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The value of negative thinking

Mon, 2014-05-26 06:25

It turns out anxiety-- that nagging feeling that something, everything might go wrong -- actually has benefits in the business world. Wharton Business School professor Adam Grant joins Marketplace Morning Report host David Brancaccio to discuss the value of negative thinking. Click on the audio player above to hear more. 

A stroll across the Golden Gate Bridge

Mon, 2014-05-26 05:09

From the Marketplace Datebook, here’s a look at what’s coming up Tuesday, May 27:

In Washington, President Obama will host the 2014 White House Science Fair and celebrate the student winners of a broad range of science, technology, engineering and math (STEM) competitions from across the country.

U.S. Secretary of Labor Thomas E. Perez, will participate in his first live Facebook Q&A to discuss the "importance of increasing the federal minimum wage, ensuring our workforce has the skills to succeed in today’s economy, and equal pay."

On this day in 1930, Richard Gurley Drew received a patent for his adhesive tape, later manufactured by 3M as Scotch tape.

And in 1937, 200,000 pedestrians crossed San Francisco’s Golden Gate Bridge on its opening day. Cars weren’t allowed on the span until the next day.

In prison and getting an education

Mon, 2014-05-26 04:46

In a ground floor classroom, dark but for the glare of fluorescent lights, about a dozen men are discussing "The Odyssey." They’re talking about the part where Odysseus comes home after being away for so long. 

It’s hard not to imagine that the story has an added poignancy for them, students in the Bard College program at the Woodbourne Correctional Facility, a medium-security prison inupstate New York. 

Earlier this spring, New York Governor Andrew Cuomo presented a new plan for higher education. Citing the cost savings of preventing recidivism and helping newly released inmates find jobs, he said that New York planned to set up—and fund—college programs at 10 prisons around the state. Soon after, though, some New Yorkers began complaining that it was unfair for the state to fund education for prisoners, when many middle class families are struggling to pay for college. The plan was dropped. 

But the Bard Prison Initiative has been offering college courses -- and degrees -- to prisoners around New York State since 1999.

It may sound abstract, said BPI’s founder and director, Max Kenner. But he thinks a liberal arts education is a better investment than many vocational training programs.

“Nothing prepares people for the challenges of the workforce like a liberal education,” he said.  “Liberal education is the best vocational education we can provide, because it trains people to respond to the dynamics of their circumstances.”’

The sample size is small -- Bard only has about 278 graduates. But Kenner says that of the alumni the college is still in touch with, around two-thirds of them have gotten jobs and/or continued their educations after leaving prison.

And he says the actual cost of running college programs in prison is cheap.

“The round number that we’ve come up with is roughly $5,000 a year,” he said. “And that is books, teachers, and the administrative cost of staff or the people who oversee the programs.” (Part of the reason it’s so much cheaper than regular campus-based programs is that it a lot of the fixed costs, say for the physical plant, are a already covered.)

The Rand Corporation did a study recently, looking at all the studies that have been done about the benefits of prison education. Lois Davis, one of the report’s authors, says she found the real economic benefit of educating inmates is that education makes people less likely to recidivate.

“For every dollar spent on correctional education programs, you save about four to five dollars on reincarceration costs,” she said. “That’s a huge difference in terms of cost-effectiveness.”

Having a job is another thing that helps keep people from coming back to prison, but having a criminal record can make it hard to get a job. 

Francisco Feria, who’s been incarcerated since he was 16, for robbery and assault, got his GED when he was in the county jail. Now 24, he hopes his Bard degree will help him get a job when he gets out of prison.

“College or not,” he said. “I’m still considered a felon. I’ve committed a crime. And that’s always going to follow me throughout my whole life, but I just think that college just boosts that chance that much more.”

Feria got his associate’s degree this spring, and plans to spend the last two years of his sentence getting his bachelor’s.

Merger push means big lobbying effort

Mon, 2014-05-26 02:43

Comcast is going to war in its pursuit to merge with Time Warner Cable. The telecom giant has reportedly bought up lobbyists at 40 different firms around Washington.

