Showing posts with label Global Economic News. Show all posts
Showing posts with label Global Economic News. Show all posts

September 4, 2009

Who's To Blame For The Mortgage Crisis?


If you're having a hard time getting your head around exactly what happened in the historic meltdown of America's home-mortgage market, you're not alone.

As the wife-and-husband investigative team Leslie and Andrew Cockburn suggest in their new documentary, "American Casino," nobody fully understands it: Not the bankers and brokers who sold subprime mortgages (often using deceptive tactics or disingenuous language), not the Wall Street wizards who carved them up into ever more esoteric financial instruments, not the free-market wise men like former Fed chair Alan Greenspan or former Sen. Phil Gramm, and certainly not the ordinary citizens who believed they were fulfilling the American dream and wound up losing their homes, their financial security and their self-respect.

Actually, the Cockburns meet one guy in "American Casino" who understands the whole mess better than most, a California real estate investor named Jeff Greene who smelled the end of the housing bubble around 2006 and bet $1 billion against the mid-decade exuberance of Wall Street. Sitting in his walled and gated beach compound in Malibu, Greene calmly tells the camera that the opportunity for his successful hedge bet (which has yielded $500 million so far) involved massive pain for millions of homeowners.

We meet some of those people too; the Cockburns focus in particular on the African-American community of Baltimore, a city devastated by the tidal wave of foreclosures. Of course foreclosed properties can be found in virtually every neighborhood of every town and city, and at every income level. But Latinos and African-Americans are several times more likely to be affected than whites, and while the problem is undeniably complicated, that almost certainly reflects the enduring legacy of racism. In the 1990s and 2000s, neighborhoods that had previously been "redlined" by traditional lenders became targeted by unregulated and unscrupulous vendors of subprime mortgages, who neither knew nor cared whether borrowers were likely to default on those loans. As we now know, the results were toxic.

One of the film's sad ironies is that middle-class homeowners like Denzel Mitchell, a Baltimore high-school teacher, or Patricia McNair, a family therapist, might well have qualified for conventional loans from normal banks. (One survey mentioned in the film suggests that at least half the people who applied for subprime mortgages in 2006 could have qualified for prime mortgages.) Instead, they were enticed into too-good-to-be-true first and then second mortgages that adjusted sharply upward, which they couldn't realistically afford. Both people are aware that their own lack of financial sophistication is partly to blame for their predicament, but that does nothing to lessen the heartbreak as McNair and her husband have to leave the appealing family home where her adult children grew up, or as Mitchell must abandon his organic vegetable garden and the Tuskegee Airmen-themed bedroom for his little boys.

But if you want to blame somebody for what happened to Mitchell, McNair and millions of other Americans, the place to point the finger is at the fervid deregulation advocated by Greenspan and enacted by Congress under the whip of Gramm and other free-market ideologues. Such laissez-faire reforms created a wide-open marketplace where bankers and brokers could sell whatever extortionate mortgage deals they wanted to whomever they wanted, while lying to consumers about what they were getting and lying to lenders about the borrower's income and assets. Meanwhile, as one anonymous former Bear, Stearns banker tells the Cockburns, Wall Street securities dealers carved up packages of mortgages into abstruse, "fourth-dimensional" instruments to be sold to "idiots."

"American Casino" is of necessity a fragmentary tale; it was being filmed in 2008 as the crisis broadened and deepened, with events unfolding too fast for the Cockburn cameras. But while the mortgage crisis still awaits a rigorous deconstruction along the lines of Alex Gibney's "Enron: The Smartest Guys in the Room," this film stands as an intimate, terrifying document that renders an incomprehensible slice of recent history in human terms. While the stories of Denzel Mitchell and Patricia McNair made me want to weep, the film's most memorable images stem from the Sisyphean task of Jared Dever, a bright and handsome local official in Riverside County, Calif., whose job is to control the county's mosquito epidemic, largely caused by the fetid, abandoned swimming pools behind foreclosed suburban homes.

Dever patrols a nightmarish, new-but-decrepit landscape straight out of the fiction of J.G. Ballard, carefully checking empty houses for signs of meth labs or marijuana grow zones before attacking the pools, whose algae-green water is full of abandoned patio furniture, tires and sports equipment, along with millions of mosquito larvae and the minnows who live on them. I'm not sure that hosing down the whole subdivision with Malathion is any kind of answer. Civilization didn't leave much of an imprint on that place. Now that the bankers have sucked out all its supposed economic value, we might as well drain the pools, knock down the houses and let the coyotes and rattlesnakes take over.

