons, including: 1. The same people who were sifting through all of the data are now trying to manage the surplus of data required to create an all-encompassing warehouse; 2. BI infrastructure and design are faced with a dilemma: as soon as they are completed, they are out of date due to the massive proliferation of data in the business ecosystem. It is almost impossible for organizations to keep up with the veritable explosion of data from new sources; 3. The needs of an organization are constantly shifting. In order to respond to these changes, it is necessary (but virtually impossible) to anticipate today what will happen tomorrow. My guess is that this debate of BI and analytics has been in progress since the inception and branding of BI as a standalone discipline for organizations. BI, as I see it, is a complete end-to-end platform consisting of tools, processes and business models that allow for the retrieval of relevant information in the best format for your business. At this level, analytics is a key part of the BI process. It’s about the predictability of the business – to the extent in which you can predict it – based on potential variances of business norms. The question of what data is being retrieved becomes static in the bigger picture. At this point, it is necessary to move from “static analytics” to “dynamic analytics,” allowing the dynamic concept of searching and obtaining relevant information to come to fruition. Please follow SAI on Twitter and Facebook. Join the conversation about this story »
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Speaker of the House John Boehner fired back at the White House this afternoon, after President Barack Obama criticized Congress in a press conference for stalling a deal to raise the debt ceiling. "His administration has been burying our kids and grandkids in new debt and offered no plan to rein in spending," Boehner said in a statement. "The President has been AWOL from that debate." Boehner also reiterated that Congressional Republicans would not vote for any deal to increase the debt ceiling that includes tax increases, setting the stage for a showdown next month. Boehner's full statement is below: House Speaker John Boehner (R-OH) released the following statement in response to comments made by President Obama at a press conference calling for higher taxes instead of larger spending cuts as part of his request for a debt limit increase. “The President's remarks today ignore legislative and economic reality, and demonstrate remarkable irony. His administration has been burying our kids and grandkids in new debt and offered no plan to rein in spending. Republicans have been leading and offering solutions to put the brakes on this spending binge. The President has been AWOL from that debate.
“The President is sorely mistaken if he believes a bill to raise the debt ceiling and raise taxes would pass the House. The votes simply aren’t there – and they aren’t going to be there, because the American people know tax hikes destroy jobs. They also know Washington has been on a spending binge for many years, and they will only tolerate a debt limit increase if we stop it. “The new majority in the House is going to stand with the American people. A debt limit increase can only pass the House if it includes spending cuts larger than the debt limit increase; includes reforms to hold down spending in the future; and is free from tax hikes. The longer the President denies these realities, the more difficult he makes this process. If the president embraces a measure that meets these tests, he has my word that the House will act on it. Anything less cannot pass the House.” Please follow Business Insider on Twitter and Facebook. Join the conversation about this story » See Also:
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There's no getting around it. Greece is Screwed. So is the World. Bloomberg reports today that the “Euro Gains on Greece Plan Optimism; Dollar Rises Versus Yen on U.S. Yields.” In other words, Bloomberg (and the general financial press) is reporting that the financial world is completely wrong, has gone insane, and is otherwise delusional when it comes to the “Greek conundrum.” Whether it’s policy ignorance, political indifference, or willful absence of sound decision making, the business press and world could not be more wrong about where Greece is headed. And make no mistake: this erroneous thinking WILL drive us into a global-wide Depression. Here‘s why Greece is inevitably screwed and what its means for the rest of us: - HISTORY: No matter how optimistic the rest of the world, Greece’s survival depends upon Germany’s good-will. Why? Historical wrongs, atrocities, and, you know, a few World Wars. Because the European Union is a product of political optimism but economic ignorance – created with the idea that if the world bound Germany and France together in a single political and economic entity, the economic “pie” would grow while the two nations would be forced to play nice together – people think “Well, Germany’s got this. They’ll rescue Greece before things get too bad.” Sadly for these mis-informed (or, worse, ignorant) optimists, there’s only so much German money to go around. At some point, the German people will stop economically apologizing for WW2 and start letting things “sort themselves out.” Greece will inevitably be that point. And from there, the economic dominos will fall.
- POLITCAL, um, OPENESS (aka, SLUTTINESS): Let’s be honest: in the mid-2000’s, the European Union played fast and loose with membership, letting in second- and third-tier economies, like Greece (and, frankly, Ireland and Portugal, not to mention Spain, Romania, and…well, you get the idea). This tacking of the economic fates of the “anchor” nations (i.e. Germany and France) to those of smaller, “evolving” (aka less “productive”) nations, all in the name of “political unity,” has created this mess that no amount of political will can clean up. That is, the European Union only works so long as the “anchor” countries lift up and support the economies of the “smaller” nations. Of course, there are only so many levers the German and (again, to a much lesser extent) French governments can pull to save economies such as Greece, and no amount of European “let’s hug this out” political good-will can change that these countries are economically stretched to the limit.
- STREET RIOTS?: The citizens of Germany (and, to a lesser extent, France) are all but threatening mutiny at the idea that they will be the ones economically propping up an (in their opinion unwilling-to-change) Greece. Conversely, while citizens of Greece are protesting at the same time the idea of “economic austerity,” designed to curb the damage) simply in the name of political unity, there may, literally, be riots in the streets of Europe the next few months if the natural economic course of things (i.e. a Greek default) are not allowed to play themselves out. The political tone deafness of the world’s pundits are grossly underplaying this threat to social stability. Look for riots in the German streets, should Greece be kept from defaulting.
- FUNDAMENTALS: While Greece is pledging to “change” in order to receive ROUND TWO of European Union bail-out dollars, the country clearly hasn’t learned it’s the lesson to be gleaned from teetering on the brink of financial ruin. The economy as it exists pre-and-post-crisis is fundamentally the same, as is the nation’s spending and taxing habits. A constant drain on the European Union’s coffers, Greece has done little, if anything, to enact and enforce the fundamental financial and economic changes necessary to save the economy from default. Given that the European Union can only pump so many dollars into this financial sink-hole – while Greece seems unable or unwilling to change – default seems the only viable option.
Given these Euro-realities, (and misreads from the world at large), then, the end-game is clear: no matter how much and how often Germany (and the rest of the European Union) throws “emergency financing” at the financial-disaster-that-is-Greece, the Greek economy will (and almost has to) default. When, you ask? Brace yourselves… Within the next 12 months, with the Euro strained to it’s financial breaking point, the Greek economy will plunge into the abyss, dragging down not only the European Union but also the broader financial world. This will lead to an economic depression the likes of which we haven’t seen since 1929. Why is that? When the Euro inevitably collapses in value, investor dollars will split between the USD, Swiss Franc, and Japanese Yen, severely depressing the majority of the other 1st world economies. With these central importers rendered relatively economically helpless, commodities prices will collapse, leaving the world’s 2nd and 3rd tier economies and exporters even further depressed, creating a global financial crisis and chasm that will take nearly a decade to render itself right again. Furthermore, so goes Greece, goes the European Union; that is, the EU as we know it will cease to exist. Instead, this default will lead to a permanent fracture between the member-states, leaving a core of “financial foundation” countries (France, Germany, and maybe 2-3 others) left to clean up the continental economic mess. It could very well take decades to reverse this seemingly inevitable and nearly-irrevocable economic damage. While the business press (and general punditry) is desperate to explain away a potential Greek default, we must instead prepare for the inevitable one that IS coming. We can dance around, ignore, or paint pretty financial pictures over the economic realities of the situation, but make no mistake: Greece will default, and with it will go the entire world economy. Instead of hoping it away in a last-minute reading of the economic-tea-leaves, we’d be best to prepare for the inevitable. And don’t say I didn’t warn you. Please follow Europe on Twitter and Facebook. Join the conversation about this story » See Also:
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On Wednesday, the Associated Press announced plans to expand access in North Korea, following agreements with the Korea Central News Agency. Leaders from the two news organizations signed two memos of understanding and a contract. According to one memo of understanding, discussion will be begin immediately regarding opening an AP bureau in Pyongyang, "the first permanent text and photo bureau operated by a Western news organization in the North Korean capital." Cooperation on journalistic and photo/video technology issues are outlined in the second memo. In a statement, AP President and CEO Tom Curley said of the news: "This agreement between AP and KCNA is historic and significant. AP is once again being trusted to open a door to better understanding between a nation and the world. We are grateful for this opportunity and look forward to providing coverage for AP’s global audience in our usually reliable and insightful way." KCNA President Kim Pyong Ho also commented: "I hope this agreement contributes not only to the strengthening of relations between our two news agencies but also to the better understanding between the peoples of our two countries and the improvement of the [Democratic People's Republic of Korea]-U.S. relations.” The signed contract names AP as "the exclusive distributor of contemporary and historic video from KCNA’s archive." Please follow The Wire on Twitter and Facebook. Join the conversation about this story » See Also:
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When Americans think about human trafficking, they tend to think about sexual slavery. The very real stories of girls sold to brothels or tricked into prostitution by gangsters are great fodder for journalists. They attract the kind of celebrity commitment that puts causes on the map—see, for example, last week’s Demi Moore-hosted CNN special about sex slaves in Nepal. The issue certainly deserves our attention—indeed, its horrors can scarcely be overstated. But as the State Department’s 2011 "Trafficking in Persons" report makes clear, sexual bondage is only a part of a much larger and more insidious evil. Click here to read more at The Daily Beast > Please follow Politics on Twitter and Facebook. Join the conversation about this story » See Also:
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I was watching the History Channel recently, and happened to catch “101 Gadgets That Changed The World.” It’s an ambitious ranking, counting down the inventions that have altered the face of mankind. The device that tops the list? The smartphone. These days, the thought of leaving home without a “mini computer” in your pocket or purse is unthinkable for a growing number of people. Android alone has experienced a surge of activations, up to 500,000 per day. This growth is one reason why the platform is being targeted for viruses and trojans, says Sian John, a Norton mobile security expert. The other is its open-source nature: “Phones actually have more security built into them than PCs. But because Android is open source, it’s easier for people to write malicious apps.” According to Symantec, makers of the Norton Anti-Virus suite, the Android attacks are only just getting started. The company released a whitepaper called “A Window into Mobile Device Security,” which analyzes the security protocols for iOS and Android. The paper also assessed the biggest virus threats to the platform — such as games that grabbed credit card numbers, as well as the Holy F***ing Bible app, which sent unauthorized (and unsavory) texts to the contacts in phone’s addressbook. The major findings include: - While offering improved security over traditional desktop-based operating systems, both iOS and Android are still vulnerable to many existing categories of attacks.