There's a simple way you could describe Comcast's strategy: have an unlimited budget and then exceed it. The Sunlight Foundation’s Bill Allison says the nation’s capital eats it up.

“You know Washington is the kind of girl that always falls for the dozen of flowers sent three or four times a day,” he says.

By the looks of it, Comcast’s got all the florists on speed-dial. According to the Center for Responsive Politics, the company spent nearly $20 million dollars lobbying the federal government last year, putting it in the top 10, and it is on track to be there again this year.

Former FCC chief of staff Blair Levin says this is less about influencing Congress than convincing regulators and Comcast competitors this is a done deal.

“Because if you have the impression this deal is going to go through and everybody is going to rearrange their lives, it’s much harder for a government to act in a way that upsets those expectations,” he says.

Levin says there is something of a firewall. He says regulators at the Department of Justice – key decision-makers in telecom mergers – are historically immune to lobbying campaigns, regardless of size.

The right to be forgotten... or, at least, edit

Mon, 2014-05-26 01:00

The Venn Diagram of "people who use the internet" and "people who have googled themselves" is pretty much just a circle. And if you've participated in such an activity, you know the fear of turning up an item of your past that you'd rather not have available to the public at large. 

Mario Costeja Gonzalez of Spain certainly knows how that goes. His case against Google argued that he should have the right to remove links to an article detailing his debt to the government (which he has since settled). The European Union ruled in his favor, thus creating "The Right to be Forgotten."

While there are still questions of exactly how this ruling will play out, Jonathan Zittrain, professor of law at Harvard and co-founder of the Berkman Center for Internet and Society, certainly understands the desire to control one's online identity, or as he puts it: "that first magic page result on Google, in particular, does more to define you than pretty much anything else."

Zittrain also points out that Google has experimented in the past with features that let users influence their internet presence. In 2007, for example, Google News allowed people who were quoted or mentioned in an article to add a comment contextualizing the content pertaining to their name and reputation.

It's this kind of curation that gets the regulation of the internet into a gray zone, according to Zittrain.

With Google being merely a search engine -- a machine, if you will -- no one is to blame for a curated selection of materials that appear when someone is Googled. According to Zittrain, when you add a hand-picked element, however, and regulating becomes more problematic:

"The more curated that [Google results] is -- whether by machine or by human -- the more it deserves some kind of scrutiny and possibly an ability to contextualize for people who are mentioned or implicated by those results."

What do John Wayne and Dracula have in common?

Fri, 2014-05-23 15:45

From the Marketplace Datebook, here’s a look at what’s coming up Monday, May 26:

The markets and most government agencies will be closed in observence of Memorial Day.

But that needen't stop you from celebrating the birth of American actor, John Wayne, star of well over 100 westerns.

Or, you can spend the holiday re-reading Bram Stroker's Dracula, which was published on this day in 1897.

Swim team, chess club, drones?

Fri, 2014-05-23 14:45

Laptops, tablets, calculators.  For lots of high school students, technology has become pretty routine. Not so for students at three Illinois high schools.

Those students are building drones, as part of a program funded by the a  National Science Foundation, and created by Matthew Schroyer, an amateur mechanical engineer, and a  journalist who promotes using drones in investigative reporting.  

Schroyer, who is based at the University of Illinois, also trains teachers in how to incorporate creative science and tech education into their classes. If he had his way, he’d just be out there building drones with the kids all day.

"My favorite thing is to help the students just put those things together,” Schoyer said.

Students build the drones, and then use them in ways that benefit the local community.  One group did low-flight photography of local corn and soybean fields, to gather information about the plants for a biological survey. Another helped map out a local quarry, using the same aerial photography techniques.

Schroyer’s aim is to make drones an integral part of the science curriculum.  Students could build and fly very small drones indoors, he said.  

So if you catch your kid with aerial photos of your neighbor’s backyard someday, don’t be alarmed. He may just be doing his homework.

What does HUD do?

Fri, 2014-05-23 13:57

President Obama has nominated San Antonio Mayor Julian Castro as secretary of the Department of Housing and Urban Development, or HUD.

Now, if you wanna be HUD secretary, there are a few things you should know. No. 1: HUD doesn’t have a say in the biggest federal housing initiative, the housing deductions in the federal tax code.

