Elizabeth Warren Calls for Breaking Up the Banks - U.S. News & World Report

Sen. Elizabeth Warren, D-Mass., called Wednesday for breaking up big banks through structural reforms that would bring a decisive end to “too big to fail.”


Warren told a Levy Economics Institute conference she has worked with other lawmakers to advance a bill that would build a wall between commercial banking and investment banking.


“If banks want to access government-provided deposit insurance, they should be limited to boring banking,” she said. “If banks want to engage in high-risk trading, they can go for it, but they don’t get access to insured deposits and put the taxpayer on the hook for some of that risk.”


At least one bank observer would be OK with this move.


“To say theoretically that we should have more manageable-sized financial institutions than some of these mammoths that are a threat to the stability of our economy like we saw in 2008, essentially I agree with that,” says Michael Grant, president of the National Bankers Association. “My only issue would be in terms of process, how does one dismantle them, how does one cut them down to size.”


Another approach would be to simply reduce the size of some of the biggest banks.


Warren urged action on the issue because though she believes the Dodd-Frank financial reform law improved the financial landscape systemwide, risks remain among the largest institutions.


She said according to both the Federal Reserve Bank and the Federal Deposit Insurance Corporation 11 of the biggest banks in the nation were so risky that if one faltered, it would require a bail out from the federal government. Even worse, she warned, it could endanger the entire financial system.


“That is not a statistic that should make you sleep well at night,” Warren said.


A strong advocate for everyday borrowers, Warren also underscored the need for reform in the auto loan market, which she compared to the pre-crisis era housing market. She views the industry as rife with lax underwriting, predatory and discriminatory lending practices and increasing repossessions.


As a solution she called for the industry to come under the oversight of the Consumer Financial Protection Bureau, an agency she has championed and at one time led.


“The key steps aren’t hard. We know what we need to do. It just takes political courage and strong demand from the public to complete the unfinished work of financial reform,” she said.


Warren has resisted entreaties from liberal supporters who want her to launch a presidential campaign. However, her strong rhetoric on what she sees as Wall Street’s excesses could help shape the debate in 2016.



Dallas Symphony Orchestra's Conductor Jaap van Zweden Says Goodbye With No Replacement in Sight - Dallas Observer
Gov. Christie Courts Latino, Women Votes - U.S. News & World Report

Hard to believe it was 10 years ago that the Dallas Symphony Orchestra heralded the arrival of a new conductor with billboards and banners implying the man only frowned and only stood in dark lighting. But in that time, talk about the orchestra evolved from “They’re playing Mozart this weekend? Sounds interesting,” to “Jaap’s conducting what? Take my money.”

Now we watch the formidable conductor known for imparting an unprecedented power and musicality to the DSO depart for the New York Philharmonic, no replacement in sight. (DSO has started the search, but has remained secretive about any progress.) Fortunately, Jaap van Zweden had some parting words to share.

“When you are a great orchestra it’s one thing, but remaining a big name needs a lot of work," van Zweden says. "I mean I go to big orchestras — Berlin Philharmonic, I go to Concertgebouw Amsterdam, New York, Chicago — they work really hard to keep their level and this is the thing that this orchestra is realizing now."

When he arrived, he felt that the orchestra was not using its talents to the fullest extent. So they drilled down into details, different styles, building the sound in the strings, repeating passages and going over how to make them better every day. The great orchestras, he said, all worked that hard at some point in their history.

The assiduity of Van Zweden in concert with the potential of the players proved a magic combination. Over the years, they welcomed the world’s greatest: Yo-Yo Ma, Joshua Bell, Renee Fleming.

That type of energy has reverberated around the Dallas arts scene in recent years, overshadowed as it sometimes is with sports and financial endeavors. Van Zweden knows he’s leaving at a pivotal time, but he exuded optimism for the energized city.

“I think that we put a lot of seed in the ground for a national profile and I think that the years to come if things are going well," he said, "and I’m 100 percent sure that this will happen, that Dallas will be recognized as one of the big cities in the U.S. where the arts scene is a huge thing.

The vast undertaking, lofty expectations and wide regard for his predecessor the new director will meet shouldn’t be intimidating at all.

Van Zweden had some simple advice, though: Be yourself.

“He or she is going to do it completely different probably and that’s fine," he said. "That’s life. I would never imitate anybody and I hope that my successor is not going to imitate me because it’s impossible."

Van Zweden takes his signature obsession with detail and developing talent to the top of the league next season: the New York Philharmonic. There he’ll follow in the footsteps of giants like Leonard Bernstein, Zubin Mehta and Gustav Mahler, and he’s aware of the enormousness of the task.

“Yes, of course I’m thrilled, but also humbled because these people have all proved that they were the right choice and I still have to do that,” he said. “To be humble is the best place for me now.”

New York will also point him in some different directions musically. With more adventurous artistic tastes, the city will allow for more freedom for experimentation and new music. Already, he played Philip Glass with the orchestra, and he will perform a contemporary violin concerto next season.

New music is a sticking point for some of his critics. Van Zweden’s favorite composer is Richard Wagner, the 19th century German known for tempestuous, sprawling operas, and his repertoire seems weighted with late romantics Mahler and Bruckner. Van Zweden doesn’t think the critics have done their homework, though. In Dallas, he often had to balance new music with more recognizable works on the program. As music director of a radio symphony in the Netherlands he did a contemporary piece every two weeks, and he has performed a long list of world premieres and music by living composers over the past 15 years.

“So if somebody writes like he doesn’t do contemporary music, then I’m not going to react at all. I’m just going to say they can wait,” he said. “So dealing with toughness is fine as long as it is fair.”

The New York Philharmonic releases its 2018/19 program Tuesday. Van Zweden plans to head there next week to conduct Wagner’s "Die Walküre," then return to Dallas to perform Mahler’s Symphony No. 2 before hitting a world tour to China, Japan, Taiwan and other countries with the philharmonic in two weeks.


He hasn’t played extensively with them yet, he said, but already he feels a strong chemistry and looks forward to meeting the family behind the orchestra on the tour. Dallas announces its new season next week, but said that, fortunately, the city will continue to see him from time to time.

“In the coming years when I will return here there is one thing I can assure you —  that when I fly in and I fly in this airport I will feel always at home here,” he said. “I never felt Dallas as my second or third home but my other home, and this is going to stay.”




New Jersey Gov. and potential Republican presidential candidate Chris Christie courted Latino and women voters on Wednesday by criticizing the GOP for being unwelcoming to them.

In a speech at the Latino Coalition Business Summit, Christie said the Republican Party does not always sound "very welcoming to new members." Instead, Christie attempted to unite the different groups by emphasizing common American values.

"Our country has been built on the idea that men and women all over the world look to America as a place where there were no limits on their dreams," he said. "That the only limitation would be the goodness of their soul, the greatness of their idea and the level of their work ethic."

He also touted his own popularity among diverse voters, noting that he received 51 percent of the Latino vote in his re-election for governor, 56 percent of the female vote and 22 percent of the black vote.

Thorn Mejias, a civil engineer living in Virginia who attended the summit, said he believed Christie would be able to appeal to a wide demographic. 
"I don't think he necessarily courts the Latinos per se in New Jersey. I actually believe when he says that he tries to represent all the people that voted for him or not," he said.

But Lizette Delgado-Polanco, vice chair of the New Jersey Democratic State Committee, said Christie “is delusional if he thinks he has support from minorities or women.”

“In New Jersey, he has seriously undermined women's health services, perpetuated the gender wage gap, waffled on tuition equity for DREAMers, and ruined our state economy with his misguided priorities,” she said. "In truth, Chris Christie has no credibility, and considering the mounting costs of his other scandalous behavior, it is hard to imagine anyone less appealing to voters of any kind, especially minority women."

Christie additionally emphasized his leadership potential and spoke about steps a future president should take. 

