Wednesday, December 10, 2008

Sony Launches PlayStation Home (Finally!)

Sony Launches PlayStation Home (Finally!)

Posted by: Kenji Hall on December 10

This just in: After pushing back the launch date by more than a year, Sony's video game division plans to release PlayStation Home, an online 3-D social networking service, on Dec. 11. Like Linden Labs' Second Life, Home will let users interact with others through their own computer-generated characters in a virtual setting.

Sony is counting on Home to improve the fortunes of its struggling video games unit. The unit, which is in charge of the PlayStation 3 business, has been a huge drag on earnings, losing roughly $3.8 billion over the past two years. Credit Suisse has predicted that Sony's gaming unit could eke out a profit this year, but that's less than certain in the face of a long recession and an unfavorably strong Japanese yen.

Sony officials say they don't expect an immediate payoff from Home. Their plan is to offer Home as a free software download to all PS3 users, and to charge gaming companies and other brands to create shops, sell goods, host events and advertise. "We think that Home will increase the opportunities for gamers to find each other," says Ryoji Akagawa, Home senior producer. "That, in turn, will increase the total number of people playing games, which is a key mission for us."

Home marks the latest phase of a rollout of online services for the PlayStation 3. Recently, Sony added video downloads to the PlayStation Network, which, according to Sony, has attracted 15 million subscribers worldwide. But rival Microsoft still has the lead in offering a full range of online gaming and video-download services, and Nintendo is tops in game console sales. In October, market researcher NPD said Sony sold just 190,000 PS3s in the U.S., compared to 803,210 Nintendo Wii consoles and 371,000 Microsoft Xbox machines. (Since the PS3's release in November 2006, Sony had sold more than 16.8 million units globally. Nintendo launched its Wii that same month but has sold 34.5 million units.)

It's unclear what impact the delays will have on Home. The original plan was to have Home ready by autumn 2007. Sony Computer Entertainment chief Kaz Hirai announced the first delay in October, 2007. The company had expected Home to be ready by April of this year, but instead announced another delay. In late August, the company started inviting a limited number of users for a trial.

Sony asked for feedback to fine-tune the service before making it available to a broader audience. Among the things they learned: Japanese users complained that the virtual characters, or avatars, looked too Western. Home's programmers also changed the appearance of options menus and added voice chat features. And they built in security measures so parents could prevent their children from visiting certain areas and gamers could report cyberstalkers.

One thing that could frustrate gamers: Though PlayStation Network lets gamers compete against anyone around the world, Home users who log on in the U.S. won't be able to interact with users in Japan, other parts of Asia or Europe. Sony did that to avoid the cross-border legal issues, says Junji Shoda, who is in charge of Home's business strategy.

The beauty of Home is that it's constantly evolving. Sony officials are already considering new features that will make Home more like social networks like Facebook and MySpace. In time, Home users will be able to post links to outside Web sites or upload photos for others to see. Want your avatar to eat or drink? That's not possible now but it might get programmed in later, says Sony's Akagawa. With so many features, though, could Home distract gamers from playing games? "We don't really worry about that," says Shoda.

Monday, December 8, 2008

Applicants Flock to Teacher Corps for Needy Areas

Applicants Flock to Teacher Corps for Needy Areas
  Dec 6, 2008 Washington Post, A1  

By Megan Greenwell

Like many Georgetown University seniors, Olubukola Bamigboye has no shortage of postgraduate options. She has a line on an internship with a high-profile fashion magazine, is considering law school or might train full time for a spot on the 2012 U.S. Olympic track and field team.

But Bamigboye is focused on her second-round interview at Teach for America, hoping to win a stressful job in one of the nation's worst public schools, where, at best, she might earn $45,000 next year.

Her chances of landing a spot: less than 15 percent -- lower than the admission rate to Georgetown itself.

In its 18th year, Teach for America has emerged as the most popular nonprofit service organization among college seniors in the United States, with 14,181 applications received this year and as many as 23,000 more expected by the end of February -- all for fewer than 5,000 teaching spots.

In part because of the dearth of other job prospects in the sagging economy but mostly because the program has captured the imagination of a generation of student leaders bent on doing good, some graduates of the nation's elite universities are fighting for low-paying teaching positions the way they once sought jobs on Wall Street.

"We were quite hopeful that we would see an increase in applications based on last year's growth, but I don't know if anyone could have predicted this," said Elissa Clapp, who oversees recruitment for the organization, which sends recent college graduates to teach for two years in schools in low-income areas.

Experts say a 50 percent increase in applications in one year is surprising for any program, but they add that young adults' growing interest in public service organizations does not end with Teach for America. Programs such as AmeriCorps and the Peace Corps also report a steady rise in applications for the past several years, though not as large as Teach for America's.

A 2007 UCLA survey of college freshmen showed that 70 percent of students say it is "essential or very important" to help those in need. And many young people became socially motivated during this year's presidential election, when record numbers volunteered for President-elect Barack Obama, inspired by his message of change.

"Teach for America may fit a perfect niche," said Peter Levine, director of a research center on civic engagement at Tufts University. "You get to work on a social problem on the public payroll, but you're going through a nonprofit, which many young people prefer to working for the government."

The program's success in attracting top talent such as Bamigboye has not silenced its critics in the world of education, many of whom say teachers need more than a summer's worth of preparation before taking jobs in inner-city schools. Lorri Harte, a 20-year teacher and administrator in New York City who writes a blog called Debunk TFA, argues that placing the least-experienced teachers with the highest-risk children is a potentially harmful combination.

"Teaching is a job where you get better as you go along, so for the first two years, people are generally not good teachers," Harte said. "The public relations blitz for the program does not address the real problems in education."

Research into Teach for America's effectiveness has been inconclusive, but at least three major studies in the past several years indicate that students taught by its teachers score significantly lower on standardized tests than do their peers. A small handful of other studies, and the organization's own research, contradict that claim.

The latest spike in applications is only the most recent high point for the program. More than 24,700 students applied for the 2008 teaching posts, a 36 percent increase over 2007. They teach in 30 cities and regions across the country, including 416 schools in the District, Prince George's County and Baltimore, where D.C. Schools Chancellor Michelle Rhee began her education career as a Teach for America teacher.

Created by a Princeton graduate based on her senior thesis, the program has built a sizable staff that aggressively recruits student leaders and has become the top employer at dozens of elite colleges, including George Washington University and Georgetown. This year's expected total would more than double the number of applications received just two years ago.

Teach for America leaders say much of the growth is the result of gradual gains in name recognition rather than circumstances specific to this year. But they acknowledge that the shortage of other job prospects has prompted applications from some students who might not have considered teaching.

Business majors are expected to make up a larger percentage of the applicant pool, perhaps in part because six-figure entry-level investment banking jobs -- until this year considered natural slots for thousands of graduates of elite colleges -- have all but disappeared during the Wall Street collapse.

"The silver lining in the economic downturn is it has provided people the chance to pursue something they've always wanted to do," said Tom Clark, Teach for America's recruiting director for Georgetown and GWU. "Even last year, there was pressure to head straight to Wall Street, and now there's a lot less pressure."

Georgetown senior John Swan, the former editor-in-chief of the student newspaper, said he didn't seriously consider applying to Teach for America when he first heard about it as a sophomore. But after an internship at Forbes magazine, he decided that an entry-level reporter's position wouldn't provide enough responsibility. He met with Clark this fall, was accepted to the program and will teach in the District next year.