- iOS’s security model offers strong protection against traditional malware, primarily due to Apple’s rigorous app certification process and their developer certification process, which vets the identity of each software author and weeds out attackers.
- Google has opted for a less rigorous certification model, permitting any software developer to create and release apps anonymously, without inspection. This lack of certification has arguably led to today’s increasing volume of Android-specific malware.
- Users of both Android and iOS devices regularly synchronize their devices with 3rd-party cloud services (e.g., web-based calendars) and with their home desktop computers. This can potentially expose sensitive enterprise data stored on these devices to systems outside the governance of the enterprise..
- So-called “jailbroken” devices, or devices whose security has been disabled, offer attractive targets for attackers since these devices are every bit as vulnerable as traditional PCs.
The most recent known attack for the Android platform is a virus called GG Tracker, which conned users by impersonating the Android Market. The most disconcerting aspect of GG Tracker is that users aren’t even aware that their data has been compromised. The virus spreads through in-app ads that, when clicked, takes users to an impostor Android Market website. Users are then urged to download an app that, upon launch, enrolls them into sketchy paid SMS services. The result? The poor user actually pays a premium for being pummeled with text spam. As for iOS, it’s universally acknowledged that its closed eco-system makes the development and spread of viruses a tougher proposition (jailbreaking notwithstanding), but that could be changing. What’s not in the white paper is that both Stonesoft and MacAfee have predicted that iOS’ popularity could attract more malware attempts to the platform in the future. So how do you protect yourself? Well, according to security experts, a little common sense goes a long way: - Password-lock your phone, and set it to auto-wipe after a set number of failed attempts
- Keep confidential or private data off the phone
- Only download apps from trusted sources or the official app market. (Viruses have tended to come from Russia or the Far East, at least so far.)
- Note the permissions an app is asking for. (Why would a game or traffic app need to access your contacts or messaging?)
- Update your system software. As vulnerabilities are discovered, the patches for them get included in software updates.
- Keep watch over your battery levels. If they take a huge dive when you’re not using the phone, say overnight, it indicates that there’s some sort of activity (downloading? uploading?) taking place during that time.
These measures can help, but it’s tough to lock down a smartphone completely. For example, these wouldn’t have protected against GG Tracker, since it cons people into thinking they’re in the Android Market. Mobile security services, like Lookout, claim to be able to stop threats like this in their tracks, but regardless, it’s important to stay vigilant. “What you can do is look at the list of running programs on your Android phone and make sure you know what they all are,” says Sian John. “If there’s anything you don’t know about, get rid of it.” Are you concerned about smartphone malware? Let us know if you’ve ever gotten a virus or trojan horse on your phone, or if you have any other security tips to add to the list. This post originally appeared at TechnoBuffalo. Please follow SAI: Tools on Twitter and Facebook. Join the conversation about this story » See Also:
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The names of big credit card firms have spiked on the news that the Fed is proposing swipe fees higher than those originally expected, at $0.21 per swipe, according to Bloomberg. This is a huge win for the credit card companies. The original cap was set at $0.12. As a result, Visa shares have spiked, and are now up nearly over 10%. MasterCard too has taken a big jump, up 9.23%. Shares were temporary halted, but it appears they have now reopened. Here's what that Visa spike looked like: 
More to follow... Please follow Money Game on Twitter and Facebook. Join the conversation about this story » See Also:
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The Human Resources Skills Development Center is offering small businesses the opportunity to hire new graduates in order to expand their business capabilities and expertise through the Youth Employment Program (YEP). Incorporated businesses are encouraged to apply for this program in order to hire graduates with unique skill sets to their company. Grant Amount & Eligibility YEP covers 50% of the new employee's salary, up to a maximum of $30,000, for the first 12 months of employment. The related position must be permanent full-time and needs to focus on a skill set that is both unique to the employer and relevant to the candidate's area of study. Funding is released every April and there is still funding available as of today (June 29th, 2011). The company must be financially stable and incorporated. They must also have fewer than 500 employees in order to be eligible. YEP has a preference for companies that will utilize the new hire's skills in order to carry out an innovative project to advance or grow the business. Eligible candidates must have graduated from a four-year college or university program in Ontario, under the age of 31, and not currently collecting CPP or EI. The YEP can be used for up to two new hires per company. Get Started The Youth Employment Program is currently open for application submissions. If you would like to learn more about this program or have Mentor Works assess a potential candidate, please contact us today with "Youth Employment Program" in the Subject line. Be sure to stay updated on the latest hiring funding mechanisms by subscribing to our blog and following us on Twitter, Facebook, and LinkedIn. Read more posts on Mentor Works, Ltd. » Please follow War Room on Twitter and Facebook. Join the conversation about this story »
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The Federal Sixth Circuit Court of Appeals upheld a lower court ruling dismissing a challenge to the Affordable Care Act, the health care reform bill passed last year. A three judge panel ruled that the legislation's so-called "individual mandate" — which requires most Americans to buy health insurance — is constitutional. It was the first time a federal appeals court has ruled on the Affordable Care Act, and the first time a judge nominated by a Republican President ruled in favor of the bill. “We find that the minimum coverage provision is a valid exercise of legislative power by Congress under the Commerce Clause,” Judge Boyce F. Martin Jr. wrote for the majority. There are at least two other challenges to the Affordable Care Act awaiting decisions by separate appellate courts — and at least one of them is expected to be taken up by the Supreme Court, reports The New York Times. In a statement, Tracy Schmaler, the deputy director of the Department of Justice office of public affairs, lauded the decision, and added that the Department is confident the law will withstand further judicial scrutiny. "We will continue to vigorously defend the health care reform statute in any litigation challenging it," she said. Please follow Politics on Twitter and Facebook. Join the conversation about this story » See Also:
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Whoo boy! Did I ever get railed in the comments for comparing Google+ to Facebook in my tour of the new service. But if you don't have an invite yet, take a look at these screenshots, and you'll see it's hard not to make the comparison. I decided to take a moment and delve a little deeper into why I think Google+ won't work in the long run: Recycled Features Save for some minor improvements, Google+ offers nothing groundbreaking enough to drive the masses from Facebook. Almost every feature from "Circles" to "Streams" has a counterpart feature in Facebook. The only notable exception is "Hangouts," the feature that lets you host group video chats with your friends. It's pretty cool, but again, I can't see someone ditching Facebook just so they can video chat. Yes, it will help that Google+ is baked into Google services like Gmail, but that still doesn't mean all those users will suddenly stop using Facebook because there's now a "+You" button at the top of their inboxes. Everyone's already on Facebook, and most don't use Gmail. A social network is no good unless your friends are on it too. As my colleague Dan Frommer put it: "It's like Facebook with no people." Google+ even looks like Facebook, except with a whiter background. Frankly, it's embarrassing for Google. If the way we share information on the web is as broken as Google says, it does no good to tweak a few of Facebook's annoyances and pitch it as a revolution. What I Do Like All these criticisms don't mean I think Google+ is a bad product. It's actually well-designed and easy to use. Facebook has its problems, and Google+ addresses many of them. The design is user-friendly. Circles are a brilliant way to group friends and actually kind of fun to make. And the mobile app for Android is a great way to get your mobile photos online instantly. (The upcoming iPhone app will do the same.) Plus, Google gets a huge win for making privacy settings very easy to manage. Facebook, on the other hand, has yet to figure out how to implement clear privacy settings. (Check out my old post on it to see for yourself.) Conclusion At the end of the day, Google+ is a solid product on its own. But it's not rich or new enough to get people to make the switch. And there's nothing keeping Facebook from making changes on the features that Google+ does better. It already has a 700 million user head start. Please follow SAI: Tools on Twitter and Facebook. Join the conversation about this story » See Also:
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LivingSocial is talking to bankers about going public at a $10 billion to $15 billion valuation, CNBC reports. LivingSocial started its life as a Facebook app, but it eventually evolved into the very most successful Groupon clone. In April, we learned that LivingSocial revenues are expected to reach $1 billion this year. Groupon, which filed its S-1 earlier this month, is also planning to IPO soon. It hopes to raise $750 million. The valuation is expected to be around $30 billion. The big challenge facing both Groupon and LivingSocial is a host of competitors – from startups to established players like Google and Facebook. This competition is making it more expensive for both companies to acquire new email subscribers. It's also forcing them to cut better deals for local merchants. Amazon invested $175 million in LivingSocial in December 2010. Click here for updates to this post. Please follow SAI on Twitter and Facebook. Join the conversation about this story » See Also:
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Thanks to the climbing price of gas, driving is quickly turning into a pastime for the rich and famous. So unless you’re ready to re-mortgage your house, you may have to leave your car at home and hop on a subway, bus or light rail to get to work. Not sure what to expect? We’ve put together a top 10 list of public transportation systems in the world to give you an idea of what cities have the best mass transit available to the working public. To make the list each city’s transit system has to have a combination of reliability, safety, good coverage of routes and cleanliness. If your city is on the list, you’re in good shape.If not, you may want to demand more from it, because if gas prices keep rising this could be your “ride” for a while. This post originally appeared at AskMen.com. 10. Copenhagen Metro  Copenhagen, Denmark If something was ever rotten in the state of Denmark, Copenhagen’s public transportation system wasn’t it. The Copenhagen Metro was completed in 2002, and Copenhagen’s public transit is linked by another train system -- the S-trains -- that connect people to the suburbs and outside regions of Denmark. They also have an urban bike program that allows people to use a quarter to unlock a parked bike, then go for a ride and park it in another zone across town whereupon their quarter will be returned. In 2006, its metro had a 98-99% reliability rate, with train cars that have a reputation for cleanliness thanks to the Danish culture that frowns upon littering of any kind. Copenhagen’s trains use an Automated Train System (ATS) that runs the train network through a computer, which increases both its efficiency and safety. All told, Copenhagen’s public transportation system offers customers a comfortable, dependable ride.
