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http://www.bloomberg.com/news/2011-...ket-value-bias-masks-66-rally-since-2000.html



No Lost Decade for S&P 500 as Big-Cap Bias Masks Rally
By Nikolaj Gammeltoft and Lu Wang
December 5, 2011


Even with the Standard & Poor’s 500 Index down 19 percent since the bursting of the technology bubble in 2000, it’s been no lost decade for stocks.

The benchmark gauge for American common equity has climbed 66 percent since March 24, 2000, after stripping out adjustments for market value, which gives equal credit to Exxon Mobil Corp. (XOM), whose shares are worth $382.5 billion, and Monster Worldwide Inc. (MWW), at $945.6 million. That’s little help for most investors, whose returns reflect the capitalization-weighted index, says Cliff Asness at AQR Capital Management LLC.

Gains in the S&P 500 Equal Weighted Index through the dot-com tumble, the Sept. 11 attacks, the real-estate collapse and the worst financial crisis since the Great Depression show the resilience of U.S. companies that are forecast to report record earnings this year even as Europe’s debt crisis threatens growth again. Declines in the S&P 500’s biggest members have left them cheaper (OEX) compared with the full index than 89 percent of the time since 2000, according to data compiled by Bloomberg.

“On an equal-weighted basis, it hasn’t been a lost decade.”

Emergency Dollars
The S&P 500 (SPX) rose 7.4 percent last week to 1,244.28 after six central banks led by the Federal Reserve made it easier for lenders to obtain dollars in emergencies and the U.S. economy added 120,000 jobs. Bigger companies rallied more, pushing the S&P 100 Index up 7.6 percent. Both measures posted their largest gains since March 2009, the data show. The S&P 500 pared its loss this year to 1.1 percent.

Owners of stocks in the S&P 100 suffered the most since March 24, 2000. The index fell 33 percent, driven by declines of 70 percent or more in Cisco Systems Inc. and General Electric Co., the second- and third-largest companies behind Microsoft Corp. (MSFT) at the peak of the technology bubble.

Equities suffered two bear markets lasting longer than a year in the previous decade. The first began after the S&P 500’s price-earnings ratio reached 31.2 following the 1990s rally led by computer and software makers. The second started in 2007 as global bank losses from subprime mortgages spiraled toward $2 trillion. The gauge doubled in five years starting in October 2002 as energy companies rallied 242 percent as a group and raw- material producers jumped 162 percent.

Lehman Bankruptcy
U.S. gross domestic product has increased every year since 2000 except for the 2008-2009 period, when the bankruptcy of Lehman Brothers Holdings Inc. triggered the worst recession in seven decades. Growth is forecast to reach 2.2 percent in 2012 from 1.8 percent this year, according to the median estimate of 63 economists in a Bloomberg survey.

Energy producers climbed 149 percent in the past decade as Houston-based Southwestern Energy Co. (SWN) surged 44-fold to $37.69. Materials producers, including Cliffs Natural Resources Inc. (CLF), gained 57 percent. The Cleveland-based miner went from a split- adjusted $3.18 to $68.34.

Record Earnings
Companies in the S&P 500 are poised to report record earnings of $99.05 a share for 2011 and profits may rise 10 percent next year and 12 percent in 2013, based on analyst forecasts compiled by Bloomberg.

The decline in the S&P 100, whose companies have an average market capitalization of $73.9 billion, has reduced valuations to 35 percent below the mean of 18.6 since 1997, data compiled by Bloomberg show. The index trades for 12.1 times reported earnings, 7.6 percent lower than the S&P 500, the data show.

Smaller companies lifted the S&P 500 Equal Weighted Index to a record on May 10, almost four years after the capitalization-based gauge reached its all-time high of 1,565.15 in October 2007.

Worse Than Bonds
The Russell 2000 Index (RTY), a gauge of small-cap shares with an average market value of $667.8 million, peaked on April 29 and is up 28 percent since March 24, 2000. Equity benchmarks did worse than corporate bonds, which returned 121 percent, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield Master Index.

The relative performance of smaller stocks doesn’t help the majority of investors. More than $5.58 trillion is benchmarked to the S&P 500 and about $1.31 trillion is directly linked to its value, according to an estimate by New York-based S&P. The biggest 100 companies make up 63 percent of the value of the S&P 500 and almost half of the entire American market.

Investors Weren’t Spared
Gains in the equal-weighted index reflect appreciation in its smaller companies and stocks with lower valuations over the past decade, according to Asness, who helps oversee $38.8 billion as founder and president of the AQR hedge fund in Greenwich, Connecticut. Since most investors didn’t anticipate that, they weren’t spared the lost decade, he said.

“Sorry, I’m not sure it means more than small-cap and cheap stocks had a good decade,” Asness wrote in an e-mail. “If you add us all up, we add up to cap-weighted, not equal- weighted indexes.”

Cisco (CSCO) in San Jose, California, trailed the S&P 500 in eight out of the last 11 years as the market value of the world’s biggest maker of networking equipment fell 82 percent to $99.7 billion. The stock is down 8.3 percent this year, even after posting earnings that beat analysts’ estimates for at least the 27th straight quarter.

GE (GE) Declines
The market value of Fairfield, Connecticut-based GE has dropped 67 percent. The world’s largest maker of jet engines failed to exceed analysts’ estimates for the first time in two years as third-quarter earnings suffered from tighter profit margins in the industrial business. Its shares have fallen 12 percent this year.

Microsoft, the Redmond, Washington-based software maker, has been displaced by Irving, Texas-based oil producer Exxon as the world’s biggest company after demand from emerging markets bolstered energy stocks. Exxon’s profit almost doubled in the past 11 years.

Southwestern Energy, the Houston-based natural-gas producer, earned $604.1 million last year after losing $46.7 million in 2000. Cliffs, North America’s largest iron-ore producer, has boosted earnings 56-fold since 2000 as a housing boom in China and demand from automakers boosted steel orders. Southwestern Energy has a market value of $13.1 billion, while Cliffs is worth $9.77 billion.

“It was a lost decade for most investors, but it didn’t have to be.”


http://www.bloomberg.com/news/2011-...ket-value-bias-masks-66-rally-since-2000.html
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http://www.bloomberg.com/news/2011-...anium-supply-deficit-may-loom-after-2013.html



Uranium Deficit May Loom After End of Warhead Accord
By Christopher Donville
December 5, 2011


Cameco Corp., the world’s largest uranium producer, said some investors underestimate the potential for supply shortfalls to spur higher prices for the nuclear fuel.

Disruptions in mine production, the difficulty faced by development companies in raising funds for new mining projects, and the end of a Russian deal to supply uranium from scrapped atomic warheads may help create a supply deficit, Chief Executive Officer Tim Gitzel said in an interview.

“People don’t focus so much on the supply side,” he said Dec. 2 at Bloomberg’s Toronto bureau.

“They take every possible project, think it’s going to operate to perfection, and add it up and say ‘there’s lots of supply,’” Gitzel said. “It’s easier said than done.”

Uranium prices have slumped 24 percent since a magnitude-9 earthquake and tsunami struck Japan on March 11, causing a partial meltdown at Tokyo Electric Power Co.’s Fukushima Dai- Ichi nuclear plant. The crisis at Fukushima led to Germany’s declaration in May that it would close its reactors by 2022. Cameco, which is based in Saskatoon, Saskatchewan, in August cut its full-year global uranium demand estimate to 175 million pounds (79,400 metric tons) from 180 million pounds.

Investors are too caught up in a “post-Fukushima attitude,” said Gitzel, 49, who became Saskatoon, Saskatchewan- based Cameco’s chief executive in July, replacing Jerry Grandey, 65, who retired.

Expansion Plan

Cameco, which in 2010 produced 22.8 million pounds of U3O8 -- a tradable form of uranium -- still plans to raise annual output to 40 million pounds by 2018.

Cameco rose 1.8 percent to C$19.37 in Toronto on Dec. 2. It has tumbled 52 percent in 2011, while the S&P/Toronto Stock Exchange Composite Index has dropped 10 percent.

Global mined uranium supply was 53,663 tons in 2010, according to the World Nuclear Association. That’s not enough to cover global demand, and so some utilities also use fuel recovered from Russian warheads under the Highly Enriched Uranium agreement, which has run since the 1990s.

Gitzel said Russia will withdraw from the HEU accord by the end of 2013, removing 24 million pounds of supply.

“There’s a lot, and I spoke to some of them this week, who think the HEU agreement is still going to be around,” Gitzel said. “We don’t.”

Chinese Reactors

There are 433 operable reactors globally and 62 under construction around the world, according to the WNA. China is building 26, plans to construct another 51 and has proposed 120 others, the WNA data show. Developing nations are adding nuclear capacity to meet growing electricity demand and to diversify away from power generated from oil, gas and coal.

A gigawatt of electricity, enough to power about 1 million U.S. homes, requires 200 tons of uranium a year at full operating rates, according to the WNA.

“The game’s not played in Europe anymore,” said Gitzel, who ran French nuclear company Areva SA’s global mining business before joining Cameco in 2007. “The game is played in Asia. China’s barely blinked post Fukushima.”

Although Germany plans to phase out nuclear power, there will be a net 93 new reactors by the end of the decade, Gitzel said. That compares with Cameco’s projection prior to the Japanese earthquake and tsunami of as many as 104, he said.

Potential Targets

Cameco is assessing potential takeover targets after it was trumped by Rio Tinto Group (RIO)’s C$654 million ($641 million) takeover bid for Vancouver-based Hathor Exploration Ltd.. (HAT) Hathor is the developer of the Roughrider uranium deposit in the Athabasca basin in Saskatchewan, the center of Cameco’s operations. Cameco allowed its hostile offer for Hathor to expire last week.

“We’re always looking, we’re cashed up very nicely, and we have a solid balance sheet,” Gitzel said. Cameco is willing to look at potential bid targets beyond its current operations in Canada, the U.S., Kazakhstan and Australia, he said.

“We’ve got the resources and the ability to move quickly,” Gitzel said.

Gitzel’s predecessor Grandey said in November 2009 that Cameco has been interested in Australian uranium miner Paladin Energy Ltd. (PDN) and been challenged by its valuation.

“We have the same concern about valuation,” Gitzel said in the interview. “We’ve got some other pieces and projects that we like better.”

Cameco is on schedule to start production at its Cigar Lake mine in mid-2013. The Saskatchewan mine is scheduled to eventually produce about 18 million pounds of uranium a year, of which Cameco’s share will be about 9 million pounds.

Cigar Lake, which is on the site of the world’s richest undeveloped uranium deposit, was delayed by six years after an October 2006 underground flood at the mine. The uranium spot price more than doubled to a record $138 a pound in the eight months after the accident.

