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Google Wants Your Money, But Not Your Advice

Christopher Matthews — Wed, 19 Jun 2013 09:45:13 +0000

Big tech companies like Google and Facebook have made their fortunes by putting the power of the Internet in the hands of ordinary people. But when it comes to empowering their own shareholders, these companies are a lot less willing to relinquish control. When these firms went public in 2004 and 2012 respectively, they each issued two different classes of stocks: One class to be held by the founders and another by ordinary shareholders. In both cases, the voting rights of these share classes enabled the founders to retain complete control of the company. And on Monday, Google reached a settlement in a class action lawsuit that will allow it to issue a third class of shares with no voting rights at all, which will presumably give the firm ammunition for future acquisitions. The tendency for tech firms to use a so-called “dual-class” structure (a bit of a misnomer in Google’s case, as it will now offer three classes) has drawn the ire of many investors. When Facebook launched its dual-class structure last year the advisory firm Institutional Investor Services (ISS) inveighed against the social media giant in a letter to clients. The letter recalled examples of companies like Benihana in which the dual-class structure fomented contentious battles for control of the company after the founders left. Writes ISS: “By establishing a dual-class structure at the onset of public trading, companies divide ownership interests into potentially opposing groups. These early fractures can widen into fault lines, eventually resulting in a costly, distracting, and potentially unpopular restructuring.” (MORE: After Austin: Five Reasons You’ll Want Google Fiber in Your City) ISS also worries that a dual-class structure leads to unaccountable management and poor performance over the long run. Indeed studies have shown that firms with a dual-class structure pay their executives more, and their stocks perform worse than companies with a single-class structure. But when deciding whether a company’s share structure will be good for the firm in the long term, it’s really necessary to look at companies on a case-by-case basis. First of all, Google has

Google Challenges NSA Secrecy in FISA Court

Sam Gustin — Wed, 19 Jun 2013 00:39:48 +0000

Google has petitioned a secret U.S. national-security court to relax restrictions on the information the tech giant can reveal about government data requests, claiming such restrictions violate the company’s right to free speech under the First Amendment. Google’s motion, filed on Tuesday with the Foreign Intelligence Surveillance Court, is the tech giant’s latest attempt to address recent media reports that suggested it gives the National Security Agency (NSA) unfettered or “direct” access to user data. Google and other large Internet companies, including Apple, Facebook, Yahoo and Microsoft, have come under intense scrutiny following reports that the NSA uses a classified U.S. intelligence system called Prism to examine data — including e-mails, videos and online chats — that it collects via requests made under the Foreign Intelligence Surveillance Act (FISA). Following those reports, the tech giants have vigorously pushed back against the notion that they allow the government unfettered or “direct” access to their servers. In its motion, Google says its “reputation and business has been harmed by the false or misleading reports in the media.” Specifically, the tech giant referred to reports in the Guardian and the Washington Post that suggested that the NSA’s Prism system allows the federal government to tap directly into the company’s servers. Google has strenuously objected to those reports — which appear to have been based on a misreading of leaked NSA Prism slides — but the disclosures have nevertheless sparked a debate about the role of U.S. Internet companies in national-security investigations. (MORE: NSA Scandal: Tech Titans Jockey to Be the Most Transparent of All) Last week, Google asked U.S. Attorney General Eric Holder and FBI Director Robert Mueller for permission to publish “aggregate numbers of national-security requests, including FISA disclosures — in terms of both the number we receive and their scope.” Google is currently prohibited by a government gag order from even acknowledging that it receives classified FISA requests. In a remarkable footnote to its FISA court motion, Google points out that it can’t even confirm or deny that is has received FISA court orders. Google has been pressing the feds