Personalized e-mails to student leaders -- such as the one Clark sent Swan asking him to chat over coffee -- are the heart of Teach for America's recruiting strategy. Student council members, athletes, political group leaders, newspaper editors and others whose names are provided by alumni and professors are invited to meet with campus recruiters around the beginning of each academic year. If a student does not respond or declines the invitation, more e-mails follow, a barrage that many students call incessant and unnecessary.

Yet it's difficult to dispute that the targeted recruitment strategy has been effective in luring seniors who might be worried about finding jobs. Three of Swan's friends have been accepted to the teaching corps, and seven others are in the process of applying. All told, 13 percent of seniors at Georgetown and 10 percent at GWU are expected to apply this year, numbers that are not uncommon at the most elite universities.

One major point of criticism from many educators is that the program does not specifically recruit students who are interested in teaching full time. For many, like Bamigboye, the program is a two-year stop on the way to graduate school or a corporate job, paths that program administrators encourage with a career services office and partnerships with private firms and universities.

"I'll be done when I'm 23, so jobs in fashion and law school and the Olympics will still be there," Bamigboye said.

But many current and former Teach for America participants say their work -- whether for two years or longer -- makes a significant impact on students' lives. Most former Teach for America participants can cite the moments that made them proud of their students' gains.

"Every year, teachers see the proof right in front of them that they're helping to raise achievement," said Rachel Evans, a Texas A&M graduate who taught in Baltimore and now directs Teach for America recruiting efforts at four universities in Maryland and Delaware. "It doesn't take much to sell the fact that these jobs actually change lives."

The organization's officials contend that engaging the brightest young minds to teach disadvantaged children for two years is better than not having them at all, and some do become career teachers.

The rigorous application process, Clapp said, ensures that the program accepts only graduates who are truly motivated to serve in those classrooms.

"What we need to do now is make sure we maintain our position as one of the premier things to do after college," Clapp said. "You don't stay on top unless you continue to aggressively compete for the best people."

WSJ: A Second Look at Citywide Wi-Fi

A Second Look at Citywide Wi-Fi

Wireless networks across entire cities were launched with great promise. Too much, in fact.

For proponents of citywide Wi-Fi projects, this has been a tough year -- and one of fresh promise.

The idea of setting up networks to beam wireless Internet access across entire cities and towns has been touted for years as a spur to economic development. It also has been promoted as a way to help bridge the so-called digital divide -- the gap between those who have access to all the advantages of the Internet and other digital technology and those who don't, mainly because of lower income.

Progress on such networks has been halting, however, because of financial, technical and political hurdles. And over the past year or so, there have been a string of reversals. The companies that built and maintained some of the most prominent municipal Wi-Fi networks abandoned them, and other projects stalled or were scaled back.

At the same time, though, a handful of communities have applied lessons learned from the first round of failed projects and are developing Wi-Fi networks that are more realistic in their ambitions and business models.

"This was about a business model that simply didn't work," said Rolla Huff, chief executive of EarthLink Inc., after the Internet-service provider announced in May that it would stop serving the Wi-Fi network it built in Philadelphia, a project that inspired communities across the country to initiate similar efforts. "It was a great idea," said Mr. Huff. "It wasn't a great business."


EarthLink put itself in a financial hole from the start by setting up the network at its own expense, and then the service didn't attract enough users to offset that investment and the costs of operating the network. In the meantime, other cities followed Philadelphia's example, getting Internet-service providers to cover most or all of the cost of setting up Wi-Fi networks.

"That's where all of these cities got into trouble," says wireless consultant Craig Settles, based in Oakland, Calif. "They were trying to get the same thing for free, when it's just not financially viable."

The cost of setting up a network isn't the only problem that has plagued municipal Wi-Fi systems. Finding ways to overcome geographical and architectural barriers to signals has proved daunting in many cases. And local politics has been more of an obstacle than some providers anticipated. Negotiations between cities and providers have often bogged down in disagreements over the pricing of Wi-Fi service and where it is made available. Companies sometimes want to focus coverage on a city's business district, figuring that's where they can make the most money, but some community advocates have pushed for broader coverage and at least some free access, especially in low-income and public areas. Providers have had difficulty attracting enough advertising to support free service.

So what's different now? For starters, some cities are lowering their expectations, proposing smaller networks that can be expanded later, and they don't expect to get them free. These cities have taken a number of different approaches to the issues of coverage and pricing. For example, some have acted as anchor "tenants" -- or clients -- for the network, ensuring a stream of revenues to the provider from the start, while others have at least been more flexible about how providers can price their service. Still others have focused Wi-Fi on governmental use, treating it as a utility for police, fire and other public needs.

Here's a look at what four cities are doing, including second tries in Philadelphia and San Francisco.


Municipal Wi-Fi experts often point to Minneapolis as a success story, and its anchor tenancy as an example of how other cities should financially support local wireless initiatives.

The city agreed to pay $1.3 million a year for 10 years for its employees to use a network built by USI Wireless, a unit of Minnetonka, Minn.-based US Internet Corp., for official business. Residents, meanwhile, can select from a handful of packages from USI that start at $19.95 a month, and about 10,000 currently subscribe, says Lynn Willenbring, Minneapolis's chief information officer.

About 85% to 90% of Minneapolis now has coverage, and it's aiming for 95% this fall, with no plans to provide coverage on the city's many lakes because that would require transmission poles to be placed in the water.

It hasn't been all smooth sailing, though. The city had to redirect the antennas on transmission radios hung during the winter when leaves returned to the trees around them in the spring, distorting the wireless signals. The city also is planning to spend $1 million to replace poles in some areas that aren't strong enough to support signal transmitters.

Oklahoma City

While Oklahoma City's municipal Wi-Fi network isn't yet available to residents, the city is using it to synchronize traffic lights, monitor weather conditions and provide wireless Internet access to police and firefighters. The network, which uses equipment from Sunnyvale, Calif.-based Tropos Networks Inc., has been in development for several years and was unveiled in June.

The city paid about $5 million to set up the network, and the annual maintenance cost is about $200,000. But the network is paying off in unexpected ways. "We have been surprised at how much more it is actually doing" than the city expected, says Mark Meier, Oklahoma City's information technology director. For instance, the city has placed sensors on traffic lights to measure air temperature, humidity, wind and barometric pressure, and uses the Wi-Fi network to transmit the data to city officials. They can then use the data to help predict things like the likely path of a tornado, which roads are likely to freeze or in which direction a fire might spread.

Oklahoma City is targeting a 5% savings in travel time through the city because of the improved synchronization of traffic lights, which Mr. Meier expects to reduce consumer fuel costs and emissions. And an informal study among police officers revealed that Wi-Fi access allows them to spend about an hour a day more in the field, since they don't have to return to a police station to work on computers.

San Francisco

Meraki Inc., a start-up based in San Francisco, began offering free Wi-Fi access in the city earlier this year, after a previous effort by EarthLink and Google Inc. failed because of financing and political problems.

Unlike EarthLink and Google, Meraki doesn't aim to have an official relationship with the city. It has placed a limited number of transmitters around the city, free of charge, and relies on residential volunteers to put devices called repeaters on their rooftops that help spread the wireless signal. By not having to deal with city officials to set up the network, Meraki avoided bureaucratic delays, says Sanjit Biswas, the company's chief executive.

