NickyJack News

Cherokees to protest Warren at convention

2012-05-31T16:08:00.001-07:00

Cherokees to protest Warren at convention

Cherokees angered by Elizabeth Warren’s claims of Native American heritage said today they’ll stand in silent protest against the embattled Senate candidate during Saturday’s Democratic Convention in Springfield.

“I believe we need a presence there. Warren hasn’t recanted her claims or apologized to the Cherokee people,” said David Cornsilk, a 53-year-old citizen of Cherokee Nation who co-created a group called “Cherokees Demand Truth from Elizabeth Warren.”

The protest will come as Warren’s Democratic rival Marisa DeFranco pushes to get 15 percent of delegate support at the Saturday convention in order to get on the ballot. Warren nabbed Gov. Deval Patrick’s endorsement yesterday, only three days before the convention as questions continue about whether she used her alleged roots to get a teaching job at Harvard Law School and the University of Pennsylvania.

Cornsilk said Warren’s admission today that she did inform both ivy league schools of her alleged American Indian ties points to her character. Warren had originally said she didn’t know the universities were listing her as Native American until she read about it in the Boston Herald.

“I think there’s a pattern of deception that is emerging, and she’s showing that she did know and that she did do these things,” said Cornsilk.

Warren said she told the school about her claims of Native American links, but only after she already received a job.

Full article: http://bostonherald.com/news/politics/view.bg?articleid=1061135629

Israel Returns Remains of Palestinian Militants

2012-05-31T16:06:00.000-07:00

Israel Returns Remains of Palestinian Militants

Photo: AP

JERUSALEM — Israel on Thursday handed over the remains of 91 Palestinian militants, including suicide bombers, to the West Bank government in an effort to induce President Mahmoud Abbas to renew peace talks.

All 91 were killed over the past decades while carrying out suicide bombings or other attacks on Israeli targets, Palestinian officials said. At least one of the attacks dated back to the 1970s.

The bodies had been buried in coffins in Israel and were dug up for the transfer. The Palestinian official in charge of Thursday's transfer, Salem Khileh, said Israeli officials handed over the remains to Palestinian liaisons in the Jordan Valley.

Eighty bodies were then transported to Ramallah, and 11 to the Hamas-run Gaza Strip. Palestinian government ceremonies honoring the dead militants were to be held in the West Bank and Gaza later Thursday.

"We hope that this humanitarian gesture will serve both as a confidence-building measure and help get the peace process back on track," Israeli government spokesman Mark Regev said. "Israel is ready for the immediate resumption of peace talks without any preconditions whatsoever."

Abbas has given no sign that the gesture would persuade him to return to talks.

On Wednesday, he reiterated that the Palestinians would not return to negotiations unless Israel freezes all settlement construction in the West Bank and east Jerusalem. Palestinians see those areas, captured by Israel in 1967, as the core of a future state that would also include Gaza.

Israel rejects that demand. Israeli-Palestinian talks stalled more than three years ago and have failed to take off again despite U.S. mediation, primarily because of the dispute over settlement construction.

Full article: http://www.newsmaxworld.com/middle_east/israel_palestine_remains/2012/05/31/453722.html

Axelrod Booed by Pro-Romney Crowd in Boston

2012-05-31T16:02:00.006-07:00

Axelrod Booed by Pro-Romney Crowd in Boston

President Barack Obama’s top campaign adviser David Axelrod appeared rattled as he was booed and shouted down by Mitt Romney supporters during an appearance in Boston on Thursday, the New York Times reported.

What was meant to be a press conference criticizing the Republican nominee’s record as Massachusetts governor in front of the statehouse he once occupied turned into a kind of political rally for Romney supporters, who chanted, “We Want Mitt!” “Broken Record!” and “Go Back to Chicago!”

Axelrod and Democratic state lawmakers pressed on throughout the relentless chants and boos to make their case to the cameras—CNN carried it live—and Axelrod responded to the shouts at one point, saying, “You can’t handle the truth, my friend. You can’t handle the truth,” according to the Times. His attempts to attack Romney’s tenure as governor were mostly lost in the din of the chants. He said Massachusetts under Romney’s leadership was 47th in job creation, according to the Times and that its government expanded at a rate of 6.5 percent.

Axelrod also had to face questions from reporters about the Elizabeth Warren, who admitted yesterday for the first time that she claimed minority status as a Native American at Harvard University and the University of Pennsylvania. Warren is the Democratic party’s front-runner in the campaign against incumbent Republican Sen. Scott Brown.

Full article: http://www.newsmax.com/Newsfront/axelrod-booed-boston-romney/2012/05/31/id/440844

Romney Declares Solyndra a ‘Symbol of Failure’ for Obama

2012-05-31T16:01:00.002-07:00

Romney Declares Solyndra a ‘Symbol of Failure’ for Obama

Photo: AP

Mitt Romney visited the closed facilities of Solyndra LLC, the solar-panel manufacturer that went bankrupt after receiving a $535 million federal loan guarantee, and called the company a “symbol of failure” for President Barack Obama’s administration.

The presumptive Republican presidential nominee spoke today outside the factory Solyndra constructed with government funds at its headquarters in Fremont, California, terming it “the Taj Mahal of corporate headquarters.” The campaign didn’t disclose the speech location until Romney arrived.

“This building, this half-a-billion dollar taxpayer investment, represents a serious conflict of interest on the part of the president and his team,” Romney said.

The former Massachusetts governor has repeatedly criticized the Obama administration’s decision to extend the $535 million loan guarantee to Solyndra, saying it was part of a pattern of rewarding companies and people that supported the president with taxpayer dollars. The family foundation of Obama fundraiser George Kaiser was Solyndra’s biggest investor.

“Free enterprise to the president means taking money from the taxpayers and giving it freely to his friends,” Romney said.

FBI Raid

Solyndra, heralded by Obama as proof that “the promise of clean energy isn’t just an article of faith,” filed for bankruptcy last September, days before the FBI raided its headquarters. The company received its loan guarantee under an Energy Department program in September 2009.

Its demise has sparked investigations by Congress, the FBI and watchdogs at the Energy and Treasury departments.

“If the business had done spectacularly well, the shareholders -- his friends -- would have done very, very well, but the taxpayers would have just gotten their money back,” Romney said. “On the other hand, of course, if the business failed -- as it did -- it’s the taxpayers that get stuck with losing a half a billion dollars.”

Solyndra received funding through a program created under President George W. Bush’s administration that “has supported tens of thousands of jobs across the country,” Obama campaign spokeswoman Lis Smith said today in a news release.

“In fact, both Republican and Democratic administrations advanced Solyndra’s application, and the company was widely praised as successful and innovative both before and after receiving the Department of Energy loan guarantee,” Smith said.

Nomination Wrap-Up

Romney, 65, founder of Boston-based private-equity firm Bain Capital LLC, sealed the Republican presidential nomination on May 29 by winning the Texas primary, which gave him more than the required 1,144 delegates.

Since then, Romney’s focus has been on raising campaign cash. He conducted a fundraiser last night in Hillsborough, California, where he was endorsed by two former secretaries of state: Condoleezza Rice, who served under Bush, and George Shultz, who held the post under President Ronald Reagan.

Romney, who holds another fundraiser tonight in Beverly Hills, also attacked Obama over Solyndra at the Hillsborough gathering.

U.S. Republican Boehner Holds Firm on No Tax-hike Pledge

2012-05-31T15:59:00.004-07:00

U.S. Republican Boehner Holds Firm on No Tax-hike Pledge

House of Representatives Speaker John Boehner on Thursday dismissed suggestions that Republicans were warming to raising revenue as a part of a plan to cut the deficit, adding that tax hikes on millionaires would cost jobs.

The top Republican in Congress blasted a proposal from House Democratic leader Nancy Pelosi to raise taxes only on those earning more than $1 million, saying it would hurt too many small business owners, who hire the most U.S. workers.

"I believe that raising taxes at this point in our recovery is a big mistake," Boehner told reporters. "At a time when we're trying to help small businesses create jobs, this proposal would kill jobs."

Boehner's comments came after some Senate Republicans recently indicated they might be willing to change some key parts of U.S. tax law to eliminate some exemptions, credits and deductions as a part of broad tax reforms that would allow income tax rates to be lowered while shrinking federal deficits.

In a sign of potential progress, a bipartisan group of 47 senators and as many House members are working with the leaders of a 2010 fiscal commission - former Republican Senator Alan Simpson and Democratic ex-White House chief of staff Erskine Bowles - on a plan to solve U.S. fiscal problems .

The commission's recommendations to shrink deficits through tax hikes and spending cuts were not adopted, but still serve as a model for some in Congress who favor a more pragmatic approach to deficit reduction.

A so-called "grand bargain" on taxes, deficit- and debt- reduction is not likely until after the Nov. 6 election, but both parties are trying to lay the groundwork for legislation to deal with the expiring tax cuts enacted under former President George W. Bush.

In April, Republican presidential candidate Mitt Romney was overheard saying at a private fundraiser that he might seek to limit tax deductions for mortgages as a revenue-raising measure and reduce tax credits as part of a plan to slash U.S. tax rates by 20 percent.

Aides later said Romney was simply throwing out ideas, not outlining policy.

In the Republican-controlled House, where fiscal conservatives aligned with the Tea Party movement have held sway, any plan to bring in more tax revenue is expected to be extremely difficult to pass. Nearly all House Republicans have signed a pledge promoted by influential conservative activist Grover Norquist to reject tax increases.

Boehner told reporters that the House, in June, would vote to extend current tax rates into next year, bringing certainty to the tax code for businesses reluctant hire workers for fear of their tax bills rising.

The move is intended avoid a spike in rates that would hurt economic growth and to buy time for Congress to craft a broader tax reform plan, but it is likely to stall in the Democratic-controlled Senate.

Meanwhile, Pelosi continued to push on Thursday for her plan to raise taxes on millionaires, which caused a stir last week because it represented a retreat from Democrats' longstanding position of raising taxes on those making more than $250,000.

"I urge the Speaker to bring a middle income tax cut to the floor of the House. Put on the table whatever you want to put on the table. Let's have that debate," Pelosi told reporters.