Germany Has Become the Cut-Rate Prostitution Capital of the World

Brad Tuttle — Tue, 18 Jun 2013 15:45:39 +0000

The presence of thousands of brothels and hundreds of thousands of prostitutes has heightened competition and pushed prices down steeply in the German sex trade. One tourist from Florida, who visits the country three times annually to pay for cheap sex, compares the scene to a discount supermarket: “Germany is like Aldi for prostitutes,” he says. Prostitution became legal in Germany in 2002, and the open sex trade has taken off in the years since. There are reportedly around 3,000 red-light establishments in the country, and 500 brothels in Berlin alone. It’s been estimated that more than 1 million men pay for sex in Germany every day. One of the classic arguments for legalizing prostitution is that recognizing and regulating the world’s oldest profession would improve the conditions of sex workers. Instead, recent reports paint legalized prostitution in Germany largely as a failure. In May, Der Spiegel published a series of stories highlighting the atrocious conditions endured by prostitutes in Germany, some of whom say they arrived in the country against their will. Typically, the stories involve young women from Romania and Bulgaria who were unwittingly duped into coming to Germany, where they were forced to service dozens of men daily in flat-rate deals where customers can have all the sex they want for an allotted time period, starting at just €49 (around $65). The women say customers are known to take drugs to improve their sexual performance in order to get their money’s worth. Some women report getting paid a pittance and never being allowed to leave their brothels. During rare breaks from work, they share a room with other prostitutes, where there is a single bed and no other furniture. (MORE: Brazil’s ‘Happy Prostitute’ Slogan Gets a Chilly Reception) In early June, a documentary aired on ARD, Germany’s public-broadcasting station, called Sex — Made in Germany. The film was made in part by bringing hidden cameras into brothels over the course of two years. “Sex is cheaper than anywhere else,” one brothel owner in Berlin says on camera.

NSA Scandal: Tech Titans Jockey to Be the Most Transparent of All

Sam Gustin — Tue, 18 Jun 2013 09:45:27 +0000

Trust us, we’re from Silicon Valley. America’s largest Internet companies are tripping over themselves to bolster their public image following blockbuster disclosures about their role in the U.S. government’s controversial data-gathering program. Ever since news reports suggested that major tech firms — including Apple, Google, Facebook and Yahoo — provide the National Security Agency (NSA) with unfettered or “direct” access to their servers, the companies have been waging an aggressive campaign to demonstrate that they’re not government stooges. Now, several of the top Silicon Valley firms are engaged in a game of one-upmanship to show that they are the most transparent Internet company on the block. The initial reports about “direct access,” as part of a classified U.S. intelligence system called Prism, have turned out to be wrong. But the Prism reports have highlighted long-standing privacy fears about how the largest U.S. tech companies handle their vast troves of user data. The Internet giants have come under scrutiny following reports that the NSA uses Prism to examine data — including e-mails, videos and online chats — that it collects via requests made under the Foreign Intelligence Surveillance Act (FISA), one of the controversial laws at the heart of the current NSA-snooping furor. Following the Prism leak, which was supplied to the Guardian and the Washington Post by whistle-blower Edward Snowden, Apple, Google, Facebook and Yahoo all issued statements — in strikingly similar legal language — denying that they give the NSA “direct” or unfettered access to their computer servers. But the companies apparently felt the need to go further than those denials, and in recent days have engaged in a competition to demonstrate their commitment to transparency. (MORE: Google: We’re No NSA Stooge and We’ll Prove It if the Feds Let Us) Although Silicon Valley has roots in the U.S. military — the Defense Advanced Research Projects Agency was central to the development of the Internet — today’s big tech companies are keen to demonstrate their independence from the government, and often display a libertarian streak. Many engineers in Silicon Valley are sympathetic to “hacker” culture. Above all, Silicon Valley tech

Jay-Z, Samsung and the 21st-Century Patrons of the Arts

Christopher Matthews — Tue, 18 Jun 2013 09:45:12 +0000

When you’re locked in a global war to dominate the smartphone market, every little advantage helps. And now Samsung has enlisted one of the most brilliant musicians and promoters of the past two decades to its arsenal: Jay-Z. During game 5 of the the NBA finals on Sunday, Samsung aired a three-minute ad announcing the release of the rapper’s upcoming album Magna Carta Holy Grail, due out on July 4. According to The Wall Street Journal, the cellphone maker is paying the rapper $5 per album to issue his newest LP, through a dedicated app, to the first million Samsung Galaxy users 72 hours before its wider release. For Jay-Z, the deal will provide a nice supplement to the wider album sales, which even in this age of rampant piracy should be significant. Jay-Z’s last LP, Watch The Throne, sold 436,000 copies in its first week, according to Nielsen Soundscan. (MORE: Why YouTube is Launching a Music Service) Samsung’s motivation, however, is a bit more complex. As TIME contributor Eliot Van Buskirk has pointed out, content distributors are increasingly vying to have exclusive access to new music as it debuts, before it’s proliferated widely via radio, satellite radio, streaming services, and piracy. But surely Samsung doesn’t believe that offering access to a rap album three days early is going to generate enough extra Galaxy sales to justify the $5 million investment. Indeed, Samsung probably just views this deal as another advertising expense, and a way to get its brand associated with one of the biggest and hippest names in music. This is the same strategy that companies like Mountain Dew and Converse have taken by launching their own record labels. These companies aren’t getting into the music business so much as trying burnish their image by linking their brands to hip, young musicians. In fact, when you look at it that way, and consider the staggering amount of money Samsung spends on marketing each year, the deal begins to look like a real coup for Samsung. Industry analyst Horace Deidu estimates that Samsung Electronics spends more than $10 billion per year on ads, sales promotions,

