Sep 27 2010

Ignorance, Greed, and Entitlement

Monday Business Edition

Republican Economics as Social Darwinism

by Robert Reich

Sunday, September 26, 2010

In the late 19th century it was called Social Darwinism. Only the fittest should survive, and any effort to save the less fit will undermine the moral fiber of society.

Republicans have wanted to destroy Social Security since it was invented… Remember George W. Bush’s proposal to privatize it? Had America agreed with him, millions of retirees would have been impoverished in 2008 when the stock market imploded.

Of course Republicans don’t talk openly about destroying Social Security, because it’s so popular. The new Republican “pledge” promises only to put it on a “fiscally responsible footing.” Translated: we’ll privatize it.

Republicans also hate unemployment insurance. They’ve voted against every extension because, they say, it coddles the unemployed and keeps them from taking available jobs.

That’s absurd. There are still 5 job seekers for every job opening, and unemployment insurance in most states pays only a small fraction of the full-time wage.

Finally, like Hoover and Mellon, Republicans want to cut the deficit and balance the budget at a time when a large portion of the workforce is idle.

This defies economic logic. When consumers aren’t spending, businesses aren’t investing and exports can’t possibly fill the gap, and when state governments are slashing their budgets, the federal government has to spend more. Otherwise, the Great Recession will turn into exactly what Hoover and Mellon ushered in – a seemingly endless Great Depression.

What are the results of Hoover/Mellon policies?

The Super Rich Get Richer, Everyone Else Gets Poorer, and the Democrats Punt

by Robert Reich

Friday, September 24, 2010

The super-rich got even wealthier this year, and yet most of them are paying even fewer taxes to support the eduction, job training, and job creation of the rest of us. According to Forbes magazine’s annual survey, just released, the combined net worth of the 400 richest Americans climbed 8% this year…

From another survey we learn that the 25 top hedge-fund managers got an average of $1 billion each, but paid an average of 17 percent in taxes (because so much of their income is considered capital gains, taxed at 15 percent thanks to the Bush tax cuts).

The rest of America got poorer, of course. The number in poverty rose to a post-war high. The median wage continues to deteriorate. And some 20 million Americans don’t have work.

Only twice before in American history has so much been held by so few, and the gap between them and the great majority been a chasm – the late 1920s, and the era of the robber barons in the 1880s.

Structure of Excuses

By PAUL KRUGMAN, The New York Times

Published: September 26, 2010

What can be done about mass unemployment? All the wise heads agree: there are no quick or easy answers. There is work to be done, but workers aren’t ready to do it – they’re in the wrong places, or they have the wrong skills. Our problems are “structural,” and will take many years to solve.

But don’t bother asking for evidence that justifies this bleak view. There isn’t any. On the contrary, all the facts suggest that high unemployment in America is the result of inadequate demand – full stop.  …

After all, what should we be seeing if statements like those of Mr. Kocherlakota or Mr. Clinton were true? The answer is, there should be significant labor shortages somewhere in America – major industries that are trying to expand but are having trouble hiring, major classes of workers who find their skills in great demand, major parts of the country with low unemployment even as the rest of the nation suffers.

None of these things exist. Job openings have plunged in every major sector, while the number of workers forced into part-time employment in almost all industries has soared. Unemployment has surged in every major occupational category. Only three states, with a combined population not much larger than that of Brooklyn, have unemployment rates below 5 percent.

Oh, and where are these firms that “can’t find appropriate workers”? … (T)he percentage citing problems with labor quality is now at an all-time low, reflecting the reality that these days even highly skilled workers are desperate for employment.

So all the evidence contradicts the claim that we’re mainly suffering from structural unemployment. Why, then, has this claim become so popular?

I’ve been looking at what self-proclaimed experts were saying about unemployment during the Great Depression; it was almost identical to what Very Serious People are saying now. Unemployment cannot be brought down rapidly, declared one 1935 analysis, because the work force is “unadaptable and untrained. It cannot respond to the opportunities which industry may offer.” A few years later, a large defense buildup finally provided a fiscal stimulus adequate to the economy’s needs – and suddenly industry was eager to employ those “unadaptable and untrained” workers.

But now, as then, powerful forces are ideologically opposed to the whole idea of government action on a sufficient scale to jump-start the economy. And that, fundamentally, is why claims that we face huge structural problems have been proliferating: they offer a reason to do nothing about the mass unemployment that is crippling our economy and our society.

So what you need to know is that there is no evidence whatsoever to back these claims. We aren’t suffering from a shortage of needed skills; we’re suffering from a lack of policy resolve. As I said, structural unemployment isn’t a real problem, it’s an excuse – a reason not to act on America’s problems at a time when action is desperately needed.