“HUD has not traditionally been one of the most powerful cabinet agencies,” says Robert Van Order, a former HUD economist who now teaches finance and economics at George Washington University. Van Order points out a second challenge facing Castro: HUD’s budget has been cut. 

Still, Van Order says, housing is important, especially now when it’s so key to our economic recovery. 

“And so the secretary of HUD has to represent housing as a part of the discussions of what legislation ought to be,” he explains.

Henry Cisneros, who was HUD secretary during the Clinton administration, says the top boss at HUD still sets priorities for housing.

“A HUD secretary can make a difference," he says.  "Tweaking policy and budgets. Working with the Congress.”

And Cisnerso says, don’t forget the Federal Housing Administration , or FHA, is part of HUD. It insures housing loans for people banks pass over.  And during the housing crisis, it was "essentially the only source of credit for first-time homebuyers in particular, but minority homebuyers as well,” says Erika Poethig, who worked on policy development at HUD and left last year to join the Urban Institute. 

Poethig says Castro will have plenty of work to do as the housing recovery sputters along.  

That is, pending a Senate confirmation vote. 

The millennial takeover

Fri, 2014-05-23 13:04

This final note today comes to us from the Bureau of the Census. They did a whole big data dump this week buried deep inside of which was this tidbit:

The most represented age in the American population, that is the biggest age group, is 22 year olds. The second largest group is 23 year olds, then followed by 21 year olds.

Then and only then in fourth place a baby boomer- a poor lonely 53 year old.

There are now more people in their 20's in this country, yes, millenials, than any other group.

The Weekly Wrap: Still waiting for a housing boost

Fri, 2014-05-23 13:03

Housing is up today, but the market still remains bleak and has yet to provide us with any sort of economic boost.

John Carney with the Wall Street Journal believes we're still burned out from last year. 

"We had so much refinancing the last year that we sort of smuggled forward a lot of housing energy with low interest rates last year. There's just not a lot of juice. Everybody who wanted to refinance has. With wages sitll pretty low and unemployment still high, there's not a lot of new household formation going on."

Linette Lopez from the Business Insider adds, "And the people that could possibly refinance are thinking:  Hey, maybe the Fed is going to raise rates soon, so why don't I just forget about this for now."

And with that, we move on to Credit Suisse. Early this week, Credit Suisse pleaded guilty to criminal charges of tax evasion, which coulld lead to additional related cases.

"When they criminally charged Arthur Andersen and the firm collapsed, that scared everybody to death. The prosecutors were loathed to actually charge criminally big corporations. What we've seen now....is that it's in fact surviveable. It doesn't just mean you go out of business when you're criminally charged. You can even plead guilty which is what Credit Suisse did... So I think prosectuers will now no longer fear it's a death sentence for corporations," says Carney.

In mergers and acquisitions news this week, AT&T also announced its plans to buy DirecTV for $48.5 billion on Sunday and we broke the news on Monday. There seems to be more corporate get togethers happening lately. 

"There's probably a lot of pent up demand deals that haven't happened , so we're going to see a lot more of that," says Carney.

"When you're talking about AT&T and Direct TV, they're going to have make a lot of promises to consumers to insure and assuage the views of politicians that everything is going to be okay. And I'm talking about no bundling, helping people in rural areas get faster internet connection. The companies are going to have to sweeten the pot so that the government believes this isn't going to be monopolizing or hurting consumers in any way shape or form" says Lopez.

Overall, everything seems to be going a million miles an hour on Wall Street.

"It was expected," say Lopez. "As David Tepper said last week at a Wall Street conference, 'it's nervous time!' He said, 'I wouldn't go short. But don't be too long. It's time to keep some cash. So everybody just hold on to your hats until everything stabilizes.'"

...And that's the guy who made $3.5 billion last year!

Amazon and the publisher

Fri, 2014-05-23 13:02

Publisher Hachette, and some of its authors, are complaining that Amazon is cutting them out. Amazon and Hachette are in the middle of negotiations over pricing. As a negotiating tactic, Amazon allegedly is listing Hachette’s books as unavailable, delaying shipping, and advertising similar books at lower prices. 

