Financial and business news and articles
Posts tagged United States
Auditors face inquiry call after Lehman revelations
Mar 14th
MPs and financial experts demand regulators reform industry in effort to eliminate risky practices, writes Phillip Inman
Pressure was mounting this weekend for a root-and-branch review of the role played by auditors in the credit crunch, following the revelation that Lehman Brothers was able to hide $50bn (£32bn) of debts from regulators despite checks by accountancy firm Ernst & Young.
MPs and financial experts called on regulators to clean up the audit industry as part of a clampdown on reckless and risky practices in the financial sector.
Liberal Democrat treasury spokesman Lord Oakeshott urged the government to commission a fundamental review, while Tory MP Michael Fallon, who is deputy chairman of the influential treasury select committee, said: “Too much is being concealed. We need a fresh approach that gives a more realistic picture of bank finances and not one that disguises risky practices.”
Oakeshott said the treasury select committee’s investigation of Northern Rock’s collapse had already revealed that accountants should be banned from accepting additional consultancy work for the firms they audit; but, he added, “that is just a starting point to cleaning up the whole profession”.
Prem Sikka, a professor of accounting at Essex University and a leading critic of the accounting profession, warned that without deep-rooted reform the crisis could repeat itself. “The report into the collapse of Lehmans is indicative of a deeper malaise,” he said. “We rely on the discretion of eminent firms of auditors and lawyers that are paid millions of pounds for their efforts, but that discretion is too often abused.”
A damning 2,200-page report commissioned by the US bankruptcy courts into the collapse of Lehman said that Ernst & Young’s failure to act over off-balance sheet accounting practices which allowed the bank to hide $50bn of debts, and failing to investigate the concerns of a whistleblower, amounted to “professional negligence”.
Ernst & Young, which earned fees of $31m from auditing Lehman Brothers in 2007, has insisted that a thorough internal review showed it did nothing wrong.
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
Blair chooses America for launch of faith offensive to unite the religions
Mar 14th
Former prime minister builds network of Christian allies as he prepares to launch a religious ‘offensive’ in North America
Tony Blair is preparing to launch a “faith offensive” across the United States over the next year, after building up relationships with a network of influential religious leaders and faith organisations.
With Afghanistan and Iraq casting a shadow over his popularity at home in Britain, Blair’s focus has increasingly shifted across the Atlantic, to where the nexus of faith and power is immutable and he is feted like a rock star.
According to the annual accounts of the Tony Blair Faith Foundation, a UK-based charity that promotes cohesion between the major faiths, the foundation is to develop a US arm that will pursue a host of faith-based projects. The accounts show that his foundation has an impressive – and, in at least one case, controversial – set of faith contacts. Sitting on some £4.5m in funds as of April last year, mostly gathered through donations, it is now well placed to make its voice heard.
The foundation’s advisory council of religious leaders includes Rick Warren, powerful founder of the California-based Saddleback church. It attracts congregations of nearly 20,000 and is reportedly one of the largest in the US. Warren, who has addressed the UN and the World Economic Forum in Davos, has been named one of the “15 world leaders who matter most” and one of the “100 most influential people in the world”.
His influence was confirmed in December 2008 when Barack Obama chose him to give the invocation at his presidential inauguration. But the decision angered many liberals, who see Warren as an opponent of gay rights and abortion on demand; a prominent alliance with Warren is likely to attract similar attacks on the former British prime minister.
Also on the council is David Coffey, president of the Baptist World Alliance (BWA), a Virginia-based network of churches that spans the globe and is particularly active in the US.
Another initiative has been to team up with the Belinda Stronach Foundation in Toronto. Unknown in the UK, Stronach, daughter of a Canadian billionaire, is hugely influential in Canada where as a philanthropist, businesswoman and former politician she has served in both the Conservative and Liberal parties. Attractive and barely into her 40s, media commentators have dubbed her “bubba’s blonde”, a reference to her friendship with Bill Clinton.
According to the accounts, Blair intends to open an office in Toronto to develop the relationship.
His desire for North America to be the focus of his faith-based operations was confirmed by the decision to hold his foundation’s inaugural event in May 2008 in New York, for the “charity’s key partners and religious stakeholders”.
The accounts also shine a light on the close connections the foundation now enjoys with major political institutions in the US. “With the Washington-based Centre for Interfaith Action, the foundation supported a meeting of major international organisations active in faith-based approaches to combating malaria (plus the White House, World Bank, UN, World Health Organisation) to co-ordinate international efforts,” the accounts state.