All of a Sudden, There Aren’t Enough Electric Cars to Keep Up with Demand

Brad Tuttle — Tue, 18 Jun 2013 09:45:05 +0000

Electric vehicles like the Nissan Leaf and Honda Fit EV used to languish on dealership lots for months. A pricing war with aggressive incentives and cheap lease deals has changed all that. Last year, Nissan sold about half the number of Leafs it had anticipated, marking two years in a row of disappointing sales for the electric car pioneer. One of the factors holding the Leaf back from appealing to the masses has been the upfront price premium drivers have had to pay for the cars, when compared with similar vehicles that run on plain old gas. But in early 2013, Nissan tried to cut the knees out from this part of the anti-EV argument. The automaker dropped base prices on the Leaf by $6,400 for the new model, making the idea of buying an electric car for under $19,000 a reality, when state and federal incentives are factored in. And once lease deals, tax credits, and gas savings are considered in the equation, word has spread this spring that it’s basically possible to drive an EV for next to nothing. Nissan’s EV competitors have followed with compelling deals of their own, including $199-per-month lease specials for the Chevy Spark EV and Fiat 500e. Mitsubishi and Toyota have also dropped prices dramatically for EV models. As CNET pointed out, the Honda Fit EV might be the best offer of all: a three-year lease for $259 per month, with no money down, unlimited miles, a 240-EV home charging station, and auto insurance included. Honda’s previous lease deal was $389 per month, a price point that failed to get consumers excited. (MORE: Tesla Beat the Odds — And the Haters — But Now Comes the Hard Part) But within days of Honda dropping the special lease price by $130 in early June, dealerships in California were sold out and customers had to compete to get on the waiting list for more, per the Los Angeles Times: “It’s incredible, especially since we haven’t had any foot traffic or interest in the car in

Why They Build Mega Yachts in Central China — an Economic Mystery Story

Rana Foroohar — Tue, 18 Jun 2013 01:00:31 +0000

This article is the second in Foroohar’s series on Chinese business developments and their effects on the global economy; read the first installment here. It’s tough to feel sorry for billionaires. But even they have taken a hit over the past five years, or so says Brad Bean, the managing director of Dynasty Yachts in Wuhan, China, which is a division of the Miami-based Megayacht Group. Bean is a 35-year veteran of the yacht business, with a specialty in mega yachts — sea monsters that range in length from 50 to 120 m. With the rise in global wealth over the past two decades, the number of mega yachts, which start at about $50 million and top out at around $250 million, has been growing — as have the prices and backlog. “The order books of traditional yachtmakers in Germany, Italy and the Netherlands are filled for the next several years, and demand means the costs have just become too high,” says Bean. “And so our customers — many of whom have also become somewhat more price-conscious since the financial crisis — started coming to us and asking us to find new building areas.” Solution: yachts made in China. “It wasn’t the first place we thought of,” says Bean, who is used to people raising an eyebrow at the thought of what may be the world’s most expensive luxury good being manufactured in a country still better known for light fixtures and component electronic parts. Indeed, he looked at setting up production in Poland, Turkey, Russia and a number of other countries before finally settling on Wuhan, a city of 10 million in central China. The inland city, which sits on the Yangtze River, had the advantage of a port that wasn’t vulnerable to tsunamis and workers whose hourly rates are a fraction of those in Europe and lower even than those in China’s more developed coastal areas. No matter that they’d never built big boats there before. Bean brought in consultants from companies in Europe to manage and train