And for all their ‘Galtian’ Social Darwinist self reliance, what is the richest woman in the world doing?

Queen tried to use state poverty fund to heat Buckingham Palace

Ministers were asked if money earmarked for schools, hospitals and low-income families could be used to meet soaring fuel bills

By Robert Verkaik, The Independent

Friday, 24 September 2010

The Queen asked ministers for a poverty handout to help heat her palaces but was rebuffed because they feared it would be a public relations disaster, documents disclosed under the Freedom of Information Act reveal.

Royal aides were told that the £60m worth of energy-saving grants were aimed at families on low incomes and if the money was given to Buckingham Palace instead of housing associations or hospitals it could lead to “adverse publicity” for the Queen and the Government.

It seems our evil, greedy, immoral, hypocritical “betters” are all too willing to accept government handouts for “the right sort of people” and steal food out of the mouths of babies, the sick, and the elderly so they can line their pockets to impress others of their “class” with their conspicuous consumption and ‘flash cash’.

Business News below.

From Yahoo News Business

1 Russia, China fete completion of oil pipeline

by Anna Smolchenko, AFP

Mon Sep 27, 3:42 am ET

BEIJING (AFP) – The leaders of China and Russia celebrated Monday the completion of a cross-border oil pipeline, a symbol of growing ties between the two emerging economic powers, particularly in the energy sector.

Visiting Russian President Dmitry Medvedev and his Chinese host President Hu Jintao attended a launch ceremony for the long-awaited pipeline linking the world’s biggest oil producer with the largest energy consumer.

The deal reached last year — which will see China receive oil for 20 years in exchange for 25 billion dollars in loans — is the centrepiece of a new era of energy cooperation between the two neighbours.

2 Anwar trial harms Malaysian investment: Branson

by M. Jegathesan, AFP

31 mins ago

KUALA LUMPUR (AFP) – British tycoon Richard Branson said on Monday that the ongoing sodomy trial against opposition leader Anwar Ibrahim was discouraging investors from coming to Malaysia.

“Malaysia has a good reputation overseas. (But) what is happening to politician Anwar Ibrahim damages Malaysia a lot,” he said at an investment conference in Kuala Lumpur.

“I think it is not a major issue but it is definitely a thorn. I think this has gone on for a long, long time. It looks bad overseas.”

3 Japan’s August export growth slowest this year

by Harumi Ozawa, AFP

2 hrs 41 mins ago

TOKYO (AFP) – Japan’s exports grew at their slowest pace this year in August, data showed Monday, as the impact of a strong yen and softening overseas demand illustrated the risks threatening a fragile recovery.

Analysts expect exports to decelerate further with the potential impact of frayed relations with key trade partner China over a territorial dispute casting a shadow over Japan’s economic outlook.

While demand for steel and automobile-related products saw Japan’s exports jump 15.8 percent to 5.22 trillion yen year-on-year in August, this was below July’s 23.5 percent rise and the slowest pace since December 2009.

4 Spain braced for general strike, but impact may be limited


Sun Sep 26, 5:26 pm ET

MADRID (AFP) – Spain’s Socialist government, forced to impose unpopular measures to fix a battered economy, faces a general strike on Wednesday with unions angry over what they see as a policy U-turn.

But many view the government’s tough labour reforms and belt-tightening moves as inevitable, and even necessary, and a low turnout is expected.

A poll published Friday in the newspaper Publico said only 18 percent of workers backed the strike, and 71 percent believed it would not force the government of Prime Minister Jose Luis Rodriguez Zapatero to change course.

5 Italian bank chief’s exit sparks concern

by Mathieu Gorse, AFP

Sun Sep 26, 3:43 am ET

MILAN (AFP) – The ouster of Alessandro Profumo from the top post at Unicredit this week has sparked concern about future governance at Italy’s largest bank as other shake-ups rattle the European banking world.

Profumo’s dramatic exit following a shareholder rebellion over Libya’s growing stake in the bank rocked Italy’s financial elite and weighed down Unicredit’s share price at a time when the country’s economy is being scrutinised by investors because of its high debt levels.

Profumo, who oversaw a major international expansion by the bank in central and eastern Europe, resigned late on Tuesday after losing a shareholder confidence vote during a four-hour board meeting.

6 Afghan govt reopens tender for giant iron ore mine

by Waheedullah Massoud, AFP

Sat Sep 25, 2:29 pm ET

KOTAL-E-KHERSKHAN, Afghanistan (AFP) – The Afghan government Saturday invited bids from international mining firms to develop an iron ore deposit said to be one of the world’s richest, the mines minister said.