“You want to talk about a catalyst, that was it right there,” Gitzel said. “That just ran it way up.”


http://www.bloomberg.com/news/2011-...anium-supply-deficit-may-loom-after-2013.html
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The Top 100 Cult Films
Source: "100 Cult Films" by Ernest Mathijs and Xavier Mendik
http://www.npr.org/2011/12/07/143296617/what-s-on-your-cult-film-list?ps=cprs

2001: A Space Odyssey, Stanley Kubrick, 1968 ×

Akira, Katsuhiro Otomo, 1988 ×

Angel of Vengeance, Abel Ferrara, 1981

Bad Taste, Peter Jackson, 1987

Baise-moi, Virginie Despentes, Coralie Trinh Thi, 2000

Begotten, E. Elias Merhige, 1991

Behind the Green Door, Artie Mitchell, Jim Mitchell, 1972 ×

La belle et la bête, Jean Cocteau, 1946

Beyond the Valley of the Dolls, Russ Meyer, 1970

The Big Lebowski, Joel Coen, Ethan Coen, 1998 ×

Blade Runner, Ridley Scott, 1982 ×

Blue Sunshine, Jeff Lieberman, 1978

Brazil, Terry Gilliam, 1985

Bride of Frankenstein, James Whale, 1935

The Brood, David Cronenberg, 1979

Das Cabinet des Dr. Caligari, Robert Wiene, 1920

Café Flesh, Stephen Sayadian, 1982

Cannibal Holocaust, Ruggero Deodato, 1979

Casablanca, Michael Curtiz, 1942 ×

Un chien andalou, Luis Buñuel, Salvador Dalí,1928

Coffy, Jack Hill, 1973

Daughters of Darkness, Harry Kümel, 1971

Dawn of the Dead, George A. Romero, 1978

Deadly Weapons, Doris Wishman, 1974

Debbie Does Dallas, Jim Clark, 1978 ×

Deep Red, Dario Argento, 1975

Dirty Dancing, Emile Ardolino, 1987 ×

Django, Sergio Corbucci, 1966

Donnie Darko, Richard Kelly, 2001

Don't Torture a Duckling, Lucio Fulci, 1972

Edward Scissorhands, Tim Burton, 1990 ×

Emanuelle and the Last Cannibals, Aristide Massaccesi, 1977

Emmanuelle, Just Jaeckin, 1974 ×

Enter the Dragon, Robert Clouse, 1973

Eraserhead, David Lynch, 1977 ×

The Evil Dead, Sam Raimi, 1981

Fight Club, David Fincher, 1999

Flaming Creatures, Jack Smith, 1963

Freak Orlando, Ulrike Ottinger, 1981

Freaks, Tod Browning, 1932

Ginger Snaps, John Fawcett, 2000

The Gods Must Be Crazy, Jamie Uys, 1981 ×

Godzilla, Ishirô Honda, 1954

The Harder They Come, Perry Henzell, 1972

Harold and Maude, Hal Ashby, 1971

Häxan, Benjamin Christensen, 1922

Hellraiser, Clive Barker, 1987

The Holy Mountain, Alejandro Jodorowsky, 1973

The House with the Laughing Windows, Pupi Avati, 1976

I Walked with a Zombie, Jacques Tourneur, 1943

Ichi the Killer, Takashi Miike, 2001

In Bruges, Martin McDonagh, 2008

Invasion of the Body Snatchers, Don Siegel, 1956

Invocation of My Demon Brother, Kenneth Anger, 1969

It's a Wonderful Life, Frank Capra, 1946 ×

The Killer, John Woo, 1989

Lady Terminator, H. Tjut Djalil, 1988

The Lord of the Rings, Peter Jackson, 2001–3 ×

Mad Max 2: The Road Warrior, George Miller, 1981 ×

Man Bites Dog, Rémy Belvaux, André Bonzel, Benoît Poelvoorde, 1992

Manos, the Hands of Fate, Harold P. Warren, 1966

The Masque of the Red Death, Roger Corman, 1964

Monty Python and the Holy Grail, Terry Gilliam, Terry Jones, 1975

Near Dark, Kathryn Bigelow, 1987

Nekromantik, Jörg Buttgereit, 1987

Night of the Living Dead, George A. Romero, 1968

Pink Flamingos, John Waters, 1972 ×

Piranha, Joe Dante, 1978

Plan 9 from Outer Space, Ed Wood, Jr, 1959

Re-Animator, Stuart Gordon, 1985

Reefer Madness, Louis Gasnier, 1936

Repo Man, Alex Cox, 1984 ×

Ringu, Hideo Nakata, 1998

The Rocky Horror Picture Show, Jim Sharman, 1975

Rome Armed to the Teeth, Umberto Lenzi, 1976

The Room, Tommy Wiseau, 2003

Salò, or the 120 Days of Sodom, Pier Paolo Pasolini, 1975 ×

She Killed in Ecstasy, Jesús Franco, 1971

Showgirls, Paul Verhoeven, 1995 ×

Soul Vengeance, Jamaa Fanaka, 1975

The Sound of Music, Robert Wise, 1965 ×

Star Wars, George Lucas, 1977–2005 ×

Superstar: The Karen Carpenter Story, Todd Haynes, 1988

Suspiria, Dario Argento, 1977

Tank Girl, Rachel Talalay, 1995

Tetsuo, Shinya Tsukamoto, 1989

The Texas Chainsaw Massacre, Tobe Hooper, 1974

This Is Spınal Tap, Rob Reiner, 1984 ×

Thriller: A Cruel Picture, Bo Arne Vibenius, 1974

Thundercrack!, Curt McDowell, 1975

El Topo, Alejandro Jodorowsky, 1970

The Toxic Avenger, Michael Herz, Lloyd Kaufman, 1984

Two-Lane Blacktop, Monte Hellman, 1971

Two Thousand Maniacs!, Herschell Gordon Lewis, 1964

The Vanishing, George Sluizer, 1988

Videodrome, David Cronenberg, 1983

The Warriors, Walter Hill, 1979

Witchfinder General, Michael Reeves, 1968

Withnail & I, Bruce Robinson, 1987

The Wizard of Oz, Victor Fleming, 1939 ×
 
http://encyclopedia.thefreedictionary.com/Fair+use

Fair use under United States law
The legal concept of "Test copyright" was first ratified by the Kingdom of Great Britain's Statute of Anne of 1709. As room was not made for the authorized reproduction of copyrighted content within this newly formulated statutory right, the courts created a doctrine of "fair abridgment" in Gyles v Wilcox, which eventually evolved into the modern concept of "fair use," that recognized the utility of such actions. The doctrine only existed in the U.S. as common law until it was incorporated into the Copyright Act of 1976, 17 U.S.C. § 107.

17 U.S.C. § 107
Notwithstanding the provisions of sections 17 U.S.C. § 106 and 17 U.S.C. § 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include:
the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
the nature of the copyrighted work;
the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.[1]​
The four factors of analysis for fair use set forth above derive from the classic opinion of Joseph Story in Folsom v. Marsh, 9 F.Cas. 342 (1841), in which the defendant had copied 353 pages from the plaintiff's 12-volume biography of George Washington in order to produce a separate two-volume work of his own. The court rejected the defendant's fair use defense with the following explanation:

[A] reviewer may fairly cite largely from the original work, if his design be really and truly to use the passages for the purposes of fair and reasonable criticism. On the other hand, it is as clear, that if he thus cites the most important parts of the work, with a view, not to criticize, but to supersede the use of the original work, and substitute the review for it, such a use will be deemed in law a piracy…

In short, we must often… look to the nature and objects of the selections made, the quantity and value of the materials used, and the degree in which the use may prejudice the sale, or diminish the profits, or supersede the objects, of the original work.​

Once these factors were codified as guidelines in 17 U.S.C. § 107, they were not rendered exclusive. The section was intended by Congress to restate, but not replace, the prior judge-made law. Courts are still entitled to consider other factors as well.

Fair use tempers copyright's exclusive rights to serve the purpose of copyright law, which the U.S. Constitution defines as the promotion of "the Progress of Science and useful Arts" (Art. I, § 8, cl. 8). This principle applies particularly well to the case of criticism and also sheds light on various other limitations on copyright's exclusive rights, particularly the scenes à faire doctrine.

Purpose and character
The first factor is regarding whether the use in question helps fulfill the intention of copyright law to stimulate creativity for the enrichment of the general public, or whether it aims to only "supersede the objects" of the original for reasons of personal profit. To justify the use as fair, one must demonstrate how it either advances knowledge or the progress of the arts through the addition of something new. A key consideration is the extent to which the use is interpreted as transformative, as opposed to merely derivative.

When Tom Forsythe appropriated Barbie dolls for his photography project "Food Chain Barbie," Mattel lost its claims of copyright and trademark infringement against him because his work effectively parodies Barbie and the values she represents.[2] But when Jeff Koons tried to justify his appropriation of Art Rogers' photograph "Puppies" in his sculpture "String of Puppies" with the same parody defense, he lost because his work was not presented as a parody of Rogers' photograph in particular, but of society at large, which was deemed insufficiently justificatory.[3]

However, since this case, courts have begun to emphasize the first fair use factor—assessing whether the alleged infringement has transformative use as described by the Hon. Judge Pierre N. Leval.[4] More recently, Koons was involved in a similar case with commercial photographer Andrea Blanch,[5] regarding his use of her photograph for a painting, whereby he appropriated a central portion of an advertisement she had been commissioned to shoot for a magazine. In this case, Koons won; the case sets a favorable precedent for appropriation art where the use is deemed transformative.

The subfactor mentioned in the legislation above, "whether such use is of a commercial nature or is for nonprofit educational purposes," has recently been deemphasized in some Circuits "since many, if not most, secondary uses seek at least some measure of commercial gain from their use."[6] More important is whether the use fulfills any of the "preamble purposes" also mentioned in the legislation above, as these have been interpreted as paradigmatically "transformative." Although Judge Pierre Leval has distinguished the first factor as "the soul of fair use," it alone is not determinative. For example, not every educational usage is fair.[7] See also L.A. Times v. Free Republic, described below.

Nature of the copied work
Although the Supreme Court of the United States has ruled that the availability of copyright protection should not depend on the artistic quality or merit of a work, fair use analyses consider certain aspects of the work to be relevant, such as whether it is fictional or non-fictional.[8]

To prevent the private ownership of work that rightfully belongs in the public domain, facts and ideas are separate from copyright—only their particular expression or fixation merits such protection. On the other hand, the social usefulness of freely available information can weigh against the appropriateness of copyright for certain fixations. The Zapruder film of the assassination of President Kennedy, for example, was purchased and copyrighted by Time magazine. Yet their copyright was not upheld, in the name of the public interest, when they tried to enjoin the reproduction of stills from the film in a history book on the subject in Time Inc. v. Bernard Geis Associates.[9]

Following the decisions of the Second Circuit in Salinger v. Random House, Inc.[10] and in New Era Publications Int'l v. Henry Holt & Co.,[11] the aspect of whether the copied work has been previously published suddenly trumped all other considerations because of, in the words of one commentator, "the original author's interest in controlling the circumstances of the first public revelation of his work, and his right, if he so chooses, not to publish at all." Yet some view this importation of certain aspects of France's droit moral d'artiste (moral rights of the artist) into American copyright law as "bizarre and contradictory" because it sometimes grants greater protection to works that were created for private purposes that have little to do with the public goals of copyright law, than to those works that copyright was initially conceived to protect. This is not to claim that unpublished works, or, more specifically, works not intended for publication, do not deserve legal protection, but that any such protection should come from laws about privacy, rather than laws about copyright. The statutory fair use provision was amended in response to these concerns by adding a final sentence: "The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors."

Amount and substantiality
The third factor assesses the quantity or percentage of the original copyrighted work that has been imported into the new work. In general, the less that is used in relation to the whole, e.g., a few sentences of a text for a book review, the more likely that the sample will be considered fair use. Yet see Sony Corp. v. Universal City Studios for a case in which substantial copying—entire programs for private viewing—was upheld as fair use, at least when the copying is done for the purposes of time-shifting. Likewise, see Kelly v. Arriba Soft Corporation, where the Ninth Circuit held that copying an entire photo to use as a thumbnail in online search results did not weigh against fair use, "if the secondary user only copies as much as is necessary for his or her intended use." Conversely, in Harper & Row, Publishers, Inc. v. Nation Enters,[12] the use of fewer than 400 words from President Ford's memoir by a political opinion magazine was interpreted as infringement because those few words represented "the heart of the book" and were, as such, substantial.