“I can see on the page that Amazon is trying to tell people to buy other books at lower prices elsewhere and that my book won’t ship,” says writer and illustrator Nina Laden.  Laden’s book, “Once Upon a Memory” sank precipitously in the book rankings as a result, she contends.  “I find myself caught in the middle.”

Laden’s complaint belies a not uncommon concern over Amazon’s dominance of the book business. Amazon controls more than a third of the book business in the United States, but it’s far from a monopoly, says Gerry Guttman, a publishing consultant with Lexicon Group. “In fact, what they would say is all they’re doing is trying to get the books to consumers at the cheapest possible rate.”

In the long run, Amazon promises more returns for authors, according to best-selling author Joe Konrath. 

“In the past publishing has had as much power as amazon and they were incredibly irresponsible with that power,” says Konrath.  “Amazon is keeping prices low, they’re giving authors much better rates than any publisher in history ever has – 70 percent compared to 12.5 percent.”

Konrath left Hachette to publish through Amazon. He says authors upset with Amazon’s treatment of the publisher have the option to switch. 

It’s not clear, however, whether there is a single winner for consumers. “The outcome of this dispute, even if it in the short run leads to higher prices or contract terms that prevent Amazon from discounting, that’s not so bad for consumers,” says Geoffrey Manne, director of the International Center for Law and Economics. “Consumers don’t want to pay high prices – but if it maintains profit margins allowing companies to enter into the market” and compete, “those things are good for consumers.” Amazon wants lower prices now, but perhaps slightly higher prices would invite companies such as Apple to compete with Amazon, bringing lower prices later.

Regardless of what, ultimately, will benefit consumers most, “It’s a fight over margins. Both publishers on the one hand and Amazon on the other are struggling for profits right now.”

But in the short term, from the perspective of the affected authors, it’s like the Kenyan phrase, “when elephants fight it’s the grass that suffers.”

Hewlett-Packard's innovation trend flattened long ago

Fri, 2014-05-23 13:01

Hewlett Packard helped create Silicon Valley. Bill Hewlett and Dave Packard started the company out of a garage in Palo Alto in 1939, and innovated like crazy for decades. But the company hasn’t been in the innovation business for quite some time, and it’s had a rocky 15 years. CEO Meg Whitman announced up to 16,000 layoffs Friday— bringing the total for this round to 50,000. And this is the sixth or seventh round of cuts since 2002.

Tech writer George Anders wrote the book on HP—Perfect Enough, which looked at the company’s efforts to reinvent itself in the late 1990s— after its work in innovation was over.

Hewlett-Packard’s last great innovation came about 30 years ago, says Anders, when it introduced the inkjet printer and the laser printer. "And that started as a small, stumbling little business with low-quality products, and it just kept getting better and better and more competitive."

After that, the company was too focused on looking for monster hits to tinker around with the little innovations that had made the company great. "At the boardroom level," says Anders, "HP was always thinking, 'Where’s the next printing business?'”

A series of CEOs came and went. HP bought companies and cut workers. A 2008 layoff made at least one list of all-time biggest mass firings. This round of cuts, which started in 2012, is twice as big.

However, tech analysts say the company has a future. For one thing: It’s now the old dinosaur — HP’s major revenue comes from serving giant corporate clients — and that comes with advantages. "The case for legacy companies is that they have client relationships, they have client trust," says Jim Kelleher, a tech analyst with Argus Research. He says the core business HP is now in — managing data — is growing.

Even though that business is threatened by cloud computing, HP has time to make a transition, says Brent Bracelin from Pacific Crest Securities. "That $110 billion billion dollars of infrastructure that they sell annually doesn’t move to the cloud overnight," he says.

Hewlett-Packard's innovation trend flatened long ago

Fri, 2014-05-23 13:01

Hewlett Packard helped create Silicon Valley. Bill Hewlett and Dave Packard started the company out of a garage in Palo Alto in 1939, and innovated like crazy for decades. But the company hasn’t been in the innovation business for quite some time, and it’s had a rocky 15 years. CEO Meg Whitman announced up to 16,000 layoffs Friday— bringing the total for this round to 50,000. And this is the sixth or seventh round of cuts since 2002.