That also means that the network isn't available everywhere in the city, since it depends largely on where people have installed repeaters. "It's nothing like a citywide network," says Glenn Fleishman, editor of the Wi-Fi Net News site. Nevertheless, Meraki's San Francisco network sees more than 10,000 users a week, Mr. Biswas says, and the launch of Apple Inc.'s 3G iPhone in June has sharply increased its use.

The Meraki network isn't supported by advertising, so the company isn't making any money from it. Mr. Biswas says Meraki is using the network as a laboratory where it can test new equipment and new technologies, and as a model it can use to pitch its services to other cities. But those cities would have to pay for networks to be set up, and users would have to pay for access.

That's important for other cities to realize, no matter what provider they're dealing with, says Mr. Settles, the wireless consultant. "The rest of the world should take heed that the network is not going to be free," he says.


Philadelphia's Wi-Fi ambitions were saved when an investor group created Network Acquisition Co. to take over the network in June, paying an undisclosed sum for the infrastructure in place.

While EarthLink charged residents a monthly fee for Wi-Fi access, NAC is providing it free in public areas. That spurred a surge in usage to 28,0000 unique users per weekday, says Derek Pew, NAC's chief executive. (EarthLink said it had only about 5,000 subscribers for the network in May.)

But NAC is focused on developing the network as a business, says Rick Rasansky, a member of NAC's board of directors, with companies and other organizations paying to use the network. The free service, he says, "is a byproduct of our commercial services. Our ability to advance digital inclusion in the Philadelphia region -- that's obviously something that we'd all like to do. But at the same time we have to have a profitable business to support that."

—Mr. LaVallee is a staff reporter in The Wall Street Journal's New York bureau.

Write to Andrew LaVallee at


Thursday, December 4, 2008

Bill Gates Urges Obama to Increase Spending

Bill Gates Urges Obama to Increase Spending
  Dec 4, 2008 Washington Post  

By Philip Rucker

The world's richest technology entrepreneur -- and leading philanthropist -- came to Washington yesterday with a simple message for President-elect Barack Obama: Increase spending.

Against the backdrop of a recession, Microsoft founder Bill Gates said the federal government must increase deficit spending to stimulate the economy and help the country's most vulnerable residents. Gates said new investments are critical to building on recent improvements in U.S. public education and fighting disease abroad, which he said could be reversed if spending dries up.

Gates, who has used his fortune to build the world's largest foundation, redefining the meaning of mega-philanthropist, said his foundation will increase the amount of its grants next year, despite declines in its $35 billion endowment caused by the sagging economy. He called on Obama to follow through on his campaign commitment to double U.S. foreign assistance to $50 billion by the end of his first term.

"In a crisis, there is always a risk that you take your eyes off the future and you sacrifice long-term investments for short-term gains," Gates said in a speech at George Washington University. "You have to seek both. . . . We should have a bigger goal than getting the economy growing again. I think we should expand the number of people who are contributing to the economy and benefiting from it."

Gates described the financial crisis as an opportunity for innovation, likening it to the economic woes of the 1970s, which gave rise to America's information technology boom, during which Microsoft was born. "Difficult times can launch great ideas," he said.

Later, in a broad interview with The Washington Post, Gates also lamented the state of the District's struggling public schools, which have received hundreds of millions of dollars from his foundation, but had high praise for efforts by Chancellor Michelle A. Rhee.

Gates's foundation funds charter schools, scholarships and other programs for the city's poorest students.

"It's a very hard job, and whether it's the facilities or the personnel issues, somebody had to come in and really point out that the students are not getting what they deserve," he said of Rhee. "The irony [is] that it's almost the highest spending per pupil in the country, and it's almost the worst set of outcomes of students in the country -- and this is the nation's capital. You'd think that in terms of effective spending of dollars and outcomes, that D.C. would be a model city, and, in fact, it has been the exact opposite."

As much as the Gates Foundation invests in U.S. education -- its grants last year totaled more than $400 million -- the investments pale in comparison with government spending. The foundation's entire endowment, for instance, would not be enough to fund public schools in California for a single year.

Gates also uses his star power to draw attention to what he considers priorities. Just one week after last month's election, Gates summoned some education policy heavyweights -- Education Secretary Margaret Spellings, New York schools chief Joel I. Klein, Rhee and leaders of Obama's transition team -- to Seattle, where he unveiled his foundation's new approach to education, which includes new investments in community colleges.

Gates stepped down this summer from Microsoft, the technology company he grew into a behemoth, to work full time on the Bill and Melinda Gates Foundation, whose endowment receives more than a billion dollars each year from investor Warren Buffett's fortune. At 53, Gates is pioneering a new approach to philanthropy, applying the risk-taking and results-based philosophy of an entrepreneur to solving some of the world's most chronic problems.

In the interview, Gates likened his role at the foundation to running Microsoft. "How do you find the smartest people, and how do you create teams around them where they've got the right set of skills? How do you take on things where you're going to have failures and learn from those failures, be willing to do things that are risky, some of which will end up being a complete dead end, and have a set of outcomes: lives saved."

The foundation is akin to a start-up. "It's like a large company with a big vision and a determination to grow rapidly," said Duke University professor Joel L. Fleishman, who studies philanthropy. "But in this case, it's not growing to make money. It's growing to figure out how to give away money in an orderly and effective fashion."

Philanthropic leaders have looked upon the foundation's rise with awe. "It's the largest in the world by a factor of two, and that's astonishing," said Harvey P. Dale, a nonprofit law professor at New York University. But, he said, some leaders "are jealous of it, some feel threatened by it, including some of the foundations who were hugely dominant and now, by comparison, are relatively modest."

But many other philanthropists try to emulate Gates. "When you're as large as Gates, the market moves when you move," said Larry Brilliant, a health expert who directs Google's giving.

"Great public health accomplishments on a global scale require prescience. They require resources. They require scientific and managerial excellence, and maybe most importantly, they require leadership and public will," Brilliant said. "This is something only Gates can do."

It is too soon to determine whether Gates's work will have a lasting impact, experts said.

"The jury is definitely still out," said Fleishman, who has written a history of foundations. "They're going about things in the right way, but it is still too early to say that they have had an unqualified success. . . . The problems are just so big."

Asked what his legacy may be in 15 years, Gates said he hopes it would be as a catalyst for "dramatic improvement in global health. . . . I expect that we would have played a role in a dramatic reduction in disease in many of the top areas: malaria, tuberculosis, AIDS, childhood diseases."

Tuesday, December 2, 2008

The Longest Recession Since .

The Longest Recession Since …

By now, everyone has heard that the current financial crisis is the worst since the Great Depression. Is this also going to turn out to be the longest recession since the Depression?

The National Bureau of Economic Research — the widely acknowledged arbiter of recessions — announced today that a recession began in December 2007. That means the downturn is now a year old, and no one thinks it’s on the verge of ending.

Here are the longest recessions of the last century:

1929-33: 43 months
1910-12: 24 months
1913-14: 23 months
1920-21: 18 months
1973-75: 16 months
1980-81: 16 months

Economists have been forecasting that the current recession will likely end sometime in the spring (which is, presumably, when some of the new stimulus money will start to be spent). If they’re right, this recession will be roughly as long as the 1973-75 recession and the 1980-81 recession, both of which were 16 months. To find a longer one than that, you have to go back to the Depression.

