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The fight over America's rails

Wed, 2015-03-25 08:28

There’s something romantic about a train whistle. It makes you think about far-away places. Adventure. Lawsuits.

Yep, lawsuits. The jostling for rail space has actually made it all the way to the Supreme Court

Part of the problem is the way rail traffic is split up in this country. Privately-held freight railways are thriving. Amtrak gets government subsidies, and it mostly runs on track owned by the freight lines. 

Delays peaked over the past few years for both passenger and freight rail.

“Our biggest concern was our customers,” says Ed Hamberger, president and CEO of the Association of American Railroads, a trade group for freight rail companies. “We move what Americans consume, what American manufacturers make, what American farmers grow,” he says.

Meanwhile, over at Amtrak, passengers were frustrated by all the delays.

“We watched on-time performance plummet,” says Jim Mathews, president and CEO of the National Association of Railroad Passengers.  He says, on some trains, there were: “Five, six, seven hour delays.”

Federal law says passenger trains  get priority on the rails. Amtrak says that means freight trains should pull over for passenger trains. But Mathews says that doesn’t always happen. He says at one point, Amtrak’s Capitol Limited train, from Washington to Chicago, was late more than 90 percent of the time.

“It had on-time performance in the single digits last summer,” he says.

The freight railways say they’re often blamed for delays that weren't their fault — delays caused by weather, or accidents. They say they actually subsidize Amtrak, because it uses their tracks. Which they pay to maintain. 

“Last year they spent $26 billion – private money," Hamberger says. "This year they've announced plans to spend $29 billion.”

And that lawsuit, the one that ended up in the Supreme Court? Amtrak scored a partial victory. But the case was kicked down to a lower court, and the legal fight continues. But court battles aside, here’s the deal. Freight and passenger lines  need to figure out how to share the rails.

“The primary issue between the freight and the passenger railroads is both have growing business,” says Steven Ditmeyer, adjunct professor of railway management at Michigan State University. 

You could build more track, Ditmeyer says. The passenger association certainly wants the government to spend more money on rail infrastructure. The freight railways would welcome more government cash, but not if it came with more regulation. 

Ditmeyer says: Let’s think about what we can do, now.

“There can be ways to make sure that both get the time and space they need on the track,” he explains.

Freight trains could run on more set schedules, Ditmeyer says, making it easier to coordinate them with strictly scheduled passenger trains. There’s also a sort of air traffic control system in the works for our railways, designed to eliminate bottlenecks and improve safety. 

It was supposed to be finished by the end of this year, but it's behind schedule.

PODCAST: What do you do with a liberal arts education?

Wed, 2015-03-25 03:00

Kraft and Heinz announced today they are merging. It's a $40 billion plus deal that unites some of the biggest names in processed foods. There's even a Brazilian angle here. More on that. And a hedge fund called American General has increased its bid for what remains of bankrupt Radio Shack, up $20 million to $165 million according to Reuters. We talk about how the store seemed to have become less about electronics and more about bugging you to buy batteries and extended warranties. And It is the season for colleges and universities to announce what they're charging for the coming academic year. In the face of this, students and parents around the country want to know that all this money will lead to a job sometime. This is the argument to make higher ed more vocational, and tailor the courses to jobs. But where does this leave liberal arts education? 

State pension checkup: Better, still not great

Wed, 2015-03-25 02:01

States' pension funds are better off today than they were during the Great Recession, but that doesn't mean they're healthy.

Russell Walker, Vice President of Wilshire Consulting, said "in the depths of the financial crisis ... the funding ratio dropped down to 64 percent. That funding ratio is what's known as the asset to liability ratio. That means for every $100 governments promised beneficiaries, they only held $64."

But today that ratio is at around $80. The economy isn't entirely to blame for that down-in-the-dumps number from 2009. Keith Brainard, research director for the National Association of State Retirement Administrators, said some states, like Illinois, Connecticut, and Kentucky, "have chronically shorted their pension contributions both when the economy was strong and when the economy was not so strong." 

A pre post-mortem for RadioShack

Wed, 2015-03-25 02:00

RadioShack is bankrupt and on the auction block. Sources tell Reuters that a hedge fund called Standard General has just increased its bid for some 1,740 stores to about $165 million dollars. It's bidding against liquidators that would sell off the remaining inventory, store fixtures and real estate.