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Source:

http://www.salon.com/ent/movies/btm/feature/2009/09/02/casino/index.html?source=rss&aim=/ent/movies/btm/feature

Tags:

Salon, American Casino, Leslie and Andrew Cockburn, documentary, bankers, brokers, subprime mortgages, Jeff Greene, redlined, Phil Gramm, Alan Greenspan, Global Economic News,

Posted via email from Global Business News

July 26, 2009

United Future World Currency


Russian President Dmitry Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin of a “united future world currency.”

“Here it is,” Medvedev told reporters today in L’Aquila, Italy, after a summit of the Group of Eight nations. “You can see it and touch it.” The coin, which bears the words “unity in diversity,” was minted in Belgium and presented to the heads of G-8 delegations, Medvedev said.

The question of a supranational currency “concerns everyone now, even the mints,” Medvedev said. The test coin “means they’re getting ready. I think it’s a good sign that we understand how interdependent we are.”

Medvedev has repeatedly called for creating a mix of regional reserve currencies as part of the drive to address the global financial crisis, while questioning the U.S. dollar’s future as a global reserve currency. Russia’s proposals for the G-20 meeting in London in April included the creation of a supranational currency.

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Source:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aeFVNYQpByU4

http://www.futureworldcurrency.com/

Tags:

United Future World Currency, Dmitry Medvedev, G8, Russian President, Unity in Diversity, Laquila Italy, Supranational currency, G20, Global Economic News, coin, hard currency, Belgian mints, SDR’s,

Posted via email from Global Business News

July 23, 2009

Budget Deficit Tops $1Trillion For First Time


Nine months into the fiscal year, the federal deficit has topped $1 trillion for the first time.

The imbalance is intensifying fears about higher interest rates and inflation, and already pressuring the value of the dollar. There's also concern about trying to reverse the deficit — by reducing government spending or raising taxes — in the midst of a harsh recession.

The Treasury Department said Monday that the deficit in June totaled $94.3 billion, pushing the total since the budget year started in October to nearly $1.1 trillion. The deficit has been propelled by the huge sum the government has spent to combat the recession and financial crisis, combined with a sharp decline in tax revenues. Paying for wars in Iraq and Afghanistan also is a major factor.

The country's soaring deficits are making Chinese and other foreign buyers of U.S. debt nervous, which could make them reluctant lenders down the road. It could force the Treasury Department to pay higher interest rates to make U.S. debt attractive longer-term.

"These are mind boggling numbers," said Sung Won Sohn, an economist at the Smith School of Business at California State University. "Our foreign investors from China and elsewhere are starting to have concerns about not only the value of the dollar but how safe their investments will be in the long run."

Government spending is on the rise to address the worst financial crisis since the Great Depression and an unemployment rate that has climbed to 9.5 percent. Congress already approved a $700 billion financial bailout and a $787 billion economic stimulus package to try and jump-start a recovery, and there is growing talk among some Obama administration officials that a second round of stimulus may be necessary.

This has many Republicans and deficit hawks worried that the U.S. could be setting itself up for more financial pain down the road if interest rates and inflation surge. They also are raising alarms about additional spending the administration is proposing, including its plan to reform health care.

President Barack Obama and other administration officials, including Treasury Secretary Timothy Geithner, have said the U.S. is committed to bringing down the deficits once the country has emerged from the current recession and financial crisis.

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Source:

http://www.mercurynews.com/business/ci_12827891?source=email

Tags:

Treasury Department, Great Depression, Barack Obama, Timothy Geithner, Treasury Secretary, Government spending, Smith School of Business, wars in Iraq and Afghanistan, Global Economic News,

Posted via email from Global Business News

July 17, 2009

IKEA is as Bad as Wal-Mart


My mother still owns, and uses, the same vacuum cleaner she bought early in her marriage, just after World War II. She still lives in the house my father -- not a carpenter by trade, but an electrician -- built in the early 1950s with the help of his brothers, a small but sturdy Cape Cod-style dwelling with hardwood floors and solid wood doors that close with a hearty, satisfying clunk (as opposed to the echoey click of hollow-core doors).