Reiterating a key campaign theme of President Barack Obama's Democrats, Pelosi said Republicans will show voters that they will go "to any length to protect the wealthiest people in America at the expense of the middle class."

More revenues are needed to shrink deficits, she added. "Everybody has to pay his or her fair share."

Full article: http://www.newsmax.com/Newsfront/boehner-house-speaker-republican/2012/05/31/id/440836

Dershowitz: Edwards’ Jury Made Right Decision

2012-05-31T15:57:00.002-07:00

Dershowitz: Edwards’ Jury Made Right Decision

Alan M. Dershowitz’s Perspective: It is a wise person who knows when not to decide. The jury in the John Edwards case rendered exactly the right verdict. Of course they couldn’t make up their mind on most of the charges.

No rational person could.

The judge essentially instructed them to get into John Edwards’ mind (as well as into the minds of several other actors in this political soap opera) and to determine precisely what his intention was in receiving money from friends.

If his intention was primarily personal (to try to save his marriage and not humiliate his wife any further), then there was no crime. But if his intent was primarily political (to help him get elected president), then there may have been a crime.

Precisely how many angels were dancing on the head of that pin! No one, not even Edwards himself, could calculate the precise quantification of his complex and multiple intentions. This kind of decision should never be the subject of a criminal case, and the jury was right to find a reasonable doubt as to one of the charges and to throw its hands up as to the others.

All reasonable people should now hope that the Justice Department sees the light of day and does not seek a retrial. The jury has spoken, though ambiguously, and there is no reason to believe that another fairly picked jury will be able to discern the precise intentions of the actors with any greater certainty or precision.

This entire farce of a trial is part of a larger problem that infects not only America but other Western countries as well: the criminalization of policy differences and of personal sin.

No one can justify what John Edwards did to his family, to American politics, and to himself. He will forever pay a steep price for his selfishness and arrogance.

But it is not a price that all Americans should have to pay by the distortion of the criminal justice system into a Rorschach test, in which the jury is asked to interpret vague action and attribute precise intentions to actions done with mixed motives.

The criminal law should be limited to what I call “Hamlet decisions.”

Before a person is charged with a serious crime, the government should have to prove beyond a reasonable doubt that the defendant actually engaged in a “to be or not to be” decision — to be a felon or not to be a felon, to step over a clear line that separates criminality from sin!

There is no reason to believe that John Edwards ever made that decision, because the law governing his conduct is vague, subjective and unclear in the extreme.

At the time of the founding of our Republic, there was a common expression that said that a criminal law must be so clear that a potential defendant “can read it while running and still understand it.” The law under which Edwards was tried was so unclear that a bevy of lawyers could not understand it while sitting and studying it for hours.

So let the remaining charges be dropped against John Edwards. Let him be relegated for his deserved place in history and let us reserve the criminal law for real felons who knowingly violate clear criminal statutes.

If Congress wants to criminalize what Edwards was accused of doing, let it enact a clear law that gives fair warning to all politicians that they may not accept any gifts, regardless of intent. I doubt Congress will pass such a law. In the absence of clear guidance, the Edwards jury showed wisdom and common sense. Let’s hope the Justice Department now does the same.

Full article: http://www.newsmax.com/Newsfront/John-Edwards-corruption-trial/2012/05/31/id/440847

Author Ed Klein: Obama's Biggest Lie

2012-05-31T15:56:00.001-07:00

Author Ed Klein: Obama's Biggest Lie

Veteran journalist Edward Klein has shot to the top of the New York Times’ best-seller list with a blockbuster new book about Barack Obama — the president Klein calls the “most divisive in modern history.”

Klein’s book “Amateur: Barack Obama in the White House,” which is debuting on the Times’ list at No. 1, is buttressed by nearly 200 interviews, many of them with insiders who know Obama best, and features explosive disclosures about one of the most secretive White Houses.

Klein is the former editor-in-chief of the New York Times Magazine, former foreign editor of Newsweek, and a contributing editor to Vanity Fair. He sat down in New York with former Congressman and Newsmax columnist John LeBoutillier for an exclusive interview about Klein’s expose, which is being hailed as the most riveting political book of the year.

LeBoutillier asked Klein what is the biggest lie Obama has told the American public.

“He promised that he would bring us together. He promised that he would not be partisan,” Klein responds. “He promised that he would reach out to the other side, the Republican side.

“Instead, he and his small little group of people in the White House hunkered down, have not reached out, not compromised, making it impossible for Washington to work.

“It’s not Republicans who are at fault here, it’s the president, who does not know how to use the leverage of power and his powers of persuasion. He’s the anti-Lyndon Johnson in that he doesn’t know how to get things done.

“And so he’s been more divisive, more partisan than any president we’ve seen in modern history.”

Full article: http://www.newsmax.com/Newsfront/klein-obama-amateur-promises/2012/05/31/id/440846

Wisconsin unions see ranks drop ahead of recall vote

2012-05-31T15:51:00.001-07:00

Wisconsin unions see ranks drop ahead of recall vote

Public-employee unions in Wisconsin have experienced a dramatic drop in membership -- by more than half for the second-biggest union -- since a law championed by Republican Gov. Scott Walker sharply curtailed their ability to bargain over wages and working conditions.

Now with Mr. Walker facing a recall vote Tuesday, voters will decide whether his policies in the centrist state should continue -- or whether they have gone too far.

The election could mark a pivot point for organized labor.

Mr. Walker's ouster would derail the political career of a rising Republican star and send a warning to other elected officials who are battling unions. But a victory for the governor, who has been leading his Democratic opponent in recent polls, would amount to an endorsement of an effort to curtail public-sector unions, which have been a pillar of strength for organized labor while private-sector membership has dwindled.

That could mean the sharp losses that some Wisconsin public-worker unions have experienced is a harbinger of similar unions' future nationwide, union leaders fear. Failure to oust Mr. Walker and overturn the Wisconsin law "spells doom," said Bryan Kennedy, the American Federation of Teachers' Wisconsin president.

Wisconsin membership in the American Federation of State, County and Municipal Employees-the state's second-largest public-sector union after the National Education Association, which represents teachers-fell to 28,745 in February from 62,818 in March 2011, according to a person who has viewed Afscme's figures. A spokesman for Afscme declined to comment.

Read more: http://www.foxnews.com/politics/2012/05/31/wisconsin-unions-see-ranks-drop-ahead-recall-vote/?intcmp=trending#ixzz1wUTGqP00

John Edwards Beats the Rap But Bears the Scars of His Decisions

2012-05-31T15:47:00.004-07:00

John Edwards Beats the Rap But Bears the Scars of His Decisions

Photo: AP

He could have been President of the United States. He was almost Vice President. But John Edwards did himself in, quite thoroughly. With the mistrial, he will not be welcomed back into Democratic Party politics. He will spend his days chasing ambulances in North Carolina.

This afternoon Edwards was found not guilty on one count of illegal campaign contributions. This was after a nine day deliberation which left his North Carolina jury in a deadlock on the other five counts. The judge declared a mistrial and dismissed the jury. It’s unlikely the Department of Justice will re-try the case. It’s over. John Edwards has won.

What are his crimes? Lying and being a sneak. Living one life in public and another in public. As his wife battled cancer, and became a national celebrity, Edwards hooked up with — you fill in the blank– and fathered her child. He lied repeatedly to his wife. In her book, “Resilience,” Elizabeth Edwards said when she was first told about Rielle Hunter, she threw up.

Edwards promised her it was a one time thing. But it wasn’t. It was a full fledged affair. He would sneak into the Beverly Hilton Hotel from the basement elevator to see mother and daughter. When he was caught, he lied.

But now Elizabeth is dead. John Edwards has skated on the whole thing. It was too complex for a North Carolina jury. They couldn’t handle the truth. And the truth was, Rielle Hunter hated Elizabeth and wanted to get rid of her. So she has. I do hope that her own family, Elizabeth’s, will stand up and say something.

Full article: http://www.forbes.com/sites/rogerfriedman/2012/05/31/john-edwards-beats-the-rap-but-bears-the-scars-of-his-decisions/

President Obama's Wealth Destroying Goal: Taking The 'Curley Effect' Nationwide

2012-05-31T15:45:00.003-07:00

President Obama's Wealth Destroying Goal: Taking The 'Curley Effect' Nationwide

Detroit

Photo: AP

It’s hard to think of anything more perverse in American politics than the Curley effect. The Curley effect historically has been an urban phenomenon, but President Obama seems bent on taking the entire country down this wretched path.

As defined by Harvard scholars Edward L. Glaeser and Andrei Shleifer in a famous 2002 article, the Curley effect (named after its prototype, James Michael Curley, a four-time mayor of Boston in the first half of the 20^th century) is a political strategy of “increasing the relative size of one’s political base through distortionary, wealth-reducing policies.” Translation: A politician or a political party can achieve long-term dominance by tipping the balance of votes in their direction through the implementation of policies that strangle and stifle economic growth. Counterintuitively, making a city poorer leads to political success for the engineers of that impoverishment.

Here’s an example of how the Curley effect works: Let’s say a mayor advocates and adopts policies that redistribute wealth from the prosperous to the not-so-prosperous by bestowing generous tax-financed favors on unions, the public sector in general, and select corporations. These beneficiaries become economically dependent on their political patrons, so they give them their undivided electoral support—e.g., votes, campaign contributions, and get-out-the-vote drives.

Meanwhile, the anti-rich rhetoric of these clever demagogues, combined with higher taxes to fund the political favors, triggers a flight of tax refugees from the cities to the suburbs. This reduces the number of political opponents on the city’s voter registration rolls, thereby consolidating an electoral majority for the anti-wealth party. It also shrinks the tax base of the city, even as the city’s budget swells. The inevitable bankruptcy that results from expanding expenditures while diminishing revenues can be postponed for decades with the help of state and federal subsidies (“stimulus” in the Obama vernacular) and creative financing, but eventually you end up with cities like Detroit—called by Glaeser and Shleifer “the first major Third World city in the United States.”