Before 1991, sampling in certain genres of music was accepted practice and such copyright considerations as these were viewed as largely irrelevant. The strict decision against rapper Biz Markie's appropriation of a Gilbert O'Sullivan song in the case Grand Upright Music, Ltd. v. Warner Bros. Records, Inc.[13] changed practices and opinions overnight. Samples now had to be licensed, as long as they rose "to a level of legally cognizable appropriation."[14] In other words, de minimis sampling was still considered fair and free because, traditionally, "the law does not care about trifles." The recent Sixth Circuit Court decision in the appeal to Bridgeport Music has reversed this standing, eliminating the de minimis defense for samples of recorded music, but stating that the decision did not apply to fair use.

Effect upon work's value
The fourth factor measures the effect that the allegedly infringing use has had on the copyright owner's ability to exploit his or her original work. The court not only investigates whether the defendant's specific use of the work has significantly harmed the copyright owner's market, but also whether such uses in general, if widespread, would harm the potential market of the original. The burden of proof here rests on the defendant for commercial uses, but on the copyright owner for noncommercial uses. See Sony Corp. v. Universal City Studios,[15] where the copyright owner, Universal, failed to provide any empirical evidence that the use of Betamax had either reduced their viewership or negatively impacted their business. In the aforementioned Nation case regarding President Ford's memoirs, the Supreme Court labeled this factor "the single most important element of fair use" and it has indeed enjoyed some level of primacy in fair use analyses ever since. Yet the Supreme Court's more recent announcement in Campbell v. Acuff-Rose Music, Inc.[16] that "all [four factors] are to be explored, and the results weighed together, in light of the purposes of copyright" has helped modulate this emphasis in interpretation.

In evaluating the fourth factor, courts often consider two kinds of harm to the potential market of the original work: First, courts consider whether the use in question acts as a direct market substitute for the original work. In the judgement of the Supreme Court in Acuff-Rose Music they decisively stated that, "when a commercial use amounts to mere duplication of the entirety of the original, it clearly supersedes the object of the original and serves as a market replacement for it, making it likely that cognizable market harm to the original will occur." In one instance, a court ruled that this factor weighed against a defendant who had made unauthorized movie trailers for video retailers, since his trailers acted as direct substitutes for the copyright owner's official trailers.[17] Second, courts also consider whether potential market harm might exist beyond that of direct substitution, such as in the potential existence of a licensing market. This consideration has weighed against commercial copy shops that make copies of articles in course-pack for college students, when a market already existed for the licensing of course-pack copies.[18]

Courts recognize that certain kinds of market harm do not oppose fair use, such as when a parody or negative review impairs the market of the original work. Copyright considerations may not shield a work against adverse criticism.

Fair use and professional communities
Courts, when deciding fair use cases, in addition to looking at context, amount and value of the use, also look to the standards and practices of the professional communities where the case comes from.[citation needed]

Practical effect of fair use defense
The practical effect of this law and the court decisions following it is that it is usually possible to quote from a copyrighted work in order to criticize or comment upon it, teach students about it, and possibly for other uses. Certain well-established uses cause few problems. A teacher who prints a few copies of a poem to illustrate a technique will have no problem on all four of the above factors (except possibly on amount and substantiality), but some cases are not so clear. All the factors are considered and balanced in each case: a book reviewer who quotes a paragraph as an example of the author's style will probably fall under fair use even though he may sell his review commercially. But a non-profit educational website that reproduces whole articles from technical magazines will probably be found to infringe if the publisher can demonstrate that the website affects the market for the magazine, even though the website itself is non-commercial.

Free Republic, LLC, owner of the political website freerepublic.com, was found liable for copyright infringement in L.A. Times v. Free Republic for reproducing and archiving full-text versions of plaintiffs' news articles even though the judge found the website minimally commercial. She held that "while defendants' do not necessarily 'exploit' the articles for commercial gain, their posting to the Free Republic site allows defendants and other visitors to avoid paying the 'customary price' charged for the works."

The April 2000 opinion ruled concerning the four factors of fair use that 1) "defendants' use of plaintiffs' articles is minimally, if at all, transformative," 2) the factual content of the articles copied "weighs in favor of finding of fair use of the news articles by defendants in this case," though it didn't "provide strong support" 3) concerning the amount and substantiality prong, "the wholesale copying of plaintiffs' articles weighs against the finding of fair use," and 4) the plaintiffs showed that they were trying to exploit the market for viewing their articles online and defendants didn't rebut their showing by proving an absence of usurpation harm to plaintiffs. Ultimately the court found "that the defendants may not assert a fair use defense to plaintiffs' copyright infringement claim."

Fair use as a defense
The Supreme Court of the United States described fair use as an affirmative defense in Campbell v. Acuff-Rose Music, Inc..[16] This means that, in litigation on copyright infringement, the defendant bears the burden of raising and proving that his use was "fair" and not an infringement. Thus, fair use need not even be raised as a defense unless the plaintiff first shows (or the defendant concedes) a "prima facie" case of copyright infringement. If the work was not copyrightable, the term had expired, or the defendant's work borrowed only a small amount, for instance, then the plaintiff cannot make out a prima facie case of infringement, and the defendant need not even raise the fair use defense.

Because of the defendant's burden of proof, some copyright owners frequently make claims of infringement even in circumstances where the fair use defense would likely succeed in hopes that the user will refrain from the use rather than spending resources in his defense. This type of lawsuit is part of a much larger problem in First Amendment law; see Strategic lawsuit against public participation.

Because paying a royalty fee may be much less expensive than having a potential copyright suit threaten the publication of a completed work in which a publisher has invested significant resources, many authors may seek a license even for uses that copyright law ostensibly permits without liability.

The frequent argument over whether fair use is a "right" or a "defense"[19] is generated by confusion over the use of the term "affirmative defense." "Affirmative defense" is simply a term of art from litigation reflecting the timing in which the defense is raised. It does not distinguish between "rights" and "defenses," and so it does not characterize the substance of the defendant's actions as "not a right but a defense."

In response to perceived over-expansion of copyrights, several electronic civil liberties and free expression organizations began in the 1990s to add fair use cases to their dockets and concerns. These include the Electronic Frontier Foundation ("EFF"), the American Civil Liberties Union, the National Coalition Against Censorship, the American Library Association, numerous clinical programs at law schools, and others. The "Chilling Effects" archive was established in 2002 as a coalition of several law school clinics and the EFF to document the use of cease and desist letters. Most recently, in 2006, Stanford University began an initiative called "The Fair Use Project" (FUP) to help artists, particularly filmmakers, fight lawsuits brought against them by large corporations.

In 2009, fair use appeared as a defense in lawsuits against filesharing. Charles Nesson argued that file-sharing qualifies as fair use in his defense of alleged filesharer Joel Tenenbaum.[20] Kiwi Camara, defending alleged filesharer Jammie Thomas, announced a similar defense.[21]

On September 2, 2009 Israeli District court ruled out a detailed decision[22] not allowing disclosure of "John Doe"'s details for the request of the FA Premier League based on several reasons, but the most interesting were that "fair use" under the new Israeli law of 2007 (which is based on the US 4 factors test) is a right and not merely a defense. The court specifically states that the public may have base for a legal cause of action if its fair use right is infringed by the copyright holder. Other important decision in said judgment is the fact that the court finds streaming Internet filesharing site of live soccer games not infringing copyright as this use is fair use (mainly due to the importance of certain sport events and the public's right). The court analyzes the 4 factors and decides that due to such importance of sporting games (and other less important factors), such use is fair.

The economic benefit of fair use
A balanced copyright law provides an economic benefit to many high tech businesses such as search engines and software developers. Fair Use is also crucial to non-technology industries such as insurance, legal services, and newspaper publishers.[23] On September 12, 2007, the Computer and Communications Industry Association (CCIA),[23] a group representing companies including Google Inc., Microsoft Inc.,[24] Oracle Corporation, Sun Microsystems, Yahoo[25] and other high tech companies, released a study that found that Fair Use exceptions to US copyright laws were responsible for more than $4,500 billion dollars in annual revenue for the United States economy representing one-sixth of the total U.S. GDP.[23] The study was conducted using a methodology developed by the World Intellectual Property Organization.[23] The study found that fair use dependent industries are directly responsible for more than 18% of U.S. economic growth and nearly 11 million American jobs.[23] “As the United States economy becomes increasingly knowledge-based, the concept of fair use can no longer be discussed and legislated in the abstract. It is the very foundation of the digital age and a cornerstone of our economy,” said Ed Black, President and CEO of CCIA.[23] “Much of the unprecedented economic growth of the past ten years can actually be credited to the doctrine of fair use, as the Internet itself depends on the ability to use content in a limited and nonlicensed manner."[23]

Fair use and parody
Producers or creators of parodies of a copyrighted work have been sued for infringement by the targets of their ridicule, even though such use may be protected as fair use. These fair use cases distinguish between parodies (using a work in order to poke fun at or comment on the work itself) and satires (using a work to poke fun at or comment on something else). Courts have been more willing to grant fair use protections to parodies than to satires, but the ultimate outcome in either circumstance will turn on the application of the four fair use factors.

In Campbell v. Acuff-Rose Music, Inc.[16] Supreme Court recognized parody as a fair use, even when done for profit. Roy Orbison's publisher, Acuff-Rose Music Inc., had sued 2 Live Crew in 1989 for their use of Orbison's "Oh, Pretty Woman" in a mocking rap version with altered lyrics. The Supreme Court viewed 2 Live Crew's version as a ridiculing commentary on the earlier work, and ruled that when the parody was itself the product rather than used for mere advertising, commercial sale did not bar the defense. The Campbell court also distinguished parodies from satire, which they described as a broader social critique not intrinsically tied to ridicule of a specific work, and so not deserving of the same use exceptions as parody because the satirist's ideas are capable of expression without the use of the other particular work.

A number of appellate decisions have recognized parody as a protected fair use, including both the Second (Leibovitz v. Paramount Pictures Corp.) and Ninth Circuits (Mattel v. Walking Mountain Productions). Most recently, in Suntrust v. Houghton Mifflin, a suit was brought unsuccessfully against the publication of The Wind Done Gone, which reused many of the characters and situations from Gone with the Wind, but told the events from the point of view of the slaves rather than the slaveholders. The Eleventh Circuit, applying Campbell, recognized that The Wind Done Gone was a protected parody, and vacated the district court's injunction against its publication.

Fair use on the Internet
A US court case in 2003, Kelly v. Arriba Soft Corporation, provides and develops the relationship between thumbnails, inline linking and fair use. In the lower District Court case on a motion for summary judgment, Arriba Soft was found to have violated copyright without a fair use defense in the use of thumbnail pictures and inline linking from Kelly's website in Arriba's image search engine. That decision was appealed and contested by Internet rights activists such as the Electronic Frontier Foundation, who argued that it is clearly covered under fair use.

On appeal, the 9th Circuit Court of Appeals found in favor of the defendant. In reaching its decision, the court utilized the above-mentioned four-factor analysis. First, it found the purpose of creating the thumbnail images as previews to be sufficiently transformative, noting that they were not meant to be viewed at high resolution like the original artwork was. Second, the fact that the photographs had already been published diminished the significance of their nature as creative works. Third, although normally making a "full" replication of a copyrighted work may appear to violate copyright, here it was found to be reasonable and necessary in light of the intended use. Lastly, the court found that the market for the original photographs would not be substantially diminished by the creation of the thumbnails. To the contrary, the thumbnail searches could increase exposure of the originals. In looking at all these factors as a whole, the court found that the thumbnails were fair use and remanded the case to the lower court for trial after issuing a revised opinion on July 7, 2003. The remaining issues were resolved with a default judgment after Arriba Soft had experienced significant financial problems and failed to reach a negotiated settlement.