Remember, too, that forecasters have been far too optimistic over the past year. At some point, that will change. But for now, the best bet seems to be that this recession will last for more than 16 months.

Run to the explosion in Mumbai

New York Times
November 29, 2008
Op-Ed Contributor
What They Hate About Mumbai
MY bleeding city. My poor great bleeding heart of a city. Why do they go after Mumbai? There’s something about this island-state that appalls religious extremists, Hindus and Muslims alike. Perhaps because Mumbai stands for lucre, profane dreams and an indiscriminate openness.
Mumbai is all about dhandha, or transaction. From the street food vendor squatting on a sidewalk, fiercely guarding his little business, to the tycoons and their dreams of acquiring Hollywood, this city understands money and has no guilt about the getting and spending of it. I once asked a Muslim man living in a shack without indoor plumbing what kept him in the city. “Mumbai is a golden songbird,” he said. It flies quick and sly, and you’ll have to work hard to catch it, but if you do, a fabulous fortune will open up for you. The executives who congregated in the Taj Mahal hotel were chasing this golden songbird. The terrorists want to kill the songbird.
Just as cinema is a mass dream of the audience, Mumbai is a mass dream of the peoples of South Asia. Bollywood movies are the most popular form of entertainment across the subcontinent. Through them, every Pakistani and Bangladeshi is familiar with the wedding-cake architecture of the Taj and the arc of the Gateway of India, symbols of the city that gives the industry its name. It is no wonder that one of the first things the Taliban did upon entering Kabul was to shut down the Bollywood video rental stores. The Taliban also banned, wouldn’t you know it, the keeping of songbirds.
Bollywood dream-makers are shaken. “I am ashamed to say this,” Amitabh Bachchan, superstar of a hundred action movies, wrote on his blog. “As the events of the terror attack unfolded in front of me, I did something for the first time and one that I had hoped never ever to be in a situation to do. Before retiring for the night, I pulled out my licensed .32 revolver, loaded it and put it under my pillow.”
Mumbai is a “soft target,” the terrorism analysts say. Anybody can walk into the hotels, the hospitals, the train stations, and start spraying with a machine gun. Where are the metal detectors, the random bag checks? In Mumbai, it’s impossible to control the crowd. In other cities, if there’s an explosion, people run away from it. In Mumbai, people run toward it — to help. Greater Mumbai takes in a million new residents a year. This is the problem, say the nativists. The city is just too hospitable. You let them in, and they break your heart.
In the Bombay I grew up in, your religion was a personal eccentricity, like a hairstyle. In my school, you were denominated by which cricketer or Bollywood star you worshiped, not which prophet. In today’s Mumbai, things have changed. Hindu and Muslim demagogues want the mobs to come out again in the streets, and slaughter one another in the name of God. They want India and Pakistan to go to war. They want Indian Muslims to be expelled. They want India to get out of Kashmir. They want mosques torn down. They want temples bombed.
And now it looks as if the latest terrorists were our neighbors, young men dressed not in Afghan tunics but in blue jeans and designer T-shirts. Being South Asian, they would have grown up watching the painted lady that is Mumbai in the movies: a city of flashy cars and flashier women. A pleasure-loving city, a sensual city. Everything that preachers of every religion thunder against. It is, as a monk of the pacifist Jain religion explained to me, “paap-ni-bhoomi”: the sinful land.
In 1993, Hindu mobs burned people alive in the streets — for the crime of being Muslim in Mumbai. Now these young Muslim men murdered people in front of their families — for the crime of visiting Mumbai. They attacked the luxury businessmen’s hotels. They attacked the open-air Cafe Leopold, where backpackers of the world refresh themselves with cheap beer out of three-foot-high towers before heading out into India. Their drunken revelry, their shameless flirting, must have offended the righteous believers in the jihad. They attacked the train station everyone calls V.T., the terminus for runaways and dreamers from all across India. And in the attack on the Chabad house, for the first time ever, it became dangerous to be Jewish in India.
The terrorists’ message was clear: Stay away from Mumbai or you will get killed. Cricket matches with visiting English and Australian teams have been shelved. Japanese and Western companies have closed their Mumbai offices and prohibited their employees from visiting the city. Tour groups are canceling long-planned trips.
But the best answer to the terrorists is to dream bigger, make even more money, and visit Mumbai more than ever. Dream of making a good home for all Mumbaikars, not just the denizens of $500-a-night hotel rooms. Dream not just of Bollywood stars like Aishwarya Rai or Shah Rukh Khan, but of clean running water, humane mass transit, better toilets, a responsive government. Make a killing not in God’s name but in the stock market, and then turn up the forbidden music and dance; work hard and party harder.
If the rest of the world wants to help, it should run toward the explosion. It should fly to Mumbai, and spend money. Where else are you going to be safe? New York? London? Madrid?
So I’m booking flights to Mumbai. I’m going to go get a beer at the Leopold, stroll over to the Taj for samosas at the Sea Lounge, and watch a Bollywood movie at the Metro. Stimulus doesn’t have to be just economic.
Suketu Mehta, a professor of journalism at New York University, is the author of “Maximum City: Bombay Lost and Found.”

Tuesday, November 25, 2008

Gates Foundation to slow growth in grants in 2009

Gates Foundation to slow growth in grants in 2009
  Nov 25, 2008 Associated Press  

SEATTLE--Bill & Melinda Gates Foundation, the world's largest philanthropic foundation, expects to slow the planned growth in its grant making in 2009 in response to the troubled economy.

The foundation said payouts will grow by about 10 percent in 2009, a smaller growth than previously planned.

"The financial crisis is affecting everyone, from our foundation to our partners," Chief Executive Officer Jeff Raikes wrote in a letter dated last week that was posted on the foundation's Web site.

Started by the Microsoft Corp. (NASDAQ:MSFT) co-founder and his wife in 1994, the foundation has the international goals of overcoming hunger, poverty and disease. In this country, its focus is on education.

The foundation had an endowment valued at $35.1 billion as of Oct. 1, down $800 million from June, according to The Seattle Times.

As the foundation explores its options, Raikes said employees have been asked to cut expenses. But he said the foundation will remain focused on education initiatives in the United States and fighting extreme poverty in developing countries.

"Within these areas, we'll continue to follow the evidence. We will make grants in the areas where the data tell us we have the best chance to make the greatest impact," Raikes said. "Even as we make our own grants, we also try to encourage other funders, such as governments, businesses, and other foundations, to do their part. This advocacy is especially important in tough times."


Gates Foundation:


Thursday, November 20, 2008

Tuesday, November 4, 2008

The inventor behind CNN's election 'Magic Wall'

By Jeremy Bradley - CNN

NEW YORK (CNN) -- On the 16th floor of a nondescript building in lower Manhattan, a group of tech-savvy staffers clad mostly in jeans and T-shirts is changing the way Americans watch TV election coverage.

Perceptive Pixel is a high-tech startup company. You may not have heard of them, but you've probably seen their most famous product: an interactive, Multi-Touch Collaboration Wall better known as CNN's "Magic Wall."