Tech writer George Anders wrote the book on HP—Perfect Enough, which looked at the company’s efforts to reinvent itself in the late 1990s— after its work in innovation was over.

Hewlett-Packard’s last great innovation came about 30 years ago, says Anders, when it introduced the inkjet printer and the laser printer. "And that started as a small, stumbling little business with low-quality products, and it just kept getting better and better and more competitive."

After that, the company was too focused on looking for monster hits to tinker around with the little innovations that had made the company great. "At the boardroom level," says Anders, "HP was always thinking, 'Where’s the next printing business?'”

A series of CEOs came and went. HP bought companies and cut workers. A 2008 layoff made at least one list of all-time biggest mass firings. This round of cuts, which started in 2012, is twice as big.

However, tech analysts say the company has a future. For one thing: It’s now the old dinosaur — HP’s major revenue comes from serving giant corporate clients — and that comes with advantages. "The case for legacy companies is that they have client relationships, they have client trust," says Jim Kelleher, a tech analyst with Argus Research. He says the core business HP is now in — managing data — is growing.

Even though that business is threatened by cloud computing, HP has time to make a transition, says Brent Bracelin from Pacific Crest Securities. "That $110 billion billion dollars of infrastructure that they sell annually doesn’t move to the cloud overnight," he says.

Biometric underwear helps monitor the sick

Fri, 2014-05-23 11:55

We’ve all heard about patients using various apps and devices to track their health.

Well a hospital in Greece has taken what sometimes is called telemonitoring to a whole new level.

Doctors gave patients with the lung disease COPD biometric underwear to keep tabs on their heart rate, breathing and activity levels.

Biometric underwear goes against the rule of thumb in the world of wearable technology that fashion matters.

Unless, the Robert Wood Johnson Foundation’s Steve Downs says you’re sick. 

“In the case of somebody who is discharged from the hospital for COPD they may have a very strong motivation for putting on something that may or may not be comfortable,” he says.

In the case of the biometric underwear whatever discomfort there was, may have been worth it.

Patients left the hospital sooner, were less likely to come back and had fewer follow-ups.

A path to lower costs and improved health.

“The promise of this technology is that it allows you to have the data about effective the treatment is so you can make the kind of adjustments to get the best outcome,” says Downs.

These tantalizing possibilities drive the rush into wearables.

IHS Electronics and Media projects in just three years, it could be a $60 million dollar industry.

But it’s a tricky business says Dr. Jesse Shantz, Chief Medical Officer for Montreal-based startup OMsignal which has just introduced a line of workout shirts to monitor heart and breathing levels.

“To be successful in this, you have to become commercially viable. To be commercially viable you have to pick a narrow consumer segment and give them what they need,” he says.

The difficult question for consumers is what do they need?

“I think there is going to be a lot of chaos and cacophony until they figure this out,” saysDr. Bob Wachter, a health professor at the University of California San Francisco.

“I’m just worried that your mom, who is 80 years old but fine is in Boca. And here you are the daughter who is sitting in Philadelphia and the sensor that she’s wearing in her underpants shows that her heart rate just went up by 10 or 15. What do you do?”

Wachter expects Madison Avenue to convince the worried that collecting real time data helps you and your loved ones.

But right now, it’s the truly sick who may benefit the most from wearables fashion be damned. 

Ukraine's industrial heartland is up for grabs

Fri, 2014-05-23 11:19

Ukrainians head to the polls on Sunday. Well, maybe. 

Mark Lowen says that, in chaotic eastern Ukraine, the election may not even happen.

“You do occasionally stumble upon armed groups in the city center,” says Lowen, a BBC correspondent in the eastern Ukrainian city of Donetsk. “But if you go out of Donetsk to [the outlying towns] they are totally in the hands of pro-Russia armed militias.  There is a siege-like atmosphere there, and that is where the election will not be held at all.”

Lowen says that losing eastern Ukraine to separatists would be a huge economic blow to the Ukrainian government.