9. U-Bahn  Berlin, Germany Sure the words “German efficiency” are a cliché, but their public transportation definitely fits the bill. It has a huge underground network called the U-Bahn that covers 132 kilometers of the city. This links to the S-Bahn, the above-ground train network that links to other transportation routes throughout the city. The U-Bahn claims few accidents and also includes mobile phone network coverage throughout its tunnels and stations. What about that for efficiency? The underground system runs trains every two to five minutes at rush hour and at regular intervals during non-business hours. Unless you wake up late, the trains are designed to get you there on time.
8. Hong Kong MTR  Hong Kong, China Approximately 90% of all travel in Hong Kong is done via mass transit. And the Mass Transit Railway (MTR), aka the Hong Kong Subway, is responsible for most of it. The system takes seven million riders a day through its 175-kilometer long network, with trains that are known to run on time, no matter what. They also have a good safety record, using platform screen doors to keep riders off the tracks when the trains aren’t at the station. One of its most unique features is the Octopus Card. Users can fill this card with a dollar limit that they can charge against their transit fares, fast food, parking meters, and anything in a convenience store. Another bonus? MTR offers 3G network coverage for phones and computers. That means riders can make video calls and watch video streams on their commute, even underground.
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The number-lovers at PropertyShark have passed along a treat for an otherwise slow summer day: data! The Pshark team combed through property tax figures to come up with a list of the most valuable single-family homes in NYC, based on city assessments. Not surprisingly, the Upper East Side dominates—though a few notable Upper East Siders are missing. 4 East 80th Street, currently on the market for $90 million, doesn't even make the top 20. (It was last valued at just $19.4 million.) 973 Fifth Avenue, new to market at $49 million, comes in at 15th place, with an assessed value of $23.8 million. Of course, the market value calculated by the city will often be much lower than what a buyer will really pay for the property. Much, much lower. Here now, without further ado, let's count down the top 10. This post originally appeared at Curbed. #10 601 Park Avenue  Market Value: $25 million Last Sale Price: $31,789,500 in 2008 Vitals: 9,400 square feet The skinny: 601 Park is at the bottom of the list in both size and estimated market value. Before it sold in 2008, it was asking $35 million, a price it didn't quite get. But it still sold for a good bit more than its assessed value.
#9 4 East 75th Street  Market Value: $27.2 million Last Sale Price: $53 million in 2006 Vitals: 21,700 square feet The skinny: Investor J. Christopher Flowers broke records when he bought this place a few years back. Then he cleaned up the limestone facade in the hope of making more on the flip.
#8 9 East 71st Street  Market Value: $30.1 million Last Sale Price: Unknown Vitals: 18,814 square feet The skinny: This place last sold in 1989, but it had some significant facade repairs in 2002.
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The greatest lesson of the still young 21st century is proving to be that governments are the primary source of systemic risk to the economy, our standard of living, and our liberty. The latest case in point is the European government debt crisis, with Greece once again running out of money and threatening to trigger yet another financial crisis. The government's debt now totals more than 150% of its GDP, and continues to grow. Last year's bailout by other European governments was supposed to give it the time needed to reduce its budget deficits so that next year Greece could roll over its maturing debts, as well as finance additional deficits at interest rates under 6%. However, the government's austerity plan of tax increases and budget cuts has not reduced current or projected government deficits because the economy in 2010 contracted by 4.5% and the unemployment rate jumped to 15%. The combination of a contracting economy and rising debt levels has driven the market yield on Greek two-year notes to near 25% and on its 10-year debt to around 15%. Since these loans are in euros, rates this high reflect the growing risk the people of Greece will not be able to make good on their collective debts. They also effectively shut the government out of the capital markets. Last week, S&P downgraded its rating on Greek debt to B from BB-, well into junk bond territory. The downgrade reflects the increasing possibility that Greece will restructure its debt by forcing current debt holders to accept longer maturities, or do what demonstrators in the streets of Athens are demanding, which is to force its creditors to take a loss on their loans. Normally, this would be a matter between a debtor and its creditors. However, European Central Bank (ECB) Executive Board Member Juergen Stark warns that the effects of restructuring "could overshadow the effects of the Lehman bankruptcy," which is associated with the beginning of the 2008 financial crisis. At the heart of that financial crisis were government policies including Federal Reserve efforts to manipulate the economy by keeping interest rates artificially low and a weak dollar policy that fueled the housing bubble, federal government rules and regulations that de facto required banks to make loans to high risk borrowers, and two government sponsored enterprises, Fannie Mae and Freddie Mac, who stood ready to purchase hundreds of billions of dollars of sub-prime mortgages if only Wall Street could figure out how to turn them into high grade bonds. In the case of Greece, government actions and regulations also lie at the heart of what threatens to be a European financial crisis. Greek social security funds hold nearly two-thirds of their liquid assets in government bonds. Thus, any default would undermine these funds' ability to meet their obligations to pay promised health and pension benefits. Such an outcome understandably would create massive political unrest that could reduce government revenues and the government's ability to make good on its debts. This risk is amplified by special rules created by politicians that encourage banks to lend freely to governments. Here's how it works. Governments require banks to hold capital against the loans that they make, anticipating that in the normal course of business, some of the loans will not be repaid. The riskier the loan, the more capital that needs to be held in reserve. However, under international rules negotiated by government representatives through the Bank for International Settlements (BIS), government loans fit into a special category that has a 0% risk requirement. That means European banks do not have to hold any reserves against loans they make to European governments. That's right, politicians implicitly promised banks that governments would never default. And, given the opportunity to make "risk free" loans that require no capital commitment, bankers purchased mountains of government debt. According to Reuters, Greek banks own nearly 60 billion euros ($84 billion) of Greek government debt, and would almost certainly need additional capital and potentially a government bailout in the event of a government default. In addition, the European Central Bank has increased the risk of systemic failure by becoming one of Greece's largest creditors. As reported by The New York Times, J. P. Morgan estimates that the ECB owns 40 billion euros of Greek debt. In addition, it has lent 91 billion euros to Greek banks, with much of that backed by Greek government bonds. That means any Greek default would cost the ECB billions of euros in losses and potentially impact the value of the euro, disrupting European and international financial markets, and the conduct of European monetary policy. In a television interview last Friday, ECB Vice President Lucas Papademos warned: "…the adverse consequences both on the banking system in Greece as well as on financial stability in the euro area as a whole can be far reaching and undesirable. So all in all, I think that Greek debt restructuring should not be on the agenda." One possible "far reaching and undesirable" consequence of such a disruption to European financial markets would be follow-on defaults by Ireland, Portugal, Spain and Italy. According to AEI Scholar Desmond Lachman, the combined debt of the first four countries alone is about $2 trillion, a large portion of which is held by European banks. As a consequence, a write-down of 30% of that debt could lead to a European financial crisis not unlike that which struck the US banks from subprime mortgages. Thus, the systemic risk created by the political class has put the citizens of Europe on the hook for irresponsible levels of government spending. Wealth producers are faced with the lose-lose choices of bailing out governments, bailing out bankers who were induced into buying government debt, or suffering the economic consequences and losses associated with widespread bank failures. The brewing European debt crisis demonstrates again that the greatest source of systemic risk is believing politicians when they promise government guarantees are costless, and that elite public servants are capable of protecting us from systemic risks in the first place. The lesson is that giving governments more power over the economy and financial system is itself a source of potentially catastrophic financial and economic instability. Regards, Charles Kadlec,
for The Daily Reckoning Governments are the Primary Creators of Systemic Risk originally appeared in the Daily Reckoning. The Daily Reckoning provides 400,000+ readers economic news, market analysis, and contrarian investment ideas. The Daily Reckoning features articles by Addison Wiggin author of Empire of Debt and Bill Bonner author of Financial Reckoning Day and The Idea of America. Read more posts on The Daily Reckoning » Please follow Money Game on Twitter and Facebook. Join the conversation about this story »
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Jes Staley, the head of JP Morgan's investment bank sent out a memo today announcing the internal promotion of Jeff Urwin to Global Head of Investment banking, according to the Bloomberg wire service. Urwin is a former Bear Stearns banker; this promotion makes him the highest-ranking Bear executive since the bank was bought by JP Morgan in 2008. "Urwin, co-head of North American investment banking since July, will lead investment-banking coverage, capital markets and mergers and acquisitions," according to Bloomberg. "JPMorgan... hasn’t had a global head of investment banking in years." The move is part of the bank's attempt to coordinate operations globally.