The governor blasted "overwhelming" regulation of small businesses and the Dodd-Frank Act, which he said was responsible for the closing of 41 percent of community banks across the country. 

"The next president should sign an executive order on the first day freezing any new regulation as we begin to look back at the mountain of regulation that were put in by this past regulation, and then have the task of getting rid of that regulation as we can," he said.

Christie also critized teachers' unions as the main culprit for impeding progress in education, saying they have prevented longer school hours and innovation while demanding lifetime health care, he said. 

"Kids need a union as good as they are, and they don't have it," Christie said.

New Bill in Congress Could Launch Gold Rush in Space - Christian Science Monitor

WASHINGTON — A new measure in Congress would help pump money into a fledgling industry that says it could soon mine rare resources from where they are plentiful – asteroids – and form the building blocks of a space economy.


The lack of clarity regarding property rights to minerals mined from asteroids has made it hard for the companies developing the space mining technology to get financing from investors. The bill, which passed the House in May, would change their prospects by requiring the president to assign a federal agency to oversee the industry and grant property rights to companies for the materials extracted in outer space.


“We like to believe it is the first time there will be social license to develop the space frontier,” says Sagi Kfir, legal counsel for Deep Space Industries, one of two asteroid-mining companies in the United States. “This is a very big deal – this is as big as it gets."


The chunks of rock flying through space contain water and resources valuable for sale earth, such as gold, iron, nickel, and cobalt. They also contain plentiful platinum-group metals, which are used in an estimated 1 in 4 industrial goods on Earth, according to Planetary Resources, the other US asteroid-mining company.


In addition to getting access to more rare minerals, a priority for the companies is to sustain the expansion of human life off of earth, which they believe is inevitable.


“That’s the importance of this piece of legislation: it opens up the possibility to look out toward space,” says Mr. Kfir. “It’s like it’s 1491 and someone in Amsterdam is saying, ‘Do you really think that there’s something beyond the edge of the ocean that we can see?’"


Some observers say more work will be necessary because the US is not the only country interested in space. “There does need to be some international component because outer space is governed by international law and there is a treaty regime in place and the US is bound by the obligations of the outer space treaty so an international aspect would be appropriate,” says Joanne Irene Gabrynowicz, space law professor at the University of Mississippi School of Law and editor in chief emerita of the Journal of Space Law.


Meagan Crawford, director of public relations and communications for Deep Space Industries, agreed that international cooperation will have to occur in addition to building a regulatory framework at home.


“It’s a great first step but not the only,” she says. “Because space doesn’t belong to the US. It belongs to the whole world. So it’s a great way to get the international community talking about it.”


The mineral value of a single asteroid can range from the millions to trillions of dollars, according to Asterank, a database of more than 600,000 asteroids created by Space Resources, another asteroid mining company backed by Google co-founder and chief executive Larry Page and Google chairman Eric Schmidt. But bringing back more platinum than the Earth can yield in an entire year would crash the market, Ms. Crawford says. Deep Space Industries does not plan to sell space resources on Earth for 25 to 30 years, she says, because it costs too much to make it economically viable.


“It didn’t pass the test for me for a lot of years,” says Molly Macauley, vice president for research and senior fellow at Resources for the Future in Washington. “I really changed my way of thinking in part because these wealthy entrepreneurs are interested and there are a lot of commodities on asteroids that we could use, especially in space. It wouldn’t make any sense at all to bring water back from space. But if you’re going to use it in space then it makes sense.”


Water from asteroids can not only sustain astronauts, but be divided into gas and methane for use as fuel. Customers needing the resources in space could include public space agencies, such as NASA, or companies with plans for long-term human settlements, such as Elon Musk’s private rocket firm SpaceX.


“You can derive all the material to develop reliable space infrastructure in space and a space economy by space resources,” Kfir says. “In other words, New York City wasn’t built because they brought a bunch of concrete on the Mayflower.”

Kfir also says space development could solve environmental issues that earth faces. For instance, solar satellites could provide renewable, unlimited energy by directing sun energy to earth.


“You need space resources in order to develop that because you can’t lift it from a rocket – it’s just too expensive,” he says.


The House passed the property rights bill, introduced by Rep. Bill Posey (R-Florida), on May 21. It now awaits Senate action.


The space mining bill is not without detractors.


One of them, Rep. Alan Grayson, (D-Florida) who voted against the bill, says it did not appropriately address the issues of passenger safety and corporate responsibility.


“Specifically, this bill essentially would require passengers on commercial space flights to sign away their legal right to sue if they are injured,” Mr. Grayson says in a statement. “It would provide virtual immunity to the commercial space industry, and prohibit Americans injured due to corporate malfeasance or carelessness from securing adequate redress for their injuries.”


Other congressmen oppose it because they have NASA facilities in their districts and have said it would take away part of NASA’s mission.


Crawford says they plan to harvest materials in prospecting missions within five years. They would have the ability to sell water for human habitation and fuel by 10 years, and to begin building colonies from space materials in 20 to 25 years.

“As for space pirates, I’m sure there will be space pirates,” Kfir says. “We have to give Han Solo something to do.”




Sobriety Checkpoints Bill Passes House -

If you grew up in, say, America, you might reasonably expect that when a police officer pulls you over it’s because he’s got some kind of probable cause or evidence of a violation. Then again, maybe not.

The Texas senate views that expectation as a personal problem, it would seem. A bill just passed by the Texas house allows for “sobriety checkpoints” to be set up, in which the police are allowed to pull over and inspect every motorist passing through to see if they’ve been boozing.
These kinds of methods were banned by the courts as unconstitutional a decade-and-a-half ago on the grounds that there were no state-wide regulations for the procedures and methodologies of the checkpoints. After these 15-odd years, legislators have finally hit on the relatively sapient expedient of, you guessed it, defining such a set of regulations.

The rules restrict the checkpoints to cities with populations of at least 500,000 or counties of at least 250,000 residents.  They must also have the approval of a sheriff or mayor.

There has been some effort made to make sure the checkpoints are as purely focused on alcohol-detection as possible, with no room for funny business. All checkpoints must be video- and audio-recorded, the officers cannot ask for driver’s licenses or insurance cards, and drivers can only be detained for three minutes.
There is plenty of reason, it must be admitted, to think that these checkpoints will do a good service: it is estimated that 300 lives will be saved if they can be set up, which is not inconsiderable if you reflect on the nearly 1,300 people killed in alcohol-related crashes in Texas in 2007. It’s hard to argue against that in any direct way, but it’ll be worth keeping an eye on how things work in practice at these checkpoints, after such a fundamental liberty has been smudged and elided.


Oil Prices Freeze the Illinois Fracking Boom - Medill Reports

Illinois may have missed the fracking boom, as oil prices simmer near $50 a barrel. But a heated drama to reclaim the gold rush is playing out downstate with a cast of environmental activists, big oil, farmers, politicians and Saudi Arabians.

Only one company, Strata-X signed up to apply for a permit to drill in Illinois to date. The boomtown era of just three years ago eroded rapidly over the past six months as oil prices lost half their value.

“Oil is the biggest part of our economy around here with agriculture, and maybe some manufacturing,” said Ted Whitehead, chairman of the Clay County Board. Whitehead works for a company that transports oil to a refinery in Indiana.

Clay County in southern Illinois, a coveted area for potential fracking and at the center of the controversy, covers wide swaths of farmland sprinkled by grain silos, farmhouses and oil pump jacks bobbing up and down. It sits atop the Illinois Basin, home to most of the state’s 650 oil fields. The fallen remnants of last year’s crop fill the fields along with an occasional pump jack marking traditional vertical wells that are still in use.