In August 2008 U.S. District Judge Jeremy Fogel of San Jose, California ruled that copyright holders cannot order a deletion of an online file without determining whether that posting reflected "fair use" of the copyrighted material. The case involved Stephanie Lenz, a writer and editor from Gallitzin, Pennsylvania, who made a home video of her 13-month-old son dancing to Prince's song Let's Go Crazy and posted the video on YouTube. Four months later, Universal Music, the owner of the copyright to the song, ordered YouTube to remove the video enforcing the Digital Millennium Copyright Act. Lenz notified YouTube immediately that her video was within the scope of fair use, and demanded that it be restored. YouTube complied after six weeks, not two weeks as required by the Digital Millennium Copyright Act. Lenz then sued Universal Music in California for her legal costs, claiming the music company had acted in bad faith by ordering removal of a video that represented fair-use of the song.[26]

Common misunderstandings
Fair use is commonly misunderstood because of its deliberate ambiguity. Here are some of the more common misunderstandings with explanations of why they are wrong:

  • Any use that seems fair is fair use. In the law, the term fair use has a specific meaning that only partly overlaps the plain-English meaning of the words. While judges have much leeway in deciding how to apply fair use guidelines, not every use that is commonly considered "fair" counts as fair use under the law.
  • Fair use interpretations, once made, are static forever. Fair use is decided on a case by case basis, on the entirety of circumstances. The same act done by different means or for a different purpose can gain or lose fair use status. Even repeating an identical act at a different time can make a difference due to changing social, technological, or other surrounding circumstances.[13][citation needed]
  • If it's not fair use, it's copyright infringement. Fair use is only one of many limitations, exceptions, and defenses to copyright infringement. For instance, the Audio Home Recording Act establishes that it is legal in some circumstances to make copies of audio recordings for non-commercial personal use.[27]
  • It's copyrighted, so it can't be fair use. On the contrary, fair use applies only to copyrighted works, describing conditions under which copyrighted material may be used without permission. If a work is not copyrighted, fair use does not come into play, since public-domain works can be used for any purpose without violating copyright law.
    Note: In some countries (including the United States of America), the mere creation of a work establishes copyright over it, and there is no legal requirement to register or declare copyright ownership[28]
  • Acknowledgment of the source makes a use fair. Giving the name of the photographer or author may help, but it is not sufficient on its own. While plagiarism and copyright violation are related matters—-both can, at times, involve failure to properly credit sources—-they are not identical. Plagiarism—using someone's words, ideas, images, etc. without acknowledgment—is a matter of professional ethics. Copyright is a matter of law, and protects exact expression, not ideas. One can plagiarize even a work that is not protected by copyright, such as trying to pass off a line from Shakespeare as one's own. On the other hand, citing sources generally prevents accusations of plagiarism, but is not a sufficient defense against copyright violations. For example, reprinting a copyrighted book without permission, while citing the original author, would be copyright infringement but not plagiarism.[citation needed]
  • Noncommercial use is invariably fair. Not true, though a judge may take the profit motive or lack thereof into account. In L.A. Times v. Free Republic, the court found that the noncommercial use of L.A. Times content by the Free Republic Web site was in fact not fair use, since it allowed the public to obtain material at no cost that they would otherwise pay for.
  • Strict adherence to fair use protects you from being sued. Fair use is an affirmative defense against an infringement suit; it does not restrain anyone from suing. The copyright holder may legitimately disagree that a given use is fair, and they have the right to have the matter decided by a court. Thus, fair use does not guarantee that a lawsuit will be prevented.
  • The lack of a copyright notice means the work is public domain. Not usually true. United States law in effect since March 1, 1989, has made copyright the default for newly created works. For a recent work to be in the public domain the author must specifically opt-out of copyright. For works produced between January 1, 1923 and March 1, 1989, copyright notice is required; however, registration was not required[29] and between January 1, 1978 and March 1, 1989 lack of notice is not necessarily determinative, if attempts were made immediately to correct the lack of notice. Any American works that did not have formal registration or notice fell into the Public Domain if registration was not made in a timely fashion. For international works, the situation is even more complex. International authors who failed to provide copyright notice or register with the U.S. copyright office are given additional contemporary remedies that may restore American copyright protection given certain conditions. International authors/corporations who fail to meet these remedies forfeit their copyright. An example of a company who failed to prove copyright was Roland Corporation and their claimed copyright on the sounds contained in their MT-32 synthesizer.
  • It's okay to quote up to 300 words. The 300-word limit is reported to be an unofficial agreement, now long obsolete, among permissions editors in the New York publishing houses: "I'll let you copy 300 words from our books if you let us copy 300 words from yours." It runs counter to the substantiality standard. As explained above, the substantiality of the copying is more important than the actual amount. For instance, copying a complete short poem is more substantial than copying a random paragraph of a novel; copying an 8.5×11-inch photo is more substantial than copying a square foot of an 8×10-foot painting. In 1985, the U.S. Supreme Court held that a news article's quotation of approximately 300 words from former President Gerald Ford's 200,000 word memoir was sufficient to constitute an infringement of the exclusive publication right in the work.[30]
  • You can deny fair use by including a disclaimer. Fair use is a right granted to the public on all copyrighted work. Fair use rights take precedence over the author's interest. Thus the copyright holder cannot use a non-binding disclaimer, or notification, to revoke the right of fair use on works. However, binding agreements such as contracts or license agreements may take precedence over fair use rights.[31]
  • If you're copying an entire work, it's not fair use. While copying an entire work may make it harder to justify the amount and substantiality test, it does not make it impossible that a use is fair use. For instance, in the Betamax case, it was ruled that copying a complete television show for time-shifting purposes is fair use.
  • If you're selling for profit, it's not fair use. While commercial copying for profit work may make it harder to qualify as fair use, it does not make it impossible. For instance, in the 2 Live Crew—Oh, Pretty Woman case, it was ruled that commercial parody can be fair use.


http://encyclopedia.thefreedictionary.com/Fair+use
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FairUse
Fair Use
 


http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=S5CONS%3AIND&img=png
Standard and Poor's 500 Consumer Staples Index is a capitalization-weighted index.The index was developed with a base level of 10 for the 1941-43 base period.


http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=S5FINL%3AIND&img=png
Standard and Poor's 500 Financials Index is a capitalization-weighted index


​


Financials
ConsumerProducts
 


The whole shebang. The big enchilada. The market value of all U.S. publicly-traded stocks:


http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=WCAUUS%3AIND&img=png

WCAP data does not include ETFs and ADRs as they do not directly represent companies. It includes only actively traded, primary securities on the country's exchanges to avoid double counting as well. Therefore the values will be significantly lower than expected market capitalization values of a country's exchanges. Please note that history prior to 2003 is not available for these indices unfortunately. All figures are reported in millions of US dollars. NOTE: Effective September 24,2008 Zimbabwe Market Cap Index is excluded from the calculations of World Market Cap Index {WCAUWRLD} due to persistent hyperinflation and revaluation of ZWD currency.
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It peaked at $18,816,300,000,000 ($18.8 trillion) on 7/21/07.


​

http://www.bloomberg.com/apps/quote?ticker=WCAUUS:IND



The market capitalization of all the world's publicly-traded companies:

http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=WCAUWRLD%3AIND&img=png

WCAP data does not include ETFs and ADRs as they do not directly represent companies. It includes only actively traded, primary securities on the country's exchanges to avoid double counting as well. Therefore the values will be significantly lower than expected market capitalization values of a country's exchanges. Please note that history prior to 2003 is not available for these indices unfortunately. All figures are reported in millions of US dollars. NOTE: Effective September 24,2008 Zimbabwe Market Cap Index, {WCAUZIMB}, is excluded from the calculations of World Market Cap Index, due to persistent hyperinflation and revaluation of ZWD currency. This index measures the world market capitalization.
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It peaked at $54,934,364,000,000 ($54.9 trillion) on 7/21/07.

​

http://www.bloomberg.com/apps/quote?ticker=WCAUWRLD:IND
 
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99% of these financial planners are incompetent buffoons. Most of 'em are salespeople who haven't got a clue what they're talking about. Many of 'em have been to some kind of diploma mill certification process which makes them adept at regurgitating stuff as if it were the gospel truth. They mindlessly pump figures into computer progams without the vaguest idea what kinds of assumptions are incorporated in those programs. If you'd gone to a financial planner in 2000, they'd have babbled out some kind of nonsense about stocks returning 9-10% per annum and have had you thinking it would be perfectly safe— nay, prudent— to spend 4 or 5 or even 6% of your capital per year. Ten years later, you'd have been very, very, very unhappy ( and a lot poorer ) because you listened.

Beware of fast talkers !! Beware of salespeople !!


____________________________

http://www.npr.org/2012/01/02/14456...mmentKey:4a6afee0-1b4e-4ff4-8069-22b1db7dea8d



Why Fear, Greed Block Successful Financial Planning

Financial adviser Carl Richards gave himself bad advice. During the housing boom, Richards bought a place in Las Vegas with no down payment. He then borrowed more money against his home, and when the economy tanked, he was forced to sell the house for less than the original loan. Richards talks to Linda Wertheimer about an article he wrote for The New York Times, which led to his new book Behavior Gap.
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LINDA WERTHEIMER, HOST:

A new year means new predictions for the stock market. Carl Richards says don't get wrapped up in them. Some people may know Carl Richards as the financial adviser who gave himself bad financial advice. During the housing boom, he fell for a place in Las Vegas and bought it with no down payment. When the economy tanked, he was forced to sell that house for less than the original loan.

ALIX SPIEGEL, BYLINE: Richards wrote about this humiliating experience for The New York Times. He also blogs about personal finance for the Times, and now he has a new book called "The Behavior Gap." He spoke to us from member station KPCW in Park City, Utah. I asked him if losing his home has changed the advice he gives.

CARL RICHARDS: No question. I mean, going through what I went through certainly informed the advice that I give and the stuff I write about, for sure.

WERTHEIMER: Among other things, you write that financial decisions should be based on principles and not on feelings, but that feelings often get in the way of good decisions. What feelings are you talking about?

RICHARDS: You know, the two primary culprits, it often seems that are always sort of lurking around bad financial decisions, are fear and greed.

WERTHEIMER: Like the surprise of houses rising fast, greed takes over and cancels your sort of common sense feeling that this is crazy.

RICHARDS: Yeah. It applies to a lot more than just housing. But in that specific example, of course, it was really - I mean, if you take yourself back to that time, and specifically if you take yourself to some place like Phoenix or Las Vegas, and everything around you is reinforcing the idea that housing prices are going to continue to go up, that your income is going to continue to grow, it's very easy to start believing that.

And then you start making decisions that in hindsight are very obvious, and even at the time might have been obvious to an outside observer. But we just get so close to those decision ourselves, it's hard to be objective.

WERTHEIMER: And you write that what we ought to be doing is thinking of principles. Now, what sorts of principles should we think about when we're making financial decisions?

RICHARDS: Well, things don't continue to go up forever. That's a principle. Diversification. You don't put all of your eggs in one basket. Leverage is a double-edged sword and can be incredibly painful when you're on the other side of it.