That Blair, a charismatic politician driven by faith, should be at home across the Atlantic is no surprise to political analysts. “He comes across as confident and persuasive,” said Professor Shawn Bowler, of the University of California at Riverside. “He does not talk like a modern robo-candidate in the way so many US political figures do.” Unlike in the UK, Blair’s religious fervour is seen as a strength. “Blair is very open about his faith and that plays a lot better in the US than in Britain,” Bowler said.
But the overtly religious dimension has drawn criticism. “The Tony Blair Faith Foundation is a fundamentally flawed concept,” said Terry Sanderson, president of the National Secular Society. “If religion is constantly at the fore, then the old suspicions and hatreds will continue to fester.”
Other North American faith-based initiatives endorsed by the foundation include the New York-based Global Nomads Group, which brings together young people through video conferences “to discuss the global issues that affect their lives”, and the Faiths Act Fellowship, which selects “30 young leaders aged 18-25, drawn from the different faiths from the US, UK and Canada, to embark on a 10-month journey of interfaith service”.
Blair’s status is such that he is now called on to sprinkle stardust at religious gatherings, such as a speech he delivered at the National Prayer Breakfast in Washington. Even his autobiography, The Journey, for which he was paid a £4.6m advance, appears to be aimed at the US market. “Tony Blair is an extremely popular figure in North America,” said Sonny Mehta, his publisher. “His memoir is refreshing, both for its candour and vivid portrayal of political life.”
So embedded is he that Blair regularly crops up in Washington society diaries. Last September, the former Republican vice-president, Dick Cheney, was dining in the same restaurant. Blair got top billing in the gossip columns.
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
Lehman Brothers: Repo 105 and other accounting tricks
Mar 12th
There are lies, damned lies and investment bank balance sheets. It’s always been a puzzle how Lehman Brothers was able to spout reassuring figures on declining indebtedness and healthy underlying trends until the day it collapsed, sending the global financial system into a near-apocalyptic meltdown.Now, thanks to bankruptcy examiner Anton Valukas’s exhaustive 2,200-page “autopsy” of the bank, we have a clearer idea of how Dick Fuld and his team disguised the 158-year-old firm’s desperate predicament and carried on trading through weeks of insolvency.
The term “Repo 105″ will take its place in the annals of big-brained, misguided Wall Street distortions. It was a trick allowing Lehman to sell packages of mortgages, Treasury bonds, Eurobonds, even Canadian government instruments, on a temporary basis at the end of an accounting quarter, with an obligation to buy them back a few weeks later. The deals, amounting to $50bn, allowed Lehman to publish healthier accounts than it really had.
People within the bank knew this was a sleight of hand. In one exchange of emails, a senior Lehman executive wrote: “It’s basically window-dressing.” A colleague replied: “I see…so it’s legally do-able but doesn’t look good when we actually do it? Does the rest of the street do it?” One of Fuld’s top lieutenants, chief operating officer Bart McDade, referred to Repo 105 as “another drug we’re on”. A US law firm didn’t like the look of the practice, so Lehman turned to Britain’s very own Linklaters, which duly signed it off as lawful. London-based auditor Ernst & Young concurred, taking “virtually no action” when a Lehman whistle-blower, Matthew Lee, raised a red flag.
While Repo 105 may have been a uniquely Lehman trick, it gives a broader clue to one of the mysteries of the credit crunch. Top executives at Bear Stearns, Washington Mutual, Royal Bank of Scotland and Northern Rock were adept at rattling off impressive figures on healthy debt ratios in the run-up to financial collapse. Citigroup and Merrill Lynch produced evidence that they were solvent – while analysts were dubious and the US government’s “stress tests” found otherwise. However, tightly drawn accounting standards may be, the finest financial brains will find ways to bend them.
Fuld and his lieutenants are already under criminal investigation and were subpoenaed as early as October 2008 in grand jury probes. It isn’t easy to pin lawsuits on professional advisers. Before a top law firm or “big four” accounting practice signs anything off, they will at least have constructed an argument of legality. A successful prosecution would need to prove conscious wrongdoing – that they actually knew what they were doing was over the line.
We’ve been here before. There are eerie echoes of a certain Texas energy trading firm known as the “crooked E” that collapsed in 2001. Sam Buell, a former Enron prosecutor turned US law professor, says there are “uncanny” parallels in colourful internal emails about accounting tricks, signed off by a major auditing firm, used to bolster balance sheets at the end of a quarter: “This is exactly the kind of shenanigans that went on at Enron. It doesn’t seem like anyone learnt their lesson.”