Today the idea of anything -- a household appliance, a piece of furniture, a house -- being built to last is almost laughable. When your vacuum cleaner stops sucking, you most likely haul it out to the curb and trek to Target or a big-box home-goods store to replace it. Even if you could readily find someone to repair it, the trouble and the cost would be prohibitive. If you need a bookcase, there's always IKEA: Sure, you'd prefer to buy a sturdily built hardwood version that doesn't buckle under the weight of actual books, but who has extra dough to spend on stuff like that? The IKEA bookcase is good enough, for now if not forever.

That cycle of consumption seems harmless enough, particularly since we live in a country where there are plenty of cheap goods to go around. But in her lively and terrifying book "Cheap: The High Cost of Discount Culture," Ellen Ruppel Shell pulls back the shimmery, seductive curtain of low-priced goods to reveal their insidious hidden costs. Those all-you-can-eat Red Lobster shrimps may very well have come from massive shrimp-farming spreads in Thailand, where they've been plumped up with antibiotics and possibly tended by maltreated migrant workers from Burma, Cambodia and Vietnam. The made-in-China toy train you bought your kid a few Christmases ago may have been sprayed with lead paint -- and the spraying itself may have been done by a child laborer, without the benefit of a protective mask.

"Cheap" is hardly a finger-waggling book. This isn't a screed designed to make us feel guilty for unknowingly benefiting from the hardships of workers in other parts of the world. And Shell -- who writes regularly for the Atlantic -- isn't talking about the shallowness of consumerism here; she makes it clear that she, like most of us, enjoys the hunt for a good deal. "Cheap" really is about us, meaning not just Americans, but citizens of the world, and about what we stand to lose in a global economic environment that threatens the very nature of meaningful work, work we can take pride in and build a career on -- or even at which we can just make a living.

Discount chains pretend to be the most democratic of enterprises, willing and able to fill our every need at a price we can afford: Ingenious slogans like "Design for All" (Target) and "Save money. Live Better" (Wal-Mart) make that point pretty well. Shell asserts that an excess of cheap goods -- and the drive to make and sell them ever more cheaply -- is putting a deadly squeeze on workers worldwide. Most liberal-leaning citizens are aware of the profit-making schemes of Wal-Mart and, even if we actually shop there, find them distasteful (although Shell notes that among economists, the chain has its defenders).

But Shell asserts that even outlet malls and seemingly benign, friendly, progressive stores like IKEA are part of the problem; along with more obvious bad guys like Wal-Mart, they perpetuate a cycle that, far from nurturing creativity and innovation in the marketplace, ultimately benefits a relative few at the very top of the economic chain. Shell notes that before retiring in February 2009, "Wal-Mart CEO Lee Scott Jr. took home in his biweekly paycheck what his average employee earned in a lifetime." You might say that, for Scott, the good news is that everybody can afford to shop at Wal-Mart; the better news is that he himself doesn't have to.

Shell begins by outlining the history of mass production in America (perhaps not surprisingly, firearms were among the first items to be mass-produced) and the rise of the discount chain. In the late 1800s a sickly farmer's son named Frank W. Woolworth opened the first "five-and-dime"; later, foreshadowing a future that workers around the world now seem doomed to live out, he quipped, "We must have cheap labor or we cannot sell cheap goods. When a clerk gets so good she can earn better wages elsewhere, let her go."

The understanding is that she'll have somewhere else to go, where her skills and talents are wanted or needed, considered something worth paying for. But increasingly in our current work climate, more skills only make a worker more expensive and possibly more demanding, not more desirable. With meticulousness and daring, Shell approaches this problem and the myriad thorny issues twined around it, incorporating the research and views of an assortment of economists, political scientists and law professors to build her case. At the core of her argument is the idea that the wealth of cheap goods available to us doesn't make our lives better; instead, it fosters an environment that endangers not just the jobs of American workers but the idea of human labor, period.

It's impossible to grapple with the global economy without addressing the tricky subject of China, and Shell does so with the right amount of clear-eyed empathy. She notes that China as a nation has grown wealthier while its poor have become poorer. According to figures released by the World Bank, between 2001 and 2003 the income of the poorest 10 percent of China's 1.3 billion people had fallen by 2.4 percent, to less than $83 per year. In that same period, the country's economy grew by 10 percent, and its richest people became 16 percent richer.