According to Financial News, "Urwin... had been co-head of global investment banking at Bear Stearns [and] was among the five bankers picked from a group of 25 chosen to run JP Morgan’s investment bank in April 2008 after its acquisition of the smaller firm." Before Bear, he was head of global emerging markets at Lehman Brothers Holdings. We've reached to JP Morgan to see if this means that Jes Staley's role as head of the investment bank will be changed going forward. Please follow Clusterstock on Twitter and Facebook. Join the conversation about this story » See Also:
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Research in Motion is halting development on its BlackBerry PlayBook 2, according to recent reports, choosing instead to focus on its "super-phones," as the struggling company tries to rebound against surging competition. The Waterloo, Ontario-based company's beefier phones are expected to feature dual-core chips and run on the PlayBook's operating system, called "QNX" -- the main component in its plan to catch up to Apple and Google. RIM hoped to rush a release of the PlayBook 2 after wanted to release a second Blackberry PlayBook after lukewarm sales of the initial tablet in April, but its recent troubles -- poor sales, diminishing market share and an exodus of app developers -- have made resources scarce, impossible to continue production on both tablets and smartphones. So instead, RIM is laying off 200 workers and regrouping. The company fell on tough times partly due to difficulties in keeping up with Apple and Google, leading to several key executives departures. Keith Pardy, one of the company's most respected marketing executives left RIM in February, and vice president of digital marketing Brian Wallace jumped ship for Samsung earlier this month. Critics, which have called the current BlackBerry OS sluggish and outdated, say RIM's stale platform and less than spectacular PlayBook performance led the company to a poor second quarter. With no new software planned for its phones, there is little evidence to suggest a turnaround may come sooner than later. Focusing on a product refresh may help RIM gain some lost ground, but the fast pace of the mobile market may find the company still struggling to keep up. Still, RIM is banking on QNX to breathe new life into its smartphones. But QNX is the same operating system that powers the failing PlayBook, and developers have stated they won't develop for the OS until RIM proves it can be successful. In tough times, RIM has sharpened its focus to smartphones, planning to release its first super-phones early next year. But with a new iPhone and several Android devices due out before then, RIM's last ditch effort may come up short. This post originally appeared at Mobiledia. Please follow SAI on Twitter and Facebook. Join the conversation about this story »
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Do those in Congress know how to read? Do they open their mail? News is leaking that Congress may be inclined to have Wall Street’s self-regulator, FINRA, gain oversight of the investment advisory industry. That industry is currently regulated by the SEC and operates under a fiduciary standard. The industry is fighting tooth and nail NOT to be regulated by FINRA which regulates broker-dealers under the less stringent suitability standard. While the investment advisory industry and FINRA may duke it out, let’s return to my initial questions. Do those in Congress know how to read? Do they open their mail? Why do I ask? Because none other than the Project on Government Oversight sent four separate sub-committees on the Hill a letter on February 23, 2010 seriously questioning the validity of FINRA’s oversight of Wall Street and highlighting FINRA’s practices and failures. I highlighted this letter from POGO in my commentary, Is FINRA’s Future in Doubt?, The pursuit of truth, transparency, and integrity within the Wall Street financial regulatory system goes to a whole new level with this letter: February 23, 2010
House Committee on Financial Services
House Committee on Oversight and Government Reform
Senate Committee on Banking, Housing, & Urban Affairs
Senate Committee on Finance Dear Chairman and Ranking Member: The Project On Government Oversight (POGO) is writing to raise concerns that Congress's efforts to reform the financial regulatory system have not adequately addressed the failures of the private self-regulatory organizations (SROs) that are tasked with protecting the investing public and maintaining the integrity of our financial markets. Specifically, we urge you to take a much closer look at the Financial Industry Regulatory Authority (FINRA)—an SRO that regulates thousands of securities brokerage firms—and to consider whether FINRA can ever be an effective regulator given its cozy relationship with the securities industry. Sixteen months later, Congress seemingly never seriously addressed the concerns raised by POGO, an independent government reform entity, BUT now our esteemed colleagues on the Hill seem poised to increase the FINRA footprint. Is this wise public policy? Is this the best America gets? While I have written more than I would have ever possibly imagined about the Wall Street SRO, FINRA, let’s see what somebody else has to say. Constantine von Hoffman of the CBS Business Interactive Network takes a hard but often sarcastic swing at our FINRA friends in writing today, Congress Wants to Give Wall Street Another Chance to Regulate Itself, Congress apparently thinks the SEC is too effective. To remedy that, it wants to increase the role of FINRA, Wall Street's self-funded self-regulator. What could go wrong? FINRA, the Financial Industry Regulatory Authority, is already deputized by the government to oversee brokers. The idea is that using it is cheaper than giving more money to the SEC. Why? Because FINRA's $877 million budget is paid by the brokers it regulates. If this plan goes through, FINRA would replace the SEC as regulator of registered investment advisers, who collectively manage about $40 trillion. And where did Congress get this money-saving idea? From people like former congressman Michael "Sarbanes and" Oxley, who earlier this year registered as a lobbyist for FINRA. He was part of the $300,000 the group spent in the first three months of the year exercising its constitutional right to petition Congress. Very patriotic. FINRA vs. the SEC — a comparison
Let's be clear — FINRA is not a toothless watchdog. It fined members almost $43 million last year. At the same time the SEC, which has a similar budget, issued more than $1 billion in penalties. Granted, $550 million of the SEC’s $1 billion in fines came in one fell swoop provided by Goldman Sachs. That said, excluding the Goldman fine, did FINRA only bring in approximately 10 cents for every SEC dollar? Hmmmm… FINRA's top 10 executives were paid $11 million in 2009. As previously mentioned, this is paid by Wall Street. SEC chair Mary Schapiro, who used to head FINRA, made $163,000 last year. Hmmmmm…..a little bit of a disparity there. Pay much more, get much less. Interesting business model there especially when we are talking about investor protection. Coincidentally, FINRA's become a much more aggressive regulator just as it's pushed for more power. In the first five months of the year it levied $28.1 million in fines, a 118 percent increase over the previous year. Over the same period it has taken 463 disciplinary actions, the most in at least five years. FINRA seems to have no interest in answering the astounding number of questions that people — including Congress — are asking about it: How does it select arbitrators for securities disputes? For more than a year the Public Investors Arbitration Bar Association has been trying to get the SEC to hand over documents about this via the Freedom Of Information Act. The SEC has refused, citing an exemption to FOIA which allows it and other regulatory agencies to keep secret their dealings with "financial institutions." To most folks that means banks, brokerages and the like, not a regulatory agency working – allegedly – for the U.S. public. Neither the SEC nor FINRA would seem to care to fully embrace the ‘sense on cents’ virtue of transparency. Hmmm… Where does FINRA invest its own money? A key piece of information when it comes to determining if the group has any conflicts of interest. No answer. Oh, yes, we have asked this question numerous question over the last thirty months. What about FINRA’s fortuitous liquidation of its ~$647 million auction-rate securities position in mid-2007? We have never learned the details on that sale while tens of thousands of ARS investors remain stuck holding ARS of questionable value. Hmmmm… Why won't it let Sen. Charles Grassley (R-Iowa) have information he requested about "suspicious trading" complaints regarding SAC Capital? Why did it fire investigator Joseph Sciddurlo after four years on the job? He says it was because he wanted to take a harder look at some Wall St. accounting procedures. No answer. What about the truth? We need the truth from both the SEC and FINRA. Hmmmm….. Why did it only fine UBS $2.5 million for misleading investors? UBS sold $1 billion in notes which for some reason investors thought were safe. (Could have something to do with their catchy name: "100 Percent Principal-Protection Notes.") Despite that, the notes were worth about nothing once Lehman Brothers collapsed. 2.5 cents on the dollar. Fearless FINRA….Hmmmm…. Why does it no longer send examination reports on brokers to state securities regulators? FINRA stopped doing this two years ago, claiming this would have forced it to give certain rights to brokers during investigations that it currently doesn't. State regulators do not agree. That is coordination for you. Reminds me of the time when a former SEC attorney informed me that she had no interaction with anybody from FINRA while investigating Bernie Madoff. And last, but certainly not least: How will we even know if FINRA is doing its job?
A March report by the Boston Consulting Group found that self-regulatory organizations like FINRA don't have to regularly disclose information to the SEC about their regulatory operations. Further, the SEC also doesn't have a consistent set of metrics or standards to assess FINRA. Is this the best America gets? But before we answer that, let’s go back to the beginning. Can Congress read? Do they open their mail? We never did hear from them about POGO’s letter and assorted other overtures sent their way. America deserves so much better. Larry Doyle Isn't it time to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook? Please get your friends and colleagues to do the same. Thanks!! I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved. Read more posts on Sense on Cents » Please follow Clusterstock on Twitter and Facebook. Join the conversation about this story »
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BlackBerry blog N4BB ran a post earlier today claiming that RIM has killed plans to make a 10″ version of their PlayBook tablet and is instead focusing on getting their first QNX-based smartphone out the door. QNX is the operating system powering the all-touch PlayBook, and whatever criticisms have been levied against the tablet, most critics and users alike have had good things to say about its user interface. To be honest, this is my first time hearing of N4BB, but enough folks tipped us off to the story that it seemed worth reporting on. Also, it’s always nice to write a phrase like this: If you’ll recall, just last week Jon suggested that getting QNX onto a phone should be priority number one in righting RIMs ship: For RIM to really fix the hole in their boat, they have to use their QNX built PlayBook operating system as the patch. While currently missing key functionality (e-mail!) the OS is incredibly solid, modern, elegant, and secure. If RIM can successfully add the missing functionality to QNX, port it to the phone form factor, and add some modern hardware to the mix, they might just have some life left in them yet. According to N4BB, RIM is working on a “superphone” that will run QNX on a high-resolution 4.3″ touchscreen. The site lists “900+ screen resolution” as a spec, which could mean qHD resolution (960 x 540). Also listed is the same single-core 1.2GHz processor found in the Bold 9900, which would run counter to earlier statements by RIM brass that they won’t launch a QNX phone without dual cores. Apparently battery life is a big concern around the idea of shoehorning the 7″ PlayBook’s dual-core chipset into a phone form factor. Then again, N4BB also mentioned that if they can pull it off, RIM hasn’t taken two cores completely off of the table for this first QNX phone. At least one RIM executive has already gone on record about high-end QNX-based prototypes living and breathing somewhere within company confines. Carlo Chiarello, VP of RIM’s GSM/UMTS business unit, told TechRadar a few weeks back, “That [QNX] experience is going to start to come in to our high tier products…. I can’t tell you timings specifically. But it looks marvellous! [sic]” Could it be that RIM brass is feeling the heat – and there’s been a lot of it – to the point of pushing up production schedules, changing priorities, and rushing to get their next-generation of smartphones out the door sooner than later? And, oh yeah … While the 10″ PlayBook may well be scrapped for now, RIM’s not about to bow out of the tablet market so soon. This new batch of rumors also mentions a 4G LTE-based version of the 7″ tablet being pushed up to an October 2011 ship date. So, would a QNX-based BlackBerry before year’s end be enough to give RIM a much-needed boost, even if it shipped with a single-core processor? Or should RIM stick to the game plan and hold off on QNX phones until they can churn ‘em out with dual-cores inside? This post originally appeared at TechnoBuffalo. Please follow SAI: Tools on Twitter and Facebook. Join the conversation about this story » See Also:
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As had been anticipated, the Greece parliament approved the austerity measures along party lines.That it had been anticipated in the currency market is evident in the euro's appreciation in recent days
from almost $1.41 on Monday to almost $1.4450 today. The peripheral bonds have also rallied over the past 36 hours. As we warned, the euro is vulnerable to a "buy the rumor sell the fact type of activity. Support for the euro is seen in the $1.4340-50 area now. Resistance is pegged near $1.45.