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
Amnesty report condemns US death rates of women in childbirth
Mar 12th
Those from poor, African American and Native American backgrounds most at risk
The death rate of women giving birth in the US is worse than in 40 other countries, including nearly all the industrialised countries, Amnesty International said today in a report that describes the country’s approach to maternity care as “disgraceful and scandalous”.
According to the World Health Organisation (WHO), the likelihood of a woman dying in childbirth in the US is five times greater than in Greece.
The US has some of the best medical care in the world, but Amnesty says the lives of poor, uninsured, African American and Native American women are put at risk by neglect.
“This country’s extraordinary record of medical advancement makes its haphazard approach to maternal care all the more scandalous and disgraceful,” said US Amnesty executive director Larry Cox. “Good maternal care should not be considered a luxury available only to those who can access the best hospitals and the best doctors. Women should not die in the richest country on earth from preventable complications and emergencies.
“Mothers die not because the United States can’t provide good care, but because it lacks the political will to make sure good care is available to all women.”
The US ranks 41st in the WHO’s league table of maternal mortality, with a risk of women dying in childbirth at one in 4,800. Top of the league is Ireland with one in 47,600, which has partly to do with the small population, followed by Bosnia and Herzegovina and then Italy and Greece. The UK ranks 26th with a risk of one in 8,200.
The damning report comes in a year of unprecedented international effort to reduce the death rate among mothers in developing countries, which will include a major conference called Women Deliver in Washington in the summer. The cause has been taken up by Secretary of State Hillary Clinton as well as Sarah Brown in the UK.
That context makes the Amnesty report all the more shocking. Death rates among women in pregnancy and labour have doubled in the US from 6.6 per 100,000 in 1987 to 13.3 per 100,000 in 2006.
Although some of the increase is due to better data collection, there is no doubt that deaths have risen while the technology and know-how to prevent them has improved.
Whatever form they finally take, President Obama’s healthcare reforms will not resolve the crisis of unavailable and unaffordable maternal care, says Amnesty.
The reform proposals will still leave millions without cover and do not address race discrimination, systemic failures and lack of accountability. Amnesty is urging Obama to set up an office of maternal health to address the issues directly.
The report, Deadly Delivery, reveals that severe pregnancy-related complications that nearly cause death – known as near misses – are rising at an alarming rate, increasing by 25% since 1998. Currently nearly 34,000 women annually experience a “near miss” during delivery.
Discrimination is costing lives, it says. Women who are poor, who are African American, Native American or immigrants and those who do not speak English face serious barriers in obtaining care. One in four women do not get the antenatal check-ups they need, which can warn of pregnancy complications. Among African American and Native American women, one in three go without antenatal care.
One in five women of reproductive age (15-44), amounting to about 13 million, are not insured. Half of them are women of colour, says the report. The burdensome bureaucratic procedures involved in Medicaid enrolment delay women access to check-ups, risking their lives.
Nearly a third of all deliveries in the US are by caesarean section, which is a rate twice as high as that recommended by the WHO. Caesareans carry a risk of death three times as high as natural birth.
Amnesty says that the death rate in the US is probably even higher than it appears, because there is no federal requirement for the reporting of deaths in childbirth.
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
Miliband’s grand Middle East delusion | Chris Phillips
Mar 12th
The foreign secretary is wrong: Britain’s soft power in the Middle East has much greater influence than its show of force in Iraq
There is a common ritual that I, like most Britons, have regularly encountered when riding a taxi in Damascus, Amman or Cairo over the past seven years. Talkative and curious, most cabbies will immediately ask where you are from and, on hearing London, raise the usual questions about Tony Blair and Iraq.
Seven years after the invasion, British citizens are still taken to task for their government’s actions in 2003. It is therefore hard to take seriously David Miliband’s claim earlier this week that the Iraq war has boosted Britain’s reputation in the Arab world.
Called before the Chilcot inquiry, the foreign secretary stated:
“People in the region do respect those who are willing to see through what they say [they will do]. Even people who disagreed with it say to me, ‘You’ve sent a message that when you say something, you mean it’ … In the Arab world today, I don’t believe that the Iraq decisions have undermined our relationships or our ability to do business. Some of our ambassadors say we are in a stronger position.”