WERTHEIMER: Maybe you should explain leverage.

RICHARDS: Leverage is just borrowing money. When you put 20 percent down on your house, you're certainly leveraged. When you put 5 percent down, you are more leveraged.

WERTHEIMER: Now, you also write that the people we love and our most important relationships should be a baseline for making all kinds of financial decisions. Now, what do you mean by that?

RICHARDS: You know the old saying that the calendar and the checkbook never lie? It just means if I really want to understand what you really value, it doesn't matter so much what you say you value. We can look and see real quick how you're spending your time and how you're spending your money.

WERTHEIMER: So then you sit down with that person and you say, now, wait a minute. Let me explain to you that you're telling me one thing, but I'm looking at another thing.

RICHARDS: That's the essence - to me, at least - of good financial advice. And we hired a financial planner, and what he does for us is really reminds me of the things we told him were important.

WERTHEIMER: Now, you do say that you think financial plans are pretty much worthless.

RICHARDS: Right.

WERTHEIMER: What do you mean? Why? I mean that's the business you're in.

RICHARDS: A financial plan has almost become a product, right. You go in, you meet with somebody. You leave with a two-inch thick binder. Those plans are full of guesses. We have no idea what interest rates are going to be next week, let alone 20 years from now. We have no idea what return you're going to get. We have no idea how long you're going live.

Understanding that we have two choices, right. We can say well, the whole thing is a guess. Forget it. Or we can start to incorporate in our lives sort of a process of saying, all right. Let's make the best guess we can. Let's let go of the need for precision. And then, the very important part, Linda, is to revisit those guesses.

WERTHEIMER: How do you feel about what happened to you, looking back?

RICHARDS: I still have mixed emotions about it, obviously. I mean, we made some mistakes, and it's been painful to continue to talk about it. My goal was to try to be as honest as I could, despite knowing that we all self-deceive ourselves. I mean, you know.

(SOUNDBITE OF LAUGHTER)

RICHARDS: And hope that those lessons would be sort of burned in my psyche to prevent making the same mistakes again.

WERTHEIMER: Mr. Richards, thank you very much.

RICHARDS: Thank you. It's a pleasure.

WERTHEIMER: Carl Richards is a certified financial planner working in Park City, Utah. He's the author of the "Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money."



http://www.npr.org/2012/01/02/14456...mmentKey:4a6afee0-1b4e-4ff4-8069-22b1db7dea8d
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FinancialPlanning
SnakeOil
 
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Stolen Moments
Album Title: A Windham Hill Retrospective
Artist: Turtle Island String Quartet
Label: Windham Hill


Very, very good stuff.



Music
 


Mencken was right; it is a "commonwealth of morons."



____________________


http://www.bloomberg.com/news/2012-...ing-wall-street-20-billion-for-bad-swaps.html



Americans Pay Wall St. $20B for Bad Swaps
By Darrell Preston and Aaron Kuriloff
January 13, 2012


Seven months after Hurricane Katrina ripped holes in the Superdome’s roof in 2005, Louisiana State Bond Commission members made what they were told would be “the best of a bad situation” in financing the stadium’s renovation.

Acting against the recommendation of their staff, the commissioners voted for a Merrill Lynch & Co. plan to use debt and interest-rate swaps to pay for the job. While the deal helped keep the National Football League’s New Orleans Saints from leaving town -- and the arena got new scoreboards while 12,000 seats were converted to luxury class -- taxpayers became the losers for supporting a winning team.

The cost of financing the work has reached $42 million, almost a quarter of the $187 million spent on Katrina-related repairs and enhancements and three times as much as expected. The deal became so expensive that the state repurchased the debt sold by the New York investment bank to stop the bleeding.

“It was a flawed idea out of the gate,” said Robert Brooks, who teaches financial management at the University of Alabama in Tuscaloosa.

Scores of public officials, including Michael Bennet, now a U.S. senator from Colorado, and Jon Corzine, the former governor of New Jersey, bought the same Wall Street pitch: So-called auction-rate bonds would lower financing costs by allowing them to pay short-term rates, and interest-rate swaps would protect them if markets moved in the wrong direction.

Move Defended
Corzine didn’t respond to a request for comment. A spokesman for Bennet, Adam Bozzi, defended the move made when the senator was superintendent of the Denver public schools, saying that the financing put the district “in much better financial shape.”

Brooks said that it was “no surprise that the leaders went for something with that level of complexity. An auction-rate security with a swap is much more exciting for the officials, but it’s terribly expensive for taxpayers.”

Government overseers often didn’t understand that the market was controlled by the banks that sold the derivatives they claimed would minimize risk, and that could impose penalties when deals unraveled.

From Portland to Puerto Rico, officials gambled with sewer, road, school, pension and stadium financing. Municipal securities made up about half of the $330 billion auction-rate market when it collapsed in February 2008, data compiled by Bloomberg show. Taxpayers have forked over $20 billion in fees for swap agreements in the past five years, according to Andrew Kalotay, chief executive officer of the debt-management firm Andrew Kalotay Associates Inc. in New York.

‘They’re Unsophisticated’
Public officials, Kalotay said, “think they know what they’re doing, and they screw up.” Few have acknowledged their mistakes. “No one wants to say out loud they’re unsophisticated,” said Marcus Stanley, policy director of the Washington-based nonprofit Americans For Financial Reform, a coalition of unions and civil rights and consumer advocates.

“In most cases, the elected political leadership are part- time amateurs,” said Roger Noll, professor emeritus of economics at Stanford University near Palo Alto, California. “They get a noisy political grassroots movement that wants to subsidize a team, and then they get sold a bill of goods.”

In Louisiana, Treasurer John Neely Kennedy, who serves as bond commission chairman, warned before the Merrill Lynch plan passed in March 2006 that the swaps could backfire. There was so much pressure to overhaul the 37-year-old stadium for the Saints that he said he felt as if he had “a gun to my head.”

Drew Brees
The NFL franchise did stay put in the arena, known since October as the Mercedes-Benz Superdome. Not only that, the Saints acquired quarterback Drew Brees, won the Super Bowl in 2010 and will play the San Francisco 49ers in the second round of this year’s playoffs on Jan. 14.

Still, the costs to the state are “outrageously high,” Brooks said. That the auction-rate deal was done in part to satisfy team owner Tom Benson made it all the more imprudent, said Robert Baade, a professor at Lake Forest College near Chicago and co-author of a 2006 study that found subsidizing the Saints after Katrina wouldn’t make economic sense.

The Bayou State’s costs spiraled out of control after banks, reeling from the credit crisis, stopped acting as buyers of last resort at auctions of floating-rate securities.

Rates on the debt surged, going as high as 20 percent. The swaps didn’t cover the difference. Investors shunned the market. “If the banks were cardiologists, they would have been sued and thrown in jail years ago for what they have done,” Brooks said.

‘Ignorance No Excuse’
The Louisiana Stadium and Exposition District did sue, claiming bond-insurer Financial Guaranty Insurance Co., a unit of New York-based FGIC Corp., sold the agency protection that became worthless and that Merrill Lynch fraudulently failed to tell officials everything they needed to know.

Charles “Buddy” Roemer, Louisiana governor from 1988 to 1992, said he doesn’t buy the contention that Tim Coulon, who was the head of the stadium agency at the time of the deal and urged the bond commission to approve it, and the commissioners didn’t have enough information. “I don’t think ignorance is a good excuse here,” Roemer said. “I don’t think unsophistication is a good excuse. All these entities pay large sums for legal and financial advice.”

In May 2010, U.S. District Judge Loretta Preska dismissed the claims against FGIC. The state has appealed. Officials with FGIC didn’t respond to telephone calls seeking comment.

Court Action
Preska tossed out seven counts against Merrill Lynch, now a subsidiary of Charlotte, North Carolina-based Bank of America Corp., letting stand accusations of breach of fiduciary duty, intentional and negligent misrepresentation and fraud. The bank denied the claims in its response. “LSED and its sophisticated advisers fully understood the risks of the bonds and knowingly accepted those risks in exchange for a lower interest rate,” said William Halldin, a spokesman for the bank, in an e-mail.

Coulon, who left the agency in 2009, declined to be interviewed, saying in an e-mail that he was “proud of the work and creativity” that went into the Superdome project.

Jason Redmond, a spokesman for the treasurer’s office, said Kennedy declined to be interviewed. Greg Bensel, a team spokesman, didn’t respond to a request for an interview with Benson, who bought the Saints in 1985 for $70 million.

Democrat Kathleen Blanco, Louisiana’s governor in 2006, said that even in retrospect the auction-rate bond deal was worth it. “Losing the Saints was not an option, as far as I was concerned,” she said by e-mail. “With no crystal ball it was impossible to predict the colossal failure of the financial system and its attending costs.”

Other Money
In the end, the money spent to get the Superdome ready for the 2006 football season came mostly from other sources, including the Federal Emergency Management Agency, the NFL and the state general fund. The auction-rate bonds covered only about $40 million, according to financial reports from the stadium district.

Most of the rest of the $294 million the bonds brought in went to refinance earlier borrowing. The price tag -- which was originally expected to be $14 million -- will be at least $42 million, including fees for the securities and swaps, the cost of the auctions and expenses incurred when the bonds were repurchased, according to data compiled by Bloomberg.

The costs have been steep for other auction-rate borrowers. New Jersey, which got into the debt under Corzine, and the Denver schools, which issued the securities under Bennet, later borrowed money to end related interest-rate swap agreements. New Jersey paid $122.6 million in one case, and the school district spent about $62 million.

Denver Schools Respond
Michael Vaughn, a spokesman for the district, said the 2008 deal cut the cost of unfunded liabilities for retirees, facilitated the merger of its pension plan with a state fund and hire more teachers. It allowed the school system “to avoid severe budget cuts,” he said.

Louisiana didn’t need the burden, said state Representative Jim Fannin, a Democrat from Jonesboro. The state this fiscal year cut spending on health care and prisons, canceled workers’ pay raises and eliminated 4,000 positions.

“There are so many other needs,” said Fannin, chairman of the Appropriations Committee of the House of Representatives.

The bonds were another chapter in the financial relationship between the state and the 45-year-old Saints, a team so popular fans filled the stadium during the 20 years it took to notch a winning season, though in the 1980s some started wearing paper bags on their heads during the games.

Keeping Saints
“We love our Saints,” said Tricia Miller, a lawyer in New Orleans. “The Saints are what keeps our city together, before, during and after Katrina.”

Before the hurricane, Benson had sought a new home for the team. The Superdome lacked the revenue-boosting amenities of stadiums in larger, wealthier markets. In 2001, after he complained it failed to meet league standards, Louisiana agreed to pay the Saints $180.5 million over 10 years, a subsidy meant to put it in the middle of NFL franchises in terms of revenue.

The state had to borrow, from Merrill Lynch and others, to make some of those payments. When the stadium agency in early 2005 started planning to restructure its debt, one goal was to free up money to help fund the subsidies, Whit Kling, director of the bond commission, said at the meeting where the Merrill Lynch auction-rate deal was approved. The bank had been hired after the agency issued a request for proposals through the bond commission in April 2005, according to court documents.

Difficult Spot
Katrina changed the equation. Louisiana was, as Kennedy, the state treasurer and commission chairman, put it at the meeting, “between a rock and a hard place.”

Revenue from the hotel tax dedicated to paying off Superdome debt had plummeted to about $24 million in 2006 from about $41 million before the hurricane, which killed an estimated 1,400 in New Orleans. The stadium, where more than 25,000 people had taken shelter after much of the city was flooded, needed repairs as well as enhancements.