Feds: N.Y., Va. 7-Eleven Stores Exploited Immigrants

AP / LARRY NEUMEISTER — Mon, 17 Jun 2013 17:20:32 +0000

(NEW YORK) — Nine owners and managers of 7-Eleven stores across Long Island and in Virginia were charged on Monday in a scheme to exploit immigrants from Pakistan and the Philippines, in part by paying them using the stolen Social Security numbers of a child and three dead people. Most of the defendants were arrested early Monday as federal authorities raided 14 franchise stores. Immigration and Customs Enforcement agents were executing search warrants at about 30 other stores across the country suspected of similar infractions, authorities said at a news conference in Brooklyn. Federal indictments naming eight men and one woman allege that since 2000 they employed more than 50 immigrants who didn’t have permission to be in the U.S. They tried to conceal the immigrants’ employment by stealing the identities of about two dozen people — including those of the child, the dead and a Coast Guard cadet — and submitting the information to the 7-Eleven payroll department. When 7-Eleven’s headquarters sent the wages for distribution, the employers stole “significant portions” of the workers’ pay, authorities said. The defendants also forced the workers to live in houses they owned and pay them rent in cash, they added. “The defendants not only systematically employed illegal immigrants, but concealed their crimes by raiding the cradle and the grave to steal the identities of children and even the dead,” U.S. Attorney Loretta Lynch said in a statement. “Finally, these defendants ruthlessly exploited their immigrant employees, stealing their wages and requiring them to live in unregulated boarding houses, in effect creating a modern day plantation system.” The government seized the franchise rights of 10 stores in New York and four stores in Virginia. The stores will remain open under the parent company’s operation. Immigration officials detained 18 workers, including some who first notified authorities about the alleged fraud. The defendants were to appear in court on Long Island and Norfolk, Va., later in the day to face wire fraud conspiracy, identity theft and alien harboring charges. They face up to 20 years in

The Real Lesson Behind Excessive Overdraft Fees

Dan Kadlec — Mon, 17 Jun 2013 16:09:10 +0000

What’s more effective: consumer protections or consumer education that leads to sound individual decision-making? There is a place for both. But those who question whether financial education works would do well to consider the Consumer Financial Protection Bureau’s new report on bank overdraft fees, which in my opinion demonstrates that when individuals understand their choices, they will protect their pocketbook all on their own, thank you very much. Unfortunately, as the report also shows, individuals too often do not understand the choices. That is the watchdog bureau’s central finding and helps make the case for greater regulation. The report concludes that “each institution’s overdraft policies, procedures, and practices are highly complex and can be difficult for a consumer to navigate.” Among the overdaft complexities: Complicated fee structures Bank polices vary widely. Some cap daily overdraft charges to two a day while others allow you to pile up insufficient funds fees 12 times a day. Coverage limits Some banks have fixed limits on how much they will lend on a check or debit with insufficient funds; others vary the limits based on average daily account balance, overdraft history, and deposit patterns. Complex transaction postings The order in which check, debit card, and other transactions are posted to an account can influence the number of overdraft fees—and banks all do this differently. Some process transactions at periodic intervals throughout the day, some only at night. Some process debits in order, some from largest to smallest during a single day. You can see why confusion reigns. But it was another part of the report that caught my eye: The fact that so-called heavy overdrafters reduced their bank fees by a significant amount after declining overdraft protection. “The average checking account fees per account holder who chose to opt in (to overdraft protection) were $196 in 2011, while the average fees for those who did not opt in were $28,” the report states. (MORE: 4 Reasons Excessive Overdraft Fees Just Won’t Go Away) Just to be clear here, I’ll reiterate: The people who did not

5 Negotiation Tips From Steve Jobs

Erik Sherman — Mon, 17 Jun 2013 15:40:46 +0000

U.S. Homebuilder Confidence Soars to 7-year High

AP / Alex Veiga — Mon, 17 Jun 2013 14:06:09 +0000

For the first time in seven years, most U.S. homebuilders are optimistic about home sales, a sign that construction could help drive stronger economic growth in coming months. The National Association of Home Builders/Wells Fargo builder sentiment index leaped to 52 this month from 44 in May. A reading above 50 indicates more builders view sales conditions as good, rather than poor. The index hasn’t been that high since April 2006, just before the housing market collapsed. Measures of customer traffic, current sales conditions and builders’ outlook for single-family home sales over the next six months also soared to their highest levels in seven years. Steady job growth, low mortgage rates, rising home prices and tight supplies of homes for sale have supported a recovery in housing this year. MORE: Why All Eyes Are On Ben Bernanke This Week