The Curley effect is extensive. Perhaps you have seen the chain e-mail listing the ten poorest U.S. cities with a population of at least 250,000: Detroit, Buffalo, Cincinnati, Cleveland, Miami, St. Louis, El Paso, Milwaukee, Philadelphia, and Newark. Besides all having poverty rates between 24 percent and 32 percent, these cities share a common political factor: Only two have had a Republican mayor since 1961, and those two (Cincinnati and Cleveland) haven’t had one since the 1980s. Democratic mayors have had a lock on City Hall despite these once-great and prosperous cities stagnating on their watch. This is the Curley effect in action.

Let me comment on the city on that list that I know the best—Detroit. (I grew up a few miles from its city limits.) In the 1920s, Detroit was arguably the richest city in the world. Today it is broke—a shadow of its former self after 51 years of Democratic hegemony and a Curley-like agenda.

I’m going to say something provocative that leftists will surely quote out of context, but it needs to be said: Detroit was a lot better off in the 1950s, when the city funded one of the best zoos in the country but had not yet built today’s gravy train for favored segments of the human population. Detroit’s decline has paralleled a shift toward funding far fewer zoo animals and far more human beings.

Critics may take this to mean that I value animals more than people. On the contrary, it is because I value humans more than animals that I find the policy shift to be morally offensive in addition to being so obviously destructive economically. It is bad enough to see a trapped lion carrying 80 pounds of flab that a lion in the wild would never have, but why would you reduce human beings to a similarly pathetic dependency? The bars that ensnare humans behind the economic and psychological cages of the government dole may not be physical, but it is pathetic to see people reduced to lives of unproductive idleness and despair, all in the name of “compassion” and, of course, for the sake of cementing Democratic mayors in office.

What is most troublesome about the Curley effect is that it is spreading beyond its historical setting of cities. Entire states—most notably our most populous, California—are manifesting all the symptoms of the Curley effect: Democrats enjoying electoral hegemony; businesses and middle-class individuals, more Republican than Democratic, emigrating to states with less oppressive tax regimes; reduced job opportunities; a budget careening toward bankruptcy.

The ultimate political prize for the Democrats, of course, would be to control the national government. (Note: Yes, I know that technically we have a “federal” government, but if Big Government Democrats find a way to forge a permanent majority, you can kiss the last vestiges of federalism goodbye.)

Everything Obama has done has been designed to strengthen Democratic constituencies (e.g., stimulus spending steered predominantly toward unions and strategically allied state and municipal entities; waivers from Obamacare for unions; a hefty 23 percent increase in the Index of Dependence on Government during Obama’s first two years) and to weaken Republican constituencies (e.g., making small business formation more difficult by impeding venture capitalists; refusing to amend Sarbanes-Oxley; using Dodd-Frank regulations to discourage loans; fewer waivers from Obamacare; proposing lower tax rates for large corporations, but not on the “S” corporations that are the preferred choice of small business owners; constant efforts to raise taxes on the “rich”—which means, as we’ve seen in Detroit, California, and other Curley effect victims, higher taxes on the middle class).

Obama’s smash-mouth, Curley-like politics is all about choosing winners and losers. Reread his State of the Union address from January, and you see a parade of proposals to take from A to give to B, to encourage businesses to do C and discourage them from doing D. Indeed, Obama seems incapable of suggesting a single economic policy that does not redistribute wealth from his political opponents to his political allies. The message is clear: He wants Americans to be dependent on the government; consequently, he is hostile to the private sector, because a vibrant private sector enhances economic independence and self-reliance.

If Obama and his fellow progressives succeed in applying the Curley strategy on the national level, Americans will no longer be able to move to a new city or state to escape the withering economic impact of Curley-effect policies; their only option would be to leave the country. However, it appears that Obama has anticipated that response. To close the escape hatch from an Obama-Curley American, the president signed the Foreign Account Tax Compliance Act that mandates closer monitoring of Americans’ offshore accounts. apparently approves of policies to impose financial penalties on anyone desiring to give up U.S. citizenship, and periodically calls for “global minimum taxes.”

The Curley effect already has inflicted great economic damage on important American cities and states. It now presents an existential threat to our entire country. That one of our major political parties has based its own success on such a ruthlessly cynical strategy is disgusting, if not diabolical. How we get off this suicidal path is one of the most urgent challenges facing us today.

Full article: http://www.forbes.com/sites/markhendrickson/2012/05/31/president-obamas-wealth-destroying-goal-taking-the-curley-effect-nationwide/2/

Mark Zuckerberg Has First Winning Day As Facebook Shares Finally Tick Up

2012-05-31T15:42:00.003-07:00

Mark Zuckerberg Has First Winning Day As Facebook Shares Finally Tick Up

Mark Zuckerberg was the big winner in the markets Thursday as Facebook shares finally reversed their two-week nosedive.

The stock closed Thursday at $29.60, a relatively small step up from Wednesday’s close of $28.19, but a victory nonetheless. Since the social network debuted at $38 a share on May 18, shares have been dropping daily. Zuck must be breathing a little easier in his hoodie now that he’s worth an additional $685 million.

But it was an up-and-down kind of day for the Facebook billionaires. At midday, around 1:34 p.m. Eastern time to be precise, Zuckerberg was the second biggest loser of the billionaires we track, down $611 million. Also around that time, fellow Facebooker Dustin Moskovitz was down $168 million. But like Zuck, Moskovitz ended the day a richer man, his net worth up $188 million.

Jeff Bezos was the day’s second-biggest winner, up $324 million as Amazon agreed to collect state sales tax in New Jersey from customers in that state, where it is building two new distribution plants. Thursday was also a good day for Larry Ellison: he gained $303 million as tech news site CRN reported that Oracle had snapped up Gary Koopman, former vice president of U.S. distribution at Hewlett Packard, as the company’s group vice president of North America hardware and channel sales.

The world’s richest man, Carlos Slim Helu, was Thursday’s biggest loser as his America Movil shares dropped 1.8%. That’s not much of a change, but Slim owns a lot: at market’s close he was $711 million poorer than the day before. Sheldon Adelson, Republican presidential contender Mitt Romney’s potential odd political bedfellow, was the second biggest loser of the day; shares in his Las Vegas Sands dropped 3.4%, taking his net worth $604 million lower. He’s probably not too worried about it, since his stakes of his three largest holdings are still worth $19.9 billion.

All in all, Thursday was a more normal day in the markets than Wednesday, when all but two billionaires lost big money. Thursday’s trading finished with 33 billionaires worth less than Wednesday, and 17 worth more.

Full article: http://www.forbes.com/sites/erincarlyle/2012/05/31/mark-zuckerberg-has-first-winning-day-as-facebook-shares-finally-tick-up/

Kim Kardashian Sponsored Shoes Lead to Settlement: Skechers Proves We Need Clinical Trials Of Running Shoes

2012-05-31T15:40:00.002-07:00

Kim Kardashian Sponsored Shoes Lead to Settlement: Skechers Proves We Need Clinical Trials Of Running Shoes

Kim Kardashian with her "Shape-Ups"

Photo: AP

I’m of the opinion that we don’t run enough clinical trials for things that are not obviously medicines or medical devices, but that people generally assume have health benefits. Things like yogurt — and sneakers. Today, Skechers proved my point by getting in trouble with the feds.

Today the Federal Trade Commission announced that Skechers USA, the discount sneaker maker that found its way to premium pricing by selling “toning shoes” with rounded soles that were supposed to strengthen muscles better than regular sneakers, would pay $40 million to settle claims “that the company deceived consumers by making unfounded claims that Shape-ups would help people lose weight, and strengthen and tone their buttocks, legs and abdominal muscles.”

Consumers who bought the shoes should go to www.ftc.gov/skechers. Besides Shape-ups, Skechers also made deceptive claims about its Resistance Runner, Toners, and Tone-ups shoes, the FTC argues, and. Consumers who bought these “toning” shoes will likewise be eligible for refunds either directly from the FTC or through a court-approved class action lawsuit.

Central to the FTC’s allegations is the argument that Skechers used bad science and celebrity endorsements (including Kim Kardashian and Brooke Burke) to sell the shoes. Two egregious-sounding examples from the FTC news release:

Shape-ups ads with an endorsement from a chiropractor named Dr. Steven Gautreau, who recommended the product based on the results of an “independent” clinical study he conducted that tested the shoes’ benefits compared to those provided by regular fitness shoes. The FTC alleges that this study did not produce the results claimed in the ad, that Skechers failed to disclose that Dr. Gautreau is married to a Skechers marketing executive, and that Skechers paid Dr. Gautreau to conduct the study.

An ad that claims consumers who wear Resistance Runner shoes will increase “muscle activation” by up to 85 percent for posture-related muscles, 71 percent for one of the muscles in the buttocks, and 68 percent for calf muscles, compared to wearing regular running shoes. The FTC alleges that in citing the study that claimed to back this up, Skechers cherry-picked results and failed to substantiate its ad claims.

via Skechers Will Pay $40 Million to Settle FTC Charges That It Deceived Consumers with Ads for “Toning Shoes”.

The idea that one type of shoes could be better than another is a testable claim — and there’s no reason that a company that wants to launch a marketing blitz on how their product will help you get in shape couldn’t spend a few million dollars on a reasonably sized study to prove that those benefits are actually there. Certainly, they could do better than relying on the husband of a marketing executive or using a weak, probably meaningless data point like “muscle activation.”

I’d like to see more studies like this one, being conducted by Nike, that randomly assigns runners to get one of three shoes: a traditional running shoe, a Nike minimalist shoe with less support, and a Vibram Five Fingers — those funny shoes that fit toes like gloves. (Full disclosure: I’ve been running in Vibrams lately, and like them, but I have no idea if I’m just falling for the latest fad.) There have been great arguments made that overly cushioned running shoes can increase the risk of certain injuries, based on studies of human biomechanics. A randomized trial can actually tell you whether that’s true.