If Standard General wins, the idea is a partnership with Sprint to sell phones and phone plans. It's worth it at this juncture to ask ourselves: how did it come to this?

Heather Landy is the global news editor for Quartz and has been digging deep into the sad demise of the Shack. 

Click the media player above to hear Heather Landy in conversation with Marketplace Morning Report host David Brancaccio.

University of Phoenix faces new competition for online students

Wed, 2015-03-25 02:00

Apollo Education Group is expected to announce its second quarter earnings before the market opens Wednesday. Apollo, the parent company of the University of Phoenix, has been regrouping after years of declining enrollment.

For-profit colleges are attracting fewer students, as the economy has improved. Companies have also scaled back to head off new regulations aimed at shutting down failing programs. As interest in online education grows, Apollo is also facing more competition, says Wells Fargo analyst Trace Urdan.

"They’re losing share primarily to traditional colleges that have moved online over the past couple of years," he says.

Universities like Arizona State and Southern New Hampshire have bet heavily on online education.

U. of Phoenix faces new competition for online students

Wed, 2015-03-25 02:00

Apollo Education Group is expected to announce its second quarter earnings before the market opens Wednesday. Apollo, the parent company of the University of Phoenix, has been regrouping after years of declining enrollment.

For-profit colleges are attracting fewer students, as the economy has improved. Companies have also scaled back to head off new regulations aimed at shutting down failing programs. As interest in online education grows, Apollo is also facing more competition, says Wells Fargo analyst Trace Urdan.

"They’re losing share primarily to traditional colleges that have moved online over the past couple of years," he says.

Universities like Arizona State and Southern New Hampshire have bet heavily on online education. 

Using technology to empower women in Saudi Arabia

Wed, 2015-03-25 02:00

Princess Reema Bint Bandar Al-saud, an entrepreneur and member of the Saudi Royal Family, recently traveled to SXSW Interactive in Austin to talk about how technology is empowering Saudi women. 

Born in Riyadh, Princess Reema grew up in Washington DC while her father was Saudi Arabia’s ambassador to the United States. She is now the CEO of Alfa International, a Saudi Arabia-based luxury retailer, and she’s also a major advocate for breast cancer awareness in her country.

We sat down with her to talk about training women to work in Saudi Arabia and what role technology plays in society.

Tell me about educating women about navigating the complexities of the workplace in a country where women's rights are still quite restricted?

What we’re doing is training the frontline of employees to be able to have the skillsets to learn to work. Because if you train someone how to use the cash register but you don’t actually train her how to use HR or train her how how to engage in dialogue with her coworkers, she's not actually going to be a very successful salesperson. But it’s not a skillset that’s given. You have to learn it. Just to give you a heads up. I might have been the CEO of the company but it took me two years to ask for a salary.

So you weren’t being paid?

No. But I also didn’t ask. And you should have seen the horrified faces on the board when they realised. They were like, "what do you mean you haven’t been paid?" I was like, "well, who am I supposed to talk to?" Now take that down to a woman that has no exposure and no experience. So I want to make sure nobody goes through that.

Do you think new technology plays a role at all in helping to make that happen?

Yes. Because everybody is talking to everybody and everyone is listening to everybody right now. It’s not second hand. It’s not tomorrow. It’s not next week. If you said it today, I can read it today. And so you can actually action change very fast these days. I think.

You know, you’re referencing social media in some ways right?   

Yes.

Are there complexities to that when it comes to how it happens in your country?

Yes, because you're not talking to one group of people. We’re talking to five different generations simultaneously. And when you’re talking to five different generations, who are you looking out for in the change that you’re making?

Do you think people are fully comfortable being totally honest on social media?

I think it depends on what subject and what topic and what environment. I mean, I can tell you: religion? Don’t touch it. And it’s just about my right to say it. Somebody has to hear it so be more conscientious in the words that you use.

But at the same time I feel like you’re hinting that there's a lot of positive coming out of this?

Amazing positivity. Because half the people that I have connected to that are making 10 KSA  happen are people that are engaging with us on social media. I can tell you one thing that blew my mind.  

Yeah, please.

WhatsApp. When we were launching our social media, I sent out 500 WhatsApp messages and then I went on to Twitter, Facebook and Instagram and I am like "oh, my god!" 70 people, 120, 45...I am like, "oh, my god, it is now already a global message."