The parliament will vote on the implementation bill tomorrow. This may be a bit stickier, but it too is likely to pass. Assuming so, attention will turn again to Greece second aid package. There are a number of plans being discussed, and although the French plan may form the basis of discussion or the terms of the debate, it is not clear that the details will carry the day. In particular any kind of guarantee using EFSF does not seem to sit well with the ECB. The 30-year extensions do not sit well with many banks. The roll-over itself has been cautioned against by Fitch.
Today's vote keeps the situation from falling into the abyss, but it is not clear how far from it the situation remains. The failure of the opposition to support the measures is problematic. The Socialists have begun lagging in the polls and if the government were to collapse, all bets are off. In addition, while the markets have been focused on Greece, there has been a marked deterioration of the situation elsewhere, though the relief rally in the peripheral markets is masking this. First, note that Portugal's Q1 budget deficit came in at 8.7% of GDP. This year's target is 5.9% (2010=9.2%). New austerity measures will likely be forthcoming shortly. Recall that the old government collapsed when the opposition balked at the extreme austerity. The EU/IMF softened the terms under the aid package, but the new government now has to dust off those proposals that it previously blocked. This is a subtle example of the political instability that the IMF/EU plan seems to generate.
Second, political problems are coming to the fore in Spain. The minority Socialist government (seven seats shy) will need the opposition support for next year's budget. The Catalan Party yesterday indicated it will not support the government's budget. Neither will the main opposition party. The budget will not come up for a parliamentary vote until September. Even through Spanish law allows for a reversion to the previous year's budget, tradition requires an election. The risk is that Prime Minister Zapatero does not complete his term that expires March 2012.
Moody's has expressed concern about the regional fiscal slippage. The region's account for 1/3 of the government spending and half of the public sector workers. Total debt regional debt was 11.4% of GDP in Q1 11 up from 10.8% in Q4 10. Austerity measures are not being shared equitably between the central government and the regions. The central bank warned a couple weeks ago that regional finances are worsening. Despite the passage of some labor reforms, the IMF has has urged Spain to accelerate its efforts to overhaul the economy.
Third, Italy is likely to announce additional austerity measures as early as tomorrow. S&P warned in May and Moody's in June about the outlook for Italy's credit worthiness. Prime Minister Berlusconi has had a number of setback already this year at the hands of the public, but his most pressing challenge is within his government. Coalition partner Northern League may not support the 2012 budget and appear to have increased pressure on Finance Minister Tremonti to resign. The 10-year BTP-Bund spread was at EMU highs prior to the Greek-inspired relief. Recent ECB comments, including yesterday by Trichet, underscores the ECB is still on course to hike rates next week. The recent string of US economic data has been relatively soft and there is some downside risks to next week's US employment data (ADP and NFP). This analysis suggest that the "buy the rumor, sell the fact" on the Greek vote may offer a better opportunity to be long euros by early-mid next week. However, over the slightly longer-term, the European debt crisis is far from resolved and the problems in Spain and Italy need to be monitored closely.Read more posts on Marc to Market » Please follow Money Game on Twitter and Facebook. Join the conversation about this story »
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Second quarter cable news ratings are in and while FOX News continues their dominance in most hours there was one (very) surprising revelation. Another network beat them in June in the 2pm, 3pm (Shep!), and 4pm hours. Any guesses? HLN! Surprised? If you have been glued to the Casey Anthony trial that's been going on this month the answer is probably no. The network had its best month ever thanks to the trial with an 86% Primetime increase in total viewers and a 79% in the demo over June 2010. They also topped MSNBC in primetime and total day for the month of June. Please follow The Wire on Twitter and Facebook. Join the conversation about this story » See Also:
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Today we got a great example of the speed at which gigantic global markets respond to news. During the midst of the austerity debate, there was a bit of a surprise when one member of the ruling PASOK party voted NO on austerity. It never appeared likely to change the outcome, but just the words "RULING PARTY" and "NO" appeared briefly in headlines on Bloomberg terminals around the world. In that instant, the euro plunged, and German Bund yields tanked, as everyone rushed for safety, before (in an instant) it became obvious that there was nothing major happening, and everything would be fine with the vote. Bottom line: It doesn't take much to get gigantic moves in some of the biggest markets in the world. 
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Much of the country howled with laughter a couple of days ago when leading GOP presidential candidate Michele Bachmann defended her contention that the US's founding fathers had worked tirelessly to end slavery. The founding fathers were all dead when slavery was abolished, Bachmann ridiculers roared. And "John Quincy Adams," the one founding father Bachmann brought up when asked by ABC's George Stephanopoulos to defend herself, was a boy at the time. So there's your proof that Bachmann is an idiot! But was Michele Bachmann actually right? A lot of Bachmann defenders think so. Many of the founding fathers, they say, were against slavery, even if they didn't write this position into the Constitution. So was Bachmann unfairly slammed? The truth appears to be somewhere in the middle. Based on this article in Encyclopedia Brittanica, it seems fair to say that some of the founding fathers opposed slavery, and that some of them worked to limit it on the state level. But as a group they certainly didn't work tirelessly to end it. According to Brittanica, most of the "Founding Fathers" owned slaves. A handful didn't, including John Adams and Thomas Jefferson, and Jefferson actually wrote a draft section of the Constitution absolving Americans of responsibility for slavery by blaming the British. But this paragraph was struck from the final version. The commitment to the status quo (legalized slavery) among the "southern founders" was particularly strong, and the "northern founders" didn't challenge this. Slavery remained legal in the northern states, even though few people owned slaves. And only one of the slave-owning "southern founders" actually freed his slaves after the nation was founded. So did Michele Bachmann completely revise history when she said the founders worked tirelessly to end slavery? No. But was Michele Bachmann correct? No. The fairest characterization of the "founding fathers" view on slavery seems to be that they tolerated it. Please follow Politics on Twitter and Facebook. Join the conversation about this story » See Also:
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Bankia and Banca Cívica are continuing with their IPO plans. Doubt about Greece has not changed these companies' intentions, and yesterday their administrative advisors approved both operations. The deals are critical for rebuilding confidence in Spanish banks. Banca Cívica anticipates that its IPO will bring 3.6 billion euros. If demand is any greater, this figure could increase to 4.0 billion. But if it is less, it could drop to about 3.4 billion. The company's goal is around the average of initial predictions that settled somewhere between 3.0 and 4.0 billion. According to sources familiar with the deal, Bankia's debut will likely happen between July 15 and July 18. The Comisión Nacional del Mercado de Valores (a Spanish organization similar to the SEC) has to authorize a handout by the end of today or tomorrow at the latest. Banca Cívica, the group led by Cajasol and Caja Navarra, anticipates that the CNMV will give their approval either today or tomorrow. Banca Cívica seems obligated to postpone for one week because of informational petitions from the stock market supervisor. The company is trying to sell between 25% and 40% of its capital. Everything will depend on the final sale price, which could end up at a 60% discount on book value. This post originally appeared at El Economista. Please follow Money Game on Twitter and Facebook. Join the conversation about this story » See Also:
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The other day we mentioned with amusement how LIndsay Lohan had tweeted out an ad for the National Inflation Association, warning about Fed printing, dollar debasement and higher food prices. Of course, it was just an ad. we didn't think it was actually her belief that inflation was such a big deal. WRONG. Turns out another twitterer responded to her, and she defended the message (via Daily Caller). 