Many of China's poor work in factories, earning ever-shrinking pay under inhospitable or dangerous conditions, as the American conglomerates who do business there press the Chinese government to revise or reverse regulations that might make these laborers' work lives more tolerable. The government, understandably eager for China to take its place at the global-commerce table, is all too eager to comply. A Shanghai journalist makes a piercing comment to Shell: "We do not yet have the luxury to concern ourselves too much with things like human rights."

But Shell is careful to point out that China isn't the source of the "cheap goods" problem. She quotes Mark Barenberg, a professor of law at Columbia University and an expert on international labor law: "The severe exploitation of China's factory workers and the contraction of the American middle class are two sides of the same coin." The idea is that when global corporations squeeze labor in China and other developing nations, they're able to use the threat of low-wage competition to, as Shell puts it, "roll back decades of hard-won gains in wages, benefits, and dignified treatment for workers in the United States." In other words, employers in the United States can easily use the threat of downsizing and outsourcing to gain more power over, and squeeze more juice out of, their employees -- who, in turn, enjoy increasingly less protection from unions.

While the Chinese are hardly the villains of Shell's story, certain Swedes have plenty to answer for: Shell's chapter on IKEA is the most gently damning in the book. Shell is quick to admit that IKEA products -- from bookshelves to tables to lamps -- are very nicely designed. And the ingenuity of designing furniture so that it can be shipped efficiently, compactly and cheaply, with an eye toward environmental concerns, is admirable. But Shell also points out the hypocrisy inherent in IKEA's philosophy.

As a clever IKEA commercial, directed by Spike Jonze, points out, an old lamp (or bookcase or table) doesn't have feelings; any piece of furniture can and should be replaced at any time. The ad, and the whole IKEA approach, suggests that objects have no lasting meaning or value. They're disposable; when we tire of them, we should just throw them out. Then why, Shell asks, does IKEA personify its products by naming them, à la the Lack coffee table or the Kura loft bed? "If IKEA thinks it's crazy to care deeply about objects, why," she asks, "does it sell a wok named after a girl?"

IKEA makes money, and lots of it, by passing on to the consumer the cost of assembling its products, thus turning the consumer into part of its workforce: Depending on how you look at it, we either save money by putting IKEA furniture together ourselves, or we pay for the privilege of putting IKEA furniture together ourselves.

Regardless, these tables and bookcases aren't, and aren't intended to be, heirloom pieces. But Shell wonders if our expectations are too low. We no longer expect craftsmanship in everyday objects; maybe we don't feel we even deserve it. "Objects can be designed to low price," she writes, "but they cannot be crafted to low price." But if we stop valuing -- and buying -- craftsmanship, the very idea of making something with care and expertise is destined to die, and something of us as human beings will die along with it: "A bricklayer or carpenter or teacher, a musician or salesperson, a writer of computer code -- any and all can be craftsmen.

Craftsmanship cements a relationship between buyer and seller, worker and employer, and expects something of both. It is about caring about the work and its application. It is what distinguishes the work of humans from the work of machines, and it is everything that IKEA and other discounters are not."

What's more, IKEA is the third-largest consumer of wood in the world and uses timber that comes mostly from Eastern Europe and the Russian Far East, where, Shell points out, "wages are low, large wooded regions remote, and according to the World Bank, half of all logging is illegal." IKEA president and CEO Anders Dahlvig asserts that the timber his company uses is harvested legally, and the company does employ forestry experts to monitor the company's suppliers. But Shell points out that IKEA has only 11 forestry monitors, not nearly enough to keep a watchful eye on all those suppliers worldwide, and five of those specialists are devoted to China and Russia, a vast spread of territory by itself. Dahlvig says that hiring more inspectors would cost too much; he'd have to pass the cost on to the consumer.

Would enlightened consumers pay a little more, maybe, to buy products made from wood that had been, unquestionably, legally harvested? Maybe -- but it's not the consumer's choice to make, at least not right now. And if there's one thing that makes reading this eye-opening book an ultimately frustrating experience, it's that Shell can't offer many helpful solutions to this tangle of economic and moral problems, aside from urging us to be more aware as consumers.