Companies have been drilling in Clay County since they discovered oil there in the 1940s, making it one of the nation’s top producers. Reserves depleted over the years, but the potential for reaching rich new veins trapped in bedrock with high-tech, hydraulic techniques promises a renaissance for the industry. Last year, out-of-town oil representatives flooded the tight-knit county, researching which land to lease to begin fracking. But that abruptly stopped.

Unemployment rose to 8.1 percent – one of the highest rates in the state – as oil prices dropped.

Illinois opened the door in November for companies to obtain permits for high-volume hydraulic fracturing, the process of extracting hard-to-reach oil from shale using high-pressure water and chemicals. Yet unlike other states where fracking is thriving – enough to flood the world’s oil market and contribute to a plunge in crude prices – Illinois appears to be in limbo.

Oil and Farms – The Recipe for the Southern Illinois Economy

“We have some oil pumps on our land but we don’t own any,” said Katie Lewis, 21, who grew up in Clay County. “We don’t own the pumps or the oil, but what they do for us is we get a check every month. It’s a percent of what the oil makes every month.”

Her family, like many farmers and landowners in the area, leases their land to oil companies to run pump jacks. Lewis, who is studying agriculture at Northwestern University, said the pumps on the 1,600-acre farm near Xenia, Illinois, help supplement income from corn and soybeans.

At Anthony’s Wild West & Fallout Saloon – patrons say it’s the only restaurant in the U.S. with an oil drill for a bar footrest – four men who have been friends for decades discuss life, business and oil. Restaurant owner Anthony Booth stops by to talk and doesn’t conceal his disappointment at a drop in business.

“Ten months ago we had a lot of people here checking out leases,” he said. “Now all of that has changed. We haven’t seen one of them in months.”

The men all seem to agree.

Brenda Britton, Clay County clerk and recorder, said in January that no companies had come into the courthouse to search for mineral rights for 10 months.

What Stopped Fracking

Some companies did lease land to test for fracking, though. In July 2014 Denver-based oil company Strata-X Energy purchased leases for 67,000 acres of farmland.

Theories abound about what precipitated the sudden halt in interest from fracking companies. Plunging oil prices tops the list. When Strata-X began production tests on horizontally drilled wells in the Illinois basin, they quoted oil prices of $95.75 per barrel. By January oil process had dropped to around $40 on the global market.

“We missed out on zillions of dollars.”

– Andy Knapp

Southern Illinois oil workers are remarkably well-versed in international relations among players that include Saudi Arabia, Russia, the Middle East and Ukraine. The faraway places directly affect the livelihood of the people harvesting in the breadbasket of America.

Chris Mitchell, president of Geo. N. Mitchell Drilling Co. Inc. in Carmi, about 300 miles south of Chicago, said he believes that the rise of U.S. fracking destabilized the oil market.

“I think [the drop in oil prices] is all fabricated,” he said. “The margin between having too much and not enough oil is about a million barrels a day. To me and you that’s a lot but to the people doing the exporting it’s not a lot.”

Three OPEC countries primarily control its oil output: Saudi Arabia, United Arab Emirates and Kuwait, he said, and they want to keep their market share.

“We put these successful shale plays and increased the production in the U.S.,” he said, “meaning we’re increasing the exports, so wherever that spreads out of the market because the U.S. is taking less. So they’re going to go out and spank the shale players’ butt by putting more oil in the market forcing the price down.”

“They’re already succeeding in that several rigs in Texas, Oklahoma, North Dakota, have been shut down because of the price.”

– Chris Mitchell, Geo. N. Mitchell Drilling Co. Inc.

OPEC producers know that fracking for oil in the Eagle Ford and Bakken shale – oil from the Dakotas – costs more to produce, so it takes more for companies to get their money back.

“Well, if the price is low it’s going to hurt them,” he said. “They’re already succeeding in that several rigs in Texas, Oklahoma, North Dakota, have been shut down because of the price. They’re already getting the point across.”

Companies Clash With Environmentalists

A serendipitous sudden escalation in prices wouldn’t instantly return the momentum, though. David Hettich, chief financial officer and vice president of land for Strata-X, called high oil prices a “primary driver” for renewed interest in fracking, but the reality is more complex. Opponents concerned with the environmental impact of fracking in Illinois stalled the process of passing regulations and continue to thwart interested companies, he said. Years of clashing with opposition groups have exasperated him, he said.

“Now the rules are out – we have oil and gas depressed prices. It’s a combination of depressed oil and gas prices currently and regulatory fatigue,” Hettich said.

For Hettich, the hurdles may outweigh the rewards, since no one has yet even proven that high-volume hydraulic fracking will work in the state. Other states allowed fracking and began implementing regulations after it was underway and worked with businesses to implement them, he said. Illinois, a late-comer, wants every detail in place up front, he added, but the heavy regulations may amount to a barrier.

Illinois had the benefit of seeing the growing pains and regulatory gaps in the states at the forefront of fracking and is trying to address them upfront. But companies say they find the permit application, which spans an arduous 300 to 400 pages, vague in ways that leave them open to litigation.

"It’s a combination of depressed oil and gas prices currently and regulatory fatigue.”

– David Hettich, Strata-X

“The Illinois Department of Natural Resources is terribly understaffed to be reviewing this application,” Hettich said. “Say they make a mistake. It can be something totally nebulous. It could be I didn’t get the right approval from a landowner – the same people show up to protest, then sue them. Then sue the company.”

Any error can leave a company a target for a lawsuit, which can drag them into court for years. The first five companies will have the most difficulty navigating the application, and after that companies should have a pattern to follow.

“We’re trying to figure out how to get a handle on it right now. We can drill vertical wells in Illinois and establish production and not be continuously harassed,” Hettich said.

Pressure from environmental advocates has also left companies wary of applying for permits because the process requires them to make their names public, he said.

“In talking to the other companies in the basin, they met the Department of Natural Resources, they all eventually will put in an application,” he said.


“Whether in mid or next year or I don’t know. They don’t want to register because they will become fodder for the opposition group.”

Environmentalists Continue the Fight

Environmental concerns played through the passage of Illinois’ fracking regulations. Environmentalists warned that fracking raised risks of poisoning the state versus making it money. With demands of both sides set at equally loud volumes, the contentious debate presented a politician’s worst nightmare.

Strata-X had leased land in 2011 in Illinois and the leases gave them the right to explore for a stated period of years and then produce on it indefinitely. After spending millions of dollars on the exploration rights, the state decided it would pass new regulations. Hettich said.  What the company thought would be a short process for legislation and regulations ended up taking two and a half years from when the land was leased.

“One day [Governor Pat] Quinn would say he was in favor of a moratorium,” Hettich said. “The next day he’d say he was yelling at someone for not going quick enough. He was hitting the break and the gas pedal. He didn’t move the rules forward in expeditious ways. He literally took every day he could but two” before one deadline.

He compared fracking to marijuana and concealed handguns in terms of its controversial nature.  Anti-fracking “elves” delivered a beribboned personal fracking rig to Governor Quinn’s house during the 2013 holiday season, according to the Facebook page of Chicagoland Against Fracking. Some opponents left a coffin, tombstone and flowers – representing the death of Illinois – at the office of a state representative who  proposed a bill to  streamline the regulations process. The first draft of regulations received 30,000 comments, submitted by about 100 people.

Fracking Opponents

Environmental advocates openly admit it’s not just rigorous regulations that they want – they want no fracking at all. Fracking opponent Vito Mastrangelo, a lawyer who has lived in unincorporated Justin County, just north of Clay County, for 30 years. He has no oil wells on his land. Mastrangelo became involved in the anti-fracking campaign after he read in the newspaper about what might happen in Illinois.

He runs legal affairs for Southern Illinoisans Against Fracturing Our Environment (SAFE), a group that demands a complete fracking ban in the state. The group grew out of meetings his fellow concerned citizens began holding shortly after the news broke.