Throughout the 2008 primaries and the general election, John King, CNN's Chief National Correspondent, has stood before the now-familiar electronic wall map, zooming in and out of battleground states with a few pokes of his fingers. The big map allows King to instantly tally electoral votes, shift swing states from one candidate's camp to another's and highlight red swaths of John McCain turf alongside blue pockets of support for Barack Obama.

"Multi-touch is a whole new way of working with the computer where you can actually use more than one finger at a time. That means both hands, that means all ten fingers, that might mean multiple users in front of a screen," says Jeff Han, founder and chief scientist of Perceptive Pixel.

"Never have you been able to manipulate this many objects, with this many degrees of freedom, at the same time." VideoWatch the wall in action »

The inspiration for the multi-touch technology came from a decidedly non-digital event: Han was drinking a glass of water. He noticed the way light was interacting with his fingers as they touched the glass, and an 'Ah ha!' moment was born that put him straight to work.

"After you get an inspiration like that you run back to the lab where you have a lot of spare parts and all of a sudden, literally within days, you can start going to prototype, " he says. "It was pretty neat."

In 2006, Han became the darling of the tech world after unveiling his multi-touch tricks at the annual technology, entertainment and design conference known as TED. In front of some of the industry's biggest movers and shakers, Han zigged and zagged his way across the screen, using both hands to manipulate images, draw cartoonish figures and toss around digital vacation photos like Polaroids.

By the time TED ended, Han knew his technology was a hit. But he never expected that CNN would take his product mainstream. Han was exhibiting his multi-touch screen at a military trade show when he bumped into some executives from the cable news network who saw a groundbreaking use for the technology.

That meeting marked the birth of King's eight-foot-long electronic sidekick, which has gotten almost as much air time this year as Wolf Blitzer. In recent months the "Magic Wall" has been parodied on Comedy Central's "The Daily Show" and NBC's "Saturday Night Live," on which cast member Fred Armisen played with the map like it was a toy.

David Bohrman, CNN's Washington Bureau Chief, praises the Magic Wall for giving viewers "both deep and clear information" in a visually interesting way.

"Here is a perfect example of how effective it can be: During our coverage of the Indiana primary, we were able to zoom in, county-by-county, to voting returns, and even though some of our competitors had already called the race, we were able to explain why we weren't able to do so," Bohrman says.

"John King was able to show the votes outstanding, the votes in Gary, Indiana, and how the race could have gone for Obama or [Hillary] Clinton, with a slight difference in that county's results. We were actually able to show viewers a lot more information and make the story clearer."

On Election Night, Bohrman anticipates the Magic Wall will allow King to display and interpret county-by-county votes for every state across the country.

"So if we're able to project or not project a race, we will explain to viewers why," he says. New additions to the Magic Wall also will allow it to illustrate balance of power scenarios in the Senate, Bohrman says.

Other television networks have since added similar products to their news coverage.

Han declines to reveal the workings of his technology, but he believes the screen will have an impact on much more than the nightly news.

"We're just scratching the surface of what's possible with it," he says. "We see huge growth in diverse areas such as creative applications, architecture, in education, in collaborative brainstorming, ideation processes -- which starts to cover a huge range of companies."

Han is tight-lipped about Perceptive Pixel's current clients, although he tells CNN, "most of our customers are three-letter agencies, classified work, a lot of secret stuff."

As his touch-screens have risen in popularity -- Han says there are still some obstacles in getting people to understand how they work.

Han's multi-touch screens are undeniably cool, with a seemingly magnetic effect on users and audiences alike. One of Han's presentations has been viewed on YouTube over 250,000 times. But he says he doesn't get too caught up in their revolutionary potential.

"I don't see one kind of interface, multi-touch or whatever it is, [replacing] the traditional keyboard and mouse," he says. "When the mouse came about, the keyboard didn't go away."

Find this article at:

Starbucks, Ben & Jerry's, Krispy Kreme offer voters goodies

Starbucks, Ben & Jerry's, Krispy Kreme offer voters goodies

Silicon Valley / San Jose Business Journal

Coffee, doughnuts and ice cream are being offered up in election day giveaways by Starbucks Coffee Inc., Krispy Kreme Doughnuts Inc. and Ben & Jerry's Homemade Holdings Inc.

But Starbucks' giveaway may violate state and federal laws because it specifically targets voters, according to the attorney general of Washington state.

Seattle-based Starbucks (NASDAQ:SBUX) said it is giving away a free "tall" 12-ounce cup of coffee to anyone who votes.

North Carolina-based Krispy Kreme (NYSE:KKD) is giving away star-shaped doughnuts and Vermont-based Ben & Jerry's is offering free scoops of its ice cream Tuesday. But those companies aren't requiring people to say they voted to get their treats.

Despite the alleged election law problem, a spokesman for the Washington state AG said the office didn't plan to press charges, according to a report from the Associated Press.

Ben & Jerry's said in a statement that it had considered a promotion similar to Starbucks' but changed plans when it learned of the possible legal complications. Instead, all customers at its shops between 3 p.m. and 5 p.m. on Tuesday will be given free scoops.

Krispy Kreme is only requiring that customers at its 85 company-owned stores mention its promotion to get their free doughnut. Some of its 145 franchisees will also participate.

Friday, October 17, 2008

Warren Buffett: Buy American. I Am.

October 17, 2008
Op-Ed Contributor

Buy American. I Am.


THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.


A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

Buffett Says Now Is the Time to Buy U.S. Equities

Buffett Says Now Is the Time to Buy U.S. Equities (Update1)

By Alan Purkiss


Oct. 17 (Bloomberg) -- Warren Buffett said he's buying U.S. stocks and, if prices stay attractive, his personal investments, as distinct from his stake in Berkshire Hathaway Inc., will soon be wholly in American equities.

Writing in the New York Times, he said he's following the principle: be fearful when others are greedy, and greedy when others are fearful.

Exaggerated concern about the long-term prosperity of financially secure U.S. companies is foolish, and most will probably be setting profit records in years to come, Buffett said.

While short-term stock movements can't be foretold, the likelihood is that the market will recover before the economy or general investor sentiment do so, and ``if you wait for the robins, spring will be over,'' he said.

Referring to the 1930s Depression, Buffett pointed out that the Dow reached its nadir on July 8, 1932; economic conditions continued to deteriorate until Franklin Roosevelt became president in March 1933, and by that time the market had climbed 30 percent.

Bad news, Buffett concluded, is an investor's best friend, for it enables you to buy ``a slice of America's future at a marked-down price.''

Buffett, ranked the richest American by Forbes magazine, has committed at least $28 billion this year to acquire companies, finance buyouts and purchase securities for Berkshire as the contraction in global credit markets drove down stock prices and sent firms searching for funds.

Widely Imitated

Buffett built Nebraska-based Berkshire over four decades from a failing textile manufacturer into a $180 billion holding company by buying out-of-favor securities and businesses. Berkshire was the largest stockholder of Coca-Cola Co., Wells Fargo & Co., and Kraft Foods Inc. as of June 30, according to Bloomberg data.

Mutual funds and individuals mimic his stock picks in an effort to duplicate his success, and an academic study in 2007 found that using this strategy for 31 years would have delivered annualized returns of about 25 percent, double the gains of the S&P 500.

Berkshire advanced $3,650, or 3.2 percent, to $116,800 at 12:02 p.m. in New York Stock Exchange composite trading. The company has declined about 18 percent this year, beating the 35 percent drop of the Standard & Poor's 500 Index.