Still, she does cite one example of an organization that at least tries to get it right: Wegmans, a chain of supermarkets with stores located mostly in the suburbs of New York state, Pennsylvania, New Jersey, Virginia and Maryland, offers its employees job-training programs, health insurance and retirement benefits. The company operates on the supposition that if it treats its employees respectfully, they'll be better prepared (and more willing) to serve the needs of customers. The approach seems to work: Wegmans profits financially by fostering and retaining customer loyalty, and its employee turnover rate is low -- roughly 6 percent, measured against an industry-wide rate of more than 30 percent. The company also buys a large percentage of its produce from small, local farmers, and has been doing so for 20 years.

If "Cheap" is a harrowing document of the pursuit of profit at the expense of our basic humanity, the example set by Wegmans -- Shell saves it for the end of the book -- sounds almost too good to be true, the kind of crazy business idea that, according to the logic of outfits like Wal-Mart, shouldn't work. In reality, it's one of the foundations of good business: Treat your employees well, and they'll serve you well in return. The cost may be higher, but the price is right.

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Source: http://www.salon.com/books/review/2009/07/12/cheap/index.html?source=rss

Tags: IKEA, Walmart, China, Cheap labor, low-cost producer, Outsourced manufacturing, World Bank, Columbia University, Russian forests and timber, Global Economic News, Global Development News, Salon,

Posted via email from Global Business News

July 13, 2009

BP Wins Iraq Oil Contract


An oil consortium led by British Petroleum has won a contract to develop a large oil field in Iraq, as dozens of international firms compete for the rights to the nation's oil and gas reserves.


BP, along with China's CNPC, secured the contract for the Rumaila oil field on Tuesday, the largest of Iraq's six oil fields on offer to foreign and state-owned companies. The contract race is the first opportunity for global energy giants to gain a hold in the country since the Baath party nationalised the Iraq Petroleum Company in 1972, seven years before former president Saddam Hussein took power. The Rumaila field is estimated to hold 3.3 trillion cubic feet of oil reserves, but also lies in Diyala province, which has seen some of Iraq's worst violence in recent years.

Security concerns

A total of 32 firms, including US and European giants ExxonMobil and Shell and companies from China, India and other Asian states, are chasing the opportunity to get 20-year service contracts to develop six giant oil fields and two gas fields. Three fields were offered by midmorning on Tuesday but only one deal was struck, as several foreign companies rejected the terms laid down by the government. Nuri al-Maliki, Iraq's prime minister, has sought to address company concerns over poor security damaging business prospects and that contracts could be voided by future governments.

He said that the government would "offer security protection, offer all guarantees for their investments and offer all the facilities needed to ensure the success of this process". But Mahmoud Almusafir, a former Iraqi diplomat, told Al Jazeera that there were still questions over the transparency of oil contracts in the country. He said: "This American propaganda [is] telling people that now Iraq is free to do whatever.

"But ... who is setting the price and who is controlling? "Militias from Al Dawa party are controlling the country. They are under the American umbrella; the American occupation," he said. The country's oil industry has suffered from years of neglect and sanctions, and Iraq is hoping foreign investment will bring in the expertise to help raise production levels.

'Benefits for Iraqis'

Oil Minister Hussein al-Shahristani told Iraqi public television: "Our principal objective is to increase our oil production from 2.4 million barrels per day to more than four million in the next five years." He said increasing production to that level would push an extra $1.7tn into government coffers over the next 20 years. Shahristani has said $30bn of the sum would go to the companies that extract the oil and the rest "would finance infrastructure projects across Iraq - schools, roads, airports, housing, hospitals". The oil deposits, holding known reserves of 43 billion barrels of crude, are in southern and northern Iraq while the gas concessions are west and northeast of Baghdad.


Companies awarded deals will have to partner with Iraqi government-owned firms, principally the South Oil Company (SOC), and share management of the fields despite fully financing their development. They will be paid a fixed fee per barrel, not a share of profits and the fee will only be paid once a production threshold set by the government is reached. "This raises the question of the profitability of the contract," a source involved in the bidding told the AFP news agency. "The companies are the ones investing, but have a big problem with the fact that management will be shared," the source said.