Why All Eyes Are on Ben Bernanke This Week

Christopher Matthews — Mon, 17 Jun 2013 09:45:38 +0000

The S&P 500 closed lower on Friday, capping off another shaky week for stock markets, which have pulled back of late after a torrid start to the year. Though weak consumer-confidence data likely contributed to Friday’s declines, many market observers are blaming the recent weakness in the stock market on fears that the Federal Reserve will begin to taper its bond-buying program as soon as this week. The evidence for this point of view is pretty strong. On May 22, in a briefing to Congress, Federal Reserve Chairman Ben Bernanke said that the central bank could possibly begin to downsize its $85 billion per month bond-buying program “in the next few meetings,” if the economy sees enough improvement and it looks sustainable. And since that time the S&P 500 has fallen 1.7%. (MORE: Uh-Oh: We Already Started Spending Like It’s 2005) As Ed Yardeni, president of Yardeni Research, wrote in a research note: “The recent decline in bullish sentiment mostly reflects investors’ confusion and uncertainty about the monetary policies of the major central banks … The fear is that the monetary authorities will start cutting back on the high-octane liquidity they have been adding to the financial markets’ punch bowl.” But markets are prone to overreaction, especially during times of economic uncertainty. What Bernanke said in May was really just a reiteration of his explicit promise not to raise short-term interest rates at least until the unemployment rate falls to 6.5%, and not begin to reduce its buying of long-term bonds until “the outlook for the labor market has improved substantially.” The problem is that this latter promise is extremely vague. Nobody knows exactly what the labor market improving substantially means, and given the fact that the members of the Federal Open Market Committee themselves are in disagreement over what the appropriate policy is, the market is right to be confused over what exactly future central-bank policy will look like. (MORE: Japan Market Crash: A Slow Leak in the ‘Central-Bank Bubble’) While it would be preferable if the Federal Reserve were more of

Red Steel City: What China’s Oldest Steel Factory Says About the Nation’s Future

Rana Foroohar — Mon, 17 Jun 2013 01:00:30 +0000

If you want to understand the history of modern China, a good place to start is the Wuhan Iron & Steel (Group) Corp., with headquarters in Wuhan, a centrally located city of 10 million that is often called the Chicago of China. At the entrance of the 27-sq-km campus is a museum that documents the history of the company, beginning with its founding after the Qing dynasty’s Opium Wars, when it was decided by the provincial governor that China should enhance its “learning of advanced technology from the West to resist the invasion of Western countries.” That meant making steel — a lot of it. WISCO is the oldest steel plant in China and has churned out the metal used to make everything from the rifle that fired the first shot in the 1899–1901 Boxer Rebellion to the rolled steel used by up-and-coming Chinese automotive makers such as BYD and Cherry, to the high-performance metal that created the stunning Bird’s Nest Stadium for the Beijing Olympics. At the entrance to the factory campus is a large statue of Mao, who famously proclaimed, “Nothing in the world can defeat us as long as we have two things — one is food; the other is iron and steel.” Of course, Mao’s willingness to put the latter before the former was the cause of the Great Famine, which killed as many as 43 million Chinese between 1958 and ’61. (In a surge of nationalistic fervor, the Great Leader commanded all peasants to stop growing crops and start making steel.) But in general, the history of WISCO has been one of the rise of China. Pictures in the company museum show several decades worth of smiling Politburo members and leaders from Mao to Deng to Jiang Zemin, Hu Jintao and Xi Jinping, visiting the factory grounds, consulting with Soviet technologists, cutting new steel-trade deals with Brazilian officials and, more recently, announcing major overseas expansions (WISCO now owns and operates mines and steel facilities in places like Canada, Brazil, Liberia, Madagascar, and Australia). The company,