What’s your favorite iPhone app?

Instagram! I love Instagram. I am like the queen of Instagram.

What do you Instagram?

I travel a lot for work. And I find it so much easier to post a picture than to send 50 emails, send a 100 text messages or write something on Facebook. I really don’t want to say too much. I just want you to know where I am and what I have seen and that I have seen something great.

It's the cheesiest...and now the ketchup-iest, too

Wed, 2015-03-25 01:59
$28 billion

Kraft Heinz Co., which will form as the result of the newly announced merger between Kraft Foods Group Inc. and H.J. Heinz Co., will become the fifth largest food and beverage company, with an estimated $28 billion in revenue. As reported by the WSJ, combining the companies will save the two a predicted $1.5 billion in operating costs by 2017. That's a lot of ketchup on a lot of mac and cheese.

$6

The price for a one-way ride on Leap, one of a couple transit start-ups that have appeared in Silicon Valley recently, and nearly three times the cost of San Francisco city bus. The Leap buses are luxurious, with premium interiors, wi-fi and cold press juices available for purchase, the Verge reported, and they offer a complement to the area's notoriously slow and crowded public transit – for those who can afford to ride. 

65 million

The number of names and addresses, along with 13 million emails, that are up for sale along with RadioShack's other assets as it emerges from bankruptcy, Bloomberg reported. It's not yet clear what the customer data is even worth or if it can even be included in the sale, pending a bankruptcy court ruling.

$1.025 trillion

The total annual cost of urban sprawl in the U.S., according to a report from LSE Cities and the Victoria Transport Policy Institute as reported by CityLab. Those costs come from reduced natural and farm land, as well as increases in transportation and infrastructure needs.

101 hours

That's how long Mike Miller of Jackson, NJ will sing karaoke in order to break the Guiness World Record for longest karaoke marathon. Miller, a safari warden at Six Flags Great Adventure, started at noon on Tuesday, and is expected to finish Saturday at 6 PM. The stunt is meant to help raise funds for the Wounded Warrior Project.

‘Corporate sponsored art’ isn’t as bad as it sounds

Tue, 2015-03-24 13:51

There is a trend in the corporate world right now that’s a little more culturally enriching than say, buying another jet for executives or paying out another CEO bonus.

Some big companies, instead of sponsoring a race team or a football club, are sponsoring artists.

"Now Facebook has a residency, it’s just kind of taken over,” says Elizabeth Segran, who wrote about the phenomenon for Fast Company.

Take Amtrak for example. After a writer noted on Twitter how much writing he gets done on trains, Amtrak gave him a writing residency.

“This was kind of like a large-scale publicity stunt,” Segran says.

Segran points out how Facebook’s artist sponsorship is a little different though. “With Facebook, it’s more of a commissioning process… It’s more of an opportunity to support artists by buying their work.”

But how do the CFOs of these big companies justify the money they’re spending on art programs? Segran says there’s usually a payoff for the corporations too. In the case of software maker Autodesk, “…it allows them to see these very creative people pushing technology to the very limits of what it can do,” Segran says.

In Somalia, wire transfers go underground

Tue, 2015-03-24 13:33

Four years ago, famine in Somalia took an estimated 260,000 lives. It would have been worse without a key source of financial support: money transfers from relatives abroad. Family members "could send money in five minutes from Minneapolis to Baidoa," says East Africa scholar Laura Hammond of the University of London School of Oriental and African Studies.

Now, though, commercial banks that process remittances have pulled out of the sector. Banks fear extremist groups may be abusing the system to fund terror operations, and that they'll be punished by U.S. regulators for allowing risky transactions.

"Banks have decided to exit relationships in high-risk jurisdictions," says bank consultant Dennis Lormel of DML Associates. He trains banks to reduce money laundering and terror finance risk. "It's just not worth it to them. The benefit certainly doesn't meet the risk."

Will more Somalis starve? Perhaps not. Many transfers have gone underground. It's an open secret that couriers are hand-carrying wads of cash across borders, and sending money via non-armored vehicles. Lormel says the risk of so much money moving this way is that it's not tracked and becomes a channel for potential money laundering.