In contrast to Hettich’s view, Mastrangelo believes fracking opponents were not given enough say in the rule-making process that opened the gateway to the permit process. And he, along with SAFE and several landowners, have filed a lawsuit alleging defects in the way the Department of Natural Resources made the final rules. The violations he believes occurred primarily center around not giving the public enough say in the process.

“You’re probably aware that DNR points out that there were thousands of comments. And there were five hearings around the state. But what most people don’t realize is that there was a hearing in Chicago and there were four others down south – Effingham, Decatur, Carbondale and Ina. And the one in Chicago, they didn’t have enough capacity in the room. They had to turn people away,” Mastrengelo said.

"Southern Illinoisans, the people that I know that do not support fracking, feel vastly underrepresented both within environmental organizations and within the legislature in general."

– Vito Mastrangelo, Lawyer

“Basically DNR took the position that they had to allow the public defense, but at these public hearings and in other instances we’re arguing that they did not give us the opportunities to engage this department in how the rules were made,” Mastrangelo said.

The Illinois Department of Natural Resources did not respond to a request for comment.

“My spin on it, and I’m speaking only personally now, not on behalf of SAFE or anybody else, is industry has much more lobbying power than any environmental organization or individuals. Southern Illinoisans, the people that I know that do not support fracking, feel vastly underrepresented both within environmental organizations and within the legislature in general. We believe the industry has – they donate tens of hundreds of thousands of dollars to legislators,” he said. “They basically got the last word, let’s put it that way.”

In addition to legislative procedures, Mastrangelo fears for the environmental consequences of a procedure that has raised alarms in the scientific community.

“For years we’ve been told that there is a pretty good chance that there will be an earthquake pretty soon… So when we learned that injection wells cause earthquakes and even fracking can cause earthquakes it’s kind of a non sequitir: Earthquakes are bad; we’re going to do something that causes earthquakes. There’s a little big of illogic going on there,” he said.

The Chemical Cocktail of Fracking

Chemicals used in fracking have also been found to be toxic, Mastrangelo said.

Hettich argued that fracking uses only three materials – sand, water and chemicals.  He said chemical components used include glycol (soap), an antibacterial, a gel and possibly potassium. The amount of chemicals used equals less than 2 percent of the overall fluid makeup.

The water and chemicals are pumped into the earth at high pressure to break up the bedrock and release the oil.

Hettich said that fracking engineers protect fresh water near ground level during drilling by surrounding the pipe with layers of materials: rock, cement, steel, rock, cement and steel. The oil they extract also exists far below the fresh water table.

Stephen Nickels, a board member of SAFE and vehement opponent of fracking, strongly disagrees. Nickels grew up in the suburbs of Chicago and moved to southern Illinois when he and his wife bought her family farm. In Chicago, he worked on the floor of the Chicago Board of Options Exchange and later opened his own firm. Nickels has studied the science and economics of fracking in-depth and come to support SAFE’s unequivocal position.

“Fracking is an inherently dangerous extraction technology which cannot be made safe through any amount of regulation,” he said.

For instance, the sand Hettich mentioned, while sounding innocuous and natural, is actually silica sand, he said.

“Silica sand, once airborne, can travel 20 miles,” Nickels said. “Silica sand will – will – give the people doing the fracking and potentially the people living in the area of fracking, exposure to silicosis. Silicosis will be the black lung of the fracking generation,” he said. “Silicosis essentially turns your lungs to cement and you die. Period.”

“Fracking is an inherently dangerous extraction technology which cannot be made safe through any amount of regulation,” he said.

– Stephen Nickels, SAFE

The next environmental contaminant he mentioned is methane, a gas that oil drillers flare off when they drill for oil and that has been linked to global warming. He described a satellite image taken of earth that eerily demonstrates the size of the problem.

“You see Chicago and it’s bright and huge, and you see Minneapolis-St. Paul and it’s not quite as bright as Chicago and not quite as big, but it’s still fairly well lit up, and you see North Dakota’s Bakken oil field, and it looks just as bright as Minneapolis,” he said. “Because they’re flaring that much gas…When you see North Dakota looking like Minneapolis-St. Paul, you get the idea.”

Nickels also warned against the effects of the chemicals used in fracking, saying, “They don’t just use soap. That’s bullshit. There are 650 chemicals that have been identified as being part of frack solutions.”

New York  Gov.  Andrew Cuomo banned fracking in New York in December after a  New York State Department of Health review examined the health risks linked to the activity.

“I have 80 acres here in Johnson County where Woolsey [Energy Corporation] sold 199 leases,” Nickels sad. “I wouldn’t lease my land to a fracker for all the tea in China, as it were. For any amount of money. Nobody wants to live right next to a frack, period.”

Nickels also said believes that people have overblown the potential economic benefits of fracking.

“There was a Marcellus Shale study done by multiple universities, I want to say three years ago, and it states unequivocally that there are 3.2 jobs generated per well drilled,” he said. “The majority of those jobs are ‘Mcjobs.’”

He said the largest number of jobs likely to be generated fall in the service industry sector – restaurant help, gas station service workers, strip club dancers, bar tenders and truck drivers.

“And those people end up not even being able to live in the area anymore because of the influx of people that come with fracking,” he said.  Fracking companies “bring their own professional crews with each rig. They’re not looking to hire local people to frack a hole. All those high-paying jobs, they all come with them and leave with them.”

Fracking will never get that far though, he predicted, stressing the precarious economics of the situation. He gave the example of Woolsey Energy, a Kansas company that bought mineral rights to 260,000 acres of land in southern Illinois for about$26 million. Purchased three to four years ago, the five-year leases will soon expire or be up for renewal, which costs a fee.

“Certainly nobody who has put up $26 million and got nothing in return for it is going to dump another $26 million in unless he’s damn sure that the price of oil is going to remain high enough to make that a viable investment,” he said. “The whole geopolitical price of oil as it is currently constituted is just one nail after another in the coffin of the shale industry of the U.S.”

John Bayler, a local contract worker on wells for Strata-X, finds some middle ground between the two sides in his views and his life. He is an oilman, organic gardener, photographer and avid recycler.

He said he would  like Campbell Energy LLC of Carmi to drill a fracking well on his land. “They’re trying to lease a piece of my ground that I got a royalty on,” he said. “I’d love for them to do it on my land.”

Bayler also advocates for fracking in the region and sees the economic benefit as enormous, though acknowledges small, independent oil producers would not likely benefit from the jolt. He estimates cyclical oil prices could go back up to $100 per barrel in four to five years.

“If the price of crude oil comes up, we could have a boom town real fast,” he said. And quite frankly, even as an oil man, I can’t support drilling on the Arctic National Wildlife Refuge."

– John Bayler, Strata-X

He said he doesn’t believe it will impact the environment. “The last thing you want from an oil well is for anything to come in there but crude oil,” he said. “There are chemicals used, but they won’t get to fresh water. That isn’t going to happen.”

“And quite frankly, even as an oil man, I can’t support drilling on the Arctic National Wildlife Refuge. There’s enough oil in the world. Leave that alone,” he added. “But there’s enough oil other places that we can get it, particularly right now with shale,” he continued. “We don’t need to drill that right now. Maybe in 100 years when there is an oil shortage in the world, then maybe we need to reevaluate some of these places. But I can’t condone drilling in some of these places.”

The Future 

Despite the downturn in oil economics, Hettich predicts Strata-X will forge ahead and begin drilling as soon as they figure out the best way to manage the regulations – likely in the second or third quarter of next year. Even then, the economic windfall hangs in the balance.

“There were a lot of oil-producing areas in the U.S.,” Hettich said. “Not all of them are candidates for high-volume hydraulic fracking. There is no certainty that the resource in Illinois is going to be viable for this type of technology. If we could just get a few of them in there to see, this whole thing could either go away very quickly, or we could ultimately understand what the resource is and start working through its development process in conjunction with people who are concerned with the environment.”