The Saints were playing “home” games elsewhere, including San Antonio, where Benson owns car dealerships. Not only was he noncommittal about the team’s future, the mayor of San Antonio said they were talking about a relocation to Texas.

Before they voted, Kennedy told commissioners: “I’m not enamored with this proposal.” According to a transcript, he said he thought paying FGIC $13 million for insurance was “unconscionable” and that he was uncomfortable with the swap.

“I just want everybody to understand what we are doing,” Kennedy said. “This is a derivative. It can work in our favor. It can also work not in our favor.”

Best Course
For his part, Coulon called the deal “the best of a bad situation,” according to the transcript. The Superdome had been an economic force in the city, attracting conventions, concerts and events such as the Essence Music Festival. “It’s not all about the sports franchises,” Coulon said. “It’s about the economic viability of the city, the symbolism of the Dome.”

The plan was approved on a voice vote. And most everything about the deal that could go wrong did.

Credit markets began to melt down as the contagion from the sub-prime-mortgage market spread in 2007. FGIC lost its AAA rating in January 2008, and buyers became less interested in the securities because the lower grade meant there was more risk that they wouldn’t get paid in the event of a default. The auction-rate market fell apart the next month.

The state decided it couldn’t afford the $45 million fee to unwind the swaps associated with the bonds, nor the cost of issuing a new set to pay off the existing securities. It bought the debt back after the Legislature in March 2008 approved the move. Kling said the plan is to hold it until it matures.

IRS Fee
While federal law doesn’t allow such purchases, the Internal Revenue Service made exceptions after the auction-rate debacle. The state will have to pay a fee of about $8 million for the privilege, according to Kling.

The bonds earn 1.25 percent now, data compiled by Bloomberg show. “We’re paying ourselves,” Kling said.

In April 2009, the state committed to spending more than $400 million to secure Benson’s promise the team would stay in New Orleans through 2025.

The stadium agency made several improvements to the Superdome, including adding 15 boxes and 3,400 seats close to the team benches, at a cost of $85 million. A company Benson owns, Zelia LLC, bought a mostly empty 26-story building next to the stadium and Benson pledged to renovate it, and the state signed a $153 million, 20-year lease for 320,000 square feet of office space for more than 30 agencies. Benson and the stadium agency signed a contract to redevelop the nearby New Orleans Centre mall. The state promised the Saints as much as $6 million a year if stadium revenue doesn’t meet undisclosed targets.

In October, Superdome naming rights were sold to Daimler AG’s Mercedes-Benz unit for about $60 million. Republican Governor Bobby Jindal said that may produce enough to “significantly reduce or eliminate taxpayer funding currently spent to support the Saints.”


http://www.bloomberg.com/news/2012-...ing-wall-street-20-billion-for-bad-swaps.html
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http://www.bloomberg.com/news/2012-...ris-clients-often-get-phantom-gain-books.html



Hedge Funds Buy Ferraris With Phantom Profits, Leave Clients Crumbs
By James Pressley
January 17, 2012


Hedge-fund managers treat themselves to absolutely fabulous toys: Ken Griffin is fond of Ferraris, Steve Cohen is known for his Damien Hirst pickled shark and ice rink outfitted with its own Zamboni in a gabled cottage.

So where are the customers’ yachts?

“Who can name even one hedge fund investor whose fortune is based on the hedge funds he successfully picked?” asks Simon Lack in his stinging expose, “The Hedge Fund Mirage.”

If anyone is qualified to pose that question, it’s Lack, whose Wall Street career lofted him through the multiple mergers that begat JPMorgan Chase & Co. His answer ought to drive many hedgehogs -- and their investors -- into hibernation.

Sitting on JPMorgan’s investment committee, Lack helped to allocate more than $1 billion to promising hedge-fund managers, the book says. His conclusion about the broader industry, stated baldly on page 1, can be boiled down to one statistic.

“If all the money that’s ever been invested in hedge funds had been put in Treasury bills instead, the results would have been twice as good,” he writes.

Lack isn’t saying that hedge funds never reap superior returns for investors. Far from it. He clearly admires John Paulson’s bet against the U.S. housing bubble and George Soros’s wager against the Bank of England. And the industry did perform well and preserve capital during the 2000 to 2002 bear market, which is why so many institutional investors threw money at them, driving assets under management to more than $1.6 trillion, Lack says.

Flood of ‘08
Yet the star performers are outliers. Research shows that “a few dozen have produced most of the investors’ returns,” Lack says. And don’t forget the “thousand-year flood” of 2008, when the hedge-fund industry “lost more money than all the profits it had generated during the prior 10 years,” he writes. So much for the “absolute, uncorrelated returns” they promised: Investors would have done better by shoveling their money into T-bills, earning 2.3 percent, Lack says.

Shunning simple average annual returns, Lack measures hedge funds with an index weighted by assets, just as the stocks in the Standard & Poor’s 500 Index are weighted by their market value. This gives a better sense of the returns, he argues, because investors in aggregate have invested more in the bigger funds. Then he turns his attention to the real profit killer: fees.

He starts with two data sets: annual assets under management (as tracked by BarclayHedge since 1998) and returns as measured by the HFR Global Hedge Fund Index (HFRXGL), which is weighted by assets. Next, he estimates fees using the standard “2-and-20” formula -- a 2 percent management fee and 20 percent incentive fee.

Real Profit
This involves a few simplifications. Some managers, for example, charge more than 2 and 20, some less. Yet the methodology does reveal a clear picture of the total profit hedge-fund investors received minus fees and the return they could have gotten by parking their money in Treasury bills.

From 1998 through 2010, these “real investor profits” totaled $70 billion, compared with fees of $379 billion, Lack estimates. Adding the fees back in, hedge fund managers salted away 84 percent of $449 billion in total profits, leaving 16 percent for their investors, he says.

And that’s not the worst of it, Lack says. HFRX index doesn’t account for factors such as “survivor bias,” meaning that only surviving hedge funds report returns (just as the victors write history, he says). Adjusting for those biases, the annual fees sink to $324 billion, while the real investor profits plunge to a negative $308 billion, he says.

Consider, too, the fees charged by funds of hedge funds, used by roughly a third of hedge-fund investors, Lack says. Throwing that into the mix, investors were left with $9 billion, while the industry amassed $440 billion in fees, or 98 percent.

So Much, So Little
The risks and rewards are so cockeyed that Lack can’t resist paraphrasing Winston Churchill’s encomium about Royal Air Force fighter pilots during the Battle of Britain: “Never in the history of Finance was so much charged by so many for so little.”

If Lack’s calculations are wrong, he can kiss his career goodbye. If he’s right -- and I think he is -- pension funds have a lot of questions to answer.

Lack does more than crunch numbers in this book. He recalls a chance JPMorgan had to invest with Bernie Madoff (they passed) and an “opportunity” to do a tricky trade with Long-Term Capital Management LP. LTCM’s Myron Scholes, of Black-Scholes Option Pricing fame, offered to help price the deal. Lack declined.

“Trading options with Myron Scholes didn’t sound like a poker game I should join,” he says.

As damning as his analysis is, Lack ultimately concludes that hedge-fund managers aren’t the villains of this sad story. The real fault lies with the “supposedly sophisticated investors” who fling so much money at funds with so little skepticism and critical analysis.

“The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True” (Wiley, 187 pages, $34.95, 23.99 pounds, 28 euros).


http://www.bloomberg.com/news/2012-...ris-clients-often-get-phantom-gain-books.html
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http://online.wsj.com/article/SB100...J_article_LatestHeadlines#articleTabs=article


U.S. Sets Money-Market Plan
SEC Aims to Stabilize $2.7 Trillion Industry; Critics Say Rules Would Cut Returns
by Andrew Ackerman and Kirsten Grind

Regulators are completing a controversial proposal to shore up the $2.7 trillion money-market fund industry, more than three years after the collapse of Lehman Brothers Holdings Inc. sparked a panic that threatened the savings of millions of investors and forced the federal government to intervene.

http://si.wsj.net/public/resources/images/P1-BE749_SEC_G_20120206195409.jpg

The Securities and Exchange Commission in the coming weeks will unveil a two-part plan to stabilize money funds, which invest in short-term debt instruments and are designed to be safe and readily accessible to investors, according to people familiar with the matter. At least three of five SEC commissioners would need to approve the proposals to submit them for public comment.

The SEC's aim is to minimize any losses for shareholders in the event of another financial panic. Investors for months have fretted over how a Greek government-bond default might affect U.S. money-market funds. In recent months, these funds have moved to reduce their exposure to European banks, especially French ones, amid fears over their financial health.

But fund-industry executives say the rules could damp returns for millions of investors, prevent them from getting all their money out during a crisis and reduce confidence instead of bolstering it.

Money-market funds are an important source of credit for companies and tighter rules on their capital and liquidity might affect the funds' ability to lend to corporations, critics warn.

The proposal, which is set to draw stiff opposition from financial groups and could create internal tensions at the SEC, would affect both fund firms and investors. Firms would have to set aside capital reserves using one of three new methods. Investors who wish to sell all of their holdings at once would be able to get only about 95% of their money back immediately, with the remaining 5% returned to them after 30 days.

"Money-market funds remain susceptible to runs and to a sudden deterioration in quality of holdings, and we need to move forward with some concrete ideas for proposals to address these structural risks," SEC Chairman Mary Schapiro said in an interview last week.

J. Christopher Donahue, president and chief executive of Pittsburgh-based Federated Investors Inc., which manages $255.9 billion of money-fund assets, said he plans to sue the SEC if the new regulation interferes with his firm's ability to do business.

"We're going to do everything in our power to attack it," Mr. Donahue said of the possible regulations.

Unlike U.S. bank deposits, money-market funds, which invest in short-term debt instruments, aren't guaranteed by the government.

When Lehman collapsed in September 2008, it triggered losses in a money-market fund called Reserve Primary, which held Lehman debt. When investors learned that the fund had "broken the buck" by falling under the $1 per share value it sought to maintain, investors fled Reserve Primary and other funds. The panic eased only after the U.S. government and Federal Reserve vowed to backstop the funds.

The SEC implemented sweeping changes in 2010 designed to make the industry more resilient, including tighter standards on the kinds of securities funds could hold and a new requirement that funds keep enough cash on hand to meet "reasonably foreseeable redemption requests."

Ms. Schapiro, joined by Federal Reserve and Treasury Department officials, repeatedly has warned that additional reforms are needed, despite hesitation from some SEC commissioners and stiff resistance from the money-fund industry.

Under the proposal, funds could boost their capital in one of three ways: by injecting more cash from corporate coffers; issuing stock or debt securities; or collecting more money from shareholders.

The SEC also plans to propose scrapping money funds' fixed $1 net-asset value and make it floatable like other mutual funds. However, the industry remains staunchly opposed to the idea. The bulk of the SEC's energies are devoted to developing a workable capital buffer, people familiar with the matter said.

Industry experts warned that the capital plan would be onerous for many funds. Investors have been exiting money funds since 2008, in part because of the Reserve Primary panic and in part because returns have plummeted along with short-term interest rates. With profits being squeezed, experts say, some funds might have no choice but to collect the capital from shareholders, in the form of an upfront fee. That could dent returns more, they say.

"The generosity of giving you the choice of which way to die is really not much of a choice," said Mr. Donahue of Federated.

The 30-day rule, referred to as a "liquidity fee," is just as controversial.

