Notes of Note from John F. Ince

Archive for August, 2010

Arianna Huffington: Glenn Beck, President Obama, and the Hunger for Purpose in Times of Transition

This weekend — which included the fifth anniversary of the needless tragedy of Katrina, a presidential visit to New Orleans, and Glenn Beck’s rally in Washington — found me in the middle of my own family’s transition, dropping my daughter off for her freshman year of college and listening to the welcome speech delivered by Yale President Rick Levin.

His words were aimed primarily at the incoming students, but as he spoke about wrestling “with the deepest questions of how one should live,” “discovering an unsuspected passion,” and learning “to understand how meaning is extracted from experience,” it struck me how useful his advice is for everyone — including the millions of Americans who’ve lost jobs and homes, and are re-evaluating their lives.

Levin pointed out how the students “come from all 50 states and 58 nations” and urged them (and their parents) to go “entirely outside the range of your past experience,” and “stretch yourself.” “If the friends you make here are exclusively those who come from backgrounds just like your own and went to high schools just like your own,” he said, “you will have forfeited half the value of a Yale education. Seek out friends with different histories and different interests; you will find that you learn the most from the people least like you.”

He really struck a chord in me when he spoke of the “emerging burden of citizenship,” and of responsibilities beyond “self-gratification and personal advancement.” He urged the next generation to “raise the level of public discourse.” And, lamenting how “oversimplified ideology and appeal to narrow interest groups have triumphed over intelligence and moderation in civic discussion,” Levin said that by demanding “serious discussion instead of slogans that mask narrow partisan interests,” the new students — and, by extension, the rest of us — will be able to “help to make our democracy more effective.”

via Arianna Huffington: Glenn Beck, President Obama, and the Hunger for Purpose in Times of Transition.

Could 62 Million Homes Be Free and Clear from Foreclosure?

Mortgages bundled into securities were a favorite investment of speculators at the height of the financial bubble leading up to the crash of 2008. The securities changed hands frequently, and the companies profiting from mortgage payments were often not the same parties that negotiated the loans. At the heart of this disconnect was the Mortgage Electronic Registration System, or MERS, a company that serves as the mortgagee of record for lenders, allowing properties to change hands without the necessity of recording each transfer.

A committed homeowner movement to tear off the predatory mask called MERS could yet turn the tide.

MERS was convenient for the mortgage industry, but courts are now questioning the impact of all of this financial juggling when it comes to mortgage ownership. To foreclose on real property, the plaintiff must be able to establish the chain of title entitling it to relief. But MERS has acknowledged, and recent cases have held, that MERS is a mere “nominee”—an entity appointed by the true owner simply for the purpose of holding property in order to facilitate transactions. Recent court opinions stress that this defect is not just a procedural but is a substantive failure, one that is fatal to the plaintiff’s legal ability to foreclose.

That means hordes of victims of predatory lending could end up owning their homes free and clear—while the financial industry could end up skewered on its own sword.

via The Legal Problem of MERS and Mortgages: Could 62 Million Homes Be Foreclosure-Proof?.

Policy Options Dwindle as Economic Fears Grow – NYTimes.com

THE American economy is once again tilting toward danger. Despite an aggressive regimen of treatments from the conventional to the exotic — more than $800 billion in federal spending, and trillions of dollars worth of credit from the Federal Reserve — fears of a second recession are growing, along with worries that the country may face several more years of lean prospects.

On Friday, Ben Bernanke, chairman of the Fed, speaking in the measured tones of a man whose word choices can cause billions of dollars to move, acknowledged that the economy was weaker than hoped, while promising to consider new policies to invigorate it, should conditions worsen.

Yet even as vital signs weaken — plunging home sales, a bleak job market and, on Friday, confirmation that the quarterly rate of economic growth had slowed, to 1.6 percent — a sense has taken hold that government policy makers cannot deliver meaningful intervention. That is because nearly any proposed curative could risk adding to the national debt — a political nonstarter. The situation has left American fortunes pinned to an uncertain remedy: hoping that things somehow get better.

via Policy Options Dwindle as Economic Fears Grow – NYTimes.com.

Economic downturn defying solutions – Business – Eye on the Economy – msnbc.com

The economy is still growing, but just barely. The latest wave of downbeat economic data, including Friday’s report on gross domestic product, has renewed fears that we could be headed for the second half of a “double dip” recession.

It is even possible that the apparent economic recovery is a mirage, and that the recession that began in December 2007 never really ended.

Increasingly it seems that the unprecedented measures taken in 2008 and 2009 to revive the economy are not working because the recession is unlike any this country has seen in the past 60 years.

“After all the monetary, fiscal and bailout stimulus, the economy should be roaring ahead,” Gluskin Sheff chief economist David Rosenberg wrote in a recent note to clients. The economy’s sluggish performance shows that “this is not actually a traditional recession at all,” he said.

In a widely anticipated speech Friday, Federal Reserve Chairman Ben Bernanke tried to allay fears that the central bank is out of “bullets” and unable to do anything more to revive the economy.