The New and (Maybe) Improved Beverage Containers

Brad Tuttle — Sat, 15 Jun 2013 14:00:44 +0000

Beverage producers just keep on inventing new bottles and cans — and growlers and pouches and “Vinis” — to hold beer, wine and other drinks. This summer, your beverage of choice may come in an innovative new container that makes the drink fresher and tastier. Then again, the vessel’s main innovation could just be that it’s more eye-catching than the usual lineup of bottles and cans. Here are a few of the beverage industry’s latest packaging creations: Beer There’s been something of a renaissance in beer-can innovations lately, with craft beers rolling out special cans that supposedly give beer fresher taste and Budweiser’s “bow-tie” can design, which doesn’t affect the taste but sure does look weird. Budweiser manufacturer Anheuser-Busch InBev has also started testing a Bud Light Vented Can, which allows the drinker to pop open a second hole on top for “a smoother pour with less glug.” And the St. Louis Post-Dispatch reports that the company will be introducing a new bottle for Bud Light Platinum. It’ll come in aluminum and feature a top that twists off and is closable: the design supposedly gets beer colder faster, and, like a soda bottle, the beer container should be able to retain fizz longer if the drinker twists the top back on in between swigs. (MORE: After PBR: Will the Next Great Hipster Beer Please Stand Up?) In the craft-beer world, meanwhile, the hottest beverage container is the growler, a juglike vessel made to hold beer that’s poured straight from the keg and keep it fresh for days, if not weeks. A stretch of breweries and stores in Columbus, Ohio, has been nicknamed “growler alley” because of the number of spots where growlers filled with craft beer can be purchased by takeout customers. A bill expected to be made into law in Michigan will allow bars and restaurants to sell growlers to to-go customers. And in the craft-beer haven of Colorado, reports the Denver Post, brewers are one-upping one another with growlers of all shapes, sizes and designs — including stainless-steel

The Other Complication for Airbnb and the Sharing Economy: Taxes

Brad Tuttle — Sat, 15 Jun 2013 13:00:07 +0000

Sharing economy businesses like Airbnb, RelayRides, and FlightCar have come under fire recently, with participants accused of failure to comply with insurance regulations, building codes, and other rules. In addition to those complications, which I wrote about in the recent issue of TIME magazine, there’s the problem of taxes. Namely, it seems as if almost no one involved in the sharing economy knows exactly what taxes they’re supposed to pay, nor when or how to pay them. And for several reasons — the rules are unclear, enforcement is almost nonexistent, and many feel that “sharing” shouldn’t be taxed at all – very few people pay them. One part of the equation is fairly straightforward: Money earned from renting out a room in your apartment, loaning your car to a stranger, or from any other sharing economy business is considered income, and participants therefore may have to pay income taxes on those earnings. Airbnb, in fact, sends 1099-Misc forms to all hosts who are supposed to pay taxes on their rental income. The site also mentions that a state or locality may require that other short-term rental fees or taxes be paid, and this is where things get really, really messy. According to Airbnb, it’s entirely up to the host to include the proper taxes in their rental listing rates, and then it’s up to the host to pay them. “You are responsible for managing your tax and other regulatory obligations,” Airbnb’s Taxes FAQ section says. “Please contact a tax professional or city compliance department for advice about your tax status and compliance.” How many Airbnb hosts actually hand over hotel taxes to the local tax collector? No one really knows, but it’s likely that the percentage is tiny—perhaps even zero. Most cities haven’t even clarified if short-term hosts should be paying hotel taxes on their rental income, because such a stipulation would implicitly tell residents that short-term rentals are legal — which is itself unclear in many cases. In the spring of 2012, San Francisco made it clear that short-term rentals

Four Months After the ‘Poop Cruise,’ the Carnival Triumph Sails Again — and Is Sold Out