Of course, having to actually prove marketing claims with science can be a rude awakening to companies who aren’t used to doing so. One example: Lifeway Foods, which, as I wrote in a magazine feature two years ago, complained when a clinical trial of its yogurt-like drink did not show the expected benefits. Or, to pick a bigger target, General Mills who was recently marketing Cheerios as if they were a cholesterol-lowering drug made by Merck or Pfizer. (Actually, the Cheerios ads were better than the drug company ones.) Coca-Cola‘s Vitaminwater brand is built entirely on putting vague-sounding benefits around sugar water that contains vitamins with little proof the vitamins are actually good for you. (There’s actually little evidence vitamin supplements help most people.)

One thing that’s pretty clear is that we need a better way of regulating these kinds of studies than the FTC, which applies relatively small fines after the fact. Having all these claims go through the FDA would probably be too expensive and time consuming, but we need better mechanisms to convince marketers to actually prove their claims before they push them on the broader market.

And I really am waiting for some more clinical trials of running shoes.

How To Get An Awesome Internship

2012-05-31T15:37:00.003-07:00

How To Get An Awesome Internship

Photo: AP

There are a jazillion websites, blog posts, articles, books, seminars and YouTube videoson how to land an internship.

Chances are, you’ve read or heard 98 percent of this advice before: edit and proofread your resumes and cover letters, clean up your social media accounts, dress appropriately for an interview, be 15 minutes early to an interview, send thank you notes, don’t be too shy, find a way to stand out, look people in the eye, have a firm handshake, build your network. I don’t want to dismiss this advice, but I would call it common sense. Job applicants who aren’t doing these things are little leaguers trying to get an invite to the Olympic trials. If you’re in your twenties and this is new information, a really good article to read is here.

A lot of people tell you how to get a gig, but not the gig. Unlike jobs, internships (in general) are fairly easy to land, because some small shop in some small town or suburb will let you work for them for free. As a consequence, all internships are not created equal. Some internships, unlike the humdrum nobody-knows company internships, are the golden ticket that take you up the glass elevator to the economic penthouse, getting interns a substantial starting salary position come graduation, which means security and not having to live with their parents- every soon-to-be and recent college graduate’s dream.

How do candidates get THOSE internships? With such a high application volume, and having all the crème candidates all applying to their shop, how does anyone stand out? What makes them pick a resume out of the pile?

I asked three jackpot companies what it takes to be an intern. I interviewed intern managers from Linkedin, mtvU and Facebook to get the juice on how to score an internship at some of the most famous and influential companies in the world. Here’s what they had to say:

1. Do your Research

This is advice that I would also put in the common sense file, but my sources mentioned this as a common mistake, I’m going to write it.

Spending 20-30 minutes looking at a company’s website is not research. That’s skimming the material before a test when you haven’t bothered to go to lecture in awhile.

“The first question I always ask is, ‘How much do you know about mtvU?’” says Jordana Cohen, manager of mtvU Marketing and Distribution. “I’m shocked candidates will answer, “I don’t know anything” or tell me about their favorite MTV shows. “

MtvU produces original content, independent from MTV and reaches nearly 9 million students over 750 college campuses nationwide. They have a website,mtvU.com that gives access to everyone who may not have the channel.

Research includes not only the company and its products, but the business itself. Who are the major league companies and who are the minor league companies? What are they known for? How are they doing in the stock market? Have they been in the news lately? If yes, then why? What sort of people work there? What are their backgrounds? What are their products? What product is most popular? Which is the least popular? If people are writing about those products, what are they praising and what are they criticizing?

Potential interns who get noticed in an interview or on the job are the ones who have an opinion- they aren’t afraid to speak up, give input and contribute to brainstorming sessions. But in order to have effective and credible input, one has to put in the time and do the research.

These are the questions you should know the answers to, not word vomiting a mission statement or telling them how much you love The Real World.

2. Use and know the product

I like to think I’m the brightest bulb in the tanning bed as much as the next girl, but I hope I’m not the only person who thinks this is painfully obvious. But as my dad used to say, “Some people need 8 x 10, color glossy photos with paragraphs and arrows on the back.”

There are certain things you can wing in an application or in an interview. But being unfamiliar with the product, web site, whatever your dream company’s schtick is, is fatal- because they’ll know.

“We can generally tell when they really love Linkedin, we see them being proactive, sending inmails, Linkedin groups,” explains Doris Tong, University Relations manager, aka the intern manager. “They’ll share insight and knowledge, they’ll have stories about how Linkedin has helped them in their career and lives as students, how they’ve benefited, how they’ve used our product, connected with alums, etc.”

Tong also told me a story about how an intern candidate for their mobile app went on and on in his application and interview about how much he loved creating apps. When she asked what he thought of Linkedin’s mobile app, he said he didn’t know because he hadn’t downloaded it.The light bulb flickers on sooner for some than others, I guess.

Most interviewers are bound to ask you why you want the internship. Answers like “I love procrastinating on Facebook,” “I’m the next Mark Zuckerburg,” “I want to hang out with celebrities at the MTV events” or “I’ve heard so many good things about Linkedin,” are like eating dessert for dinner. It seems like a good idea at the time but it won’t satisfy the interviewer or your metabolism.

“The most successful answers to the question “why Facebook?” are things you’d really like to change about Facebook – whether it’s a feature you wish existed, or a bug you’d like to fix, or just a design you think we got wrong,” says Jocelyn Goldfein, a Director of Engineering at Facebook. “ If you get an internship at Facebook, you get the same access to the source code that all of our full-time engineers do. We want to hire people who’ll use that access to make a big, positive impact.”

3. See the Big Picture

The single most important thing about seeing the big picture is to know where you stand in it.

In the process of researching your desired business, the companies within that business, companies’ individual products and the internship you want, you start aligning what you have with what they have, what you want with what they want, and begin to figure out which company’s shoes you believe will fit you best.

Once you have done that, you can break down to an interviewer what you’ve done, and demonstrate the qualities you possess that go hand-in hand with the company. Because during the application process your job is to illustrate what you can do for the company, and why you’re the best choice. And in order to effectively do that you have to know a great deal about the company, a great deal about their products, and have an unwavering belief in yourself and your abilities.

“Prepare an answer to the question, ‘what makes you stand out?’ that actually makes you stand out. One candidate, who I hired, talked about how he loved how mtvU gives opportunities to students to launch their career goals in a different way than his university did,” says Cohen. “We loved that he understood, on his own, the big picture of how and why we partner with universities, and that was a big factor in him getting the position.

4. Passion Beats GPA

Many candidates see passion as giving fiery speeches or being a huge fan. To an extent that’s part of it. But college students don’t get an internship at Googlebecause they Google everything. Infusing passion into employment requires the passion to manifest itself during spare time. What does that mean? It means an applicant would do their job even if they weren’t paid to do it, and it becomes a part of everything else they do.

“For example, an engineer who builds applications and tools in their spare time,” says Tong. “If they like playing guitar, they’re creating an app to help them practice guitar, they’re integrating app building into their other interests.”

How do you showcase this in your resume and/or cover letter?

“Highlight your side projects! This shows you have a passion for making things, not just going through the motions. If you’ve written an app, built a site, or contributed to open source, make that front and center on your resume,” says Goldfein. “A resume with nothing but coursework is not going to get picked up. You have to have something extra that shows you have real passion for a career in software, not just taking classes. Those are your work experience, side projects, open source, or coding competitions. If all else fails – go to our website and try one of the coding puzzles.”

You can apply for internships at mtvU here, Linkedin here and at Facebookhere.

Full Article: http://www.forbes.com/sites/francesbridges/2012/05/31/how-to-get-an-awesome-internship/2/

The World's Best New Universities

2012-05-31T15:35:00.001-07:00

The World's Best New Universities

Photo: AP

For the last eight years, Times Higher Education, a London magazine that tracks the higher ed market, has put out a list of what it deems to be the world’s top universities. Each year, THE gets more ambitious in its rankings, expanding the list from 200 schools to 400 in 2011. (I wrote about the 2011 list here.)

Today THE put out a new listing, of the top 100 schools in the world that are 50 years old or younger. According to Phil Baty, THE’s rankings editor, the magazine wanted to highlight a list of newer universities with strong ratings, in order to demonstrate that the U.S. and the United Kingdom, which dominate most higher ed lists, are facing a crop of up-and-comers. “The traditional heritage universities do not have a monopoly on excellence,” says Baty. “There are new, rising stars coming to challenge them for the best students and the best academic faculty.”

Of the top 100 institutions under 50 years old, only nine are in the U.S. The U.K. has a stronger showing, with 20 schools, which is more than any other country. But Baty says that growing institutions in the Gulf states and in Asia, are presenting a challenge to the U.S. and the U.K. There are a total of 30 countries represented in the new ranking, including Canada, France, Ireland, Brazil, Malaysia, Turkey, Egypt and Saudi Arabia. For the complete list of 100 schools under 50 years old, click here.

The top ten on the list are a diverse group, led by South Korea’s Pohang University of Science and Technology, which is just 26 years old. Baty says the school, known as Postech, has grown in part because it gets substantial financial support from POSCO, a major Korean steel company located in Pohang. POSCO’s then-CEO, the late Tae-Joon Park, founded the institution and modeled it after the California Institute of Technology in Pasadena, with an emphasis on science and engineering. Since 2010, Postech has run as a bilingual institution, with most of its lectures and faculty meetings held in English. “It’s a shining example of what can be achieved by any nation with the right support,” says Baty. (In March, THEpublished an in-depth report on Postech, calling it “a university in the ascendant.”)

Unlike the U.S. News and World Report rankings, or Forbes’ own college rankings system, THE does not measure indicators like entry requirements, graduation rates, professor ratings by students or alumni salaries. Instead, it emphasizes global scholarship and reputation. THE gathers data on points like the number of times the school is cited in academic research, the impact of those citations on other research, and the volume, income and reputation of research the school produces. It also looks at the number of degrees awarded to undergraduates and to the academic staff, and teaching measures, like staff-to-student ratios and a survey of teacher reputations. (For more on THE’s ranking methods, click here.)

One way the under-50 list differs from THE‘s top universities ranking: it is calibrated to give less weight to prestige, explains Baty, making it possible for newer, lesser-known schools to rise in the rankings.