So there you have it kids. Be aware of gas and food prices and the Fed! Please follow Clusterstock on Twitter and Facebook. Join the conversation about this story » See Also:
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I have used an analogy regarding bankers that some may see as being unfair. I have used the analogy of a fireman starting a fire and then putting it out. Clearly, the fireman starting a fire is engaged in criminal activity. With regard to bankers in the housing bubble it is not illegal to offer easy money, toxic loans to mainstreet victims. It is a scam, a form of class warfare from the top, but it is not an act of breaking the law. However, offering easy money loans in such quantities to actually infect the value of housing with speculation should be against the law. The great New York Times columnist Will Rogers actually called for a law against speculation of all kinds. In 1930 Rogers said this: "We never will have any prosperity that is free from speculation till we pass a law that every time a broker or person sells something, he has got to have it sitting there in a bucket, or a bag, or a jug, or a cage, or a rat trap, or something, depending on what it is he is selling. We are continually buying something that we never get from a man that never had it." DT #1301, Sept. 24, 1930 (Willrogerstoday.com) We know that it is not illegal for oil to be at 100 dollars a barrel. But we know demand is less than when it was 70 dollars a barrel. We know that speculation in housing was a churn entered into by a public largly unfamiliar with anything like that happening to that market. Yet the churn was set up by Wall Street. The churn was no different than churning stocks or oil contracts. There is no law, but Rogers wanted a law. So, then you can steal legally in this country if you control the money and the credit. There is no law, except for laws that should have protected investors that are on the books. But even those are not being enforced or are not clear enough for prosecutors to act. I happen to think the former. When using the fireman analogy, the concept still sticks. If you create a mess you are not a hero for fixing the mess. I like the analogy of the used car salesman as well. The used car salesman has a reputation for selling cars that are duds. We know that not all salesmen do this. But enough did in the past to give the business a bad name. Well, now bankers, who are not breaking the law with their easy money speculation, have a reputation. It is not a good one. Many people I talk to are not willing to give them business. My dad listened to Will Rogers and never bought a car on credit. Rogers was against doing so. I hope people listen and avoid buying a house on credit with the possible exception of purchasing at the beginning of a bubble created by government guarantees of all loans. That is likely coming as a means for investors to have risk free mortgage investments. That is what Dimon, Wells, the IMF and many others want. But other than a little gambling based on knowledge, it would be better for America if people just quit buying on easy credit. I said that the German banks protect their own citizens by requiring 20 percent down. Those same German banks offered easy money, toxic loans to the PIIGS and to Americans. Americans are considered no better than weak sisters. We are disdained like the PIIGS citizens! The Germans protect their own with regard to credit and with regard to jobs, yet their banks are the most irresponsibly leveraged in the world. Germany is a predator. While articles are placed all over the internet praising Germany, the country is really just a bully. And German banks are a worry of our private Fed, which does nothing to help mainstreet, as QE goes on and on. And don't think our TBTF banks don't mind piling on with our own easy money, that caused US banks to be levered over 30 percent. That is child's play compared to German banks. That is why those banks catch cold when Greece sneezes. When you are that leveraged you are very vulnerable. So, Will Rogers was right, speculation that allows banks to leverage up is a bad thing for America. As soon as Americans realize it, the sooner there will be laws against this predatory behavior. No the easy money is not now against the law, but as in Germany, it should be. Germany is a predatory nation with regard to credit beyond her borders. It is not against the law. But it is an attack upon those with fewer means. You can attack legally if you control the rules. You can sell a loan "as is", if you have the backing of the central banks, who are heavily involved in this predatory behavior. Oh, and I long for the day when NY Times columnists speak out like Will Rogers, calling for an end to speculation. Wouldn't that be great? Update: The back end securitization fraud is illegal and should be prosecuted. This article focuses on the front end ponzi, toxic lending, that is not now illegal. Please follow Clusterstock on Twitter and Facebook. Join the conversation about this story »
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 While interning at Google or Facebook is still heaven for computer science students worldwide, some have started to consider working at a small startup as a perfectly viable, if not more attractive, alternative.
“There’s certainly a growing interest [among students] in working for startups,” said Nathan Parcells, Co-founder of his own startup, Internmatch, which matches interns with employers, particularly those in the technology space.
Parcells and Founder Andrew Maguire have listed many openings on their site for internships at startups, most with unrecognizable names. Yet Parcells said that they get a lot of interest in working for these startups from students at top schools like Harvard and the University of North Carolina at Chapel Hill.
“Just the title ‘Hot New Startup’ generates interest,” Parcells said. “Students want to be part of this culture where you can wear shorts to work and really make an impact.”
Internmatch is based in San Francisco and places student interns at tech companies, many of them startups in Silicon Valley. But there is also student interest in working for tech startups on the east coast.
“Entrepreneurship seems to be a big interest these days,” said Carole Jabbawy, the owner and founder of Internship Connection, a small company in Newton, Mass. that helps high school and college students identify and interview for internships in Boston and New York City.
Jabbawy has placed interns with startups from Mass Challenge, a Boston-based startup accelerator program, and with DogPatch Labs, a Polaris Ventures-backed incubator with offices in Cambride, Mass., New York City and San Francisco.
Jabbawy said that her student interns are excited to work for these startups for little or no pay. She said that some of the larger companies are legally bound to either pay interns or require that they receive school credit, which can exclude certain students. Startups, on the other hand, have no such requirements and have other benefits, she said.
“Since the startup operation is so small, the intern gets exposed to everything,” she said.
Two years ago, Kyle Conroy, a computer science student at UC Berkeley went to a summer internship fair where about 15 startups presented.
He didn’t think all of the startups were promising, but he was impressed with one called Twilio. He applied for the internship and he’s been working for them them ever since.  He spent two summers working for the startup, then worked part-time for it throughout his junior and senior years, and after graduating this spring, he was hired as a full-time employee.
“I was the reason why they got their first office,” Conroy said, explaining that once he joined the team two years ago, the founders realized that the company was getting too big to continue working out of cafes.
"My first summer I was sitting next to the three founders," he said. Conroy said that he could have gotten an internship at one of the large tech companies, like Microsoft or LinkedIn, where his classmates got internships, but he decided on a startup mainly because he felt that he could make more of a difference.
“I had the opportunity to make a large impact at this company, which is pretty cool for a sophomore in college,” he said.
As an intern, Conroy built Stashboard, a unique system for Twilio that alerts users if the server has gone down.
“At a place like Facebook, you’re sort of going to be a number,” Conroy said, “where as this year at Twilio we only have three interns.”
True, an intern at Facebook could be identified as a number - from one to about 300 this summer - but Facebook and other large tech companies would beg to differ that its interns can’t have an impact.
Last year, Facebook intern Paul Butler garnered significant attention and praise in the tech community for creating a graphic called “Visualizing Friendships,” which shows patterns of Facebook friendships among users in different cities and counries throughout the world.
“Sometimes [our interns] get press for their work,” said Shannon Prior, a spokesperson for Mozilla, the open source internet browser. “They love being ‘Nerdy Famous.’”
Julie Deroche, Head of College Recruiting at Mozilla, said that the long term goal is to convert interns into hires. Of the 35 summer interns Mozilla brought on last year, 20 of them were either offered another internship or a full-time job.
In addition to providing mentorship and free housing in a corporate suite, Deroche said that Mozilla offers a “highly competitive” salary to interns. According to Maguire of Internmatch, the big tech companies, like Google and Facebook, will pay its interns based on a yearly salary of about $70,000, or $15,000 for the summer. There's also the awe factor of working for, let's say the biggest search engine in the world, for example. Former Google intern, Calvin Young, said the Mountain View headquarters was like a "child nerd's paradise." And not surprisingly, Maguire said that startups cannot compete with the salaries offered by the tech giants; most startups can usually only offer $7,000 at most for the summer. But he said that students don’t join startups for short-term compensation.
“You join a startup for the possibility of creating something huge,” he said.
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Can games help you stop smoking, follow a strict diet, or even prevent diabetes? Advertising agency Brunner thinks so. Games are "proven to change behavior," says Shaun Quigley, SVP of Digital at Brunner, which just released BHiveLab, an idea incubator that helps brands reach customers through new technologies. Quigley says the lab is currently helping its clients tap into the $2.5 trillion U.S. healthcare industry. "That high cost is forcing hospitals, insurance firms, and doctors to get creative about how to treat patients," he says. So Brunner is getting creative with its clients. For one, its BHiveLab is developing game apps for clients that want to promote "non-game activities," like following a diet or establishing a workout regimen. It recently created an app for Aquafresh called "Time2Brush," which encourages children to brush their teeth by playing songs and awarding badges. "Things like points, challenges, and leader boards satisfy fundamental human desires," says Quigley. At Brunner, ideas also come from games. They hold timed innovation competitions in their offices called "swarms," in which they pit teams against each other to see who comes up with the best idea. The prize? "Bragging rights," Quigley says, "but making brainstorming competitive has amazing results." Please follow War Room on Twitter and Facebook. Join the conversation about this story » See Also:
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Can games help you stop smoking, follow a strict diet, or even prevent diabetes? Advertising agency Brunner Works thinks so. Games are "proven to change behavior," says Shaun Quigley, SVP of Digital at Brunner, which just released BHiveLab, an idea incubator that helps brands reach customers through new technologies. Quigley says the lab is currently helping its clients tap into the $2.5 trillion U.S. healthcare industry. "That high cost is forcing hospitals, insurance firms, and doctors to get creative about how to treat patients," he says. So Brunner is getting creative with its clients. For one, its BHiveLab is developing game apps for clients that want to promote "non-game activities," like following a diet or establishing a workout regimen. It recently created an app for Aquafresh called "Time2Brush," which encourages children to brush their teeth by playing songs and awarding badges. "Things like points, challenges, and leader boards satisfy fundamental human desires," says Quigley. At Brunner, ideas also come from games. They hold timed innovation competitions in their offices called "swarms," in which they pit teams against each other to see who comes up with the best idea. The prize? "Bragging rights," Quigley says, "but making brainstorming competitive has amazing results." Please follow War Room on Twitter and Facebook. Join the conversation about this story » See Also:
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You can be smart and persuade some people
or be present and influence everyone.