‘This is the industrial heartland of the country," he says, "There is a massive mining, steel, iron industries... it is an extremely important area. If Kiev loses control of this area entirely it loses a massive chunk of its economy.”

The front runner in the presidential election is a candy making billionaire named Petro Poroshenko. He's reached out to the east -- if elected he says his first trip will be to Donetsk. But Lowen says he's still a controversial figure.

"His pro-European stance will go down well in Kiev and western Ukraine," Lowen says, "But less well here in the east, where there are many people who still feel Ukraine should have closer ties to Russia."

A grand tour of Marketplace(s) in London

Fri, 2014-05-23 09:59

While the Marketplace Morning Report team visited London to broadcast from the BBC this week, we've featured audio postcards in and around the city's many neighborhoods. 

We also enlisted our BBC colleague and producer Marie Keyworth to serve as our guide on the city's vast and popular markets, traveling to Smithfield Market, a popular meat market, to Portobello Road where antiques and other goods are sold. At each stop she helped us gather snippets of people selling foods and other goods.

We asked Marie to give us an overview of London markets, and her recommendations:

There are more markets than you can shake a stick at in London.  It’s impossible to suggest to a visitor which is ‘the’ market to go to. The conversation can quickly become a long exposition, listing the various, unique, and equally interesting options available. A London market is always a true sensory experience – it just depends which one you want.

If buying meat at 3:00 am from friendly foul-mouthed traders is your thing, then head to Smithfield Market in Farringdon.  It’s Europe’s largest meat market, and it’s been around since 1868. It’s the coal-face of the food industry in London, where restauranteurs and caterers of all shapes and sizes come to buy their meat each day. But members of the public are welcome to buy on a smaller scale, if you’re not put off by the odd trader in a bloody-splattered white suit, or rows of dead piglets lined up in a fridge as if they are just sleeping.

For those who want a more rarefied atmosphere, with a touch of Hollywood glamour, a twenty minute tube ride across town gets you to Notting Hill and the famous Portobello Road market. The area was brought into public consciousness with the help of the film ‘Notting Hill’ in which Hugh Grant and Julia Roberts fell in love in a house just a stone’s throw from the market itself. Head to Portobello Road on a Saturday and you won’t be able to move for antique dealers, jewelry makers, and general purveyors of bizarre curiosities you never knew you needed.

Glamour is in short supply in Brixton market, which is south of the river and well out of London’s centre. Here you shop with the locals – the ordinary people picking up groceries sourced from all over the world. I dare say you’ll never see so many yams in one place anywhere else in London. The area’s multicultural residents hailing from the likes of Portugal, Afghanistan, and the Caribbean, make this market a down-to-earth melting pot.  But the traders say the place is changing. Brixton market is getting quieter, as steady gentrification attracts more and more young professionals to the area. These people prefer to brunch and lunch in the champagne bars and gluten free cafes of the covered Brixton Village complex next door. This, too, is a hub of independent traders, but as the population of Brixton changes, the markets there evolve to suit their more ‘moneyed’ needs.

Check out Marketplace's full set of stories about London culture, life, and economics on the Mind the Gap series homepage

London's sewers overflow about once a week

Fri, 2014-05-23 09:47

While most of our focus this week while in the U.K. has been on our series, Mind the Gap: Exploring Income Inequality in London, there was just one story we couldn’t resist: The sewers of London!

London’s sewer system is perhaps the most notorious sewer system in the world. In the 1800’s, the sewer’s overflow into the (then) main source of drinking water for Londoners, the Thames River, resulted in tens of thousands of deaths from cholera and other diseases. A more advanced system was built as a result that boasted the best of Victorian engineering and craftsmanship. It’s the same system that is still being used today, more than 150 years later.

Last week in the U.S., President Obama called for an increase in the amount of investment in infrastructure.

Here in London, similar pushes for infrastructure enhancements are being made. The two most controversial are proposals to create a high speed rail that would extend from London to Birmingham, and a campaign for a super sewer system that would prevent the existing overburdened sewer system from overflowing into the Thames River.

Right now the sewer system overflows once a week, on average.