Brad Tuttle — Fri, 14 Jun 2013 18:05:33 +0000

Is it safe to go back in the water? Based on how the Carnival Triumph was fully booked last week, when it embarked on its first departure after the infamous “poop cruise” incident, plenty of cruise passengers seem to say yes. A local TV station in Texas reports that the first post-“poop cruise” voyage for the Carnival Triumph, which departed Galveston on Thursday, was sold out. The ship’s second departure, a five-day cruise leaving Galveston on Monday, is fully booked as well. Apparently, cruise passengers aren’t scared of sailing on the Triumph, the notorious ship that stranded passengers and crew at sea for five days in February without working toilets after a fire erupted in the engine room. Carnival had to cancel 14 scheduled Triumph trips so that the ship could be repaired and upgraded. The Triumph received $115 million in improvements, including additional backup power, better fire-safety technology, and the addition of several new bars and restaurants, according to the Miami Herald. Not only does it look like passengers aren’t hesitant to board the Triumph, some travelers may be banking on the ship being cleaner, safer and better than ever immediately after the renovations. “I’d love to be on the first cruise! It’s in the best shape it’s ever going to be in,” one Galveston resident told Houston’s KHOU. (MORE: Is $500 Enough for Enduring the Cruise from Hell?) What’s unclear, however, are what kinds of prices are being paid by passengers on these Triumph sailings. That’s if they’re paying for these specific departures at all. It’s very possible that a significant percentage of the people filling up cabins in the Triumph and other Carnival ships this summer are customers who are using the credit they received for a free future cruise after the voyage they’d purchased was canceled in recent months. A recent Harris Interactive poll indicates that consumers’ perceptions about the cruise industry fell sharply right after the Triumph incident. That’s understandable. What’s more surprising — and more alarming for people in the business — is that the

Wall Street Falls in Love with Snapchat

Victor Luckerson — Fri, 14 Jun 2013 17:53:23 +0000

The photo-sharing app that’s all the rage with teenagers has found a surprising new clientele: Wall Street bankers and traders. Snapchat, an app that lets users send one another photos that self-destruct in seconds, is becoming increasingly popular in the heavily regulated world of finance — and it’s hard not to wonder if the trend is based on the mistaken belief that Snapchat messages truly disappear. According to New York magazine, recent college graduates who picked up the Snapchat habit in school are now bringing it to their older peers at America’s largest investment firms. The app hasn’t quite reached the boardroom yet, but it’s increasingly popular with young finance professionals, who seem to regard Snapchat as a more spontaneous — and safer — communication method than email or Facebook. A junior analyst at a big bank told New York that he and his colleagues agreed to keep photos of their party-filled weekends off public social media profiles and share them via Snapchat instead. “We can all see them, laugh at them, and confidentially show them to people that won’t fire us.” In fact, Snapchat isn’t a particularly effective strategy for keeping one’s private life private. The person who receives the photo can take a screenshot of it with a simple click of the iPhone. Even worse, a data retrieval firm recently said that it can restore all the Snapchat photos on an Android phone for a fee of $300 to $500. That company’s clients are often law enforcement officials, which means Snapchat might not be the best vehicle for sharing racy jokes, let alone proprietary information about a client. For now, though, it seems as if most bankers are using the app for innocuous reasons. ”I use it to show how lame I am. Taking pictures of myself, alone at my desk on the weekend,” a Goldman Sachs banker told CNBC. (MORE: Is Facebook Losing Its Cool? Some Teens Think So) Snapchat likely doesn’t care what they’re sending as long as they keep doing it. The app is now shuttling 150 million photos per

New Age Philanthropy: Donor-Advised Funds Defy Sluggish Giving Trends

Dan Kadlec — Fri, 14 Jun 2013 14:00:16 +0000

Charitable giving has a new look, one that is broadening the giving pool and helping keep the dollars rolling into nonprofits even during tough economic times, according to a new report. The reason for this change are so-called donor-advised funds, which are the fasting growing charitable giving vehicle in the country. Some 175,000 of these giving accounts now hold $37 billion in assets, up 34% in since 2009. That growth has defied general sluggishness in charitable giving since the financial crisis. The number of gifts from these funds has grown every single year and tripled in all over the past decade, reports Fidelity Charitable, the largest donor-advised program in the nation. Donor-advised funds have been around for many years but most often have been used by the wealthy. In recent years Fidelity, Schwab, Vanguard and other fund companies have turned them into a mainstream product. The minimum to open an account is as little as $5,000. Here’s how the funds works: You make an irrevocable tax-deductible contribution to a donor-advised fund, where you choose an investment option like an S&P500 index fund. The money grows tax-free. And whenever you like, you direct grants from the fund to an eligible charity. These accounts are especially effective for gifting stock or other appreciated assets because they may allow donors to avoid capital gains tax on shares or other assets that have risen in value—with the tax savings going to the charity. At Fidelity, the number of grants per account has risen steadily—to an average of seven grants per year. The average grant is $3,800. Donors in the Fidelity program supported 77,000 nonprofits with grants totaling $1.6 billion in 2012. Just one in five using a donor-advised fund exhaust their account balance each year through a “giving while living” strategy, Fidelity found. But the vast majority of account holders gives something almost every year and increasingly uses the accounts to schedule a regular contribution to a favorite charity. Regular giving greatly helps a charity’s planning. In 2012, scheduled grants from donor-advised funds accounted for