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Source: http://english.aljazeera.net/news/middleeast/2009/06/200963093615637434.html

Tags: Iraqi Oil, BP, Sinopec, BP Consortium, Oil Minister Hussein al-Shahristani, Baath party, nationalized, Iraq Petroleum Company, Global Economic News, Global Development News, Global Best Practices,

Posted via email from Global Business News

June 25, 2009

Healthcare Makes A Miraculous Recovery


Obama gets drug companies to cut senior drug bills by $80 billion. Suddenly, his plan is no longer dead

WASHINGTON -- Last week didn't bring much good news for the Obama administration's drive to overhaul healthcare. Congressional budget wonks announced the draft legislation the Senate was working on would cost more than anyone expected; the industry players the White House had worked hard to bring into the reform process started grumbling about the whole thing. By the weekend, conventional wisdom inside the Beltway had more or less already declared reform dead.

Which made Monday's announcement by President Obama that the lobbying arm for the nation's drug manufacturers had agreed to cut the costs of drugs for seniors by $80 billion over the next decade something of a confusing spectacle. If the chances for getting anything done on healthcare had dwindled away, what was the president doing bringing back his campaign slogans -- and, more confusingly still, smiling confidently?

"To those who, here in Washington, who've grown accustomed to 'sky is falling' prognoses and the certainties that we cannot get this done, I have to repeat -- revive an old saying we had from the campaign: Yes, we can," Obama said. "We are going to get this done."

So the deepest significance of the deal between the government and PhRMA, the drug lobby, may well have been what it meant politically. Yes, the announcement means Medicare patients will no longer have to deal with an odd "doughnut hole" in their drug coverage; before Monday, the government pays for seniors' prescriptions if their annual cost is under $2,700 or more than $6,100, but not if the price is in between.

But more important, the news gave the administration a public relations victory -- the president just saved the government, and seniors, $80 billion -- to kick off a week where Obama plans to play offense, not defense, on healthcare. On Tuesday, the president will hold a midday news conference, where he'll have a chance to pitch his plans, and on Wednesday, the White House will host ABC News all day, culminating in a live, prime-time town hall on health reform.

"There was this feeding frenzy last week," one administration official admitted. But White House aides -- who like to insist that they're not paying attention to day-by-day news cycle battles, even as they manage events carefully to fit them -- aren't close to panicking yet. "There will be lots of developments every day about little provisions, and ultimately [very little of it] matters until you get a final bill."

Obama certainly didn't seem ruffled on Monday. He repeated the administration's main theme about healthcare -- you may like the coverage you have, but if the current system isn't changed, you won't be able to afford it for much longer. "Our goal -- our imperative -- is to reduce the punishing inflation in healthcare costs while improving patient care," Obama said. "And to do that we're going to have to work together to root out waste and inefficiencies that may pad the bottom line of the insurance industry, but add nothing to the health of our nation."

Among healthcare policy experts, that's become common knowledge, but the administration isn't finding it as easy to sell to the rest of the country -- or even to Congress. Obama has taken to quoting liberally from a New Yorker article about healthcare cost disparities in two neighboring Texas cities; administration officials have realized the story lays out their case pretty well. What's tricky about pitching the reform plan is that surveys show most voters actually like the care they have. In the last two weeks, Democratic and Republican pollsters have both reported fairly broad satisfaction with existing healthcare options. Obama's challenge is to convince people the system will soon gobble up an unsustainable share of the budget -- both on the federal level and where their own paychecks are concerned -- unless it's changed.

That task won't be easy, but advocates say it's certainly still possible. "People need to put aside the instant gratification bug and appreciate that it's going to take a while to get through the details," said Jackie Schechner, a spokeswoman for Healthcare for America Now, a union-backed group pushing for reform. Even the price tag doesn't have to scare voters off. "They say it's expensive to fix it, and then somebody gets their next insurance bill." Republicans, though, plan to focus their rhetoric on how much the reforms would cost -- more than $1.6 trillion, according to the Congressional Budget Office, though that number is likely to change once the legislation is finished.

Meanwhile, the aspect of the reform that Congress is most upset about doesn't seem to be particularly controversial with actual voters: including a government-funded insurance option to compete with private plans. A CBS News/New York Times poll found 72 percent of respondents liked the idea. "Free puppies and ice cream isn't as popular as that," the administration official joked.