To contact the reporter on this story: Alan Purkiss in London at

Last Updated: October 17, 2008 12:34 EDT

Thursday, October 16, 2008

CIT Reports Q3 Net Loss; Vendor Business 'Disappoints'

CIT Reports Q3 Net Loss; Vendor Business 'Disappoints'

CIT reported a third-quarter net loss from continuing operations of $301.6 million, or $1.13 per share, compared to income of $208.5 million for the comparable 2007 quarter. Finance revenue was $1.4 billion, down 12.6% from $1.6 billion in the third quarter last year.

Analysts had expected CIT would swing to a profit, with predictions on average earnings of $0.20 per share, according to opinion data surveyed by Thomson Financial.

CIT said the loss included a $455 million pre-tax non-cash write-down of goodwill and other intangible assets of the Vendor Finance business segment. The company's provision charge for credit losses in the third quarter was $210.3 million, up from $63.9 million in the same quarter last year. Year-to-date through September, CIT's provision charges were $606.2 million, up from $112.4 million for the same period last year. The reserve for credit losses as percentage of non-performing assets at the end of the third quarter was 80.6% compared to 123.7% at the end of the same period in 2007.

CIT noted in its news release that its Vendor Finance unit experienced a net loss for the quarter of $354.8 million, down from net income of $58.2 million in the third quarter 2007. Year-to-date, the vendor business swung to a net loss of $337.1 million from a $204.6 net profit for the same period last year.

Commenting on the vendor finance business, chairman and chief executive Jeffrey Peek said, "Vendor Finance returns were disappointing and we are undertaking a restructuring of that unit."

Thursday, October 16, 2008

Monday, October 13, 2008

New Master's Programs Will Train Sustainable Development Leaders

New Master’s Programs Will Train Sustainable Development Leaders
The first global initiative to provide rigorous professional training for future leaders in the field of sustainable development was unveiled Friday at Columbia University. The program, which was recommended in a newly released report by the International Commission on Education for Sustainable Development Practice, sets a new standard for other universities hoping to design their own Master’s degrees along this model. At the event, Jonathan Fanton announced that MacArthur is committing $15 million to seed the creation of such Master’s in Development Practice programs at up to 12 universities worldwide over the next three years. For more information read the press release, the Commission's report, and Jonathan Fanton's remarks.

Wednesday, October 8, 2008

FW: Microsoft supporting university program on gaming for teaching



From: Shelley Stern Grach []
Sent: Wed 10/8/2008 10:58 AM
To: Seegers, Lisa; Pressl, Lance; Huang, Jerry; Stasch, Julia; Molly Day; Richard Kurtz; Dan Morris; Mike Rocco; Fred Hoch;;; Lisa Newman; Laura Thrall; Cheryle Jackson;; Mary Paulson; ''; Adam Hecktman; Jeri Johnson; Meredith Dowling; David Mosena
Subject: Microsoft supporting university program on gaming for teaching


Wanted to make sure you saw this article on how Microsoft is supporting gaming as a teaching tool, in partnership with universities.

Young gamers play video games at a gaming event this summer in Santa Monica, Calif. On Tuesday, Microsoft said it would co-fund an initiative with several universities in order to find scientific evidence that supports the use of games as a learning tool.

Microsoft, universities work to prove that video games can be educational


When John Nordlinger, senior research manager for Microsoft Research's gaming efforts, wanted a refresher on his French, he started playing "Everquest" -- the multiplayer online role-playing game -- in that language.

The strategy worked, Nordlinger said, but he added that researchers don't completely understand why.

"When people play games, there is some sort of state they get into," he said. "Nobody has really studied whether or not the brain is more receptive to learning complex concepts when you're in that state. People assume that is the case."

On Tuesday, Microsoft Corp. said it would co-fund an initiative with several universities in order to find scientific evidence that supports the use of games as a learning tool.

"Let's say you have a kid who is in school and he's in trouble and someone tries to convince you to (use) a game to teach algebra, and they ask for a study" to support the approach, Nordlinger asked. "This could be useful."

For Microsoft, the findings could potentially result in educational games designed for the company's Xbox game console, Nordlinger said.

Microsoft will invest $1.5 million over the course of three years in the initiative, which will initially focus on teaching fundamental concepts, such as fractions, in a middle school setting via games. A consortium of universities, led by New York University, will put in another $1.5 million.

"Many students become discouraged or uninterested and pour their time at home into gaming. Ironically, we think gaming is our starting point to draw them into math, science and technology-based programs," said Ken Perlin, a professor of computing science at NYU, who will co-direct the effort.

The first phase of the project will focus on trying to determine what "about games is both fun and transfers ideas," Nordlinger said.

Another phase of the project will involve developing educational games that draw on those findings.

Under the program, prototypes of the games will be introduced into 19 New York City-area schools. Nordlinger said that although the games will be developed for the Xbox, partner universities also were welcome to collaborate with other console makers.

He said it was not clear that Microsoft, which in the past has funded efforts to teach computer science with games, would produce game titles based on the new research.

But, he said, he imagined that a parent would be more enthusiastic about buying a child a "first-person shooter game" for the Xbox, if he or she knew it was "going to improve their SAT scores."

P-I reporter Joseph Tartakoff can be reached at 206-448-8221 or Read his Microsoft blog at

Shelley Stern

Central Region Citizenship Lead
Microsoft Corporation 77 W. Wacker Drive Chicago, IL 60601
office (312) 781-8177 mobile (312) 927-2754

Enabling people and businesses throughout the world to realize their full potential.

Monday, October 6, 2008

PETA's letter to Ben Cohen and Jerry Greenfield

September 23, 2008

Ben Cohen and Jerry Greenfield, Cofounders

Ben & Jerry's Homemade Inc.

Dear Mr. Cohen and Mr. Greenfield,

On behalf of PETA and our more than 2 million members and supporters, I'd like to bring your attention to an innovative new idea from Switzerland that would bring a unique twist to Ben and Jerry's.

Storchen restaurant is set to unveil a menu that includes soups, stews, and sauces made with at least 75 percent breast milk procured from human donors who are paid in exchange for their milk. If Ben and Jerry's replaced the cow's milk in its ice cream with breast milk, your customers-and cows-would reap the benefits.

Using cow's milk for your ice cream is a hazard to your customer's health. Dairy products have been linked to juvenile diabetes, allergies, constipation, obesity, and prostate and ovarian cancer. The late Dr. Benjamin Spock, America's leading authority on child care, spoke out against feeding cow's milk to children, saying it may play a role in anemia, allergies, and juvenile diabetes and in the long term, will set kids up for obesity and heart disease-America's number one cause of death.

Animals will also benefit from the switch to breast milk. Like all mammals, cows only produce milk during and after pregnancy, so to be able to constantly milk them, cows are forcefully impregnated every nine months. After several years of living in filthy conditions and being forced to produce 10 times more milk than they would naturally, their exhausted bodies are turned into hamburgers or ground up for soup.

And of course, the veal industry could not survive without the dairy industry. Because male calves can't produce milk, dairy farmers take them from their mothers immediately after birth and sell them to veal farms, where they endure 14 to17 weeks of torment chained inside a crate so small that they can't even turn around.