"If I'm a bad guy, I'm going to be more inclined to want to move money though those guys," he says. The suggestion: well-intentioned bank oversight may be backfiring and aiding terror finance.

To Hammond, it's also worrying for Somalis. Remittance make up as much as 40 percent of Somalia's GDP, and money transfer groups say less money is going in. If this financial safety net is fraying, the question is whether it will still be there when the next drought inevitably comes.

There's more than money in the Army's handgun contract

Tue, 2015-03-24 13:22

Today, the official handgun of the U.S. Army is the Beretta M9. But it may not be that way for long.

The Pentagon is searching for a new handgun for its soldiers. The request for proposals envisions a modular handgun system. Sounds simple, but the Army has only been in the market for its official gun twice before, so gun manufacturers have a lot riding on the contract. And it’s not just about the money.

Beretta learned that lesson when it won the Army's gun contract back in 1985. It was something of a coup for the Italian company — until then, the company was best-known for making boutique-type hunting rifles.

Beretta has made the Army's M9s in its Accokeek, Maryland headquarters since 1987. At the height of the Army contract, it employed about 500 people, but today it’s around 300. Gabriele De Plano, Beretta’s vice president of military marketing and sales, says that when Beretta won the contract, the impact was immediate.

"Law-enforcement agencies started to adopt the Beretta M9 or the equivalent commercial version, a lot of state-police agencies adopted the M9, the civilian market all of a sudden took greater note of our products," he says. 

But the Army’s new request for proposals for a modular handgun system is a sign that the military isn’t satisfied with the M9. There are some well-known complaints: its magazines get stuck in hot, sandy environments like Iraq and its grip is too big for those with small hands, like female soldiers. De Plano says Beretta tried to address some of those complaints with an updated version called the M9A3.

"The pistol itself operates exactly the same way, which is one of the great advantages," he says. "If you know how to shoot the old pistol, you know how to shoot the new pistol."

Beretta submitted this updated version as an “Engineering Change Proposal” to the existing contract, but the Army didn't bite. 

Brian Friel, a government-contracts analyst with Bloomberg Intelligence, says that's because the government wants a wide-open competition for its new modular system. And it's no wonder Beretta submitted the M9A3 to try to keep its contract. 

"The value of a government contract is beyond its nominal dollar amount because there's something of a good housekeeping stamp of approval that comes with the Army or an agency picking your gun to put in soldiers' hands," Friel says. 

That nominal dollar amount is actually low, in the grand scheme of Pentagon acquisitions. The Department of Defense only spent about $400 million over the life of the 30-year Beretta contract. Contrast that with the overall civilian gun market in America, which is worth around $7 billion per year, or the hundreds of billions spent on the yet-to-be-delivered F-35 fighter jet.

Mike Greene, an analyst with defense consulting firm Avascent, says gun manufacturers want this contract so they can be "The Army Gun."

"There are six, seven, eight million concealed carry holders in the U.S., which is a lot larger number than most people realize," Greene says. "Those people are carrying a firearm, those are regular civilians who are carrying a firearm every day."

Because the consumer-handgun market has grown so exponentially since the last Army gun contract in the 1980s, "in this case, the consumer market may drive what the military chooses," Greene says. "The research and development is all on the consumer side."

Even if Beretta doesn’t win this contract, its relationship with the Army will continue to have cachet. Its predecessor, the Colt M1911, was the army’s gun for 70 years. And to this day, it still has a devoted following.

An inside view from Y Combinator's exclusive Demo Days

Tue, 2015-03-24 12:39

Investor Erik Moore has spent the past two days watching dozens of pitches from tech companies covering a wide range of services, causes and vowel-dropping names. But these aren't the dime-a-dozen startups that are saturating Silicon Valley.

Moore has been at Y Combinator's "Demo Day," where a select group of startup companies supported by the Silicon Valley accelerator can pitch their ideas to an exclusive group of investors.

The big demonstrations just wrapped up Tuesday and we emailed Moore, an original investor in Zappos and head of Base Ventures, to get his perspective from the ground. The interview has been lightly edited for clarity.

How many times have you been to YC’s Demo Day?  Even just reading through all these names and concepts, things start to blend together. How do you sift through all the hype and boilerplate?