Even Republicans had to acknowledge that the public seems less than terrified. "Indeed, 'government bureaucrats' are scarcely less appealing than 'insurance bureaucrats," a GOP polling memo by Whit Ayres and Ed Gillespie reported on Monday. By the end of this week, the pundits may start declaring healthcare reform is as good as done. Last week's panic was probably premature. This week's celebration will be, too.

Source: http://www.salon.com/news/feature/2009/06/23/healthcare/index.html?source=rss&aim=/news/feature

Tags: Obama, Congressional Budget office, Phrma, Pharma lobby groups, Big Pharma, Healthcare for America now, GOP, New Yorker, Global Economic News, Pollsters, Senate, Beltway,

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June 17, 2009

Virgin, Universal Launch Music Download Service


LONDON — Virgin Media, the cable TV operator owned by entrepreneur Richard Branson, launched a new kind of music download subscription service today with Universal, the world's largest music company.

The service, described by the companies as a world first, will allow Virgin Media's broadband customers in Britain to stream and download as many songs and albums as they like from Universal's catalog for a fee. But entertainment lawyers said the service was unlikely to solve the global music industry's problem of billions of dollars lost to music piracy, and would need to offer content from big-name entertainers to be attractive to consumers.

Universal, by far the biggest industry player, has a roster of talent that includes U2, Elton John, the Rolling Stones, Amy Winehouse, Duffy and James Morrison. Virgin said it was continuing talks with other British major and independent music labels and publishers about including their artists in the new service. The music will be available to download in an MP3 format, giving buyers the ability to listen on a range of devices, including iPods, mobile phones and PCs as well as other MP3 players.

The subscription service, due to be available later this year, builds on mobile phone unlimited download services such as Nokia's "Comes With Music," — allowing for a massive range of music to be downloaded — as the industry fights a losing battle against illegal downloading.

Revenue from digital music sales rose 25 percent last year to $3.7 billion, according to the International Federation of the Phonographic Industry. But those legitimate music sales did not come close to offsetting the billions of dollars being lost to music piracy — an estimated 95 percent of music downloads are still unauthorized.

IFPI Chairman John Kennedy said the new Virgin-Universal deal was "the kind of partnership" between a music company and an internet service provider (ISP) that he expects to shape the future of the music business internationally.

The IFPI has been harshly critical of ISPs in the past for exploiting loopholes in copyright laws to allow them to avoid clamping down on people who illegally download music using their services. "It epitomizes the way in which the music business is adapting to the digital world, embracing new business models and responding to the changing needs of consumers," Kennedy said of the new service.

"It also marks new ground in ISPs' willingness to take steps to protect copyrighted content on their networks, and that sets a very encouraging example to the whole industry," he added. Virgin and Universal said they expected the new service to "drive a material reduction in the unauthorized distribution of its repertoire across Virgin Media's network."

They said they will also attempt educate file sharers about online piracy, temporarily suspending Internet access for persistent offenders. Virgin did not release details of the anticipated monthly subscription costs Monday, but said an "entry level" offer would also be available for customers who download music regularly, but may not want an unlimited service.

"Britain has a world-class reputation for artists and music," said Lucian Grainge, Chairman and Chief Executive of Universal Music Group International. "Now British consumers will have access to a world-class digital music service. I believe this puts all of us at the forefront of a new era." But Jerry Reisman, a partner at U.S. law firm Reisman, Peirez and Reisman said that the Virgin-Universal deal will not make a big dent in the piracy market.

"The Virgin Media platform may add options for the over 30 crowd but the under 20 segment will still pirate the music for free," said Reisman.

Cliff Fluet, a partner at London law firm Lewis Silkin, said that the price of Virgin's service could not be determined until it was clear if artists other than in Universal's stable were on board. Potential customers would also want to know if the service would offer tracks free of "digital rights management," or DRM, technology that limits people's ability to copy songs or move them to multiple computers, he added.

Source: http://www.mercurynews.com/business/ci_12593874?source=email

Tags: Universal, Virgin, Richard Branson, ISP’s, DRM, Virgin Media, Lewis Silkin, Lucian Grainge, Cliff Fluet, Jerry Resiman, IFPI, Nokia, Elton John, U2, Rolling Stones, Global Economic News,

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