Holding a percentage of clients' accounts for 30 days would make it challenging for investors to make trades, said Marie Chandoha, president of Charles Schwab Investment Management, a subsidiary of Charles Schwab Corp., which manages about $160 billion of money-market fund assets. "The clients are doing trades in their accounts and sweeping money in and out continuously, so you can imagine what those kind of computations look like," she said.

Regulators say holding back a small amount of customer cash would decrease the amount of capital that firms would have to hold in reserve and compare the idea to a minimum account balance required by banks.

Paul Schott Stevens, president of the Investment Company Institute, an industry group, said the ideas under consideration by the SEC could "force an enormous number of sponsors out of the business and leave those that remain with a product that nobody will want to invest in or make available to investors."

Three out of five of Ms. Schapiro's fellow commissioners have expressed reluctance to support additional reforms for money-market funds. Those commissioners haven't yet had a chance to carefully look at the staff's approach, she said.

"I understand why very few in the industry support changing the current structure," Ms. Schapiro said. "At the end of the day, the taxpayer simply can't be on the hook for failure, and the tools to ameliorate a run that existed in 2008 when Reserve broke the buck don't exist anymore."


http://online.wsj.com/article/SB100...J_article_LatestHeadlines#articleTabs=article
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Seriously gnarly:


The explanation for this phenomenon is very simple.

Nearly saturated (at almost the dew point) air from a sea breeze is being lifted (Orographic lifting) as it meets the coast and the buildings. The slight cooling from the lifting cools the air to the dew point and clouds form.

A similar phenomenon can be seen on some ocean islands.

-Anthony Watts​
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http://www.bloomberg.com/news/2012-...-billion-asian-helicopter-demand-contest.html



Chopper Makers Vie for Asia Orders Worth $10B
By Sabine Pirone and Kyunghee Park
February 19, 2012


Boeing Co., Sikorsky, Eurocopter and Bell, the top four helicopter makers, are focused on Asia as 1,000 orders from states spanning India to Korea are set to make it the fastest growing military-chopper market by 2015.

Tenders in half a dozen nations should produce sales worth $10 billion over the next three years, Norbert Ducrot, executive vice president for the Asia-Pacific region at Eurocopter, the world’s No. 1 manufacturer of rotorcraft, said in an interview.

“Asia has the ingredients to grow into one of the largest markets worldwide,” said Christophe Nurit, regional vice president at Sikorsky, a United Technologies Corp. unit that’s the No. 1 maker of military helicopters. Key bids include naval tenders in Korea and India, for which the company is pitching its Seahawk antisubmarine model, a version of the Black Hawk.

Asian military spending rose 14 percent last year, funded by the world’s fastest growing regional economy. The helicopter market is surging as nations race to replace aging western, Soviet and home-grown models, led by emerging powers seeking the means to extend their military reach, according to Craig Caffrey, a defense analyst at IHS Jane’s DS Forecast in London.

“In China and India the market is being driven by attempts to improve the mobility of their ground forces, which requires the procurement of large quantities of tactical transport helicopters,” said Caffrey, adding that Asia represents “one of the most open and diverse” markets for the aircraft.

U.S. Slide
While the U.S. will remain the biggest military-helicopter market over the next decade, its share of sales will dip from 50 percent to 38 percent, with the exit from Iraq last year and a withdrawal from Afghanistan planned for 2014 likely to “signal a damping in demand,” according to London-based Visiongain.

At the same time, South Korea will jump from ninth in the world to second, displacing the U.K., India to third from fourth and China to seventh from 13th as its market doubles, led by attack helicopters, the forecaster said in a report on Feb. 6.

“There’s a bubble of activity,” said Douglas Barrie, an analyst at the International Institute for Strategic Studies in London. “Rotary-wing procurement doesn’t tend to be high on must-have lists, so there’s also an element of this having been deferred to the point where things really need updating.”

Showdown
Competition intensified last week in Singapore, with major manufacturers pushing their products at the last major air show before a series of contract announcements begins with an Indian order for 197 light helicopters valued at about $1.5 billion.

Eurocopter, based in Marignane, France, is offering its AS550 C3 Fennec in the competition to replace aging Aloutte models built by predecessor Sud Aviation, which sold its first helicopter in Asia in 1962. Russian Helicopters, formed to consolidate the country’s rotorcraft industry, is offering the Kamov Ka-226 -- which has the NATO reporting name ‘Hoodlum’ -- with a winner to be declared in March or April, Ducrot said.

India, whose existing chopper fleet is dominated by Soviet models, also has a contest underway for 55 naval helicopters, worth $2.2 billion, for which Eurocopter is pitching the NH90 against Sikorsky’s Seahawk and Textron’s Bell 429.

The south Asian nation is also seeking 22 attack choppers in a tender for which Chicago-based Boeing says its AH-64 Apache has been selected as preferred bidder over the Russian Mil Mi-28 Havoc, together with 15 heavy-lift models that have attracted proposals from the Boeing Ch-47 Chinook and the Mi-26 Halo.

Combat-Proven
Boeing is offering the Chinook model used in Afghanistan, defense spokesman Hal Klopper said. That may enhance its credentials for operation in the Himalayas, where Indian and Pakistani forces are ranged against each other at high altitude.

With India also due to issue proposals for coastguard helicopters this year, “there are potential tenders for all the armed forces,” said Ducrot at Eurocopter, a unit of European Aeronautic, Defence & Space Co. which lifted revenue 13 percent last year a record 5.4 billion euros ($7 billion).

The surge in Asian helicopter purchases mirrors a jump in combat-plane orders led by an $11 billion Indian contract for 126 fighters, the biggest in years, provisionally awarded to Paris-based Dassault Aviation SA (AM)’s Rafale last month.

Lockheed Martin Corp., the world’s biggest defense company, won a deal to supply 42 F-35 Joint Strike Fighters to Japan on Dec. 20 and is competing with Boeing, Eurofighter GmbH and Saab AB for a $7 billion, 60-plane contract from South Korea.

Tiltrotor Interest
Korea’s chopper requirements are led by the $1.5 billion AH-X tender for 36 attack helicopters, which pits the Apache against Eurocopter’s EC665 Tiger and the Bell AH-1Z, a twin- engine variant of the Cobra series known as the Viper.

Proposals are due to be submitted in May, Jeffrey Lowinger, Bell’s executive vice president for engineering, said at the Singapore show, adding that Asia’s “tremendous growth” is spurring interest in a range of products, including the Bell-Boeing V-22 Osprey “tiltrotor,” which can also fly like a plane.

Sikorsky’s Nurit said in Singapore that Korea is also poised to request tenders for an antisubmarine contract which the company is “actively pursuing” with the Seahawk.

Among other bids, Eurocopter’s Tiger is competing for a Malaysian contract, and the company is promoting the NH90 and EC725 Super Cougar to Singapore as replacements for 30 of its Super Puma transport choppers purchased in 1985. The EC725 is also competing for a six-aircraft Indonesian order, Ducrot said.

Successful Asian bids generally require local partnerships, he said, with Eurocopter manufacturing the NH90 in Australia, the Super Puma in Indonesia and teamed with Korea Aerospace Industries Ltd. (047810) to develop the KAI Surion utility helicopter, for which South Korea placed 250 orders last year and which could be qualified for export to Europe from July onwards.


http://www.bloomberg.com/news/2012-...-billion-asian-helicopter-demand-contest.html
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The world sometimes seems to be full of liars, cheats and thieves.


[ emphasis supplied ]




Can 'I Won The Medal Of Honor' Get You Jailed?
by Nina Totenberg
...In 2008, the Chicago Tribune investigated every biography in "Who's Who" that listed a military medal. More than one-third of the 333 people claiming a medal had not received one. In recent years, those making false claims to military medals have included clergymen, doctors, CEOs, career military officers, university professors, judges and prominent officeholders...


http://www.npr.org/2012/02/22/147211850/can-i-won-the-medal-of-honor-get-you-jailed
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I didn't write this. The person who did would not want to be credited here.


...talk about saving. We hear a lot in the Presidential sweepstakes about the 99% versus the 1%. The 1% is portrayed as the “fat cats”. These are the hedge fund moguls, the real estate tycoons, and the corporate CEOs. We know that Warren Buffett and Newt Romney only pay 15% in taxes. How unfair! But that is a picture drawn with political spin. A retired man, 70-years old, who has spent a lifetime of hard work creating an estate from scratch, is going to be worth a lot more money than an 18-year old high school graduate. He is going to be worth more than a 35-year old factory worker with the economic burden of two-kids. That is true now and it was true 50 years ago. It is true whether the President is Republican or Democrat, liberal or conservative. Moreover, the retiree, by definition, doesn’t have any wage income taxed at the maximum rate. His “income” is basically a return on capital and has already been taxed once when earned in the first place. He relies on interest, dividends, investment income and Social Security. Interest income has disappeared thanks to the Federal Reserve’s efforts to force savers to spend or invest. I won’t argue about the tax rate on savings. If interest rates are zero, the tax rate becomes irrelevant. What is relevant is that the government is taxing those that save to feed the economy and to try and boost housing. I would argue such efforts haven’t worked but that is a discussion for another day. Now the President wants to more than double the tax rate on dividends. He wants to take it from 15% to the maximum rate. Starting in 2013 he wants to add a surcharge of close to 3% on all investment income. He wants to raise the capital gains rate to 20%. Forget the politics for the moment. That isn’t where I am headed. I want to look at the economics of what is being proposed. My point is that the attack on the alleged 1% fat cats is really an oppressive tax on seniors and savers. If you want to add up all the CEOs and hedge fund owners, there are a few thousand of them. Maybe even 10,000. I don’t know. But there are millions or even tens of millions of people who have worked decades to build a savings nest for retirement and that savings nest is being plundered by the government in the name of fairness and equality. It is simply a bogus political spin.


There are billionaire retirees who won’t see their lifestyle change no matter what happens to the tax code. But most savers are directly impacted. The retired “millionaire”, one who has amassed $1 million over and above his home, lives off of Social Security and the return on his $1 million. If it is put in the bank, he gets nothing. If it is invested in 10-year Treasuries, he makes an added $20,000 but is taking a big risk if inflation reignites and the value of his $1 million bond portfolio takes a big hit. He could buy a chunk of conservative blue chip stocks paying 3% dividends. That has worked well for the past year or two but if bad economic policy creates another stock market like 2008, he is in a lot of trouble.

Savers have already been robbed of about $300 billion in interest income, a penalty that helps to reduce the government’s interest cost. Now that the government has crushed interest income, it wants to go after dividends. Some states have even taxed assets until courts struck that down.

So here is a final thought. If the government really wants to go after the fat cats to pay a greater share of expanded government, why not go after them directly. Aim at earned income and carried interest. Don’t go after seniors and savers.

This isn’t a political message; it’s an economic one. Soon, seniors are going to be asked to accept less in Social Security, Medicare and other entitlements. Depleting their return on capital at the same time makes absolutely no sense...
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Just wait'll you see what this is going to cost you as a taxpayer funding state, local and municipal employee pension funds.



_________________________

http://www.bloomberg.com/news/2012-...d-rate-policy-boosts-company-liabilities.html



Pension Pain Mounts as Fed Boosts Liabilities
By Thomas Black
February 28, 2012


General Electric Co., Boeing Co. and 3M Co. will join big U.S. employers in making a record $100 billion in 2012 pension contributions, 67 percent more than two years ago, as low interest rates boost companies’ liabilities.

Payments may total $400 billion from 2011 through 2015 to ease underfunding at the 100 largest defined-benefit programs, according to consultant Milliman Inc., which estimated that assets in January were enough to cover less than three-fourths of projected payouts.