Anti-fracking activists are unlikely to suddenly feel compelled to cooperate, however, and low oil prices will spell a default win for environmental groups, Nickels said.

Nickels acknowledges the disappointment that would mean for the economy, but added, “Well, it’s great for the planet. Period.”



Will partnering with save retailers? - U.S. News & World Report

Struggling retailers hope to jump-start sales by selling on Amazon, but they have reason to be nervous.

Faced with the prospect of (Nasdaq: AMZN) crushing them, traditional retailers increasingly are choosing to partner with their giant nemesis instead. An SLI Systems study found that 65 percent of retailers have forged partnerships with Amazon as a way to increase revenue, with almost half seeking greater visibility and customer acquisition.

Nike (NKE) and Sears Holding Corp. (SHLD), for example, began partnering with Amazon this summer to sell their products through the giant online retailer's site.

For investors, there may be an opportunity to ride Amazon's coattails by buying one of its retail partners instead. The share price would certainly be cheaper. But not all retailers will benefit from partnering with Amazon, and even those that do, still risk being swallowed whole. That same SLI Systems study that found retailers open to selling through Amazon also discovered that 47 percent worried Amazon might use their sales data to compete with them.

"Partnering with Amazon is called cooperative competition," says Sunder Kekre, professor of operations management at Carnegie Mellon University's Tepper School of Business. "There might be competition with Amazon in certain products but cooperation in others. This is an age where we have to cooperate and compete at the same time."

A relationship blossoms. Nike offers a prime example of what a beneficial partnership might look like in its early stages. When the company announced June 29 that it would sell a limited line of apparel and equipment on Amazon, Nike shares bounded 11 percent. The pilot program would start small and expand if successful, Nike president Trevor Edwards says.

Experts already anticipate that Nike's top line will benefit. Nike's initial deal with Amazon led to $300 million to $500 million in revenue, according to Goldman Sachs analyst Lindsay Drucker Mann. Although this represents only 1 percent of Nike's worldwide revenue, there's huge potential for expansion.

Nike turned to Amazon because sales at the iconic sportswear company have been declining. In July, Nike logged its second quarter of margin decline along with flat sales growth in North America. The company will also have to sprint to keep up with rival Adidas, which on July 27 reported higher earnings and raised its revenue guidance for full-year 2017 to between 17 and 19 percent from 12 to 14 percent.

Many investors rejoiced at Amazon and Nike's blossoming relationship because it unites their biggest strengths: Nike brings the brand, Amazon brings logistics and analytics data. Part of Amazon's appeal to big companies is its storehouse of data that can be used to manage risk. If a product or service doesn't entice picky millennials to buy it, for instance, Amazon can adjust the supply. This comes in addition to Amazon's vast logistics channels.

At the same time, Nike competes with Amazon by selling through its own website and other online channels.

Betting big on artificially intelligent appliances. Struggling discount retailer Sears hopes Amazon will be a lifeline.


The agreement with Amazon, announced July 20, will let Sears sell its Kenmore appliances on Amazon's website. Sears is battling a long-term decline in sales, down 7.4 percent from 2015 to 2016. E-commerce also fell 1.8 percent, but selling through Amazon should increase distribution of Kenmore appliances.

Sears should also benefit from Amazon's technology, as Kenmore appliances will incorporate Amazon's Alexa voice technology so that ovens, air conditioners and other appliances can be operated at home through voice command, enabling Kenmore to keep up with Whirlpool Corp. (WHR) and General Electric Co. (GE), which already feature Alexa in their products.

"Odds are Kenmore smart appliances will be smarter, faster and at lower cost than many alternatives," says Lee McKnight, associate professor at the School of Information Studies at Syracuse University.

What's more, making Amazon its primary storefront could help compensate for diminishing foot traffic in Sears' physical stores, as well as extend the traditional retailer's reach into markets it does not currently serve, potentially stimulating growth. Without Amazon, McKnight says, Sears' future looks "increasingly bleak."

Because the terms of the deal with Amazon were not disclosed, investors will have to guess at how much revenue Sears might generate through the partnership initially. Although getting in the race for smart and artificially intelligent appliances could give Sears a pricing and competitive edge, McKnight thinks the Amazon deal may have already been priced into the stock.

Instead, McKnight suggests investors should consider companies that announce a deal like the one Sears struck with Amazon for its Kenmore appliances, as those retailers may be worth buying. Investors, he says, should view such a deal as an assurance of the retailer's future growth and profitability.

The potential for more partnerships. As the field widens for more retailers to partner with Amazon, what else should investors consider?

Krista Fabregas of says to look for struggling retail chains with established brands like Sears' Kenmore or those that can benefit from Amazon's direct-to-consumer distribution, like Nike. She also recommends brands that can include Amazon's technologies in their products, such as the Alexa-integrated Kenmore appliances.

As more details emerge about Amazon's existing partnerships with traditional retailers, so too should a clearer picture of the risks.

"After all, Amazon might boost the retailers' sales but those sales might be less profitable – it would really depend on whether the retailer offered a brand popular with consumers that Amazon had trouble copying," says Peter Cohan, strategy and entrepreneurship professor at Babson College. Otherwise, he says, partnering with Amazon might be a mistake.

Investors also should beware of deals unfairly skewed in Amazon's favor, which would be counterproductive for retailers.

"It has to be a win-win for both parties. It can't be a zero-sum game. Amazon should win and the vendor should win," Kekre says. "Then I think the marriage would last; otherwise, you may end up in divorce." 

North Korea Turning to Human Trafficking for Foreign Currency - MarketWatch

WASHINGTON – To generate new income sources, the North Korean government has engaged in state-sponsored trafficking of its citizens, sending them to work as forced laborers in other countries and confiscating all or most of their wages, an issue of increased focus in the international community.


“I see it as just starting to get attention. It’s an emergent issue on the international agenda,” said Scott Snyder, senior fellow for Korea studies at the Council on Foreign Relations.


Both the North Korea Economic Institute of America and the House’s Tom Lantos Human Rights Commission held meetings in Washington D.C. in April and May to address the trafficking.


North Korea, frequently ranked as the world’s worst human rights abuser, has lured between 50,000 and 60,000 citizens to work in industries around the globe with the promise they would keep their wages, according to a paper from the Database Center for North Korean Human Rights presented on Tuesday. Instead, the wages are sent to the North Korean government, generating as much as $2.3 billion per year.


Industries employing the laborers range from logging and mining to restaurants, and workers who complain or escape risk reprisal against themselves and their families who remain in North Korea, said Robert King, special envoy for North Korea Human Rights Issues at the State Department, at the House hearing.


Workers have been sent through bilateral contracts to around 40 countries, primarily Russia, China, Mongolia and nations in Africa, central Europe and the Middle East, according to a State Department Trafficking in Persons Report from March.


Snyder said the increased trafficking is one of North Korea’s ways of earning foreign exchange. Previously, the government sustained itself through other illicit means, such as drug trafficking, counterfeiting and weapon sales, but those income sources have been declining.


“They’re running a trade deficit with the rest of the world and it’s mostly shown in trade with China,” Snyder said.


“Whatever North Korea can do to make a profit it does, and much of it turns out to be illegal.”


One defector, Lim Il, told the Lantos commission that he had been a state employee in North Korea but went to Kuwait to work at a construction company, where he was required to put in 14-hour days under strict surveillance, with two days off per month.


“I think we were slave laborers,” Il said.


After escaping to the South Korean embassy, he learned that his salary had all gone to the Office of the Worker’s Party that manages foreign currency. “The money obtained through the export of laborers overseas [is] used as a personal fund for Kim Jong-un,” the Database Center for North Korean Human Rights paper said.