Though diplomats in Israel and Kuwait might support the foreign secretary’s view that Britain’s reputation was enhanced by Iraq, the reality on the Arab street is quite different. Militarily and diplomatically, London appears weak and tied to Washington, while economically it lags behind European competitors for influence in the region. The UK’s main area of success and influence is actually in the cultural sphere, where institutions like the British Council provide a degree of soft power. But military misadventures like Iraq, far from enhancing Britain’s reputation in the Arab world, serve to undermine the soft power that these institutions have spent decades acquiring.
The Iraq war did no favours for Britain’s military reputation in the region. The operations of the first Gulf war in 1990-91 and the bombing of Iraq in 1998 had already built the image that Britain’s armed forces were an extension of US forces, and the blind loyalty shown by Blair in 2003 only cemented this view. Marc Lynch has shown how, since 1998, millions of Arab viewers of al-Jazeera have watched Iraqis killed by Britain – which became a daily occurrence in 2003. On top of this, allegations of prisoner abuse by British soldiers were widely reported, as were claims about the under-funding of UK troops. Far from enhancing respect for the military, the Iraq war has allowed the Arab media to portray it as subservient, abusive and weak.
Subservience to the US has also characterised the Arabs’ perception of British diplomacy since 2003. The initial refusal to seek a ceasefire during the 2006 Lebanon war and a similar reluctance in Gaza are two prominent examples. Even recent diplomatic shifts, such as Miliband’s commendable lobbying for the relabelling of goods produced in Israeli settlements, or his visit to previously pariah Syria, are interpreted as reflecting the new priorities of the Obama administration rather than independent British initiatives. This perceived diplomatic dependence on America is emphasised by other actors’ comparative freedom in the region, notably France, which has re-engaged under President Nicolas Sarkozy, deepened its ties with Syria and Lebanon and opened a military base in the UAE.
Economically, Britain’s influence is similarly limited. While Lord Davies, the minister for trade, investment and small business was in the UAE this week trumpeting the increased trade between Britain and the Middle East, Britain lags behind Germany, Italy and France, which take a far greater share of the Arab market.
One field where Britain still excels is arms sales, particularly to Turkey, Israel, Jordan and Saudi Arabia. However, far from using this trade to leverage influence, Britain seems more eager to appease its customers. This was seen in the dropping of corruption charges in the BAE-Saudi scandal, and the continued sale of arms to Israel after the 2008-09 Gaza war.
Yet in spite of perceived military and diplomatic subservience and economic impotence, Britain does maintain an influential cultural presence in the Arab world. While critics may attack organisations such as the British Council as a waste of taxpayers’ money or “cultural imperialism”, arguably their many educational, cultural and developmental projects enhance Britain’s reputation far more effectively than the billions spent on the Iraq war. The British Council itself recognised this fact in 2007, substantially expanding its presence in the Arab and Muslim world.
Though the Arab press often hails the role of the British Council in supporting local projects, its reputation can be easily tarnished by the government’s foreign policy. In 2006, for example, when Britain was alleged to have a role in Israel’s capture of a Palestinian militant, the British Council in Gaza was attacked. Moreover, Britain is not alone in promoting cultural ties and soft power in the Arab World. France’s Institut Francais and Germany’s Goethe-Institut have expanded their impressive operations in the Middle East recently, without fearing a backlash against their government’s policies in the region.
As Chilcot continues and the British establishment tries to understand what went wrong in 2003, perhaps it should take the opportunity to reassess how Britain projects its power and influence in the Arab world. David Miliband is deluded. Displays of hard power on the coat-tails of the US won’t enhance Britain’s reputation. Military misadventures like Iraq only serve to undermine the soft cultural power that is far more effective in promoting a positive picture of Britain in the Middle East.
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
Lehman Brothers bosses may face court for accounting ‘gimmicks’
Mar 12th
• Former chief Dick Fuld and accountants Ernst & Young criticised in 2,200-page report
• Claims that buyer Barclays received assets it was not entitled to
• Fuld tried to involve Gordon Brown to fast-track Barclays rescue
A court-appointed US bankruptcy examiner has concluded that there are grounds for legal claims against top Lehman Brothers bosses and auditor Ernst & Young for signing off misleading accounting statements in the run-up to the collapse of the Wall Street bank in 2008 which sparked the worst financial crisis since the Great Depression.
A judge last night unsealed a 2,200-page forensic report by expert Anton Valukis into Lehman’s collapse which includes scathing criticism of accounting “gimmicks” used by the failing bank to buy itself time. These included a contentious technique known as “repo 105″ which temporarily boosted the bank’s balance sheet by as much as $50bn (£33bn).