What is presence and why is it so important to leadership and beyond? Presence is in the eye and ear and gut of the beholder. When you are totally present in a conversation or in a meeting, others around you perceive you as totally focused on the matter at hand. This doesn’t mean that you are not purposeful in keeping the matter at hand aligned with you and your company’s mission and near and long term goals. What it does mean is that you don’t have a personal agenda that serves your ambition at the expense of your people and your company. Such an agenda will distract you from being present and in service of others into something personal. And when you come from that you will either try to maneuver or even manipulate someone to do something that is clearly less to their advantage and maybe even less to your company’s advantage than it is to your own self-serving ambitious agenda. What enables presence is having nothing to hide and therefore nothing to fear. Being 100 % other, mission and company focused enables you to have nothing to hide. What obstructs presence is having something to hide such as a personal agenda which may be either to manipulate others to achieve something self-serving or to prevent others from catching you in some wrongdoing. When you are totally present and aligned with your company’s mission and near and long term goals, people spontaneously trust, have confidence in and respect (see: How Do You Measure Up as a Leader?) you. People may or may not like you (especially if they have an agenda and can’t manipulate you) and people may even like someone who is charismatic more than you. However in that latter case they are confusing being wowed by that person with their actually being present. One of the ways to detect non-present and personal agenda driven people who attempt to wow others off the scent of their real agenda is to look deeply (and I mean deeply) into their eyes. If you do so, you will see that underneath the charisma, they are really figuring how to get you to do what they say without questioning it if they are a leader or buy products or services from them if they are hawking something. One of the best ways to see how critical being present is to effective leadership is to notice what being absent, distracted, hiding something and/or agenda driven does to people’s ability to trust, respect and have confidence in you. You may get away with it with the “newbies” inside and outside your company, but any discerning person will see right through it and “buy out” instead of “buying in.” Two of the best tips for being present come from Jeff Immelt, CEO of GE and Wilfred Bion, famed psychoanalyst of the 20th century. On a number of occasions, Immelt has advised that the best way to get promoted is to focus on what you are doing as if you’ll be doing it all of your life. By that, I think he meant to be totally present and committed to what you’re doing and doing it to the best of your ability and to even develop excellence at doing it. When you develop excellence, people are more impressed with that rare ability than what you are excellent at. They will see you as a person capable of excellence and be drawn to that to both utilize you, see what other skills you are excellent at or help you develop excellence in other matters. All of these aid your promotability. If instead of completely focusing on what you are doing, you are racing ahead to something shinier or to the next best thing, you will not develop excellence. Immelt didn’t mention it, but I think he would also agree that in conversations you should have the same focus on listening, comprehending and then understanding the other person to the best of your ability. Wilfred Bion said that the purest form of listening (and he could have been referring to presence) is to “listen without memory or desire.” By that, I believe he meant that when you listen with memory, you have an old agenda that you are trying to plug/maneuver someone into and when you listen with desire, you have a new agenda that you’re trying to do the same thing. In neither case are you listening to their agenda and in neither case are you present. Instead of being absent and listening with an agenda, do your best to be a PAL to others by practicing “Purposeful Agendaless Listening.” And what is your purpose? To be of service. And what will be the result? You will be present … and trusted and respected … and influential. Please follow Business Insider on Twitter and Facebook. Join the conversation about this story »
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The New York Mets have taken their fair share of insults in the past couple years. In the eyes of many, they have been an underachieving laughing stock with a terrible owner and a horrible stadium. But this year, they’ve found moderate success under low expectations. No, they aren’t setting the league on fire. But they have a respectable 40-39 record. They’re five games back of the Braves in the Wild Card race. And, most importantly, they’ve done it all without two of their best players in Johan Santana and David Wright. If this were any other team, fans and commentators would pinpoint them as a squad poised for a late-season run. But this is not any other team. This is the Mets. So as the team remains in the playoff hunt, the rumor mill is busy dismantling them piece and piece and shipping them off to destinations unknown. Carlos Beltran is as good as gone. Francisco Rodriguez will be a Yankee by August. Jose Reyes is taking his wacky dugout hijinks elsewhere. The specifics of these rumors are suspect, but the point is clear: the Mets are gearing up for a fire sale. We see this with franchises all the time. A team builds itself around a promising nucleus of stars. The fans and the city get excited, expecting that group to be the one that leads them to a title. But a few years pass. The players get a little older. And all of a sudden the franchise stands at a crossroads, forced to choose between giving it one last go with the old gang, or blowing things up to start anew. This is where the Mets stand, and the time to choose is now. So which road should the Mets take? The arguments in favor of the fire sale route make perfect sense. The Mets are broke. There’s little evidence that this nucleus can win a title. And they have some valuable pieces that they ought to turn into young prospects before they go into free agency. But these arguments are contingent upon the Mets having no chance of winning the World Series this year. And as crazy as it sounds, the Mets can win the World Series this year. Teams like the 2010 Giants and 2007 Rockies show that middling regular-season teams can get hot at the right time and make deep playoffs runs. As long as you are in the playoff race come September, you have a chance of catching fire and going all the to the World Series. We can debate whether or not this is good for baseball, but it is an undeniable fact of the contemporary game. Despite their faults, the Mets have the requisite talent to make a run like this. They have a handful of star hitters who’ve proved they can get hot for a month. And they have one of the best pitchers in baseball coming off the DL later this summer. Not many National League teams can say that. So while the Mets chances may be slim. They owe it to themselves and their fans to give this group one last shot at making a playoff run. I can’t believe I’m saying it, but the Mets are contenders. Please follow Sports Page on Twitter and Facebook. Join the conversation about this story » See Also:
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Iran has been carrying out secret tests of missiles with nuclear capabilities, U.K. Foreign Secretary William Hague said today. Reuters reports that the tests were part of a 10-day military exercise designed to show Iran's strength and warn Israel and the U.S. that it is capable of responding to any attack. As part of the exercise, Iran successfully test-fired 14 surface-to-surface missiles yesterday with a maximum range of 1,250 miles, according to CNN. The tests were a clear violation of a United Nations resolution, Hague told British Parliament today. Tehran also unveiled several ballistic missile silos this week that the state news agency described as a new long-range radar system that can monitor low-altitude satellites. Please follow Politics on Twitter and Facebook. Join the conversation about this story » See Also:
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I wrote briefly yesterday about the various ways that startups can make me leave a room without paying the bill. A few people mailed me to ask if a) I could stop pretending to be Dave McClure and b) actually tell people what I DO want to hear. In retrospect, I really should have written about the latter first. Obviously there are no ‘right answers’ but these approaches have certainly made me listen: “Here’s what our retention graph looks like”
I seem to find myself beating up games startups more than most so I guess I should stay consistent here. I don’t care about registrations, I don’t care about page impressions. I don’t even care overly about monetization if it’s particularly early. Cut to the chase and show me if people are coming back. “I started this company/app/service because I had the following problem”
People who have actually lived their problem instantly get more of my attention. Dominic in FightMyMonster has four boys who complained that Moshi Monsters was too girly and he needed to entertain them. Boom. Got me. “This is who is going to acquire us and why”
One thing I really love are founders who completely understand their market as a multi-dimensional jigsaw and where they fit in it. “I need your specific help here, here and over here”
Read about whoever you’re meeting and have a clear idea of what you want from them. Sometimes things can happen because of meandering conversations but mostly not. “Here are five slides that summarize what we’re doing”
Okay, so obviously I prefer words but if you want to roll through slides and you’ve really worked hard to summarize things, then you’ve certainly got my attention. You work, I work. Read more posts on Dylan Collins » Please follow SAI on Twitter and Facebook. Join the conversation about this story »
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Last night Lloyd Blankfein and former New York governor David Paterson got into a debate about which one of them was more abhorred by the public. We wish we had been there. The pair were attending the annual benefit dinner for the Bed-Stuy Restoration Corporation, where Blankfein was the recipient of the non-profit's annual Founders Award, Dealbook reports. Apparently, "during a lull in the cocktail hour, [Lloyd] and the former governor were spotted arguing over who was more unpopular among the general public," Dealbook said. "I told Lloyd, ‘You’ve been kicked around more than anyone!’ ” Mr. Paterson later recalled. “And here I thought I was No. 1.”" Also representing Wall Street at the event, the CEO of Amex, Ken Chenault (who told Dealbook, "Lloyd has never lost perspective on who he is and where he came from") and David Offensend, the co-founder of Evercore. Lloyd grew up in a project in East New York. Goldman’s Urban Investments Group financed a mixed-income housing project in Bed-Stuy last year. Don't miss: What The Richest People On Wall Street's Charity Donations Say About Them > Please follow Clusterstock on Twitter and Facebook. Join the conversation about this story » See Also:
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 Rupert Murdoch must be happy.
On Tuesday, Apple released its "top charts" of news apps for the iPad. Guess what! News Corp's digital journalism apps earned the top spot in all three categories. - iPad newspaper The Daily was topped the highest-grossing app ranking;
- The New York Post app ranked No. 1 in paid app chart;
- The Wall Street Journal earned the title of top free to download app.
A News Corp. spokeswoman told The Hollywood Reporter it was "the first time that the company topped all three news app categories for the iPad." This has to be especially good news for The Daily, which has been the subject of consistently bad press since launching earlier this year. Please follow The Wire on Twitter and Facebook. Join the conversation about this story » See Also:
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LPS Applied Analytics released their May Mortgage Performance data. From LPS: The May Mortgage Monitor report released by Lender Processing Services, Inc. (NYSE: LPS) shows that the number of mortgages that are 90 or more days delinquent, combined with the foreclosure inventory at the end of May, totaled 4,084,557. With foreclosure sales at 78,676 at month end, the volume of serious delinquencies and foreclosures over-shadowed the number of foreclosure sales by 50:1. In fact, there are still significantly fewer foreclosure sales than there were before foreclosure moratoria were put into place, and foreclosure sales are declining. Read the full post at Calculated Risk > Please follow Money Game on Twitter and Facebook. Join the conversation about this story » See Also:
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LPS Applied Analytics released their May Mortgage Performance data. From LPS: The May Mortgage Monitor report released by Lender Processing Services, Inc. (NYSE: LPS) shows that the number of mortgages that are 90 or more days delinquent, combined with the foreclosure inventory at the end of May, totaled 4,084,557. With foreclosure sales at 78,676 at month end, the volume of serious delinquencies and foreclosures over-shadowed the number of foreclosure sales by 50:1. In fact, there are still significantly fewer foreclosure sales than there were before foreclosure moratoria were put into place, and foreclosure sales are declining. Read the full post at Calculated Risk > Please follow Money Game on Twitter and Facebook. Join the conversation about this story » See Also:
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Thursday is Glenn Beck's last day at Fox News. His time there, while brief -- actually only 29 months -- has unquestionably left a huge impact (the man can't even go to Bryant Park without causing a national incident.) He sells books like Oprah, draws enormous crowds on the National Mall in August, is arguably the most polarizing figure in the nation today, and is now attempting to replicate all this success online. GBTV will launch properly in September -- after Beck hosts his rally in Israel -- under the watchful eyes of every TV exec and television star curious to know whether it is possible for one man (or one brand) to carve out a profitable place in the media landscape using only the Internet. While we wait to see, here is a look back at how Glenn Beck became GLENN BECK. Feb. 10, 1964: Glenn Beck is born in Washington State. In 1979 Beck's mother commits suicide (subsequently followed by his stepbrother's suicide). Beck says he turned to 'Dr. Jack Daniel's' to cope with the losses. 