Of the 100 schools on the under-50 list, the top 19 have all made THE’s cut for the top 200 universities, establishing themselves as competitors with the world’s top schools. “This list really points out that the world is changing,” says Baty. “There are many nations ready to invest in higher education,” he adds.

Number two on the list, the École Polytechnique Fédérale de Lausanne, is arguably older than 50 years, since it started out as part of an institution founded by the Swiss government back in 1853. But in 1969, it split from the larger University of Lausanne and established its own campus in a suburb southwest of Lausanne in 1978. Like Postech, EPFL emphasizes science and engineering. It is still run by the Swiss government and it has its own nuclear reactor on campus, which it uses to teach reactor physics.

The third school on the list, the Hong Kong University of Science and Technology, has a similar emphasis to the top two schools. It opened its doors in 1991, and has already built a strong reputation in science, technology and business, offering an MBA program that the Financial Times has ranked as 10^th best in the world. The school runs the MBA program in partnership with the Kellogg School of Management in Evanston, Ill., and it has a partnership with NYU’s Stern School of Business for students who want to get a Master’s in global finance. The school ranks at no. 62 on THE’s world university rankings.

The highest-ranked U.S. school on the under-50 list comes in at number 4, theUniversity of California, Irvine, founded in 1965 to accommodate the growing number of students enrolling in the U.C. system.

THE editor Baty says the under-50 list shows how much the world of higher education is changing, with both the private and public sectors in many countries outside the U.S. and the U.K. investing in new universities. “They are waiting in the wings to steal the crown from America,” says Baty. “It’s a changing, dynamic world.”

Full article: http://www.forbes.com/sites/susanadams/2012/05/31/the-worlds-best-new-universities/

From L.A. Dodgers to Alleged Tax Dodgers: The McCourt Saga Continues

2012-05-31T15:33:00.003-07:00

From L.A. Dodgers to Alleged Tax Dodgers: The McCourt Saga Continues

Jamie McCourt arriving with her attorney

Photo: AP

It’s got to be hard to be a Dodgers fan these days. All Star center fielder Matt Kemp just came off the DL only to find himself injured again this week. Injuries continue to plague other players including Mark Ellis, Ted Lilly and Juan Rivera. And the Dodgers have little money to buy their way out of this one as their finances continue to dwindle amid charges that the former owners, the McCourts, plundered the team during their tenure, using it as their personal ATM.

(And yet the Dodgers are sitting on top of the National League West – there’s really no need to point out that my beloved Phillies are at the bottom of the National League East.)

It seems that Dodgers fans aren’t the only ones who want to know what happened to the team’s finances. The Los Angeles Times is reporting that a federal grand jury is investigating possible criminal misconduct of the Dodgers relating to the financial (mis)management of the team.

So wow, right? Bad behavior and bad judgment is one thing but criminal conduct is another.

And it gets worse. It appears that the investigation is focused not only on your run of the mill fraud but on federal and state income tax issues (the MLB has already confirmed via the bankruptcy petition that the Dodgers owe the City ofLos Angeles nearly a quarter of a million dollars in back taxes).

You can read the petition here:

Jamie McCourt had previously alleged in the nasty, public – did I mention nasty? – divorce of the former owners that the couple had paid no federal or state taxes for at least six years, beginning 2004, the year the McCourts bought the Dodgers. That was as of last year. There’s no word on whether any taxes had been filed or paid for 2010 and/or 2011. Last year, Frank McCourt’s accountant confirmed that the McCourts and/or related entities were under examination for 2006, 2007 and 2008. That was confirmed by Major League Baseball (MLB) Commissioner Bud Selig last year.

Of course, the IRS isn’t going to speak publicly about any ongoing tax investigations. But as I’ve noted before, in most cases, the behavior has to be fairly reprehensible before it turns criminal.

If you believe the MLB, the behavior is pretty awful. Among other allegations, the MLB alleges that Frank McCourt “systematically stripped the [Dodgers] of assets and liquidity for his own personal uses.” The MLB also accused McCourt of “destroying a storied franchise by using it as his personal piggy bank” which took the team down “a path of destruction.” How much of a piggy bank? The MLB alleges that Frank McCourt – who holds a degree in economics from Georgetown University – improperly converted as much as $189 million. If that’s true – and if he didn’t report it as income – that could result in a pretty sizable tax bill and potentially, criminal charges.

The McCourts lived lavishly after buying the Dodgers. They reportedly bought a $20 million home and spent nearly that much ($14 million) to bring it up to snuff. They later spent nearly $50 million to buy his and hers Malibu beach houses (there’s a Barbie joke in there somewhere, I know it). At the time of her divorce, Jamie McCourt claimed that her monthly expenses ran nearly a half million dollars. She further stated that her lifestyle had been financed largely by the Dodgers with many of their expenses “paid directly” by the team or related entities.

Those words, if true, may come back to haunt her.

Full article: http://www.forbes.com/sites/kellyphillipserb/2012/05/31/from-l-a-dodgers-to-alleged-tax-dodgers-the-mccourt-saga-continues/2/

How Evil Are Google's New Paid Shopping Search Results?

2012-05-31T15:29:00.003-07:00

How Evil Are Google's New Paid Shopping Search Results?

Photo: Forbes.com

Google announced today a change in the rule of engagement for the ‘inclusion’ of products in search results. From now on, if you see a picture of a product at the top of the page of search results, you can bet that the merchant paid to be there.

Up until now, Google has maintained a very clear “church and state” demarcation between ads and search results. If you search for a product, say “telescopes,” you will be returned a page with a tan “ad words” box at the top of the page with highlighted text ads as well as possibly some paid product listing ads with images. Then there will be “related searches” and the top, non-shopping result. Below that will be (unpaid) “Shopping results for telescopes illustrated by a prominent product, and beyond that the rest of the standard search results.

In the new regime, the large, tan premium ad words box will be reduced in height and directly below it will be a white box clearly marked “sponsored” with an image gallery of five products related to your search.

Not So Evil

On the one hand, if you see it from Google’s point of view, this is an attempt to “build delightful shopping experiences for consumers in close partnership with merchants.” The paid aspect of this will actually improve things for consumers, because “having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date. Higher quality data—whether it’s accurate prices, the latest offers or product availability—should mean better shopping results for users, which in turn should create higher quality traffic for merchants.” This is a little like saying that therapy only works if you pay for it, but I see their point.

More Evil

From the consumers point of view, some amount of trust will be eroded by the new arrangement. As soon as consumers begin to question one thing, they begin to question everything. Google has introduced new features recently like Google Hotel Finder and Google Flight Search that are, in fact, incredibly useful. But if consumers feel that the results that are returned are not necessarily the best deals and are there for purely commercial reasons, they may begin to look suspiciously at all of the new structured data displays that Google is rolling out.

Really Evil

From the merchants point of view, this will increase the cost of selling through search. Even though the image gallery is clearly marked “sponsored,” the eye naturally goes there. If a customer is in a hurry and you see an image of what you want, they’re going to click it. If you’re a merchant and your results are halfway down the page (or, horrors, on the second page) your traffic is going to be reduced compared to what you might be getting presently. Beyond that, if pay-to-play really does shape purchase volumes, Google will position itself as a collector of a tithe on all commerce that flows through it. Think Amazon without the warehouse space.

I don’t want to make this sound like a bigger deal than it is, but it is clear that Google has to get the balance right both for consumers and merchants if they want to ramp up the monetization of their search results. Unlike Facebook, when people see ads on Google, they are almost always for what they are looking for. As Jon Mitchell writes in ReadWriteWeb, “By searching for a product, you’ve demonstrated a possible intent to buy it, so Google has extended its search results with a department store where merchants can sell it to you.” Let’s hope that Google keeps to their creed and minimizes evil while maximizing utility.

Full article: http://www.forbes.com/sites/anthonykosner/2012/05/31/how-evil-are-googles-new-paid-shopping-search-results/

Jamie Dimon Will Testify But Don't Expect Much From Him

2012-05-31T15:27:00.002-07:00

Jamie Dimon Will Testify But Don't Expect Much From Him

Jamie Dimon

Photo: AP

JPMorgan Chase chief Jamie Dimonwill be making a couple of visits toWashington next month.

Lawmakers invited the CEO and chairman of JPM to testify following news that his bank lost over $2 billion on a supposed hedge gone wrong. Dimon will take them up on the offer on June 13 when he testifies before the Senate Banking Committee.

Senate Banking Committee Chairman Tim Johnson says he expects Dimon “to come prepared to provide the Committee a better understanding of this massive trading loss so we can take the implications into account as we continue to conduct our robust oversight over the full implementation of Wall Streetreform.”

Johnson can expect all he wants from Dimon but that doesn’t mean he will get any of it. We’ve seen plenty of Wall Street executives testify before lawmakers over the last few years but it’s not often they provide much insight.

Remember MF Global chief Jon Corzine’s appearance before Congress back in December? Not long after his firm went bankrupt and lost$1.2 billion of client money Corzine testified before the House Committee on Agriculture. When asked about the missing funds (which have still yet to be recovered) the former head of Goldman Sachs said “I simply do not know where the money is or why the accounts haven’t been reconciled.”

He did take responsibility for the incident but that hasn’t meant much for clients who lost money.

None of that is to say that JPMorgan’s mess is anything like MF Global’s. Dimon has been quick to point out that no clients were affected by the $2 billion loss.

Like Corzine Dimon will take responsibility for the loss as head of JPMorgan but will ultimately tell lawmakers that he’s doing everything he can to make sure nothing like that ever happens again. Committee members will ask for details behind the strategy of the bet and question whether it was a legitimate hedge or blatant speculation. Dimon will likely argue it was simply a hedge gone bad and then most certainly point to his bank’s stellar balance sheet as a means to remind the public that JPMorgan is “the good bank” on the Street. In other words, we won’t hear much new information from Dimon.

It gets even better. (Or worse.) Dimon will end up testifying twice as a House Committee is also expected to invite him to talk about the loss.