The exhaustive account reveals that Barclays, which bought Lehman’s US businesses out of bankruptcy, got certain equipment and assets it was not entitled to. And it reveals that during Lehman’s final few hours, chief executive Dick Fuld tried to get Gordon Brown involved to over-rule Britain’s Financial Services Authority when it refused to fast-track a rescue by Barclays.
With Wall Street shaken by the demise of Bear Stearns in March 2008, Valukis said confidence in Lehman eroded: “To buy itself more time, to maintain that critical confidence, Lehman painted a misleading picture of its financial condition.”
The examiner’s report found evidence to support “colorable claims”, meaning plausible claims, against Fuld and three successive chief financial officers – Chris O’Meara, Erin Callan and Ian Lowitt.
Valukis said the bank tried to lower its leverage ratio, a key measure for credit rating agencies, through a device dubbed “repo 105″ through which it temporarily sold assets, with an obligation to re-purchase them days later, at the end of financial quarters in order to get a temporary influx of cash. Lehman’s own financial staff described this as an “accounting gimmick” and a “lazy way” to meet balance sheet targets.
A senior Lehman vice-president, Matthew Lee, tried to blow the whistle by alerting top management and Ernst & Young. But the auditing firm “took virtually no action to investigate”.
During the bank’s final hours in September 2008, Fuld tried desperately to strike a rescue deal with Barclays but the FSA would not allow the British bank an exemption from seeking time-consuming shareholder approval. The chancellor, Alistair Darling, declined to intervene and Fuld appealed to the US treasury secretary, Henry Paulson, to contact the prime minister.
“Fuld asked Paulson to call prime minister Gordon Brown, but Paulson said he could not do that,” says the examiner’s report. “Fuld asked Paulson to ask president Bush to call Brown, but Paulson said he was working on other ideas.”
In a “brainstorming” session, Fuld then suggested getting the president’s brother, Jeb Bush, who was a Lehman adviser, to get the White House to lean on Downing Street.
Barclays eventually bought the remnants of Lehman’s Wall Street operation from receivership for $1.75bn – a sum that has enraged certain bankruptcy creditors who believe it was a windfall for the British bank.
The examiner’s report finds grounds for claims against Barclays for taking assets it was not entitled to, including office equipment and client records belonging to a Lehman affiliate, although it says these were not of material value to the deal – the equipment was worth less than $10m.
A lawyer for Fuld last night rejected the examiner’s findings. Patricia Hynes of Allen & Overy said Fuld did not structure or negotiate the repo 105 transactions, nor was he aware of their accounting treatment. She added that Fuld “throughout his career faithfully and diligently worked in the interests of Lehman and its stakeholders”.
A spokesman for Ernst & Young, which is headquartered in London, told Reuters the firm had no immediate comment because it was yet to review the findings.
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
A Democrat disgrace | Michael Tomasky
Mar 11th
Obama’s congressmen will sabotage the health bill to keep their seats. It is stomach-churning
In our House of Representatives – “the people’s body” – the Democrats at this moment enjoy a gaudy 75-seat majority. Wait. Did I just put “Democrats” and “enjoy” in the same sentence? Scratch that. The Democrats suffer the affliction of a 75-seat majority. That’s a joke, except not really. What is going on right now in the lower house vis a vis healthcare reform is a stomach-turning sight to behold – a saga of preening, duplicity, pomposity, self-interest and, most of all, cowardice that is worthy of Holinshed. The players in this drama are participating in the destruction of their own party. They know this. And they persist.
What’s happening right now, of course, is that Nancy Pelosi, the house speaker, and President Barack Obama, are trying to round up the votes in the house to pass the Senate’s health bill. Exactly 216 are needed. Right now they have 194. Or 202. Or 210. Or something. But not 216.
So Pelosi is on the prowl for yes votes. The house passed its version of the bill last November by five votes, 220-215. At the time, 39 Democrats voted against it. This probably sounds strange to British readers, but it’s how the Democratic party does things. Lots of Democrats – 49 of them, in fact – represent districts where John McCain defeated Obama. They live in fear of being tarred by a future Republican opponent of having abetted the march of socialism. So they voted no on the most important piece of social legislation that body has had before it in probably 40 years.