“It’s been called the wall of contributions,” said Alan Glickstein, a senior retirement consultant at Towers Watson & Co. in New York. “All of a sudden this thing jumps up and stays there for a few years. That’s what it looks like -- a wall.”

Companies from defense contractor Lockheed Martin Corp. to aviation-electronics maker Honeywell International Inc. are caught in a vise: the Federal Reserve Board’s vow to keep rates at current levels until 2014 means pension plans’ fixed-income investments are stagnating just as new rules shorten the time available to shore up funding.

“They’re going to have to kick money in,” said John Ehrhardt, a consulting actuary at Seattle-based Milliman. “We’re basically seeing historically low interest rates driving historically high employer contribution requirements.”

That’s money that won’t go back to shareholders through dividends or buybacks, or toward expansion, said Kevin McLaughlin, a pension risk management specialist with consultant Mercer in New York.

Seven Years
Under the federal Pension Protection Act, which was passed in 2006 and mostly took effect in 2008, tighter accounting rules gave employers seven years to fully fund their retirement plans and required them to use a specified, market-based rate of return to compute liabilities instead of a company estimate.

Those liabilities are calculated by projecting future payments and discounting to the present based on interest rates pegged to a basket of corporate bonds. Liabilities rise when rates fall -- and the Fed has held its discount rate at 0.75 percent since February 2010, down from as high as 6.25 percent in June 2007. The Fed said Jan. 25 it expected rates to stay at current levels until 2014.

3M’s pension plan in the U.S., which started 2011 with assets of $11.6 billion, shows the challenge for employers.

Assets rose to $12.1 billion by year’s end because of investments and contributions, even after payments of $680 million, according to a Feb. 16 filing. At the same time, the funding shortfall more than tripled, to $2.4 billion, because projected benefit obligations rose 18 percent to $14.5 billion.

‘Liabilities Did Increase’
“With the declining interest rates here in 2011, our liabilities did increase,” 3M Chief Financial Officer David Meline said Feb. 23 at a Barclays Plc industrial conference.

While 401(k) savings accounts are more common at younger companies, traditional manufacturers such are among the employers most affected by the pension pinch because they’re still making payments under defined-benefit plans. St. Paul, Minnesota-based 3M’s 2012 pension contribution will almost double to as much as $1 billion.

Pension expense is “a variable that we consider among many when we look at a company and what it could mean to their profitability,” said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. “If that were something that we said we wouldn’t want to own, we’d probably have a fairly limited universe of companies we could buy.”

S&P Industrials
The Standard & Poor’s 500 Industrials Index, whose 61 companies include manufacturers such as Boeing with defined- benefit programs, climbed 10 percent this year through yesterday, topping the S&P 500’s 8.7 percent gain.

Boeing’s pension cost will jump to $2.6 billion, 63 percent more than a year earlier, the company said in January. GE told investors in December it plans to add $1 billion, the first contribution since 1987, and expects to add about $2.1 billion in 2013. The Fairfield, Connecticut-based company closed its U.S. defined-benefits pension plan to all new hires this year.

Honeywell probably will make a contribution of as much as $1 billion, after low interest rates dashed a goal of full funding in four years, CFO Dave Anderson said. The plan was 83 percent funded at the end of 2011.

‘Little Bit Longer’
“I’d hoped to be there by 2015 to have more of a full resolution of that issue, but it’s going to take a little bit longer probably,” Anderson said in an interview. “Interest rates are at historic low levels and there’s no change in sight for that.”

Pension sponsors usually average rates over 24 months, so 2012 may be the peak year for companies’ pension contributions, said Glickstein of Towers Watson.

“We have a very unusual governmental intervention in the wake of a financial crisis,” he said. “Whatever other merits it may have, it’s clearly distorting the measures of pension obligations and putting a lot of extra pressure on plan sponsors.”

Lockheed Martin anticipated the rise in liabilities by pumping $6 billion into its plan over the last three years, curbing the projected 2012 contribution to $1.1 billion, according to a company filing.

Many pension plans, including GE’s, were overfunded before the December 2007 onset of the worst recession since World War II. Then pension assets began shriveling as stocks slumped, and lower interest rates increased liabilities.

Funding Levels
For the 100 largest defined-benefit plans, average funding levels sank to 74 percent in January from 105 percent in 2007, according to Milliman. Some companies may need to funnel cash to their pension plans for years.

Pension plan assets at Atlanta-based Delta Air Lines Inc. covered only about 40 percent of obligations at the end of 2011, down from 47 percent the previous year, according to the carrier’s latest annual report. The funding shortfall widened to $11.5 billion from $9.3 billion in 2010, the filing showed.

Even after Delta ended pilots’ pensions before its 2007 bankruptcy exit and closed other plans to new hires, CFO Hank Halter said Jan. 25 that the airline still expects to contribute as much as $675 million in 2012. Defined-benefit programs taking new employees fell 26 percent in six years to 20,381 in 2009, according to the latest U.S. Pension Benefit Guaranty Corp. figures for plans with 25 or more workers.

The threat of future contributions is driving many sponsors of defined-benefit plans to seek ways to blunt risk, said Jeffrey Saef, chief of Bank of New York Mellon Corp.’s investment strategy and solutions group in Boston. That often means using more fixed-income investments to help match pension assets more closely to liabilities, he said in an interview.

Clients struggling with the cash drain from pensions have a universal query, Saef said: “‘When will it go away?’”

With Fed Chairman Ben S. Bernanke’s thumb on interest rates, that won’t be any time soon, said McLaughlin, the Mercer consultant.

“Right now, everybody is hoping for the best, which is equity markets performing and interest rates not falling any lower,” he said.


http://www.bloomberg.com/news/2012-...d-rate-policy-boosts-company-liabilities.html
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http://www.bloomberg.com/news/2012-...-poorer-to-lie-or-cheat-researchers-find.html



Wealthy More Likely to Lie, Cheat
By Elizabeth Lopatto
February 28, 2012


Are society’s most noble actors found within society’s nobility?

That question spurred Paul Piff, a Ph.D. candidate in psychology at the University of California, Berkeley, to explore whether higher social class is linked to higher ideals, he said in a telephone interview.

The answer Piff found after conducting seven different experiments is: no. The pursuit of self-interest is a “fundamental motive among society’s elite, and the increased want associated with greater wealth and status can promote wrongdoing,” Piff and his colleagues wrote yesterday in the Proceedings of the National Academy of Sciences.

The “upper class,” as defined by the study, were more likely to break the law while driving, take candy from children, lie in negotiation, cheat to raise their odds of winning a prize and endorse unethical behavior at work, the research found. The solution, Piff said, is to find a way to increase empathy among wealthier people.

“It’s not that the rich are innately bad, but as you rise in the ranks -- whether as a person or a nonhuman primate -- you become more self-focused,” Piff said. “You can change that by reminding upper-class people of the needs of others. That may not be their default, but have them do it is sufficient to increase their patterns of altruistic behavior.”

That theory will be the basis of his next study. Piff is curious to know how to change patterns of greed and selfishness when they emerge.

Ethics Courses
Previous research has shown that students who take economics classes are more likely to describe greed as good. Pairing ethics courses with economics may be beneficial, Piff said.

“It might be as simple as not only stressing individual performance, but the value of cooperation and improving the welfare of others,” he said. “That goes a long way.”

In the research reported yesterday, the experiments suggest at least some wealthier people “perceive greed as positive and beneficial,” probably as a result of education, personal independence and the resources they have to deal with potentially negative consequences, the authors wrote.

While the tests measured only “minor infractions,” that factor made the results “even more surprising,” Piff said.

One experiment invited 195 adults recruited using Craigslist to play a game in which a computer “rolled dice” for a chance to win a $50 gift certificate. The numbers each participant rolled were the same; anyone self-reporting a total higher than 12 was lying about their score. Those in wealthier groups were found to be more likely to fib, Piff said.

Risks of Cheating
“A $50 prize is a measly sum to people who make $250,000 a year,” he said in a telephone interview. “So why are they more inclined to cheat? For a person with lower socioeconomic status, that $50 would get you more, and the risks are small.”

Poorer participants may be less likely to cheat because they must rely more on their community to get by, and thus are more likely adhere to community standards, Piff said. By comparison, “upper-class individuals are more self-focused, they privilege themselves over others, and they engage in self- interested patterns of behavior,” he said.

In the traffic tests, about one-third of drivers in higher- status cars cut off other drivers at an intersection watched by the researchers, about double those in less costly cars. Additionally, almost half of the more expensive cars didn’t yield when a pedestrian entered the crosswalk while all of the lowest-status cars let the pedestrian cross. These experiments involved 426 vehicles.

Employment Test
Another test asked 108 adults found through Amazon.com Inc.’s work-recruiting website Mechanical Turk to assume the role of an employer negotiating a salary with someone seeking long-term employment. They were told several things about the job, including that it would soon be eliminated. Upper-class individuals were more likely not to mention to the job-seeker the temporary nature of the position, the research found.

“Support for free-market capitalism will collapse if those who do well don’t do good,” said Arthur Caplan, director of the Center for Bioethics at the University of Pennsylvania. “Rapacious, intolerant, nonempathetic capitalism that says lie, cheat, steal, it’s only the bottom line that matters -- aside from being morally repugnant, it’s got a dim future.”

Study Design Criticized
Meredith McGinley, an assistant professor at Chatham University in Pittsburgh who wasn’t involved in the study, was critical of how some of the experiments were designed.

The car test complicates the results because having a flashy car doesn’t necessarily mean the driver is wealthy, said McGinley, who studies positive social behavior. In the experiment involving candy, the participants were told they could have it even though children were waiting for it. They may have felt they were doing nothing wrong, she said.

In the candy test, 129 undergraduates were manipulated to view themselves as wealthy or poor. They were then presented with a jar of individually wrapped candy, which researchers said would go to children in a nearby lab, though the participants could take some if they wanted. The undergraduates believing themselves to be upper income took more than those believing themselves to be low income, the study found.

Erik Gordon, a business professor at the University of Michigan in Ann Arbor, wasn’t surprised by the results, he said.

Greed ‘on Upswing’
“Greed has been on the upswing for 20 years,” Gordon said in a telephone interview. “Wealth or power that comes with high socioeconomic status means you are indeed enabled to ignore other people and might think that rules that apply to other people don’t apply to you.”

Gordon, though, thinks the research has its limits. It isn’t as much about wealth, he said, as it is about greed, a behavior that can be changed.

The very wealthy, who “tend to drive 8-year-old cars” and “don’t wear logos,” may offer a very different profile, he said, suggesting that the group targeted by Piff’s experiments with cars are more likely the “nouveau riche.”

To be sure, Piff and his colleagues said there are exceptions to the associations they found, pointing to Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., who has pledged the majority of his holdings to the Bill & Melinda Gates Foundation and other charities.

Less wealthy individuals also can behave badly, they wrote, noting the relationship between poverty and violent crime in previous research.

The study urged further research to determine the “boundaries” of bad behavior spurred by greed. Adam Smith, the 18th century author of “The Wealth of Nations,” may provide an example, as his first book, “The Theory of Moral Sentiments,” was about ethics.

“A long time ago, you couldn’t leave the university without having a course in ethics,” Caplan said. “One of the things college should do is provide you with the moral framework to operate in a capitalist society. When people ask about the value of philosophy, I point them there.”



http://www.bloomberg.com/news/2012-...-poorer-to-lie-or-cheat-researchers-find.html
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