The Hajigak iron ore mine in central Afghanistan is believed to hold up to two billion tonnes of high-grade iron ore, the raw material of steel making.

“The Hajigak iron ore deposit is open for tender as of today,” mines minister Wahidullah Shahrani said at the site of the deposit.

7 Outgoing HSBC boss says ‘time for the next generation’

by Sam Reeves, AFP

Fri Sep 24, 10:32 pm ET

LONDON (AFP) – HSBC’s outgoing chief executive conceded it was “time for the next generation” after reportedly losing a boardroom power struggle that culminated in his resignation and a major management shake-up.

Michael Geoghegan also admitted he was never approached to replace Stephen Green as chairman, following a day of drama Friday which saw him announce his retirement after 37 years with the lender.

Two new people were named to lead the bank, with Geoghegan being replaced as chief executive by HSBC’s head of investment banking, Stuart Gulliver.

8 Corporate showdown looms at China’s GOME

by Peter Brieger, AFP

Sun Sep 26, 3:51 am ET

HONG KONG (AFP) – China’s GOME will take centre stage this week in a bizarre corporate showdown pitting a jailed billionaire tycoon against executives of the country’s biggest household appliance chain.

From his prison cell, the company’s founder Huang Guangyu has waged a bitter war against GOME management, asking shareholders to vote Tuesday on his proposal to oust chairman Chen Xiao while installing his sister and lawyer on the company’s board.

Huang, sentenced in May to 14 years in jail for bribery and insider trading, is also trying to block the Hong Kong-listed firm from issuing new equity that would dilute his family’s position as its biggest shareholder.

9 New Basel rules bring banks ‘back to basics’

by Hui Min Neo, AFP

Sun Sep 26, 3:40 am ET

GENEVA (AFP) – New Basel III bank capital rules encourage a back-to-basics approach for banking and could therefore see those in major emerging countries benefit most from the reform, analysts said.

“The new rules will force banks to go back to simplicity, to the core business which would benefit banks that were respecting the core business in the first place,” said Arturo Bris, professor at the business school IMD.

He underlined that banks in developing markets tend to adopt basic banking — deposits and loans — unlike western investment-oriented banks which have developed complex derivative products that were blamed for setting off the global financial crisis.

10 Women entrepreneurs in China get a helping hand

by Allison Jackson, AFP

Sun Sep 26, 2:01 am ET

TIANJIN, China (AFP) – After losing her job five years ago, Zhao Weimin decided to start a business with help from a government-backed microfinancing programme that has helped thousands of laid-off women get back on their feet.

Lacking money and experience, Zhao and her husband sought the help of the Tianjin Women’s Business Incubator.

“We had to do something,” Zhao told AFP in an interview, explaining the couple’s decision to start a small business.

11 US Congress moves to punish China on currency

by Shaun Tandon, AFP

Fri Sep 24, 9:48 pm ET

WASHINGTON (AFP) – The US Congress moved to open the way for retaliation against China over its currency, warning that it has lost patience with quiet efforts to press Beijing to let its yuan appreciate.

One day after President Barack Obama pressed Chinese Premier Wen Jiabao on currency in a meeting in New York, Obama’s allies in Congress approved a measure that accuses Beijing of killing US manufacturing jobs with its yuan.

The House Ways and Means Committee, which writes tax laws, voted to expand the powers of the Commerce Department to allow it to impose tariffs when another nation is found to be manipulating its currency’s value.

12 Petrobras capitalization ‘biggest in history’: Lula

by Marc Burleigh, AFP

Fri Sep 24, 8:03 pm ET

SAO PAULO (AFP) – Brazilian President Luiz Inacio Lula da Silva launched Friday what he called the biggest capitalization in history: raising more than 66 billion dollars through the sale of new shares in Petrobras to tap potentially vast offshore oil fields.

Lula described the sale of the paper in the state-run oil company as “the most auspicious moment in world capitalism,” before ringing the trading bell in Sao Paulo’s Bovespa stock exchange to signal the start of the operation.

The head of the exchange, Edemir Pinto, told reporters that the Petrobras sale now made Sao Paulo the second-biggest stock exchange in the world, in market value, after that of Hong Kong.

13 Zucker to step down at NBC Universal, Klein out at CNN US

by Chris Lefkow, AFP

Fri Sep 24, 2:59 pm ET

WASHINGTON (AFP) – NBC Universal chief executive Jeff Zucker announced Friday that he plans to step down once the merger of the media and entertainment giant with cable television operator Comcast is complete.