1983: At age 19 Beck moves to Washington D.C. and begins working at WPGC radio station. 
1994: Following Beck's divorce from his first wife (with whom he has two daughters), he becomes sober with help from Alcoholics Anonymous. Beck later claimed that he'd gotten high daily for 15 years, since age 16. 
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CBS just announced its fall schedule premiere dates, and buried in the listings is a big indicator as to which new show it had the most confidence in. "Two Broke Girls," a comedy about New York waitresses that stars Kat Dennings and Beth Behrs, will bow behind the ninth season premiere of "Two and a Half Men" on Monday, September 19. The first new episode of that series is already kicking up a ton of buzz thanks to the rumors of Chuck Lorre's plans for it: reportedly, he's got a dark twist in mind that will kill off Charlie Sheen's character. Presumably, the episode will also include the first glimpse of Sheen's replacement, Ashton Kutcher. Add all that up, and you get insane ratings numbers -- not only will the show's vast loyal audience tune in, but so will plenty of Sheen-enfraude gawkers (us included). So "Girls" will enjoy a lead-in that feels more like the Superbowl than a season return. They better make the most of it -- "Girls" is premiering at a special time, and will resume their official time slot (Mondays at 8:30) the following week. Please follow The Wire on Twitter and Facebook. Join the conversation about this story » See Also:
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The American economy has recently slowed dramatically, and the probability of another economic downturn increases with each new round of data. This is a sharp change from the economic situation at the end of last year—and represents a return to the very weak pace of expansion since the recovery began in the summer of 2009. Economic growth in the United States during the first three quarters of 2010 was not only slow, but was also dominated by inventory accumulation rather than sales to consumers or other forms of final sales. The last quarter of 2010 brought a welcome change, with consumer spending rising at a 4% annual rate, enough to increase total real GDP by 3.1% from the third quarter to the fourth. The economy seemed to have escaped its dependence on inventory accumulation. This favorable performance led private forecasters and government officials to predict continued strong growth in 2011, with higher production, employment, and incomes leading to further increases in consumer spending and a self-sustaining recovery. A one-year cut of the payroll tax rate by two percentage points was enacted in order to lock in this favorable outlook. Unfortunately, the projected recovery in consumer spending didn’t occur. The rise in food and energy prices outpaced the gain in nominal wages, causing real average weekly earnings to decline in January, while the continued fall in home prices reduced wealth for the majority of households. As a result, real personal consumer expenditures rose at an annual rate of just about 1% in January, down from the previous quarter’s 4% increase. That pattern of rising prices and declining real earnings repeated itself in February and March, with a sharp rise in the consumer price index causing real average weekly earnings to decline at an annual rate of more than 5%. Not surprisingly, survey measures of consumer sentiment fell sharply and consumer spending remained almost flat from month to month. The fall in house prices pushed down sales of both new and existing homes. That, in turn, caused a dramatic decline in the volume of housing starts and housing construction. That decline is likely to continue, because nearly 30% of homes with mortgages are worth less than the value of the mortgage. This creates a strong incentive to default, because mortgages in the U.S. are effectively non-recourse loans: the creditor may take the property if the borrower doesn’t pay, but cannot take other assets or a portion of wage income. As a result, 10% of mortgages are now in default or foreclosure, creating an overhang of properties that will have to be sold at declining prices. Businesses have responded negatively to the weakness of household demand, with indices maintained by the Institute of Supply Management falling for both manufacturing and service firms. Although large firms continue to have very substantial cash on their balance sheets, their cash flow from current operations fell in the first quarter. The most recent measure of orders for nondefense capital goods signaled a decline in business investment. The pattern of weakness accelerated in April and May. The relatively rapid rise in payroll employment that occurred in the first four months of the year came to a halt in May, when only 54,000 new jobs were created, less than one-third of the average for employment growth in the first four months. As a result, the unemployment rate rose to 9.1% of the labor force. The bond market and share prices have responded to all of this bad news in a predictable fashion. The interest rate on 10-year government bonds fell to 3%, and the stock market declined for six weeks in a row, the longest bearish stretch since 2002, with a cumulative fall in share prices of more than 6%. Lower share prices will now have negative effects on consumer spending and business investment. Monetary and fiscal policies cannot be expected to turn this situation around. The U.S. Federal Reserve will maintain its policy of keeping the overnight interest rate at near zero; but, given a fear of asset-price bubbles, it will not reverse its decision to end its policy of buying Treasury bonds—so-called “quantitative easing”—at the end of June. Moreover, fiscal policy will actually be contractionary in the months ahead. The fiscal-stimulus program enacted in 2009 is coming to an end, with stimulus spending declining from $400 billion in 2010 to only $137 billion this year. And negotiations are under way to cut spending more and raise taxes in order to reduce further the fiscal deficits projected for 2011 and later years. So the near-term outlook for the U.S. economy is weak at best. Fundamental policy changes will probably have to wait until after the presidential and congressional elections in November 2012. This post originally appeared at Project Syndicate. Please follow Politics on Twitter and Facebook. Join the conversation about this story » See Also:
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Fat guys can surprise you. They don't move very fast. But they can be very agile intellectually. That was how G.K. Chesterton was. Laurence Lindsay, former assistant to George W. Bush for economic policy, seems to be the same way. Slow on his feet, perhaps. But quick in his mind. Writing in The Wall Street Journal, Lindsey delivers thoughts that might have come from The Daily Reckoning. First, he notes that the budget problems faced by Washington are larger than generally reported. Growth rates have been overestimated, he says, while interest costs and deficits have been grossly underestimated. When more realistic assumptions are plugged in to the numbers it adds more than $4 trillion in 'budget costs' over the next four years. He concludes: Underestimating the long-term budget situation is an old game in Washington. But never have the numbers been this large. There is no way to raise taxes enough to cover these problems. The tax-the-rich proposals of the Obama administration raise about $700 billion, less than a fifth of the budgetary consequences of the excess economic growth projected in their forecast. The whole $700 billion collected over 10 years would not even cover the difference in interest costs in any one year at the end of the decade between current rates and the average cost of Treasury borrowing over the last 20 years. Only serious long-term spending reduction in the entitlement area can begin to address the nation's deficit and debt problems. It should no longer be credible for our elected officials to hide the need for entitlement reforms behind rosy economic and budgetary assumptions. And while we should all hope for a deal that cuts spending and raises the debt ceiling to avoid a possible default, bondholders should be under no illusions. Under current government policies and economic projections, they should be far more concerned about a return of their principal in 10 years than about any short-term delay in a coupon payment in August. Yesterday, stocks rose. The Dow was up 145 points. Oil increased a little too. Gold stayed at $1,500. Still no clear direction. But the direction of the bond market for the last few months has been up. This appears to contradict Mr. Lindsey. QE2 is ending. Everybody knows it. The Fed was the world's biggest customer for US debt – in some months buying two times as much debt as the US government issued. Now that the Fed's buying program is coming to an end, shouldn't bonds go down? If the economy sinks the way we expect, Lindsey will appear to be a fool – for a while. That is, the Great Correction will intensify rather than go away. Bond yields will fall, not rise. Lenders will make money as bond prices go up, while stocks, employment, commodities, houses and almost all other assets go down. People will say: "See, everybody wants the US dollar. Everybody wants to buy US Treasury debt. It's the only thing you can trust. Debt is not the problem. The problem is growth. That's why we need QE3." This is probably the trap Mr. Market is setting. The Great Correction will prove to be more bad news for investors – except for those who have put their money in 'safe' US dollars…and US treasury debt. Gradually, investors will move more and more of their money out of 'risky' assets and into bonds. Then, Mr. Market can spring his trap. As Lindsey warns, that is when they will stop worrying about debt ceilings and Congressional budget talks. That is when they will realize that it is too late. That is when bond yields shoot up and bond prices fall. That is when investors regret having lent money to Washington. How far ahead will that be? We wish we knew. But Bill Gross, who famously sold US bonds, could turn out to be years early. Then, Mr. Market – the joker – will have such a laugh. All those people who tried to get away from risk…by moving to the dollar and US Treasury bonds…will get whacked. Bill Bonner
for The Daily Reckoning Bear Traps in the Bond Market originally appeared in the Daily Reckoning. The Daily Reckoning provides 400,000+ readers economic news, market analysis, and contrarian investment ideas. The Daily Reckoning features articles by Addison Wiggin author of Empire of Debt and Bill Bonner author of Financial Reckoning Day and The Idea of America. Read more posts on The Daily Reckoning » Please follow Money Game on Twitter and Facebook. Join the conversation about this story »
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Given these Euro-realities, (and misreads from the world at large), then, the end-game is clear: no matter how much and how often Germany (and the rest of the European Union) throws “emergency financing” at the financial-disaster-that-is-Greece, the Greek economy will (and almost has to) default. When, you ask?
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