Full article: http://www.forbes.com/sites/halahtouryalai/2012/05/31/jamie-dimon-will-testify-but-dont-expect-much-from-him/

Apple iPhone Success Strangles Profits At Sprint, AT&T, Verizon

2012-05-31T13:38:00.003-07:00

Apple iPhone Success Strangles Profits At Sprint, AT&T, Verizon

Apple’s iPhone is selling like hotcakes.

This should be good news for Sprint (S), AT&T (T), and Verizon (VZ). The reality is far different; Apple is killing phone carriers.

Sprint just reported quarterly earnings and says it sold 1.8 million iPhones. However, the earnings report showed that iPhone is killing profits at Sprint. Sprint said that 40% of iPhone sales in the fourth quarter were to new customers.

The iPhone is certainly bringing in new business to Sprint, but Sprint has to subsidize iPhones heavily. Sprint wanted the iPhone so bad that it guaranteed Apple $15.5 billion for the ability to sell Apple products over the next four years.

Previously when AT&T reported earnings for the fourth quarter, they were also dragged down by heavy iPhone subsidization costs.

I have previously written about the impact of the iPhone on Verizon in an article titled Apple iPhone A Bittersweet Taste For Verizon.

An iPhone 4S that a consumer can buy for $199 with a two year contract reportedly costs carriers about $500.

Moreover, iPhones are data hogs. Carriers have to make major investments to support the huge traffic volume.

iPhone 4S is particularly troublesome to carriers. The Siri virtual assistant feature in iPhone 4S connects to an Apple data center every time it is used. For background, please see my prior article Siri Is Apple’s Post-Jobs Ticket To $1,000. Siri users end up consuming twice the bandwidth compared to those who do not use Siri.

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Increased traffic is a vicious cycle for carriers. More traffic means more dropped calls and more difficulties using Siri. This results in more calls to customer service and churn of users.

Carriers are between a rock and a hard place. They have to carry the iPhone to attract customers, but it costs them. In comparison, devices based on Google(GOOG) Android, and those from Research In Motion(RIMM) are subsidized to a lesser degree.

From an investors perspective Apple is the only winner here.

Full article: http://www.forbes.com/sites/greatspeculations/2012/02/09/apple-iphone-success-strangles-profits-at-sprint-att-verizon/

Apple's Breakout May Be Contagious

2012-05-31T13:36:00.004-07:00

Apple's Breakout May Be Contagious

Photo: Crunchbase

My single digit ragamuffins include Sirius XM Radio and Bank of America. What I find so curious, even ironic, is that security analysts can’t even analyze (or prophesize) mega cap properties like Apple and Google. Apple now ticking at plus $400 billion was a ragamuffin a decade ago.

Even IBM and ExxonMobil elude so-called sharp penciled analysts and money managers. Nobody had factored in ExxonMobil’s drastic shrinkage in downstream earnings in the fourth quarter. As for IBM, the consensus waits impatiently for IBM to roll over and play dead. It ain’t happening.

Actually, few “investable” stocks still sell in the teens. Morgan Stanley and Cisco border the teens decile, but there is Ford and there was General Motors. General Electric is dangerously close to twenty bucks. My Xstrata on its takeover by Glencore goes from teens to maybe over $20. I remember Walt Disney at the bottom of the market in ’09 sold at $14, now $41 and thriving. Fundamental properties can get trashed, too.

Not that I’m looking for penny stocks which normally capitalize with 500 million shares or more and no fundamentals to speak of – maybe some leased acreage in Wyoming. What I’m focused on are mispriced stocks and mispriced market sectors. They’re all over the lot starting in technology, with a capital “A” as in Apple.

If you believe as I do that leveraged earnings power is the bold theme, consider four sectors now outperforming – technology, financials, materials and industrials. Reason for the outperformance is nobody can get his hands around the fundamentals and model major properties like Apple, Google, ExxonMobil, Citigroup, Goldman Sachs – even U.S. Steel and DuPont, let alone Freeport McMoRan and General Motors.

They’re gut plays. Security analysts don’t get paid to make gut plays, only feisty money managers. Analysts frequently model companies employing as many as 25 variables. If 100 analysts are within a penny of each others’ earnings projections (Coca-Cola) the stock is efficiently priced and only levitates with earnings growth.

In bear markets, many of us hide in stocks like Coca-Cola where your numbers can’t be off more than a penny or two. Same goes for Merck and United Technology because management’s “guidance” is hands on and usually accurate.

As far back as I can remember Apple’s management played fast and loose with the Street. A busload of analysts, regularly manipulated, missed quarterly projections by as much as 50 percent (the December period.) Apple low balls its numbers and analysts, who are natural cowards, hesitate to dash far ahead of the pack.

How can anyone, including management, forecast quarterly demand for iPhones and iPads? It’s even difficult to project where we are in terms of market saturation. Why can’t everyone own 2 smart phones and tablets? I do.

When the cellular telephony sector took off industry pundits projected the sector would reach an 8 percent saturation level in 5 years. Currently, we’re approaching 100 percent and beyond.

The same goes for Google and internet advertising. The Street projected internet share of advertising would move from 1 percent to maybe 5 percent over 5 years. This kind of low balling made Google a great stock. Internet advertising is at a mid-teens market share.

Comparisons with Facebook in terms of “going public” initial valuation favor Google which currently sells at a mid-teens price-earnings ratio. This is comparable with many media houses in the entertainment sector, Disney, for example.

Google’s valuation in the 2004 underwriting was pegged at 7.5 times revenues, 24 times EBITDA and 58 times earnings. Underwriters and investment bankers get paid to squeeze every last buck from the public’s purse.

Facebook actually breaks the bank, coming at 24 times revenues, 45 times EBITDA and 90 times earnings. Even if Facebook’s earnings double next year this is pricey merchandise and I’ll pass it by, maybe even buy more Google. After all, advertising is cyclical, governed by GDP momentum or lack of same. Facebook’s valuation can only be rationalized if you believe mobile ad spending mushrooms 50 percent a year for the next 5 years.

Back to Apple. The stock broke out last week coincidentally with the release of a serious, relatively lengthy but sharply focussed research report by Charlie Wolf of Needham. Charlie is the only analyst I’ve ever talked to about Apple, once, two years ago, on Steve Job’s longevity. Charlie’s at $620 from $540 but this ain’t really relevant because nobody’s valuation model has ever worked. Three years ago Apple ticked at par. Nobody ever rants a stock is going to the moon. Periodically, you update numbers, quarterly if necessary.

Charlie believes there’s a halo effect on Macintosh computer sales from iPad and iPhone market penetration. I discount this impact but agree that Apple today is more iPhone vulnerable than iPad in terms of approaching market saturation. The iPod did add luster to iMac sales. At that juncture, I bought Apple, reasoning that the iPod would put away the Sony Walkman which had a worldwide footprint of 500 million users. It was 2001 and Apple ticked in the thirties shortly after the internet bubble imploded.

My dream is that ancillary recurrent income from internet advertising and thousands of apps evolve into a major profit segment in coming years. Software and peripherals are probably no more than 5 percent of earnings today. There are over 170,000 apps written for the iPad, alone.

Is Apple a more dangerous stock to own at 11 times earnings than any other piece of paper with a comparable value tag? Pressing this valuation issue, is Google likely to revert to Apple’s multiplier or vice versa? I say versa. Either Apple is too cheap or Google is overpriced. Deep basic, neither stock is overpriced to the market considering its free cash flow multiplier and liquid assets.

Take Cisco. Sells at 11 times earnings, no net debt, annually buys back 5 percent of its outstanding stock, holds a boodle of liquid assets (alas, most of it overseas) but is finally controlling its expense lines and growing revenues near 10 percent per annum. A nice profile.

The market’s insanity is paying up for mediocre industrial properties like U.S. Steel on what they possibly could earn in 2013 if everything comes up roses and daffodils. But, everything doesn’t ever go right for U.S. Steel. Its yearend quarterly report was a mess. Despite the recovering GDP setting, U.S. Steel lost hundreds of millions. They dropped serious money in 2010 as well. Its flat rolled product segment remains in negative territory.

Big Steel is shedding liquidity as well. Capital expenditures exceed depreciation and they’re down to $408 million in cash. In a bad setting U.S. Steel burns cash fast. What caught my eye was a huge write-down on sale of U.S. Steel Serbia to the Republic of Serbia for a nominal sum. One dollar? A write-off is coming for over $400 million on their plant account of $6.6 billion. U.S. Steel has more debt than equity.

As a stock U.S. Steel bottomed at $18 and now sells near $30. When I checked analysts’ projections the best I could come up with is $3 a share in 2013 – if all goes well. Apple earns $51 a share with $150 a share in cash on the balance sheet if all goes well.

Which one would you rather own? The breakout in Apple adumbrates sharper focus on growth stocks, particularly technology. Recovery in capital goods properties is overdone, energy is just fairly priced, consumer non-durables as in PepsiCo, are boring and the financials…. well the financials remain inscrutable.

If you believe as I do that Wall Street experiences a better year in underwriting, investment banking and trading you hang onto Bank of America et al., but gimme growth at 10 times anytime, anyplace bar nothing.

What in the world was U.S. Steel doing in Serbia?

Full article: http://www.forbes.com/sites/martinsosnoff/2012/02/14/apples-breakout-may-be-contagious/3/

Why Apple Is Smart to Double Down on Siri

2012-05-31T13:33:00.003-07:00

Why Apple Is Smart to Double Down on Siri

Photo: AP

One area he was pressed on by Walt Mossberg was Siri, Apple’s voice-automated personal assistant that comes as part of the new iPhone 4S.

“When it works, it works really well,” said Mossberg. “But a lot of times, it doesn’t work.”

Mossberg isn’t the only one to criticize Siri. Henry Blodget of Business Insider has said ”Steve Jobswould have killed Siri months ago” and that ”Frankly, it’s concerning that Apple is still advertising a product as flawed as Siri.” Fortune’s Adam Lashinsky saidthat some ex-Apple insiders believe Apple employees are embarrassed by Siri.

Tim Cook’s response, which is here, was that:

- “Customers love it.”