He said that he expects growth to pick up next year and that the central bank is considering buying more securities if needed to ensure that interest rates stay low for an extended period. And he said the fed could encourage more lending by cutting interest payments to banks on the cash they keep in reserves.

“The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation. We do,” he said at an annual gathering of economists and central bankers from around the world in Jackson Hole, Wyo.

Rather, he said, the Fed is weighing whether the costs and benefits of those measures justify using them.

But Bernanke acknowledged the Fed can’t do all the heavy lifting.

“Central bankers alone cannot solve the world’s economic problems,” he said.

via Economic downturn defying solutions – Business – Eye on the Economy – msnbc.com.

Grim numbers point to the end of the venture capital era – SiliconValley.com

Excellent analysis of the current state of Venture Capital Investing in Silicon Valley …

How gloomy is this picture for venture capital firms? According to an NVCA survey, 90 percent of venture capitalists who responded expect their industry to contract through 2015.

That trend is well under way. While firms have not started collapsing en masse, they have been quietly shrinking. The number of principals at U.S. venture firms fell from 8,892 in 2007 to 6,828 in 2008. As firms raise smaller funds, they need fewer people to invest.

Some will argue that at least in the area of Web startups, companies can be launched on the cheap, and growing numbers of angel investors — those wealthy individuals who invest at the earliest stages — are stepping in to give these companies a boost. True, but that kind of funding doesn’t work as well for biotechnology, medical devices or cleantech. And these angel-backed companies are small and lean, and don’t create large numbers of jobs.

It’s not just fewer startups, though. When companies don’t go public, they don’t generate the same number of jobs in their later stages. Heesen said the cash raised from an IPO usually triggers an explosion in hiring.

“The real job creation starts far down the road, after they go public,” Heesen said.

Instead of going public, the companies that do show potential now get gobbled up by the Googles and Facebooks of the world. At the same time, valley giants like Hewlett-Packard, Oracle, Intel and Cisco Systems continue their acquisitions of larger tech companies, a consolidation trend that more often than not is accompanied by big job cuts.

So we’re seeing fewer startups and sweeping consolidation. Tie those trends together, and you’ve got a drag on job creation that could weigh down the valley for years to come.

With venture capital in retreat, we must look elsewhere for a new model for startup funding to kick-start the valley’s next era of innovation and the kind of job creation we desperately need.

via O’Brien: Grim numbers point to the end of the venture capital era – SiliconValley.com.

Bolder Giving

Those of us who consider ourselves of “normal” means may look at the giving of millionaires and billionaires and think “That’s nice.  If I had that much money, I could be that generous too.”  Jill Warren is a woman who doesn’t say “if.”  She and her husband, a minister, regularly give away at least 30% of their modest income to support causes they believe in.   If you missed the recent Bold Conversation teleconference with Jill, you must listen to the recording. You will be inspired!

Jill shared how she and her husband decided to start giving the percentage of their income that the average American pays for housing, which they do not pay because the church provides their housing.  She talked about the joys of giving, as well as the hard times they have encountered because they choose to boldly give and live check to check rather than save their money for themselves.  For Jill, the biggest benefit of giving is the liberation she feels in switching from worry over how to use money to gratitude for what they can do with the money by giving it away.  Their bold giving has not always been painless, like when the car broke down and there were no savings in the bank to help them out.  But reflecting on these times, Jill said “This is why we do it.  Not so we can have an easy life.  We’re giving because we’ve been given so much.”

To learn more about Jill’s story, listen to the recording of the teleconference, view Jill’s story page, or read the archive of her Chronicle of Philanthropy chat.  You can also join a temporary list-serv discussion by emailing Elizabeth at boldergivinglist@gmail.com.

via Bolder Giving.

Despite Reform, Banks Have Room for Risky Deals – NYTimes.com

When Congress passed a new financial regulation bill last month, it sought to prevent federally insured banks from making speculative bets using their own money. But that will not stop banks from making bets that some critics deem risky, even as the rules go into effect over the next few years. That is because many such bets — on the direction of the stock market or the price of coal, for example — are done on behalf of clients. So, the banks say, they will continue to be allowable despite the new restrictions.

Indeed, several trades that were made on behalf of clients went bad for the banks even as the new rules were being debated in Washington this year. JPMorgan Chase and Goldman Sachs, for example, each lost more than $100 million on transactions handled for customers in the period from April to July.

Blowups like these, only larger, contributed to the financial crisis and forced the federal government to spend billions of dollars to bail out financial institutions. Yet analysts are quick to point out that many of those transactions were handled by the banks, ostensibly to serve clients.

“You can use client activity as a cover for basically anything you are doing,” said Janet Tavakoli, who runs her own structured finance consulting firm. “It’s very problematic that losses like this are showing up. It’s a prime example of what the financial reform bill doesn’t address.”

via Despite Reform, Banks Have Room for Risky Deals – NYTimes.com.