Now, under our somewhat arcane rules of legislation, the house must vote on the matter again. But this time its members will vote on the Senate version of the bill, different in certain ways. More centrist, really. Pelosi is working behind the scenes. The moment she feels certain she has 216 votes, she’ll call a vote, the bill will pass and the corks will pop. And if that moment never arrives, there will likely be no vote. The alleged deadline (there is no statutory deadline, just a sort of media-suggested one) is Easter.
And, this time around, there is considerably more at stake than there was last November. We’re in an election year now (all members of the house must stand). It is, to use an American metaphor, the bottom of the ninth inning. That means the last chance of success. And what are Democrats doing?
Making demands. Hamleting away ostentatiously on cable television. Living in mortal fear that they might lose their seats. But are they thinking about how to fix the bloated mess that is American healthcare, or serve their uninsured and underinsured constituents? Maybe in private, but certainly not in public.
Here’s the situation. Everyone knows that if reform passes, it’s a historic accomplishment for the party and the president. Yes, Republicans will attack it as a government takeover of the health sector. But at least Democrats will be able to say that on the matter on which they spent months and months, they finally won. And – this part is more important – everyone knows that if it fails, it’s a historic setback for the party and the president. This fall’s elections could be a total wipeout for Democrats.
Everyone knows this. And yet, some Democrats will still oppose it. Why? For two reasons. First, some, especially among those aforementioned 49, will face well-financed Grand Old Party opponents and lose. In fairness to them, that’s actually a somewhat logical analysis.
But second, we move from logic to the realm of psychology. Passage of a big health reform bill is a classic Rumsfeldian “unknown unknown”. Congress hasn’t passed a bill like this in, as I said, four decades. What will happen? What spites and furies will be unleashed? It will alter the political landscape for years to come. But how?
Politicians dread these questions. So, far better that there’s no vote at all. That’s a known. They can go back to their districts and say: “Well, we moved too fast, Obama overreached, and now we’ll start again at square one.” That, of course, won’t happen. Reform will die. But that’s what they’ll say. And they’ll return to their collective 13% (you read that right) job approval rating and their nice important jobs in a body that is a national laughing stock and is institutionally incapable of taking actual steps to fix actual problems in American society.
Or they can take a little risk on what will be for most of them the single most substantively consequential vote of their entire careers, even understanding (horror) that some of them might lose in the election. We can’t have that, right? God forbid someone lose a seat in Congress. Life itself will end. I mean, what an unimaginable existence: getting a well-paying job as a lobbyist or corporate rainmaker, being called “congressman” for the rest of your life, drawing a congressional pension – and, by the way, congressional healthcare … Dante himself couldn’t have imagined such a savage circle of hell.
I should note that there exists a small handful of Democrats who should fairly be given a pass on the vote. They have no seniority, no long-term relationships with the constituents, and come from deep-red districts. They number around 15 or so.
But the others? Disgraceful. Virtually all of them have tens of thousands, or sometimes more than 100,000, adult constituents with no private insurance. If they’re not in Washington to do something about that, then what are they there to do? Please don’t answer that question.
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
Forbes rich list is Slim pickings | Richard Adams
Mar 11th
Only lack of ability, inheritance and money keeps the rest of us off the Forbes list of world’s billionaires. It’s not fair
There’s a scene in the satire How to Succeed in Business Without Really Trying in which two workers are vying for promotion. When their manager tells them he will award the promotion on the basis of merit, one of the workers – who is the chief executive’s nephew – complains: “That’s not fair!”
Similarly, looking at the latest Forbes list of the world’s billionaires, it’s just not fair that rich lists should be confined to only those with the most assets. What about the rest of us?
Looking at this so-called “list” of billionaires, there’s a strong theme in that all of them appear to be very rich indeed. But what else sets them apart? And how did they get to be so rich? More importantly, how can the non-billionaires among us get some of that action?
1. Invent something
Inventing things seems to be an aid to acquiring shedloads of cash. Hence, Bill Gates, who invented the computer with Al Gore and Alan Turing, is second on the list. Also, Warren Buffett, who invented the buffet style of dining, is number three.
Then down at number 11 is Ingvar Kamprad, who invented flat-pack furniture, a simple idea of selling sawdust-planks encased in cardboard. Just buy enough of those “packs” and stack them on a floor and you have a bench. Put a mattress on top and voila: a dining table. Kamprad’s genius was to sell these planks with random assortments of screws and brackets, along with keys belonging to a guy named Alan and “instructions” – or to use the Swedish term, “Rappakalja Ikea dumheter” – that show a man smiling with a screwdriver and then a line drawing of the finished product without any intervening steps. He gave them exotic names such as SKRÄP and GOJA … and the rest is history. Also, excellent meatballs.