- “There’s more that it can do. We have a lot of people working on this. I think you’re going to be pleased with what we’re doing in the next few months.”

- “Siri’s proved to us that people want to relate to the phone in a new way.”

- Cook implied that voice recognition wasn’t what makes Siri special. What makes Siri special is the Artificial Intelligence. ”It’s not voice recognition. It’s the understanding.”

- “I’d put it on the profound list.”

- “This is something that people dreamed of for years. And, it’s here.”

- “We’re doubling down on it.”

I’ve been a big believer in Siri since its introduction last October. This Forbes article, “Why Siri is a Google Killer,” explains my thinking.

If you took one thing from Cook’s entire talk on Tuesday, it’s that this guy’s a good poker player. He’s very…. controlled. Every word – as well as every detail in Apple’s supply chain – is measured.

You get the sense that nothing happens by chance at Apple. Every move is well-planned.

That’s why I think Blodget and others were supremely arrogant by stating that Steve Jobs wouldn’t have approved of Siri’s release. Jobs was of course still around and involved in green-lighting Siri before last October’s release.

More importantly, these critics fail to understand the long-term potential of Siri and what’s needed to get there from here.

As Cook said, what makes Siri special is her personality, which is to say the AI.

To get to where Apple (and more importantly its customers) want Siri to be, it needs to improve the AI and for that it needs data. So, Blodget and others are fundamentally off base by thinking Steve Jobs’ answer to Siri’s current shortcomings would be to pull it and let the guys tinker with it for another year or two back in Apple’s labs.

You can’t get it any better with some tinkering by a few guys. Siri wouldn’t improve at all with another year of tinkering. You need massive amounts of data. They’re getting that given how popular the 4S is and the Siri usage they’re currently getting.

Apple said it was in “beta” to let the world knows this is a little different from any kind of product release they’d done before. But the long-term gain of doing this exercise is going to more than compensate for the short-term pain.

And that’s the reason for all the Siri ads we’ve had since it launched last Fall. And now Apple’s doubling down on those too. Why? It’s driving more usage and more data.

It sounds like Siri will be profoundly better before its first birthday 6 months from now. Just imagine was it will be like at age 2 — or age 7.

So, let the critics howl. Apple was always about doing something for the benefit of the mainstream. Siri is no different.

http://www.forbes.com/sites/ericjackson/2012/05/31/why-apple-is-smart-to-double-down-on-siri/2/

Axelrod's Attack Rich Plan Not Working: Obama Plays Hardball and Loses Favorability

2012-05-31T13:25:00.002-07:00

Axelrod's Attack Rich Plan Not Working: Obama Plays Hardball and Loses Favorability

“The president wants to make this a personal attack campaign; he’s going after me as an individual. Look, I’m an American, I love this country. I have experience in the economy that’s going to help me get good jobs for Americans so we can be secure again.”
-- Republican presidential nominee Mitt Romney in an interview with FOX News colleague Bill Hemmer.

President Obama has adopted a new, tough-guy persona for the general election, but so far it doesn’t seem to be paying off. The rationalization for the harsh new Obama approach is that unless Democrats destroy Romney now, the president will get swamped in a flood of negative advertising from conservative groups in the fall. By making it ugly, early Obama hopes to press his advantage in organization and money while it still exists and define Romney as a bad man.

Obama, stung for years by complaints from his political base that he was a pushover and facing a Republican rival clearly unafraid to throw punches, the president is trying to show some edge.

The opening argument of the general election from Obama has been weeks of attack ads and harsh personal attacks on the character of GOP nominee Mitt Romney. On the stump, Obama has called out Romney by name and said that the former Massachusetts governor was too cruel to be president.

Simultaneously, the administration is touting the president’s role as a terrorist killer. The lavishly leaked New York Times piece on how Obama passes sentence on suspected terrorists for push-button assassinations overseas, including American citizens, is part of a longer effort to show Obama has evolved from his dovish days.

The new message from Obama: Times are tough, and so am I.

One of Obama’s leading biographers John Heilemann, laid out the new-look Obama persona in New York Magazine. His extensively sourced, well-reported piece shows the Obama organization remade as a blunt instrument. Profane, tough-talking, cynical campaign leaders explain why they are trying to absolutely destroy Romney. Short answer: because that’s what it takes to win.

One adviser explains to Heilemann that even though some voters are presumably racist, Romney can be shown to be such a villain that they would still prefer the company of the half-African-American Obama: “[Romney is] not likable. He’s not trustworthy. He’s not on your side. You live in Pittsburgh and you’ve got dirt under your fingernails, who do you want to have a beer with? It ain’t f***ing Mitt Romney. You’re like, ‘S**t, I’d rather have a beer with the black guy than him!’” His point is that even those who bitterly cling (in this case, to an ice-cold can of Iron City instead of guns and religion) can be made to find Romney more personally objectionable than Obama.

This swagger is comforting to some Democrats who worried that Team Obama lacked the thick-skin and aggressive instincts to do battle with Romney, who has a gift for getting in the heads of his political opponents.

Attack politics are hardly new to the Obama organization, but the concern among many on the Blue Team was that the president wasn’t taking the threat from Romney seriously.

There’s little doubt of that now. No incumbent American president has ever gone so negative, so early against an opponent. As in other cases, like dropping out of federal limits on campaign contributions in 2008 or blessing unlimited political action committee expenditures this year, Obama’s argument is that he has no choice but to do what is wrong now in order to have the power to do the right thing later on.

The rationalization for the harsh new Obama approach is that unless Democrats destroy Romney now, the president will get swamped in a flood of negative advertising from conservative groups in the fall. By making it ugly, early Obama hopes to press his advantage in organization and money while it still exists and define Romney as a bad man.

So far, though, it’s not going so well.

The latest ABC News/Washington Post poll shows Romney’s favorability ratings are up 8 points since late March, just before the Obama launched his spring offensive. Obama’s numbers are going the other direction, down 4 points.

The worrisome thing for the president is where this movement is happening. While Romney can credit much of his gains to the gradual coalescence of the Republican Party following the flame-throwing final act of their nominating process, swing voters are moving Romney’s way.

Romney showed substantial favorability gains among moderates, independents and saw his largest jump among female voters, a full 10 points. Obama, on the other hand, lost ground in all of the key categories. While Obama still holds a 5-point edge in overall favorability, Romney does 4 points better on unfavorability.

Put simply, 97 percent of voters have an opinion on Obama, and it’s an even split. Voters are also evenly divided on Romney, but only 88 percent have rendered a decision.

Romney has more room to grow, or, as Obama hopes, farther to fall.

Team Obama understands well the risks of negative campaigning, especially for a candidate whose previous persona was one of hopeful change and healing. But their calculation is that they can afford to take the beating now for the sake of ruining Romney and then have time in the fall to shift back to a less grim message.

The goal is that when Obama takes the stage to formally accept the Democratic nomination in Charlotte, that he will find a way to unite and inspire and that swing voters will have forgotten or forgiven his spring and summer attacks. Remember, Obama and his team very much believe in his power to reset the debate with a speech. Obama’s oration at Bank of America Stadium will be a seriously high-stakes affair.

Team Obama says it wants a replay of the 2004 election, just a pumped up version. Incumbents in tough times want choice elections, a referendum on issues, rather than stewardship elections, a referendum on the leadership of the incumbent.

In 2004, the choice was about the Iraq war. John Kerry wanted to leave, George W. Bush wanted to stay the course. Lots of things were said and done, but the election boiled down to that choice: stay or go.

Team Obama says the choice this time is between “forward” and “a return to the failed policies of the past.” This choice devolves quickly into minutiae about tax rates, mortgage incentive programs, Pell grants and other policy points. There is nothing like the starkness of the choice in 2004. Kerry explicitly wanted to leave Iraq. Bush explicitly wanted to stay. Voters narrowly chose the latter.

Given the repetitive nature of Obama’s policy proposals in the past two years, it seems highly unlikely that he will be offering any such bright-line choices. Certainly he could make it a choice election about his policies, particularly his 2010 health law, but that would not work out very well.

The actual choice Obama is seeking is between the two men personally and is right now whaling away on Romney in a hope that the dirty-fingernail set in the swing states will deem the former Massachusetts governor and quarter-billionaire unacceptable.

But unless Obama can crystallize for voters what the real choice here is, Obama risks just looking mean spirited and nasty, the very qualities he hopes voters come to see in Romney.

Seahawks confirm tryout for former high school star exonerated in rape case

2012-05-31T13:20:00.002-07:00

Seahawks confirm tryout for former high school star exonerated in rape case

Photo: AP

Brian Banks will get a crack at the NFL, even if it's simply a tryout.

The Seattle Seahawks confirmed Wednesday they will hold a tryout for Banks, a former high school football star who was exonerated last week in a California rape case in which he was falsely accused.

Seattle coach Pete Carroll did not speak following the Seahawks' offseason workout on Wednesday, but the team confirmed that Banks will work out for the team on June 7.

"This is what I have dreamed about my entire life," Banks said in a statement from the California Western School of Law, home of the California Innocence Project. "I am ready to show the NFL what I am capable of doing. I want as many opportunities with as many NFL teams who are willing to give me a shot."

Seattle may not be the only team. The statement says a half-dozen NFL teams have gotten in contact withBanks, and ESPN.com reported some of those include the Kansas City Chiefs, Washington Redskins and Miami Dolphins.

Banks' attorney, Justin Brooks, head of the California Innocence Project, could not be immediately reached for comment.

The 26-year-old Banks pleaded no contest 10 years ago on the advice of a lawyer after a childhood friend falsely accused him of attacking her on their high school campus. Last Thursday, a judge threw out the conviction that sent Banks to prison for more than five years.

It's not surprising Carroll and the Seahawks appear to be the first ones willing to give Banks a shot.

Before the charges, Banks was a star middle linebacker at Long Beach Polytechnic High School and was attracting interest from college football powerhouses such as USC, Ohio State and Michigan. He gave a verbal commitment to USC to play for Carroll.

Then, a teenage girl Banks had known since childhood claimed he had raped her. He was arrested and, on advice of counsel, pleaded no contest to rape and an enhancement of kidnapping in order to avoid a possible life sentence if tried by a jury.