I’ve been going to YC for four years now. It was hard the first several years, but you get better at it, like anything else. You come to realize that as great as YC is (and it is great), that not each startup will win. So you ultimately go back to the same filter that you impose on non-YC companies. There's so much fanfare and noise and chatter and excitement around YC in general, and certain companies in particular, that newbies – investors not used to the bustling marketplace atmosphere – can get caught up and overwhelmed and want to invest in companies without regard to their normal evaluation and diligence process.

What’s the thread running through YC this year?

Lots and lots of biotech, healthcare and medical companies, a handful of food companies. There are a handful of non-profits, but noticeably fewer than previous batches.

How do you assess a startup coming out of YC that already has a fair amount of hype behind it, like Magic’s “ask for anything” service?
 
The top two or three companies that are hot, like Magic, are "done"; meaning their funding round is fully (or even over) subscribed before Demo Day. To a certain extent, the best of the best companies get handpicked, and only "club members" – the special, well-known, or highest profile of the investors – get to invest. But as I mentioned earlier, you absolutely must do some modicum of diligence and not get bitten by the hype bug.

There’s ongoing speculation about whether Silicon Valley is in a “bubble” moment, with inflated valuations and lots of money being thrown at young companies. How does this play out at events like Demo Day?

It's fun for people to talk about, "Demo Day valuations are creeping up." You should invest during all cycles. If an investor believes that she is smart enough to predict when the top of the market has arrived and sell, or when the bottom has arrived and buy/invest, they are fooling themselves. I invested in Zappos during the first bubble in 1999 and 2000, and it sold in 2009 - the worst time possible - for 50 times my investment.  

That said, I believe that a bubble is brewing. There's tons and tons of money, often from non-tech or new-tech investors, startup valuations are getting even higher, and there's a proliferation of ideas being funded because they "sound" good. And because it's so cheap to start a company these days, it's become the thing to do: "I'm starting a tech company."

Our companies are producing enough revenue that we hope will keep them solvent through any downturn.
 
By the way, at YC Demo Day, deals get done on the spot, with firm commitments. They have what's called the "handshake protocol," and YC also makes it easy to connect with start-ups by "liking" a company as they pitch via their web app, then they follow up with an email. During breaks and before or after pitches, there's time to meet all the startups who standout by wearing hoodies, or pink pants as a team.

Anything else we should know about Demo Day? 

There was a very distinct absence of Bitcoin startups, and non-profits.

It's hard to make an investment decision after a two-minute pitch that usually does not include much about the founders and why they are the right founders for this startup.
 
Finally, there is a very definite hierarchy of investors and if you're part of the in-crowd, you see the very best deals early. Pays to be an insider!

If cars don't need drivers, do drivers need insurance?

Tue, 2015-03-24 12:33

As driverless cars go from science fiction to fact, the multi-billion dollar auto-insurance industry is trying to figure out how not to be run off the road.

Today, 90 percent of car crashes in the United States are due to driver error. But that percentage could plummet as  autonomous and semi-autonomous technology makes driving safer.

The Insurance Institute for Highway Safety says that if all cars had some semi-autonomous systems, such as collision- and lane-departure warning systems, nearly a third of all crashes would be eliminated.

And with fewer crashes come fewer losses for insurers to cover and declining premiums,  says Donald Light, who researches the impact of technology on insurance at the consulting firm Celent.

"The overall size of the automobile insurance industry, over say a  ten-to-15-year period, is definitely going to shrink," says Light.

Auto-insurance premiums totaled about $200 billion in 2013. Light predicts that amount eventually could by up to half.  

"The amount of losses are going to be a lot less and the premiums are going to be a lot less," he says.

And safer, automated cars will not impact just the auto-insurance industry. There will be fewer injured drivers, less need for repairs and lower demand for replacement parts and roadside assistance.

Agero, a roadside assistance and data-analysis  company, has already seen a decline in its business, says its Senior Vice President of Strategy Jeffrey Blecher, adding that the insurance industry is already adjusting its business model.

"The whole concept of usage-based insurance is understanding driver behavior and driver risk," says Blecher, "But when you get into a semi-autonomous car, what are you assessing? Are you assessing how the car drives?"

Agero is working with auto insurers to provide them with driver data collection tools, to find new ways of assessing risk and pricing premiums, and to create a research initiative to figure out safety questions with autonomous driving systems.