Imagine our luck when we learned that it just happens to be Sewer Week in London. This helped us gain rare access for a tour. We were told yesterday during our tour that in some cases, the public has to wait for up to five years for a tour like the one we experienced.

Marketplace's Nicole Childers wrote her take of the tour: 

We set off early in the morning and we were whisked off by Thames Water to Abbey Lane, home of the historic Abbey Mills Pumping station that was built in the 1800’s and served as the central transfer point of several of London’s sewers. We started our day learning about the history of the system before getting a tour of the Abbey Mills Pumping Station. Within Abbey Mills exists several stations. One of the most decorated is the B station, which has garnered quite a few media appearances throughout the years. The Arkham Asylum in the movie Batman Begins was filmed there as was part of Coldplay’s “Lovers in Japan” music video.

Marketplace's Nicole Childers (Marketplace)

We then made our way over to Wick Lane Depot for a tour of an operational sewer. After changing into protective gear that included rubber boots and gloves, a bright white full body protective suit reminiscent of a hazmat suit, and a hard hat to top it all off, our tour guide, Danny Brackley, led us through standard safety procedures. Then, one by one we were hooked up to a protective cable before climbing down a ladder into a hole that left us more than 30-feet below ground in a pool of raw sewage that included everything from fecal matter to cooking fat irresponsibly poured down many a London kitchen sink.

For someone like me who is terrified of heights, the last step off the ladder and into raw sewage was not as comforting as I’d anticipated. Before descending into the tunnels we had been warned that the water level could be as high as 2-3 feet in some parts. Instead of feeling solid ground beneath my feet, I was met with shaky gravel and cloudy brown water flowed through and around my legs. What was in the milk chocolate-y water that now surrounded me, you may ask?  The raw sewage included everything from what you flush down your toilet to the drainage from your shower, washing machine, and sink.

As we made our way through the sewers, the smell wasn’t as bad as I’d anticipated. It was more of a musty moldy smell than the smell you generally associate with a sewer. Our guide explained that generally our experience with sewer smells is after a blockage when the raw sewage gets stuck and turns septic; emanating that recognizable but stomach turning odor. These sewers flow at a pretty steady rate, which prevents the waste from rotting before it reaches the water treatment plan.   

I thought I’d be most surprised to see fecal matter floating by, but the real surprise was the astounding number of spoons, yes, real spoons that made their way into the sewers. Our guide, Dan, explained his theory: In jail, prisoners often smuggle spoons into their cells from the canteen to transform them into sharp weapons, but they end up getting flushed down the toilet right before guards perform cell searches. Seeing cutlery cascading past me didn’t hold a candle to what we saw at the end of our time in the sewer.  As I made my way up the ladder at the end of the tour, someone still down in the sewers spotted a ring. The discovery led us all to ponder whether it was flushed down the toilet by an angry and disenchanted spouse seeking an incontrovertible end of matrimony, or whether it belonged to one half of a happy couple who removed the ring only to have it slip unwittingly into a kitchen or bathroom sink and down the drain. 

The aftertaste of bailouts

Fri, 2014-05-23 08:41

Four years ago, I accompanied then-Treasury Secretary Tim Geithner to India.

He was there for the U.S.-India Economic Summit, and I was one of the few journalists along for the ride. I’d traveled with Geithner a few times before, and what struck me most was how relaxed he was on this trip. Geithner had grown up in India, in part. And he was, unmistakably, having fun there.

He blanched a bit when I suggested it then. But then considered the question. Part of his comfort level, he agreed, was his childhood. But another part, he suggested, was being in a part of the world familiar with economic crises. And unorthodox responses to them. Everyone was simply not as panicked.

I met with him again this week. His publisher invited a handful of journalists to an on-the-record coffee to discuss Geithner’s new memoir, Stress Test, much of which is spent defending his response to the financial crisis. It’s a philosophy very clearly shaped by his time at the Treasury Department during the Asian financial crises of the 1990s: act fast to prevent a panic, and then, he reiterated this week, “you go figure out how to bring a measure of justice.”