2. Come from a rich family
Coming from a rich family appears to be a useful encouragement to becoming rich yourself. Extraordinary. Maybe all that money rubs off on you? Yes, nothing helps like being able to say: “Hey mom, pop, can I borrow the car? And $500m?”
That doesn’t mean that some of the wealthy families on the rich list didn’t start from humble beginnings. Look at the list’s entries for billionaires 12, 15, 16 and 18: the Walton family. Many readers will recall how the Waltons struggled during the Depression and the saw-mill business that Paw and Grandpaw worked so hard on to make ends meet. Well, the family turned that reality TV show into mega-bucks thanks to founding a chain of cut-price mega-stores known as Wal-Mart. (One question: why doesn’t John-Boy appear on the list? He always seemed like the clever one.)
3. Be American
There’s been some concern among American bloggers that the US has lost its No 1 billionaire spot, now that Carlos Slim, the legitimate Mexican businessman, is top of the Forbes list for 2010. Many of them blame Barack Obama’s socialist regime of crippling public healthcare for this. And yet, being American still seems to be a big help nonetheless, based on the fact that Americans make up the single largest billionaire nationality: 400 of the roughly 900 billionaires in the world (measured in US dollars, naturally). Also, Carlos Slim, being from Mexico, is North American (true fact) and that’s practically the same as the US, and anyway President Clinton signed that secret treaty known as Nafta which merged the US, Canada and Mexico into one country. USA, still number one!
So here’s our recipe for billionaire success: get born into a rich family, invent something and sell it to Americans. Win.
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
In Kansas City, school’s out | Sasha Abramsky
Mar 11th
The closure of almost half of Kansas City’s schools shows what can happen when the wealthy opt out, and services suffer
Twenty-nine out of 61 Kansas City, Missouri, schools will soon be shuttered in a desperate bid by the struggling school district to stave off bankruptcy. At the same time, close to one-quarter of the city’s school employees will lose their jobs.
While many districts around the country are closing under-enrolled-in or low-performing schools in an effort to save money, the scale of KC’s decision puts it in a league of its own. Students around the city will be disrupted by the changes, as they lose teachers, have to travel further to school each morning, and possibly see their class sizes grow.
The number of students in Kansas City’s public schools – 18,000 – would indicate that it is a small town. But there’s not much that’s small about Kansas City. In fact, the core of the city, which is Missouri’s largest urban hub, has nearly half a million residents, and the broader metro area is home to approximately 2 million people.
Yet for decades its public schools have been in crisis and have haemorrhaged students.
For 26 years, Kansas City was under the largest court-ordered desegregation plan in American education history. At first this provided an opportunity to improve the system, injecting $2bn into local schools. But over time the benefits unleashed by the case were undermined by opposing demographic and political trends: Kansas City was bedeviled by white flight; and, eventually, it saw a near-total exodus of the middle classes, of all colours, into suburban school districts, charter schools and private schools. A few years ago, eight schools went so far as to secede from the school district, joining a suburban district that provided more resources to students.
By the time the desegregation case ended, in 2003, the city was no longer discriminating against African American students; but at the same time it was increasingly unable to provide quality public school education to any student. It had become a poster-child for educational dysfunction.
As a result, the schools that remained under the jurisdiction of the Kansas City school district saw their enrollment shrink by about 75% in recent decades, even as the region’s total population has grown. A number of schools were more than half-empty.
In many ways, Kansas City represents the depressing end-point I warned about last week in my article on California’s education cuts: a setting in which those with options have exercised them by opting out of the state school system, leaving the rump public sector both shrivelled and denuded of influential supporters in the community.
This week’s decision to downsize the system by close to 50% might well be the least bad option remaining to the board of education in the city given these harsh realities; but necessity doesn’t make these truths any less depressing.
If there are lessons to be learned from Kansas City’s dismal experiences, they are about the importance of holistic thinking: of looking for ways not just to desegregate schools but to preserve integrated, economically diverse urban cores; of providing middle-class families with reasons to continue using public services; of building up the notion of common community again so that the public sector flourishes rather than withers. Absent this, Kansas City might well represent a glimpse of a depressing American future: one in which those with resources opt out, en masse, from any and all public services, leaving the public sector to stumble drunkenly from one crisis to the next, a miserable-looking shadow of once-great glories.
guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
The war on terror: taking Jihad Jane | Marina Hyde
Mar 12th
Posted by Marina Hyde in Politics
No comments
A civilised justice system might have seen Colleen LaRose’s eccentricities as requiring help. Instead, she may face life in prison
Without wishing to undermine her twin commitments to holy war and talking to cats, the self-styled Jihad Jane might be the war on terror’s least effective bogeywoman. In fact, let’s not be gender specific. She might well be its least effective bogeyperson, making “shoe bomber” Richard Reid, as we refer to that chap who couldn’t even set a match to his own trainers, look like the KGB’s deadliest agent.