The breast is best! Won't you give cows and their babies a break and our health a boost by switching from cow's milk to breast milk in Ben and Jerry's ice cream? Thank you for your consideration.


Tracy Reiman

Executive Vice President

MacArthur Fellows 2008 - "Genius Grants"

BofA still has largest number of online customers

comScore, Inc. (NASDAQ: SCOR), a leader in measuring the digital world, today announced the results of an analysis of the impact the Chase/WaMu and Wells Fargo/Wachovia or Citi/Wachovia mergers will have on the online banking market.  Bank of America will likely continue to have the largest number of online customers compared to merged Chase/WaMu or proposed Wells Fargo/Wachovia or Citi/Wachovia across both liquid deposit account customers as well as online customers of any kind, even though the bank mergers will result in a large percentage of new additive customers.

The press release below is also available at: 

Thursday, October 2, 2008

WSJ: Entrepreneurs Scramble for Financing

Subject: WSJ: Entrepreneurs Scramble for Financing

* OCTOBER 2, 2008

Entrepreneurs Scramble for Financing

Small businesses are turning to angel investors, suppliers and
personal credit cards as the financial crisis spreads to Main Street
and access to commercial bank loans becomes more restricted.

After being rejected last month at two commercial banks, Education 4
Kids Inc. owner J.M. Ivler is back to financing his 5-year-old online
retailer with personal credit cards. "I can't get the banks to give me
a loan," complains Mr. Ivler, whose Las Vegas company is profitable
and produced $350,000 in sales last year.

Brian Moran, president of magazine publisher Moran Media Group LLC,
decided to sell $125,000 in accounts receivables and incur a 3%,
30-day rate on outstanding balances to finance his Paramus, N.J.
company after a bank credit line wasn't renewed. The bank told him it
was cutting back on small business lending to minimize risk.

It is unclear how many commercial banks aren't writing new small
business loans. But reports from across the U.S. suggest that small
businesses are chasing alternative financing more vigorously than a
few weeks ago.

What money is available can carry high interest rates. Harold Bradley,
chief investment officer for the Ewing Marion Kauffman Foundation, an
entrepreneurial-research organization, says small businesses with
variable-rate loans are "shell-shocked" by the jumping rates on those

Shelly Karras, president of Fordham Financial Services Inc., an
alternative financing company in Northbrook, Ill., says he now
receives six to seven inquiries a day from banks trying to help
customers line up alternative financing, up from just a handful a
month last summer.

Mr. Moran had to dip into cash reserves to pay off an $80,000 balance
when his local bank declined to renew a $350,000 credit line. Another
regional bank turned him down for a $200,000 credit line, citing his
personal credit score and the fact that his company didn't have enough
assets to secure the line.

Some businesses, meanwhile, are finding sympathetic suppliers will
help get them over the financing hump. Jorge Marinez and his two
partners went this route after getting turned down by seven banks over
eight months.
[Angel-investor] Getty Images

"No one wanted to qualify us for a business loan," says the
39-year-old Mr. Marinez, who with partners sought a $250,000 loan to
open a steak and seafood restaurant in Burr Ridge, Ill. "They kind of
complained to us that the way the economy is going right now, the
banks don't want to take a risk in the restaurant business."

Mr. Marinez approached the property's landlord, who agreed to finance
the endeavor last month. The landlord was also getting hit hard by the
economy and wasn't finding any other renters for the site, Mr. Marinez

He hopes to open the restaurant, called Porterhouse, in late November.

Write to Kelly K. Spors at and Raymund Flandez at

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved

Wednesday, October 1, 2008

Harvard MBA students to consult with Living Cities

Beginning in October, Living Cities will count on the consulting horsepower of a team of five MBA students from the Harvard School of Business. The team will deliver up to 450 hours of consulting on Living Cities' sourcing, uses, and deployment of capital.

Led by Professor Peter Tufano, Sylvan C. Coleman Professor of Financial Management and Senior Associate Dean for Planning and University Affairs, the team of five will identify the needs and opportunities in market-rate and below-market rate segments of the social investment sector. They will also show where and how Living Cities can play a useful role in that landscape.

The students bring diverse backgrounds and skill sets in general business, finance, and community development:

  • Aleem Remtula: Worked with Living Cities as 2008 summer associate; experienced in social investing.
  • Zach Morello: formerly of Deloitte Consulting
  • Kellie Hata: Experienced in distressed debt hedge funds
  • Laura Marquez: Completing joint program with the Kennedy School; Capitol Hill experience
  • Elana Berkowitz: Completing joint program with the Kennedy School; Capitol Hill experience
    Weekly progress meetings will culminate with a presentation slated for December, 2008.

WSJ: Loyalty Pays a Bitter Dividend


Loyalty Pays a Bitter Dividend

Grace Pace, a 72-year-old widow, says her husband invested years ago in a local bank in Biloxi, Miss. Over time, that tiny bank was acquired and re-acquired, until it became part of giant Wachovia Corp. Still, Mrs. Pace and her husband, a Biloxi physician, held on: It was a point of family pride to have a stake in the local bank.

[Grace Pace]

Grace Pace

On Monday, the day Wachovia was broken up in a forced sale to Citigroup, Mrs. Pace was in tears. Wachovia's dividend once provided a third of her income. That money is now gone. "You just think, 'This can't be happening,'" she said. "What is secure any more?"

Mrs. Pace said her son recently reassured her that if things get really bad, she can move out of her home and into his basement, which has a window. Then she began to cry again.

Variations of Mrs. Pace's story are playing out in households nationwide. The financial crisis is overwhelming some of America's most loyal investors: individuals who've held on to bank stocks for years or even generations.

After World War II, as the American middle class embraced stock investing, hometown banks were often a first choice. The honor of bank ownership became a part of small-town mythology, expressed in movies like "It's a Wonderful Life," the holiday-season fixture about a beloved local banker and his guardian angel.

In the decades after the Great Depression and the bank failures of the 1930s, financial stocks rebuilt their prestige and earned investor confidence as the industry became a major part of the nation's blossoming service economy. Banks now employ 2.2 million people -- more people, and at higher wages, than McDonald's Corp. (whose restaurants employ 1.6 million world-wide).

Families often hesitated to part with bank shares that spouses, parents or grandparents had accumulated, even as the nature of the original institutions changed almost beyond recognition. By June 2007, ordinary individuals and small institutional investors owned roughly $750 billion in the stock of financial institutions, according to Thomson Reuters.

By the end of June 2008, however, individuals' holdings in financial stocks had fallen by $380 billion -- more than half their value. Values have fallen further since then, of course.

[Two women enter a branch of Wachovia bank in New York. Wachovia was taken over by Citigroup in a deal brokered by the FDIC.] EPA/Justin Lane

Two women enter a branch of Wachovia bank in New York. Wachovia was taken over by Citigroup in a deal brokered by the FDIC.

In the first half of this year, bank-stock dividends fell by $35 billion, or 53%, according to the Federal Deposit Insurance Corp. Roughly a quarter of that stock was held by small investors, according to Thomson Reuters, meaning they lost $8.8 billion in dividends in six months. Retirees are often particularly reliant on dividends for income.

The faith of long-term holders is now being punished. Joe Thompson, whose grandfather helped found a bank in Winamac, Ind., that later became part of KeyCorp, describes the stock, which his family still owns, as "the family heirloom." Today, it is in a trust he manages for his 89-year-old mother. But the share price has fallen 70% since early 2007, and the dividend has been halved.