That approach is clearly controversial. It’s something economists and regular Americans will argue about for decades, especially as they see large banks continue to prosper. Geither is spending a heck of a press tour defending his view. Is he being disingenuous? I think it’s hard to say.

His contention is that punishment for malefactors is important, “but you need to make sure you’re not putting that ahead of what I think is the primary moral imperative: which is to prevent mass unemployment in the country.”

The book has come under criticism from many of the sharpest economic reporters around. From Felix Salmon, who was at this coffee, for overselling his role as a change agent at the New York Fed. And from Jesse Eisinger for many of the watered down solutions the Obama economic team was willing to accept.

Geithner has a strong preference for the art of the possible. Several of the reporters at this coffee asked him about the administration’s woeful record on housing. At one point, for example, the Obama team was behind a proposal that would have allowed some borrowers to reduce the principal of their mortgage if they filed for bankruptcy. The plan ran into trouble on Capitol Hill, and it was abandoned. “The president had a very talented legislative team,” Geithner said. “They tried. He told them to try, and they were not successful.”

He added: “You need a congress that can do stuff. And our system is set up so that it’s easier to block stuff than to do stuff.”

Perhaps the subject that resonates most for regular Americans is the hardest for Geithner, Hank Paulson, or anyone in either the Bush or Obama administrations to prove. That without TARP, or the subsequent lending programs, bailouts and what-have-you; we’d be worse off.  I don’t envy anyone who has to prove that negative.

Geithner himself agrees that he was terrible at explaining it. Reflecting on his opening policy speech in office, he writes: “It was a bad speech, badly delivered, rattling confidence at a bad time.” As someone who covered the crisis closely, I remember watching the markets plummet as he spoke, wondering what cataclysmic shoe would drop next.

And that brings us to the bitterest aftertaste of all the bailouts: the sense that those who gambled and were rescued with public money have never paid.  Geithner calls himself “a big believer in a powerful deterrent on the enforcement side.”

Yet when I asked him for an example of successful deterrence, he couldn’t name one. “You’ve gotta remind people, “ he said, “that I don’t get to make those judgments.” He added that the Justice Department’s prosecutors “were massively focused.”

Still, he said “its relative absence hurt us. Hurt the president a lot.” And perhaps that perception always will.

PODCAST: Can London always be a world finance capital?

Fri, 2014-05-23 08:28

U.S. and European Union officials wrap-up the latest round of talks today as they negotiate a free trade deal called the Transatlantic Trade and Investment Partnership.

London is heart of the global economy, according to a new survey out this week. But can the city hang on to its position?

London's complexity through an American eye

Fri, 2014-05-23 06:39

There are startling reasons why London’s wealth distribution caught our eye from the states: the five wealthiest families in the U.K. have more money than the poorest 20 percent of the population. By 2020, an estimated 800,000 children will be living below the poverty line. London was recently passed over by New York and Singapore to claim the top spot as the city in the world with the most economic clout. 

Marketplace explored the growing income inequality in the U.K. and London over a week’s time. As income inequality has become a primary economic concern in the U.S., especially in the aftermath of the Great Recession, Marketplace has focused reporting in recent months on what income inequality’s impact is on how we work and live. But we also wanted to see what our neighbors across the pond had to say about living in a society where unequal wealth distribution is the norm.

First, we learned that London’s real estate has skyrocketed in value, making realtors happy, and critics crying “bubble.” Sound familiar, Americans?

We saw, too, how poor Londoners are being priced out of neighborhoods they live in and were raised in, and even wealthy residents are concerned. We toured the bustling markets across the city in an everyday adventure filled with bright citrus and fresh fish.

We ended the week with a report from 30-feet below ground level in the notorious sewers of London. There’s a campaign underway to build a new super sewer system to replace the current one that frequently overflows into the Thames River.  We took a tour of London's sewers, which have a surprisingly excellent way of exposing what Londoners keep and discard in a shifting economy. 

Even though there are a lot of concerns about its economic progress, London still has some things going for it: the PwC Cities of Opportunity Index (PDF) noted the city still “finishes first in technology readiness, economic clout and city gateway – all measures of its stature as a thriving centre of the world economy.”

We leave you with musical inspiration from our trip: 

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