These are things the industry will have to figure out soon, says Blecher. That's because even if fully automated cars aren't yet zipping on highways, partially automated cars are already here.

Tesla has added an auto-pilot feature to its electric cars. Mercedes, BMW and Volvo have some automation as well. And Cadillac, Ford, GM and Nissan have all announced some amount of automation in their cars to come by 2020, at the latest.

"And what we don't know is do these systems actually improve safety or not? That's one of the fundamental questions," says Blecher.

That is exactly the question that Neville Stanton has been working on for about 20 years. He researches the safety of car automation systems at the University of Southampton in the UK.

Stanton has found that how safe a car is depends on how automated it is. And too much automation, he's found, is actually less safe.

"It takes drivers five times as long to respond in emergency in a fully automated vehicle as it does in a manually-controlled vehicle," says Stanton.

But, Stanton says, new semi-automated cars, which include features such as collision and lane-departure warnings, and blind-spot monitoring, are safer, because the driver is still in control.

"So the driver's still manually in control of the vehicle, but the automation's been there to support them in that driving task. So it's not taking over that driving task," says Stanton.

But how safer self-driving cars will effect an auto-insurance industry where premiums are based on crashes, loss, risk assessment and human factors remains unclear.

"As long as you own a vehicle, there's always going to be a need for some sort of liability insurance," says Michael Barry, a spokesperson for the Insurance Information Institute, an industry group.

While drivers might need less coverage if cars are safer, Barry says, insurers may find other revenue streams. For example, carmakers might need more coverage.

"There's product liability insurance today," Barry says, "But it will take on added importance for the manufacturers of self-driving vehicles, if in fact they become the target of lawsuits as time goes on."

Organizing India's Informal Workers

Tue, 2015-03-24 12:25

Shri Ram sells papaya in a neighborhood market in Delhi.  His business is simple. He buys Papaya from a wholesaler and sells them to individuals in a small cart.  But in 2010, something happened that altered the course of Ram’s life.

That was the year that India hosted the Commonwealth Games. Ram and the other vendors who sold in the market near the stadium were told by the Municipal Corporation of Delhi, the MCD that they would be temporarily removed from their location but they could come back after the games were over. But after the games the MCD said Ram and the other vendors’ licenses had been cancelled.

Ram explains that the MCD demanded 100,000 rupees—about $2000 — to give them their licenses and land back.  Just to put that in context, Ram earns about $1,600 a year selling papaya.

The vendors got together and collected 30,000 rupees.  They were allowed back into the market, but the vendors failed to raise the additional funds. So their stalls were bulldozed. 

Stories like this are common among street vendors in India according to the National Association of Street Vendors of India. NASVI has roughly 500,000 dues-paying members. The organization provides low-interest loans to members, offers training, organizes street food festivals with the Ministry of Tourism and helps vendors fight extortion.

“You talk to any vendor they will say they give to police, municipality, they will give to anybody and everybody. Anybody who gets an opportunity extorts money,” says Arvind Singh, the head of NASVI.

The best tool vendors have to fight this type of extortion is to organize, Singh says.

Organizing is exactly what Ram and the other vendors did. After their homes and businesses were bulldozed, they sat in protest in front of the government building for 13 days, and thanks to NASVI they met with a prominent lawyer who offered to take their case pro bono. The court has yet to reach a verdict, but the vendors are still allowed to sell in the market.

 The experience has changed Ram. He now considers himself an organizer.  On a recent tour of an East Delhi market, he pointed out street vendors he has helped, including Suresh. 

Suresh used to only sell a single dish from a cart. Today he has this shop with three tables and a full menu that includes traditional Indian dishes and Chinese food. On one wall of the shop is a certificate from a NASVI workshop where he learned budgeting and negotiating.

Suresh now has 10 employees. He makes a profit of about $15 dollars a pay, a pretty good wage for a street vendor.  He has been able to give his children an education, something he never had.  They are getting master’s degrees and he expects they will make it into the middle class.  

Ted Cruz is Obamacare's latest customer

Tue, 2015-03-24 09:54

Texas Senator and presidential candidate Ted Cruz, as you may know, has been a vocal and active opponent of the Affordable Care Act.

The Senator himself and his family had, until yesterday, gotten their health insurance through his wife, a managing director at Goldman Sachs.