Jihad Jane’s real name is Colleen LaRose, and in between caring for her partner’s sick father, this suburban Pennsylvanian is alleged to have put postings on YouTube in which she made herself available for any fundamentalist situations vacant. Last year she travelled to Ireland, where she met some people allegedly plotting to kill a cartoonist, before flying home and being arrested on her return. She has been in custody since, according to federal documents unsealed this week – and when the news broke, LaRose’s neighbours forewent the usual cliches about her having “kept herself to herself”, declaring instead that she talked to cats a lot. Mm. As our leaders are given to telling us, tapping their nose in reference to their security clearance: if you saw what I saw, it would curdle your blood.
Even Lars Vilks – the Swedish artist whose sensationally witty cartoon of Muhammad’s head on a dog sparked the alleged plot with which LaRose is accused of being associated – appears dismissively amused, pitching the affair as a caper movie, “with this fantastic name Jihad Jane”. Vilks described his alleged nemeses as not exactly professionals and “rather low-tech”, hitting a note of ironic understatement indiscernible in what we know of his work.
The movie Colleen was presumably thinking about as she settled on her nickname was GI Jane, in which a super-buff Demi Moore trains as a Navy Seal and has to retrieve some weapons-grade plutonium from the Libyans. As a 4ft 11 Christine Hamilton lookalike so luminously inept she’d already been warned once by the FBI before she was finally arrested, you have to marvel at Colleen’s self-delusion. However, I’d prefer for the authorities to conjure up footage of her at one of those terrorist training camps in the Hindu Kush, where disaffected westerners have to scramble under rope nets and suchlike, even though their missions are only ever going to consist of doing something antisocial in an aisle seat. As a rare woman at boot camp, Colleen would be a shoo-in for Jihad Benjamin, a winsome modern reboot of the Private Benjamin franchise.
The trailer line for the Goldie Hawn original was “The army was no laughing matter till Judy Benjamin joined it”, and you might agree that the forces of evil ranked against us were similarly mirthless until a pint-sized cat-lady brought the funny. Yet according to the US justice department, the fact that “a woman from suburban America agreed to carry out murder overseas and to provide material support to terrorists, underscores the evolving nature of the threat we face”. Does it? I yield to no one in my admiration for the calibre of evildoers paraded before us in the cause of justifying ever higher anti-terrorism spending and the systematic erosion of individual liberties, but the LaRose business appears yet another instance of a sledgehammer being used to crack a nut.
Just as in the case of Pentagon hacker Gary McKinnon, and on a much smaller level in that of Jack Straw heckler Walter Wolfgang, one has to question the moral wisdom (and the PR nous) of deploying the full force of anti-terror laws against the demonstrably weak or eccentric. A truly strong society would have the sense merely to leave oddballs out there – partly because the world is full of them, and partly to undermine the myth of a crack network of brilliant extremists who walk among us.
Jurists have long been fascinated by the so-called doctrine of impossible attempt, the question of whether someone can really be punished for attempted crimes that have infinitesimal or no chance of succeeding. Classic examples are trying to pick an empty pocket, or an attempt to murder a man by voodoo. It remains to be seen precisely how cackhanded were LaRose’s bunglings in what she imagined to be the world of international terrorism, but it doesn’t exactly have the flavour of the Mossad’s recent trip to Dubai.
What has come to light since the news broke, however, are police records of LaRose’s 2005 suicide attempt, reports of alcohol problems, and friends’ accounts of the depression caused by the death of her father. Presumably all of this was picked up by the FBI during their lengthy surveillance of her, and in a more civilised and intelligent justice system LaRose might have been identified as a person with a case of something or other, who could be reasonably handled by a couple of hours a week with a mental health professional. Yet she now faces life in prison if convicted.
Having said all that, I see I’ve made the textbook error of ignoring the fabled deterrent argument that governments like to advance. Do forgive me. If there are any troubled catwomen out there thinking of auditioning for Ocean’s Jihad, this case will no doubt give them pause.