Banks served five years and two months in prison, but in a strange turn of events, the woman, Wanetta Gibson, later recanted her claim and offered to help Banks clear his name after he was out of jail. Banks was on probation and was wearing an electronic monitoring bracelet at the hearing last week where he was completely exonerated.

At the press conferences that followed the court hearing, Brooks appealed to NFL teams to give Banks a chance. He said Banks has been training six days a week to get in shape for the career he wants.

"He has the speed and the strength. He certainly has the heart," Brooks said. "I hope he gets the attention of people in the sports world."

Read more: http://www.foxnews.com/sports/2012/05/31/seahawks-confirm-tryout-for-former-high-school-star-exonerated-in-rape-case/?test=latestnews#ixzz1wTrTXB93

Edwards jury ordered to resume deliberations after reaching verdict on only one count

2012-05-31T13:18:00.000-07:00

Edwards jury ordered to resume deliberations after reaching verdict on only one count

Photo: AP

In an afternoon marked by confusion and miscommunication, the jury in the John Edwards trial was ordered Thursday to resume deliberations after announcing they had reached a verdict on just one of six counts.

Judge Catherine Eagles ordered the jury to keep trying to reach a unanimous verdict on the rest of the counts, granting the request of the prosecution.

The decision came an hour after the judge initially indicated the jury was ready to announce a verdict on all counts. This was apparently a miscommunication -- the jury only reached a verdict on one count, and was deadlocked on the rest.

In response, the defense argued for a mistrial. But Eagles, after considering the matter for about 15 minutes, told the attorneys for both sides that she would send the jurors back for more deliberations.

She apologized for calling them into the courtroom and then sending them back for more discussions. "I was obviously under the impression you had reached a verdict on all six counts," Eagles said.

The unusual scene played out on the ninth day of deliberations in the tense trial of one of the nation's most well-known politicians. Edwards himself appeared stressed when the jury was first called in, drinking water and at times holding his head in his hands -- he began to smile after the foreman said the jury was deadlocked on most of the counts.

Edwards is on trial in Greensboro, N.C., for allegedly skirting campaign finance law by using contributions to help keep secret his extramarital affair during the 2008 campaign.

The one count on which a verdict was reached pertains to a charge that Edwards received campaign contributions from wealthy donor Rachel "Bunny" Mellon in excess of the legal limit in 2008. It's unclear what the verdict actually was, as it was never read.

Prosecutor David Harbach, in arguing for an extension of deliberations Thursday afternoon, told the judge, "It appears that they are not finished."

Defense attorney Abbe Lowell, though, argued that the jury has "spent many hours" behind closed doors.

"It seems to me they don't need to be told to be any more conscientious," he said, before the judge denied his request for a mistrial.

The trial began more than a month ago. Edwards, a former U.S. senator, faces a maximum sentence of 30 years in prison if convicted on all six counts.

Full article: http://www.foxnews.com/politics/2012/05/31/jury-reaches-verdict-in-edwards-trial/

Before The Ban On Sugary Drinks: 7 Other Controversial Mayor Bloomberg Initiatives

2012-05-31T11:52:00.001-07:00

Before The Ban On Sugary Drinks: 7 Other Controversial Mayor Bloomberg Initiatives

Photo: AP

New York City’s billionaire mayor,Michael Bloomberg, announced on Wednesday his intentions to ban the sale of sugary drinks larger than 16 ounces. That covers everything from sodas to sweetened iced teas to energy drinks.

This isn’t the first time Bloomberg has gone out of his way to enact laws that he deems good for our health, our environment and our economy. He seems to have made it something of a personal quest to improve our well-being through government action.

Here’s a recap of some other notable Bloomberg initiatives:

1. Calorie Counting At Restaurants

To combat a growing obesity epidemic, the New York City Board of Health voted in December 2006 to post all calorie counts on menus and menu boards. Before that, they were often found in brochures hidden behind displays, or buried on websites. Now caloric intake listings are increasingly the norm throughout the city, and country.

2. Trans-Fats Banned

The Board of Health passed legislation, also in December 2006, banning the use of artificial trans-fats in foods, giving restaurants until July 2007 to stop frying foods in oils that contain trans-fats, and until July 2008 to completely remove them from all foods. The ban allowed for restaurants and stores to serve offending foods so long as their were in the manufacturer’s original packaging. “Nobody wants to take away your french fries and hamburgers — I love those things, too,” Bloomberg said after the decision was announced. “But if you can make them with something that is less damaging to your health, we should do that.”

3. Bullying Salt

In January 2007, Bloomberg’s commissioner of the Department of Health and Mental Hygiene, Dr. Thomas R. Frieden pushed for a 10 year plan to cut the sodium levels in processed and pre-packaged foods by 25% twice in two back-to-back five year periods. And if there isn’t progress? He has legislation planned for that.

4. Smoking Limits

In February 2011, Bloomberg announced a ban on smoking in public places, including Times Square and Central Park. More recently, he has announced plans to require building owners to create written policies outlining exactly where smoking is allowed in and outside their properties, and to share this with potential renters. Of the plan, Bloomberg said: “We’re not trying to ban anything. I’ve always believed, as you know, that if you want to smoke I think you should have a right to do so. But it kills you.”

5. Hybrid Taxi Fleet

In May 2007, Bloomberg announced plans to convert the city’s 13,000 taxi fleet into one composed of hybrid cars, replacing the emblematic CrownVictoria, which got 10 to 15 miles per gallon in the city. (The hybrid Ford Escape, in contrast, gets 34 miles per gallon). He argued that the switch would save drivers $10,000 a year in fuel costs, offsetting the increased investment in the more expensive hybrid vehicles. About 1,100 of the 13,000 cabs were hybrids by fall 2008, and the mayor’s plan has called for a 20% increase each year since.

6. Limiting Liquor Access

This one is still in the planning phases, but in January, Bloomberg announced his support for a plan, in coordination with the group Healthier New York City to reduce “alcohol retail outlet (e.g. bar, corner store) density and illegal alcohol.” As well as to “reduce the exposure to alcohol products and bar advertising and promotion in retail and general (trains, buses, etc.) settings (stores, restaurants, etc.)” So keep a lookout for that one.

7. Money For Laid Off Financiers

Bloomberg’s fortune comes from the world of finance, and his eponymous firm, Bloomberg L.P., still makes a killing selling the Bloomberg Terminal, a one stop shop for trading tools, resources and news. As mayor of one of the world’s most important financial capitals, he can’t ignore the prominent contributions to the New York tax base that NYC’s financial community provides. In February 2009, following predictions that the financial crises could cost Wall Street 65,000 jobs, Bloomberg announced a plan to invest $45 million ($15 million in city funds, and $30 million in federal funds) to retrain bankers and traders who had been laid off. He hoped to prevent a max exodus from the city. Deflecting potential cries from boot-strappers when unveiling the plan, Bloomberg admitted that he received no government funds to get Bloomberg L.P. off the ground, but that didn’t count as a reason not to act in response to the recession.

Full article: http://www.forbes.com/sites/calebmelby/2012/05/31/before-the-ban-on-sugary-drinks-7-other-controversial-mayor-bloomberg-initiatives/2/

Corporate Social Responsibility, Or Throwing Away The Shareholders' Money

2012-05-31T11:48:00.001-07:00

Corporate Social Responsibility, Or Throwing Away The Shareholders' Money

Photo: AP

Lately, during visits to business schools and various MBA groups, I’ve noticed a curious new trend: Rather than adhere to the fictional Gordon Gekko’s famous admonition that “Greed is Good,” it seems that curriculae are being infused with quite the opposite idea.

Graduate students are getting heavy doses of a sort of “Anti-Gekko serum”; they’re being told that businesses must cater to the needs of stakeholders other than shareholders, and that they have the obligation to distribute money to all sorts of needy causes and cultural and “societally beneficial” sports and recreational projects.

Don’t get me wrong: it’s good for businesses to be good corporate citizens and fund charitable or cultural activities out of hopefully well-endowed corporate foundations. And it’s great to encourage (I didn’t say “pressure”) employees to devote their own time and money to United Way, the Boy Scouts of America and similar worthy causes. And, of course, when earthquakes, floods, forest fires and the like devastate whole areas, it is right and proper for an automobile company, for example, to donate a few pickup trucks. That’s just common sense, and good PR.

My concern with this new call to use shareholders’ money for “social obligations” is one of balance.

I recently heard a European professor regale an audience with the tale of an Italian manufacturing baron who dispenses enormous amounts of money not only to employees, their families, and their social and sports clubs, but also to the municipality for restorations, new buildings, theater, opera and the like. By happenstance, said industrialist is also growing, almost excessively profitable: I believe he has a roughly 60%-70% market share in the luxury consumer product he manufactures.

Therefore, the good professor, citing this and other cases, postulated a causal relationship between “giving money away to society” and “achieving high profitability” — and that’s fatuous twaddle.

The two lines may both head up, but it would be hard to prove that wanton spending “causes” profits to go up.

What I think is going on in these cases is that the business is obscenely profitable, the sole owner (note: no shareholders) is awash in cash, and quite wisely and responsibly decides to assuage his guilt, secure his legacy, and presumably attain near-sainthood in the community.

While businesses must be aware of their role in society, most companies are owned by shareholders, and they are the ones to whom management owes loyalty and commitment. The biggest obligation corporate America has, and the greatest benefit it can bring to society, is to be hugely successful, reward its shareholders handsomely, grow, expand, re-invest in the right locations, create new, well-paying jobs which, through the multiplier effect, generate more economic activity in myriad ways. THAT’s the way to get wealth flowing into cities, towns, sports teams, youth clubs, operas and the like.

Reducing operating profit by giving away the shareholders’ rightful gain to social causes is morally wrong, not in keeping with the tenets of capitalism, won’t provide the largest benefit to society, and should not be taught in business schools. Where’s Gordon Gekko when we need him?

Full article: http://www.forbes.com/sites/boblutz/2012/05/07/social-responsibility-or-throwing-away-the-shareholders-money/