Similarly, Sidney Berry, a retired obstetrician in Tennessee whose father invested in the hometown Lebanon Bank back in the 1950s, has lost tens of thousands of dollars. Still, he can't bring himself to sell.

"I think about my father buying stock in the Lebanon Bank 50 years ago, and owning the stock all that time," said Dr. Berry, 63. "I do have something of a sentimental attachment to it."

Of course, one of capitalism's bedrock rules is that when a company struggles or fails, its owners -- the shareholders -- bear the heaviest losses. Still, from the perspective of some of these conservative, long-term investors, the burden has fallen unfairly on the little guy.

Some, including Dr. Berry, question how trusted community bulwarks were allowed to become speculative enterprises that behaved more like Internet stocks, and wonder why no one is being held responsible. He points a finger at the often highly paid executives who ran the failed firms. "It seems like they soak the shareholders and take off with a lot of money," Dr. Berry said. "I don't know why boards let CEOs do that kind of thing."

Until recently, financial stocks seemed like a good bet. After the 2001 recession, financial-company profits rose to account for more than 2.5% of gross domestic product from less than 1% in the 1980s. Financial stocks replaced tech stocks as the market's largest single group, in terms of market value. (Although now, due to the financial crisis, they've swapped positions again.)

Few investors realized the danger that accompanied banking's heady growth. Once-stodgy institutions were dabbling in exotic new securities based on high-risk mortgages, leaving them exposed when the housing bubble collapsed.

Mrs. Pace, who took a hit from Wachovia's breakup, was married to a Mississippi doctor who strongly believed in local banks. "He had a very emotional tie to the bank stocks," Mrs. Pace recalled. "He felt they were perfectly safe."

[shrinking investments]

He bought shares in a local Biloxi institution called First Jefferson. First Jefferson was bought in 1994 by SouthTrust Corp. of Alabama, which in turn was bought by North Carolina's Wachovia in 2004.

Mrs. Pace sold some shares after her husband's 2003 death. But by 2006, nearly half her stock holdings were in banks, mainly Wachovia.

Her investment adviser and others urged her to diversify more. While she was nervous owning so much of one stock, she points out that her income is primarily Social Security and dividends -- and Wachovia "was the best dividend producer that I owned," she said.

Wachovia closed Tuesday at $3.50, down 94% from a recent high in February last year.

She moved to Hendersonville, N.C., into what was once the family's vacation home. Previously, she lived in a condo nearby, but now is trying to sell it to restore her nest egg.

"This was how we were going to fund our retirement," Mrs. Pace said, "We were going to have real estate, and we were going to have stocks." Now both are in trouble.

A Part of Life

For Dr. Berry of Columbia, Tenn., owning bank shares was a part of life, starting with his father's investment in Lebanon Bank more than a half-century ago. In 1987, First Tennessee National Corp., a Memphis bank with big plans, acquired little Lebanon Bank for $31 million in stock. First Tennessee (which in 2004 changed its name to First Horizon National Corp.) expanded into more than 40 states, selling mortgages and home-equity loans into the booming housing market.

Last year, Dr. Berry faced a tough decision. With the stock near its highs, his sister, Letitia Hudlow, who also inherited stock from their parents, decided to sell it and diversify her portfolio, and she urged her brother to do the same.

Dr. Berry says he just couldn't sell their father's stock. He told his sister, "I think I am just going to hang on to it and see what happens," Dr. Berry recalls. "What happened was, it went down to about 20% of its value very quickly, and stopped paying dividends."

[bank investors take a hit]

A Nashville television station broadcasts local stock prices during the evening news, and Dr. Berry watched First Horizon's shrivel. He and his wife would discuss what to do.

"The halfway point was an attention-getter," he said. At $22 a share, which it hit late last year, the stock had fallen about 50% from its 2007 high of $45.13. "I didn't want to sell low, so I didn't -- but it went way below that."

On Tuesday, First Horizon finished at $9.36 a share, down 79% from that 2007 high.

With mortgage markets in crisis and defaults mounting, First Horizon has sold its mortgage business outside Tennessee, announced plans to replace its chief executive and, in a June letter to shareholders, said it would pay its third-quarter dividend in stock rather than in cash.

"I fear that they are just diluting the value of the stock itself, so that the stockholders aren't really getting anything of value" from the dividend, Dr. Berry said. Until the bank ran into trouble, it had been paying a dividend of about 5%.

First Horizon acknowledges that its stock dividend doesn't have financial value, since it is akin to a stock split, but says some shareholders find the additional shares useful.

It defends its business strategy. "Our national expansion served us well for a certain period of time through the 1990s and part of the 2000s," said David Miller, senior vice president for investor relations and corporate strategy. More recently, however, "The strategy had to change, so we have changed it very aggressively."

Dr. Berry says he has other income and that his lifestyle hasn't been affected by the loss of the dividend. But he occasionally finds himself wondering whether he might have to resume his medical practice if he faces a further financial setback.

"I can see how a retired person whose retirement is dependent on one particular stock -- how a reversal like this could make them consider going back to work," he said.

Bank stocks have been among the hardest-hit of the financial shares. The Dow Jones Wilshire index of U.S. bank stocks was down as much as 60% in July from its record high. On it was down. Some banks, such as National City, have been down more than 90% at their lows. Another, Washington Mutual, has been subsumed into J.P. Morgan Chase & Co.

Delayed Retirement

Some people are being forced to delay retirement. Joan Makowski, a 27-year Merrill Lynch employee who was widowed late last year, hoped to ease into retirement by working part time next year. Her retirement savings included a big holding of Merrill stock. With that stock down 74%, her savings are down $150,000 and she has abandoned hopes of retiring soon. "I now worry for the first time in my life about money," she said.

As a financial manager, she knew she shouldn't keep such a big holding of one stock. But as a Merrill employee, she never imagined her employer could suffer so badly.

"I was so proud to work for Merrill Lynch. I thought I would never have anything to worry about," she said. "I am just glad I didn't work for Bear Stearns." In March, Bear Stearns Cos. was absorbed into J.P. Morgan, making Bear Stearns one of the first major Wall Street firms to succumb to the financial crisis.

Merrill has agreed to be taken over by Bank of America at a higher price than Bear Stearns shareholders received.

Mr. Thompson, whose grandfather helped found the bank in Winamac, Ind., recalled that his father wouldn't consider selling the inherited stock. His dad felt an obligation to his family, and to the town, Mr. Thompson said.

After his father died in 2006, Mr. Thompson and his mother diversified by selling half the shares. They kept the other half, which by then were in KeyCorp.

This year, Mr. Thompson, who heads two small Florida biotechnology companies, had to tell his mother that KeyCorp had taken a hit. "I said, 'You know, these bank stocks are not doing very well,'" Mr. Thompson says. But he assured his mother that that their financial adviser was able to rearrange the trust's holdings so her income wouldn't change.

"She said, 'Are we going to sit tight?'" Mr. Thompson recalls. "And I said, 'Yes, we'll sit tight.'"

As they spoke, he says, he realized that many of the residents of her retirement home were also discussing the bank-stock debacle. "A lot of them were affected by it," Mr. Thompson said.

—Shelly Banjo contributed to this report.

Write to E.S. Browning at

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