In another move involving a high-profile media figure, Time Warner’s CNN said Friday that it was replacing CNN US chief Jon Klein with Ken Jautz, who had been running its tabloid-format sister channel.

Zucker, in a memo to NBC Universal employees, said “when Comcast assumes control of NBC Universal, I will leave the company.

14 Wal-Mart offers $4 billion for South Africa’s Massmart

By Tiisetso Motsoeneng and Mark Potter, Reuters

1 hr 48 mins ago

JOHANNESBURG/LONDON (Reuters) – Wal-Mart (WMT.N) is in talks to buy South Africa’s Massmart (MSMJ.J), a $4 billion deal that would give the U.S. retailer a big presence in fast-growing Africa and bolster its emerging markets strategy.

The world’s largest retailer has been hit by weakness in the United States, where low-income shoppers are particularly vulnerable to unemployment and higher petrol prices. It has responded by focusing on cost cuts and international growth.

Buying Massmart, South Africa’s third-largest listed retailer by value, would give Wal-Mart a considerable network in Africa’s biggest economy and a foothold in 13 other countries in sub-Saharan Africa.

15 Unilever aims for big hair day with Alberto buy

By David Jones, Reuters

1 hr 25 mins ago

LONDON (Reuters) – Consumer goods group Unilever Plc/NV (ULVR.L) (UNc.AS) will buy U.S. hair and skin care company Alberto Culver (ACV.N) for $3.7 billion in the latest move to rebalance its portfolio toward higher growth lines.

Unilever’s biggest acquisition in a decade will add brands such as V05, TRESemme and Nexxus to Unilever’s existing Dove and Sunsilk, and make it the world’s leading company in hair conditioning and the second largest in shampoo.

Analysts said the price of the deal looked high but could be justified by as-yet unspecified cost savings and by skewing Unilever’s business to more high growth, high margin categories compared to its other food and detergent businesses.

16 Global stock underwriting down 9 percent so far this year

By Clare Baldwin, Reuters

Sun Sep 26, 10:55 pm ET

NEW YORK (Reuters) – Global stock underwriting proceeds have slipped nine percent so far this year as investors prove less willing to take risks amid an uncertain economic recovery.

Proceeds from global equity capital markets underwriting activity have fallen to $496.14 billion from $544.96 billion so far this year.

But the number of deals has increased 5.6 percent to 2,817 deals compared with a year earlier as banks have been willing to underwrite smaller offerings.

17 Traders manipulating cheap stocks: market maker

By Jonathan Spicer, Reuters

Sun Sep 26, 6:40 pm ET

WASHINGTON (Reuters) – Some traders are manipulating U.S. stocks that are worth less than $1 by taking both sides of trades in order to earn big rebates, according to an official at Knight Capital Group Inc (KCG.N).

Knight, a top U.S. market maker for individual investors, and the other four largest market makers discussed this problem with federal securities regulators on Thursday, Jamil Nazarali, Knight’s global head of electronic trading, told reporters on Friday.

“It happens for hundreds of millions of shares per day,” Nazarali said, adding that this type of market manipulation is hard to prove. The gaming costs Knight “tens of thousands of dollars” per day on some days, he said on the sidelines of a Security Traders Association conference here.

18 Deflation, inflation and the U.S. Fed

By Emily Kaiser, Reuters

Sun Sep 26, 3:03 pm ET

WASHINGTON (Reuters) – One day after the Federal Reserve got investors thinking about uncomfortably low inflation, Starbucks announced it was raising prices on some of its coffee drinks.

Anheuser-Busch is planning price hikes on some of its Budweiser beers later this year (although it’s also going to give away free samples to 500,000 people at bars and restaurants in the coming weeks).

So is inflation dangerously low or is it creeping higher?

19 Russia wants to supply all of China’s gas needs

By GILLIAN WONG, Associated Press Writer

1 hr 9 mins ago

BEIJING – China and Russia signed agreements Monday to boost energy cooperation, while Moscow said it wants to supply its energy hungry neighbor with all its natural gas needs.

No dollar value was given to the agreements signed during a state visit by Russian President Dmitry Medvedev, but they included documents on cooperation in coal, natural gas, nuclear energy and renewable energy.

Russian Deputy Prime Minister Igor Sechin told reporters in Beijing that Russia is in talks with Chinese partners on plans to launch natural gas supplies to China starting in 2015, according to the state ITAR-Tass news agency.