The U.S. and international community are facing difficulty curtailing the trafficking, said John Sifton, Asia advocacy director at Human Rights Watch at the House hearing. The biggest reasons are that most of the work occurs in Russia and China, it provides North Koreans minimal exposure to the outside world which may help undermine the government, and officials have not decided whether to approach it from a sanctions or human rights perspective.


“To address this is going to require attention and focus from the international community,” Snyder said. “And the best way of doing that would probably be to make this an issue of concern for the counterparts.”




GuruFocus Podcast Ep. 5: Interview With 'University of Berkshire Hathaway' Authors

new episode of the GuruFocus Podcast comes out today. The episode features a talk with the authors of University of Berkshire Hathaway, investors Daniel Pecaut and Corey Wrenn. Daniel and Corey attended 30 years of Warren Buffett (Trades, Portfolio)’s annual shareholder meetings since 1983, taking notes each year, which they have placed in this year-by-year collection.

As students of Buffett and Munger, and teachers themselves, Daniel and Corey discuss making the unprecedented project that enables investors to hold three decades of history in one volume, as well as the unique insights they gained taking in the wisdom of Buffett and Munger every year.

Daniel Pecaut is a Harvard graduate whose insights have been featured in the New York Times, Money Magazine, Grant's Interest Rate Observer, Outstanding Investor Digest, and the Omaha-World Herald.

He has worked in investing for 30+ years and is CEO of a successful investment firm, Pecaut & Company.

Corey Wrenn has a B.S. in Business Administration from University of South Dakota and an M.B.A from University of Nebraska at Omaha.

Corey is the Vice President, Treasurer, and CCO for Pecaut & Company.

Before he joined the firm in 1992, he worked for nine years as an internal auditor for Berkshire Hathaway (BRK.A)(BRK.B).

Episode 5 of the GuruFocus Podcast is currently available on the website here and will soon be available for download on Apple iTunes. Enjoy and share with friends.

Follow the podcast on Twitter @gurufocuscast.

Dividend Stocks and Younger Investors -

Controversy swirls around whether younger investors can benefit from emphasizing dividend-paying stocks in their portfolios—a practice normally associated with retirees. But evidence suggests that no age is too early to start thinking about income investing.

Growth companies—one argument goes—may be more enticing to non-retirees because they can boost returns quickly. These companies are typically young, agile and plowing earnings back into their burgeoning businesses. Dividend-paying companies, by contrast, are often slower growing, more mature businesses that have more spare cash to pay out to shareholders. Consequently, they are often rightly favored by those nearing retirement, who seek steady, passive income.

But younger investors with ample time before retirement may want to consider the power of reinvesting dividends. To begin with, dividends have contributed roughly a third of equity returns since 1925.[1] And the impact of reinvesting all those dividends  compounds as an investor’s timeline increases. Random snapshots of various time horizons tell a consistent story.

For instance, for the 10-year period from September 1, 2005 through August 1, 2015 the S&P 500 returned 66% without dividends reinvested, and 74% with dividends reinvested.[2] Not bad.

Over longer terms, however, the story becomes more dramatic. The S&P 500 index returned 455% from 1988 to 2013, but with dividends reinvested it delivered a 963.5% return, according to S&P Dow Jones Indices research.[3] Zooming out even further, for the period of December 1960 through December 2012, the S&P 500 without dividends returned 2,354%, versus 12,314% with reinvested dividends.[4]

When selecting dividend stocks, price appreciation is often a secondary consideration to the dividends themselves. And yet, some research shows that over the long term, dividend stocks can outdo growth stocks even when it comes to price appreciation. An Ibbotson study examining stock performance for the period of 1969 – 2002 found that value stocks returned an annualized average of 10.99%, compared to 8.79% for growth stocks.[5]

Of course, past performance is never a guarantee of future results. But younger investors—even those who are just getting started—will want to consider the impact of reinvesting dividends over the long-term horizon. This potential for compounded returns, in addition to the relative stability of the companies that are most likely to pay them,[6] can make them an important piece of a diversified long-term portfolio.





[5]Average annual return figures reflect the geometric mean.



Chris Stapleton Reveals Wife Is Expecting Twins During Refreshing and Chilly Dallas Show

Rarely does a musical forebear open for a scion, but so high has Chris Stapleton’s star risen in a short amount of time that Marty Stuart — with iconic hair and embroidered suit — opened the show before a sold-out crowd Saturday night.


Stapleton burst into country music’s consciousness around 2015, when he swept the Country Music Association awards and gave a landmark performance with decidedly not-country Justin Timberlake.

In 2016, Stapleton took home CMA music video of the year and Grammys for best country album and best country solo performance of the year.

The momentum continued in Dallas. He wrung cheers from Dallasites shivering at Starplex’s outdoor pavilion from the moment he stepped out in reams of blue smoke to opener “Might as Well Get Stoned.” The song was one of many odes to substances performed Saturday, including many to whiskey. So much whiskey.

Within several songs, it became clear that Stapleton’s signature furrowed brow and pared-down presentation belied a jovial streak. With his face nearly hidden by cowboy hat shadow and beard, he smiled and initiated what turned into ongoing banter with the receptive crowd.

“I’m going to have a lot of fun tonight because I’m too cold not to!” he yelled. Also: “With all the drinking tonight, someone’s going to jail.”

Stapleton's songs for other artists and for his former band, SteelDrivers, have won and been nominated for awards, so it's strange to think that 2015’s Grammy award-winning Traveller was his solo debut. Singers such as Adele, Kenny Chesney and George Strait have all performed his songs.

His lyricist background shone throughout the set. His writing is sometimes evocative, at other times pithy. “I couldn’t tell you honey/ I don’t know/ where I’m going/ but I’ve got to go,” he sings in “Traveller.”

His lyrics’ universality may explain some of his wide appeal. “Don’t go looking for the reasons,” he philosophizes in “Broken Halos,” one of the loudest singalongs. “Don’t go asking Jesus why/ We’re not meant to know the answers/ They belong to the by-and-by."

Stapleton’s show was refreshingly free of the overglamorized accoutrement of country’s current biggest pop stars. He traded fancy hair and flashing lights for a stripped-down presentation. That throwback appeal may help him reach a larger audience.

Only three other musicians joined him onstage. It seems to be, as he has said elsewhere, all about the music. Despite his accessibility, SNLappearances and history of rubbing elbows with pop stars, he remains deeply anchored in country. No risk of Swiftian crossovers here.

Stapleton’s voice also sounded as pure and versatile as it does on his albums. His range and twang were on display in “Tennessee Whiskey.” He belted so loudly in “Fire Away” that, without a back wall to hit, the sound simply faded into the wind outside the pavilion. He showed off his virtuosic guitar skills in a rambling solo at the end of “Without Your Love” that he didn’t seem eager to end.

Fans enjoyed the newest track from the unreleased latter half of his latest album, a two-parter titled “Millionaire,” an homage to the economic value of love.


Otherwise, he shared few songs from that half of the album, sticking mainly to his hits from Traveller and the first volume of From a Room.

Near the end the night, Stapleton made a major announcement as he introduced his bandmates by riffing on “Tennessee Whiskey.” His wife, Morgane, who played with him onstage, is expecting twins.

"She's the mother of my two kids, and she's about to be the mother of two more," he said. Then he sang almost the entire song directly to her.

Seemingly indefatigable, Stapleton returned enthusiastic for an encore. The night ended with “Sometimes I Cry,” a slow, bluesy piece that induced perhaps his most soulful vocal performance of the night.

Stapleton’s humble nature shone through when he stopped to thank fans. “Thank you for sticking out the cold and for sharing this music with your friends,” he said. “It lets us fill up places like this.” 


Change Ahead for the Dallas Symphony Orchestra as It Appoints Its First Female CEO - Dallas Observer

When Kim Noltemy becomes the Dallas Symphony Orchestra's first female CEO in January, she'll bring with her 21 years of experience vitalizing the Boston Symphony Orchestra — and a brain full of ideas for the one Dallas knows and loves.