No, the Lululemon CEO Didn’t Get Fired for See-Through Yoga Pants

Christopher Matthews — Fri, 14 Jun 2013 13:00:33 +0000

Earlier this year, yoga-wear company Lululemon had to initiate a massive recall of its popular luon yoga pants, which failed to fulfill one of the main duties of pants: opacity. The see-through-pants debacle cost the Vancouver-based firm an estimated $67 million in sales, and gave the press enough material for headline puns to last a lifetime. So when it was announced Monday that Lululemon CEO Christine Day would be stepping down from the top job, many assumed that it was a result of the costly recall. Despite protestations from the company, news outlets from CNN to the Consumerist linked the departure to the see-through-pants fiasco. But investors were telling a different story, as Lululemon shares fell 12% in after-hours trading following the news. In fact, for many observers, the recall episode just reinforced Day’s competence. After the news of the malfunction spread, Day moved quickly to recall product and fired the companies Chief Product Officer Sheree Waterson. As retail analyst Patty Edwards of Trutina Financial told Forbes, “They handled the whole situation incredibly well.” (MORE: Lululemon Yoga Pants Return to the Market After Recall) So if Day wasn’t forced out because of the recall, why is she leaving? Few companies in the world have succeeded as well as Lululemon has during Day’s five-and-a-half-year tenure. The company’s stock has risen in value from under $4 per share in March of 2009 to a high of more than $80 before Day’s resignation. At the same time, Lululemon was able to aggressively grow its total number of stores, which according to Morningstar sat at 186 by the end of 2012, up from a single outlet ten years before. And while much of Lululemon’s revenue growth has come from this rapid expansion of stores, its not been a slouch when it comes same-stores sales, which have grown at a double-digit pace for much of Day’s tenure. With this kind of track record it would seem very odd if Day is leaving under anything but her own accord. (It should be noted that a CEO jumping ship when things

Grading Abenomics: After Stock Slide, Japan Economic Reforms Under Scrutiny

Rana Foroohar — Fri, 14 Jun 2013 12:13:51 +0000

Is Japan now officially in bear market? It’s a question being asked by many investors today, given that the Nikkei closed yesterday 20 percent down from a recent high on May 22nd. The market was up slightly, by 1.9%, on Friday, but mainly off the back of bargain buying. In technical terms, a 20 percent drop is often labeled a bear market. But what’s happened in Japan hasn’t happened in a vacuum – it’s part of a larger central bank inflated money bubble that I’ve been writing about for some time – one that may be starting to pop. It’s not surprising to me that the Nikkei and the emerging markets have been taking the biggest and fastest correction over the last few days. As savvy emerging market experts like Morgan Stanley’s Ruchir Sharma have been saying for some time, emerging markets have been inflated by central bank money, and given their inherent riskiness, they were always to become volatile at the first sign of a pull back from “quantitative easing,” the Fed’s asset buying strategy. But Japan is a somewhat different story — the big question there is whether this Nikkei correction (or bear market, as you prefer) heralds the early death of “Abenomics.” That’s the nickname of the policy regime launched last year by Japanese Prime Minister Shinzo Abe, which includes aggressive monetary easing of the kind we’ve already seen from the Federal Reserve in the U.S., as well as promises of major structural changes to the economy, like deregulation of protected sectors, tax reform, trade liberalization, red tape cutting, and a new push for innovation and entrepreneurship. Abe calls his monetary, fiscal and growth reforms the “three arrows” in his quill, referring to an ancient Japanese legend in which three arrows bundled together prove to be stronger than one. But as in the U.S., the only arrow that has really been deployed is the first — monetary policy. Just as the Fed’s program of asset buying led the Dow to record highs, the announcement that the Bank