20 Comcast COO Burke takes top spot at NBC Universal

By EMILY FREDRIX, AP Business Writer

1 hr 22 mins ago

NEW YORK – Comcast Chief Operating Officer Steve Burke will succeed Jeff Zucker as the new CEO of NBC Universal later this year, when Comcast takes control of the broadcaster.

Comcast Corp. and General Electric Co., which currently owns NBC, said Sunday that Burke will work with Zucker during the transition. Zucker, who has spent his entire career at NBC, said last week that he would be stepping down after the change in control, telling employees in an e-mail that he understood the new owners would want to have one of their own at the helm.

The possibility of a change-in-command had been looming since last December, when Comcast agreed to buy a 51 percent stake in NBC Universal from Fairfield, Conn.-based GE. That deal, worth $13.75 billion, still hasn’t cleared regulatory hurdles, but is expected to be completed around the end of the year.

21 Sandcastles OK on Fla. beach; digging for oil not

By MELISSA NELSON, Associated Press Writer

1 hr 26 mins ago

NAVARRE BEACH, Fla. – At the height of summer, tar balls and paddies of oil were rolling ashore along the Florida Panhandle. Months later, sand castles are being built and swimmers frolic in the water, even though crude lies buried beneath the white sands.

Despite lingering concerns about the hidden oil from BP’s massive spill, sand-sculpting artists were etching masterpieces in a weekend competition designed to boost tourism and erase the images of oil-stained beaches.

“The media about the oil spill could give you an impression that all beaches were negatively affected. I don’t think it’s that bad. I think things have been cleaned up,” said sand artist Katie Corning of Fort Meyers Beach. “Many of the sculptors coming here this weekend live along the Gulf Coast and are concerned about letting people know that the beaches are healthy and beautiful.”

22 Experts question BP’s take on Gulf oil spill

By DINA CAPPIELLO, Associated Press Writer

Sun Sep 26, 3:43 pm ET

WASHINGTON – Engineering experts probing the Gulf of Mexico oil spill exposed holes in BP’s internal investigation as the company was questioned Sunday for the first time in public about its findings.

BP’s lead investigator acknowledged that the company’s probe had limitations.

Mark Bly, head of safety and operations for BP PLC, told a National Academy of Engineering committee that a lack of physical evidence and interviews with employees from other companies limited BP’s study. The internal team only looked at the immediate cause of the April disaster, which killed 11 workers and unleashed 206 million gallons of oil into the Gulf.

23 Computer attacks linked to wealthy group or nation

By LOLITA C. BALDOR, Associated Press Writer

Sun Sep 26, 9:17 pm ET

WASHINGTON – A powerful computer code attacking industrial facilities around the world, but mainly in Iran, probably was created by experts working for a country or a well-funded private group, according to an analysis by a leading computer security company.

The malicious code, called Stuxnet, was designed to go after several “high-value targets,” said Liam O Murchu, manager of security response operations at Symantec Corp. But both O Murchu and U.S. government experts say there’s no proof it was developed to target nuclear plants in Iran, despite recent speculation from some researchers.

Creating the malicious code required a team of as many as five to 10 highly educated and well-funded hackers. Government experts and outside analysts say they haven’t been able to determine who developed it or why.

24 Shippers say China slows handling of Japan goods

By JOE McDONALD, AP Business Writer

50 mins ago

BEIJING – China has stepped up customs inspections of goods shipped to and from Japan, slowing trade, logistics companies said Monday, amid a spat over the detention of a Chinese fishing boat captain near disputed islands.

Customs officers who usually look at 2 percent to 10 percent of goods in shipments began checking up to 95 percent this weekend, said employees of cargo companies in Shanghai and Shenzhen, a major port near Hong Kong. Customs officials gave no explanation for the change, they said.

“Normally it takes one or two days but now it’s going to be about a week,” said Mary Deng, an administrator for Shenzhen Hyun Young International Transportation Co. The company handles shipments of Chinese-made furniture, clothing and other goods to Japan.

25 Pass the pie: Canned pumpkin shortage is over

By SARAH SKIDMORE, AP Food Industry Writer

3 mins ago

PORTLAND, Ore. – Pumpkin lovers can relax: A nearly yearlong shortage of the canned stuff is over.

That means an end to the hoarding, rationing and even pumpkin profiteering that have been going on since heavy rain ruined last year’s harvest and caused a shortfall. But the country’s top producer says this year’s crop is healthy and cans are arriving in stores.

“I was a little panicked,” Jamie Lothridge of Toledo, Ohio, said about the prospect of a another season low on pumpkin. The avid baker bought more than 25 cans last fall and was down to her final few this month when she called Libby’s to make sure it would be back.

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