Noltemy says the city's growth, excitement and cultural organizations drew her toward accepting the position. She was also impressed by the work of departing conductor Jaap van Zweden and what his tenure said about the management style at the DSO.

“There’s a lot of flexibility and creativity, and I thought that would be a really exciting environment in which to think about moving forward and being an orchestra that’s kind of on the cutting edge of the next generation of listeners,” Noltemy tells the Dallas Observer.

Noltemy, the former chief operating and communications officer of the Boston Symphony, managed $46 million in ticket sales and revenue. She specializes in innovation. In addition to raising the DSO’s profile, she wants to make it a leader in the industry. She used the words “cutting edge” more than once.

A significant component of the path forward is digital media, Noltemy says. It can be a struggle for orchestras to reach new audiences and spread appreciation for their classical music art form, and in Boston, Noltemy encouraged the symphony to embrace the screen-filled world we live in. She spearheaded development of its digital download service, podcasts, internet TV and website, now the most visited site of any orchestra in the U.S.

But her true goal is to get people to fall in love with live music. Part of her job in Boston was to sell out concerts.

“So this is the world we live in, and we need to have really interesting, persuasive and meaningful content for people that will convert them and educate them as to why the live concert experience is also amazing,” Noltemy says.

One of DSO's most cutting-edge programs is the Soluna International Music & Arts Festival, taking place from May 6-28. It's essentially the Coachella of fine arts, juxtaposing classical organ with Don Giovanni and guitar-smashing performance art. The festival aims to increase engagement with and collaboration among a variety of artists and other arts organizations, a critical move in today’s environment, in which arts organizations can suffer if they isolate, Noltemy says. Connecting classical music with other art forms will also attract generations raised on Katy Perry instead of Khachaturian, she says.

“We need to provide the bridge for them, and a festival like Soluna does that,” Noltemy says.

In some ways, Noltemy’s strategies build on ideas the DSO has already implemented. The symphony entertains more than 30,000 people at its youth concerts each year. Its ReMix series invites audiences to see great works but adds a twist — Debussy’s “Prelude to the Afternoon of a Faun" with dancers, for instance. The ReMix program just entered its fifth year.

Noltemy’s arrival roughly coincides with another seismic shift in the top echelons: van Zweden's departure for the New York Philharmonic. As many DSO fans wait breathlessly for the announcement of his successor, she is working with the search committee to forge not just a business contract but a partnership for a multifaceted role that has changed significantly over the past 20 years. In addition to flawless work on the stage, the director must be a maestro in education, philanthropy and community engagement.

“Launching a new music director is kind of one of the most exciting things a classical music organization can do,” she says.

Noltemy says that relationships with artists, musicians, music directors, staff and the community will take center stage.  “Everyone needs to work together in total unanimity so that we can succeed,” she says. 


Who’s Going to Food Pantries? It’s Not Who You Think

Homeowners. Students. Veterans. When the Great Recession hit, these people turned to food banks to weather the downturn. They thought it was only temporary. But now the crisis has passed, and they're still coming back.


Illinois is marking a third year of peak food pantry visits since the recession began, and volunteers are seeing poverty strike at people who never seemed so vulnerable before — students, veterans and people with homes and full-time jobs.


More people with full-time jobs don’t always know where their next meal is coming from and suffer from having insufficient food to eat, according to a Hunger in Illinois study released late in 2014.


As Illinois approaches a third year of peak hunger levels among the 12.8 million people in the state, the face of the food crisis has changed, with real household income dropping for working people.


“We’re not immune from it,” said John Psiharis, executive director of Irving Park Food Pantry on the Northwest Side. “Many of us have to go through it when sometimes jobs just aren’t enough to cover all your expenses, especially when you have a family.”


The Irving Park Food Pantry on Wednesday morning bustles with volunteers organizing food and assisting customers in lines weaving almost out the door. If not for bad weather, the line would likely stretch outside, Psiharis said. Their morning hours are usually packed, but they have noticed the increasing demand among people who work during the day. The pantry began opening in the evening as well to serve them.


The Hunger in Illinois study showed that 13 percent of visitors to food pantries in Illinois had at least one member of their household who worked more than 40 hours per week. In its previous study from 2010, researchers found that 7.8 percent of food pantry visitors were employed full time. Nearly two-thirds — 61 percent — of pantry client households had at least one member who had some type of employment.


“The overwhelming majority have a roof over their heads, and maybe have jobs,” said Jim Conwell, director of communications for the Great Chicago Food Depository. “Hunger also disproportionately affects children and older adults. We saw more and more vets, people who had served our country.”


Those living paycheck to paycheck, who face increasing prices and low wages, are also encountering new, heart-wrenching decisions as they strive to make ends meet.





Cyber Security Disclosures Leave Shareholders in the Dark

Escalating cyberattacks against major U.S. companies, among them Sony Corp., Target and JPMorgan, have called into question whether regulators are requiring enough openness once an attack has occurred.


The issue doesn’t just affect consumers, whose credit card and other data may be at stake, but shareholders, who also have financial skin in the game.


The concept at the heart of this is materiality, or any information that could impact a shareholder’s decision to buy or sell a company’s shares, according to Securities and Exchange Commission rules.


“How many breaches have material affects?” said Dr. Martin Loeb, University of Maryland professor of account and information assurance. “When a General Motors has a breach and they have to spend $150,000 to detect and fix the breach, that’s just a normal operating expense. So most don’t have a material effect, but there’s still a threat that a big breach could have a very major effect.”


In the now-notorious Target Corp. breach last December, the severity of the attack was not revealed until weeks later. The company’s shares fell by as much as 10 percent in the wake of the disclosure and as it became clear that spooked shoppers had stayed away from the retailer during the key holiday season.


For all of 2013, there were 1,367 confirmed data breaches and 63,437 security incidents among global organizations that participated in a 2014 Verizon Data Breach Investigations Report.


Though the SEC issued new guidelines in 2011 to help companies decide when they should disclose a hacking incident, the decision to do so is voluntary.


“In deciding the nature and extent of the disclosures, I would encourage companies to go beyond the impact on the company and to also consider the impact on others,” said SEC Commissioner Luis A. Aguilar in a June 10 speech in New York.


“It is possible that a cyber-attack may not have a direct material adverse impact on the company itself, but that a loss of customers’ personal and financial data could have devastating effects on the lives of the company’s customers and many Americans.”


The SEC urges companies to caution investors about their cyber security risks in their annual 10-K reports. This helps protect companies against potential lawsuits if something goes awry, and many more companies are including notes about such risks since the SEC issued the guidelines.

Yet many of the disclosures companies now offer in their annual reports amount to standardized, boiler-plate statements lacking in detail and leaving shareholders in the dark.


“It’s the worst because people will only do what the law requires and then they’ll stop,” said Jody Westby, CEO of Global Cyber Risk LCC, which advises executives on managing cyber risks in their businesses. “It gives executives cover because they can say ‘we met requirements; otherwise we’re wasting shareholder money.’”


Thus shareholders who do believe a board did not adequately defend against risks and attempt to sue may have more difficulty if they cannot definitively show that it failed to meet an SEC requirement.


By law, the SEC staff is required to review disclosures, including those about cyber security breaches, once every three years, though it reviews some companies more frequently. Staff correspond with companies regarding anything they finds that might not be clear enough for investors or that investors aren’t being told about. Once the issues are resolved, the agency publishes the letters on its website for the public to read.


David Katz, a partner at Wachtell, Lipton, Rosen & Katz in New York, whose work involves investing and corporate boards, does not believe that companies will only do the bare minimum the SEC requires because they believe that will be enough to protect it from lawsuits.