Mrs. Cruz is now on unpaid leave during the campaign, which means, as the Senator told the Des Moines Register, that he and the family will be signing up for Obamacare.

Facebook seeks new friends in media companies

Tue, 2015-03-24 09:02

Facebook is reportedly in talks with a handful of major publishers — think The New York Times and Buzzfeed — about hosting their news stories directly on the social-media site.

Details are scarce on how this all would work — The New York Times Company wouldn’t even comment to its own reporters — but the basic idea seems to be that while users are looking at pictures of their friend's new baby, they could also seamlessly get the latest news about, say, the Iran nuclear talks without clicking to an outside site and waiting for that page to load.

News companies are already dependent on Facebook for the traffic it sends them, says Ken Doctor, a media analyst for Newsonomics. If publishers could cement their relationship with Facebook, plus get a share of advertising and access to data Facebook has on users, Doctor says that could be a deal worth making.

But there are still lots of risks and questions to be answered, says Joshua Benton, director of the Nieman Journalism Lab at Harvard. Questions include how much data will be shared, what happens to news organizations’ paywalls, and how will publications maintain their brand identities.

In sum: should media companies give up control in exchange for a bigger audience?

Facebook has 1.4 billion monthly users and it needs to keep those users happy, says Aaron Kessler, a senior research analyst with Raymond James. The longer users spend on the site or app, the more ads Facebook can serve them. 

Banks struggle to create "living wills"

Tue, 2015-03-24 09:00

On Monday, regulators rejected the "living wills" drawn up by BNP Pariabas, Royal Bank of Scotland and HSBC.  These plans, required by the Dodd-Frank financial reform legislation passed in 2010, are supposed to help end the era of "Too Big To Fail" by making systemically important financial institutions plan for their own demise.

But what is a "living will" for a bank? 

Oliver Ireland, partner in the financial services practice at Morrison and Foerster, says it's about having a plan that maps what happens after a bank's failure. "Is this going to solve all the problems? Probably not," says Ireland. "But, if you thought about it ahead of time, you're going to be in a lot better shape than if you haven't."

Mike Konczal, fellow at the Roosevelt Institute, says the shortcomings the Federal Reserve and FDIC have found in some banks' "living wills" are in part about inadequate analysis of interconnections. 

Rob Johnson, president of the Institute of New Economic Thinking, says inadequate "living wills" are themselves a product of incentives: Bankers would prefer to see their companies — and their stock options — bailed out.

"They have a stake in having a muddy or bad or not-credible living will," says Johnson. 

BNP Paribas, the Royal Bank of Scotland and HSBC must submit new plans by Dec. 31.

Quiz: Who’s in charge here

Tue, 2015-03-24 08:12

Almost two-thirds of school administrators are women, according to the U.S. Census Bureau.

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The "Angelina Jolie effect" on medical testing

Tue, 2015-03-24 03:01

Two years ago, actress and filmmaker Angelina Jolie wrote in the New York Times of her decision to have a double mastectomy. The surgery was preventative. Jolie carries a mutation of the BRCA1 gene, heightening her risk of breast cancer. In the months after the op-ed appeared, researchers discovered what they now call the "Angelina Jolie effect." 

"What we noticed is that very soon after Angelina Jolie went public with her risk-reducing surgery for her breasts, that there was a massive increase in referrals to clinics dealing with inherited breast cancer," said Gareth Evans, a professor of genomic medicine at Manchester University. His research focused on women in the UK, but he said similar trends were found  in the U.S., Australia and Malaysia. 

Today, in another op-ed, Jolie writes of her choice to have her Fallopian tubes and ovaries removed. Evans says he suspects clinics will see a similar bump in referrals. Many medical professionals have pointed out that Jolie's particular medical circumstances are uncommon, but say that awareness, as long as it is informed, is a positive thing.

PODCAST: Spicing things up

Tue, 2015-03-24 03:00

We haven't lost the thread that low gasoline prices are helping American pocketbooks and businesses that consume fossil fuel. But we are also watching the effects on an oil and gas industry. And guess who's warning loudly about the potential health effects of electronic cigarettes. More on that. Plus, all over the news today, a new study suggesting that whole grains in the diet is associated with people living longer. Eating healthier is also pushing people to cook more instead of just pulling something out of the freezer. This trend has been good to the spice company, McCormick where profits out today beat estimates. 

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