“That’s always a possibility,” he said. “I don’t think that’s the way boards of directors work in the real world. Remember that the SEC is focused on disclosure requirements, making sure there’s adequate disclosure. So I don’t think a company would simply say we made the right disclosure and we’re fine.”


Loeb said data breaches don’t always have a big impact on a company’s stock, even if it appears that way. Take the case of Target.


The retailer announced Dec. 19, 2013, that hackers had gained access to 40 million customers’ payment card data. The company’s shares ended the month up almost 2 percent. When it announced in January that the names, mailing addresses, phone numbers and email addresses of 70 million customers had also been stolen and reported the financial impact the breach was having on the company, shares fell by as much as 10 percent through February.


But Loeb said investors should look at the data in context.


“If you look at Target, its stock did decline, but there were other things happening, and it bounced back afterward,” he said. “At the same time that was happening they were doing poorly. They opened up a lot of stores in Canada and earnings and sales were less than expected. So compounding things were happening.”


In the same press release it announced the expanded data theft, Target also lowered its fourth quarter 2013 guidance range for its U.S. segment by 10 cents, citing dilution related to store closings, real estate impairments and losses at its Canadian segment, among other items. It did not at that time state estimated losses related to the data breach. The retail chain also said it had stronger-than-expected fourth quarter sales prior to the announcement of the data breach, followed by “meaningfully” weaker-than-expected sales since the announcement.


“The more breaches that get disclosed the more commonplace it becomes, so it’s less of an issue,” Katz said. “So you have to look at different companies. If a company’s going to really do damage over the long run to a breach, I think investors will take that into account.”


In another instance, JPMorgan, the largest bank in the U.S., announced on Oct. 2 a data breach that affected 76 million households and 8 million small businesses. Hackers stole names, addresses, phone numbers and email addresses, but not account numbers, passwords, user IDs, dates of birth or social security numbers.


JPMorgan’s shares ended the week up about 2.5 percent. When the company announced increased third quarter earnings that missed analysts’ expectations on Oct. 14, shares fell by almost 5% in the following two days.


JPMorgan CEO Jamie Dimon said the bank would double spending on cybersecurity following the attack. The company has not said whether the data breach has had additional business impacts.


Kmart stores fell prey to hackers this year as well. The company announced on Oct. 10 that malware had infected its system since early September, stealing debit and credit card numbers but no personal information, PIN numbers, email addresses or social security numbers. Shares of Sears Holdings, its parents company, closed up about 3.8 percent the following trading day.


Security breaches are worse for a company and its shareholders if they involve access to information critical to the company’s business, such as a customer list, or in the case of Sony Corp., upcoming feature-length movies critical to its future earnings.


In the wake of the Nov. 24 hack attack and unauthorized release of five movies, Sony shares are down 3.4 percent.


Loeb’s research showed that such a theft could dramatically reduce the company’s underlying value. Other kinds of attacks, such as those that stop a firm’s ability to conduct business temporarily, have less impact because the firm can continue business once it fixes the problem.


Katz argued that increased openness about attacks companies deemed immaterial could either cause unnecessary alarm or become so commonplace that investors no longer pay attention.


“I think you can take that too far,” he said. “There’s all sorts of risks companies face from plane crashes to executives to everything else… it should be more of an issue of the risk factors that can be disclosed so that investors understand that if there is a material breach, what could be the impact on the company’s business and what steps the company is taking to mitigate those risks.”


Westby said that companies are making more of an effort to inform shareholders of attacks, realizing that social media and instant communication prevent them from concealing big breaches as much as they used to.


“That said, those that are, they are being probably as broad and as general as they possibly can,” she said. “And nobody’s going under the covers.”

'Internet of Things' Demands More Web Addresses, Internet founder says - USA Today

WASHINGTON — An explosion in the number of devices that needed Internet protocol addresses as part of the "Internet of Things" has created a slower Internet for some users and a series of website problems, online pioneer Vint Cerf said Monday.


Cerf, a founder of the Internet and chief Internet evangelist for Google, told an audience at the National Press Club that the world needs more Internet addresses.


"The next wave of stuff is the Internet of Things," Cerf said. "Every appliance you can possibly imagine, you're shifting from electromechanical controls to programmable controls. And once you put a computer inside of anything, there's an opportunity to put it on the Net."


Cerf said he and Bob Kahn, another Internet co-founder, estimated that the Internet would need about 4.3 billion addresses. Now, Cisco Systems estimates about 50 billion devices will be connected to the Internet by 2020, Cerf said.


For some consumers, the change has already begun. Philips, for instance, has produced a light bulb that allows owners to control the hue and intensity, which requires an Internet address.


Internet users, Cerf said, need to switch to the latest form of IP address, IPv6, which uses more numbers to speed up access to sites. Users only need to call their Internet service provider to get switched to IPv6, he said.

IPv6 has about 340 undecillion number possibilities or about 340 trillion trillion trillion compared to the 4.3 billion in the last type of address, IPv4, which ran out of numbers in 2011.


ARIN, the American Registry for Internet Numbers, where Cerf serves as chairman, is the not-for-profit that administers both old and new IP addresses.


John Curran, ARIN's CEO, said the vast majority of people do not realize that his team is retooling the Internet behind the scenes. He called it "the world's largest technical change project."


But the change has affected the way websites work and will continue until the project is complete.


"You might get told that you can put an audio file or a podcast online," Curran said. But many site owners do not realize that some users are using the new IP address form, making it harder to read or listen to.


According to Google, about 14.5% of its customers are accessing the search engine with the new IPv6 address, he said.


"No one seems to know this is happening," Curran said of the big change under way. "You need to ask about this because it affects everyone. There's no one on the Internet it doesn't affect."


"Google, Facebook, Bing, YouTube, are all IPv6 enabled, but if your content isn't enabled, it will be slower and if you're streaming media or audio, it might get broken up because it has to go the long way around."


So far, only about 3% to 4% of Internet users have IPv6, Cerf said.

The Internet enthusiast said he believes the spread of new addresses will have multiple advantages.


"I think ultimately when we finally get (IPv6) everywhere, people will have the flexibility to run end-to-end security and safety," he said. "They'll be able to cluster things together and have hubs that manage access to them which we're going to need for the Internet of Things."



Texas College Doesn’t Need No Education -

Thirteen students have brought a suit against for-profit education providers Corinthian, Rhodes and Everest Colleges, saying they didn’t deliver on their promises and only care about money.

"Corinthian Colleges Inc. is one of the largest for-profit, post-secondary education companies in North America, with more than 69,000 students at over 100 campuses within the United States and Canada. Our campuses offer short-term diploma and/or degree programs in a variety of popular career fields," their Web site claims.

When the students complained about the quality of education they were receiving at the campuses in Fort Worth, Dallas and Arlington, they were told they would have to take the class over, at their own expense - even after one Arlington instructor simply stopped attending class, they claim.

They are also alleging false advertising, believing that Everests’ claim of having between a 90 and 99.9 percent job placement rate is false, and saying that their credits could not transfer out of Corinthian though they were told otherwise.

"Not only were many instructors unqualified, disinterested, or inexplicable absent from class, but the curriculum often lacked rigor and failed to challenge plaintiffs. Much classroom instruction involved reading from overhead slide, and meaningful homework assignments were rare,” their complaint reads.

Corinthian has been subject to numerous other similar lawsuits in recent years. One might wonder how a company with so many lawsuits could stay in business, but educational companies such as Corinthian have been fairing well overall in the recession. Corinthian’s revenue was up 29 percent this year over last year.

"While the recession helps drive enrollment growth, it also creates challenges in terms of career placement and student loan repayment," Peter Waller, the company’s chief executive officer added. "In fiscal 2010 we will continue to make substantial investments in both of these areas, to help graduates achieve their career goals and meet their financial obligations in a difficult economy." 


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 © 2018 by Holly LaFon.