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Bernanke's probably thinking about a think tank

Tue, 2014-01-21 12:16

Think tanks have become more and more prominent in Washington.   They’re attracting big money -- and big names.  There's speculation that Fed Chairman Ben Bernanke could end up at a think tank.  

According to tax filings, the top five richest think tanks in the US have more than $1.5 billion in assets.  That’s about the GDP of Liberia.

“Let’s face it.  There’s a lot of money at stake here,” says Peter Metzger, vice chairman of CT Partners in Washington and a a think tank headhunter. 

Metzger says even if you’re not a famous Washington wonk like Ben Bernanke, think tanks pay very well.

“Some in the neighborhood of three-quarters of a million to a million dollars or more depending upon their experience and what they can bring to the effort," he says.

But what do the big names do for a think tank?  Why are they so prized? 

The best known wonks are big moneymakers. They might make an appearance at a fundraiser.  If they make a speech, the think tank can charge admission.  

James McGann, who runs the Think Tanks and Civil Societies Program at the University of Pennsylvania, says sometimes just having a really big name on a think tank’s letterhead is enough to get donations  flowing. 

He says, “Those that have a strong brand, which is connected to the rigor of their research, are key.”

Think tank donors include foundations, interest groups, and, increasingly, corporations -- which see the influence of think tanks as a way to pierce Washington gridlock.  Some think tanks have even set up separate arms that can lobby Congress, according to Jack Pitney, who teaches political science at Claremont McKenna College. 

“A lot of the organizations are really conglomerates of different kinds of groups depending on what kind of contributions they’re trying to draw," he says.

But Pitney says, for all the money involved, think tanks aren’t trying to make a profit. They're more interested in the real currency of Washington: power and influence.  

If only we had technology to limit credit card fraud... Oh, wait...

Tue, 2014-01-21 12:16

IT’S JUST TOO BAD

There was TargetNieman MarcusCitiBank.  Between 2012 and 2013, the number of data breaches involving credit or debit card information increased by 41.2%

It’s really too bad there isn’t some way to use modern technology to dramatically reduce credit card fraud. 

Oh.

Wait.

There is. 

And has been. 

FOR ALMOST A DECADE.

CHIP & PIN

It’s called Chip & Pin technology, also known as EMV, it’s a little cryptographic chip embedded in the card, and unlike those magnetic stripes, it doesn't just hold all your info unencrypted for every Tom, Dick, and Harry with a card reader or hacking skills to copy or scan or download.  And there's the added protection of a PIN.

 “The types of breaches we’ve seen recently would’ve been prevented by the use of this chip and pin technology,” says Chester Wisniewski, senior security advisor with Sophos. “It makes it much harder for thieves, and it’s had widespread use in Europe and everywhere else.”

UM, WE INVENTED THE CREDIT CARD.  WHY DON’T WE HAVE THAT TECHNOLOGY HERE?

There are a few reasons. 

COST 

“One of the big obstacles is the expense,” according to Bill Hardekopf with Lowcards.com, a consumer resource website.  “Retailers would have to get a different credit card processor, probably about a $200 expense per terminal for each checkout lane.”    

Doable for large retailers, less so for small businesses, expensive for everyone.  Card issuers and banks would have to pay to make the more expensive cards too.  Small retailers, according to Wisniewski and other analysts, have been particularly resistant.   Businesses would be laying out money for the benefit of banks, in a sense, since it’s the banks which are often liable for fraudulent purchases.

But that doesn’t explain why we’re behind the rest of the world.  

WE DIDN'T NEED THIS KIND OF TECHNOLOGY BACK IN THE DAY

“There wasn’t really the same demand to address fraud in the United States as there was in other parts of the world,” says Andrew Davidson, senior vice president at Mintel. “Fraud wasn’t as big of a deal as it was in say Europe.”

Old tools used to be enough to deal with the fraud problem.  “Previously,” says Doug Jones, vice president of risk management policy the American Bankers Association, “we were able to depend on our neural networks that looked for unusual transactions.”  It seemed to work, “it didn’t create a difference in terms of the amount of fraud we saw compared to what was seen in other countries.”

Until, of course, it did. 

As other countries have adopted more secure credit card technology, the U.S. has become the fraud basket case.

NOBODY MADE US ADOPT IT. SO WE DIDN’T.

Some governments forced adoption of Chip & Pin, ours didn’t.

“We don’t tend to legislate these requirements,” says Jones.  “That serves our economy well in the long run but in this particular instance it did slow down the process.”   

You’re talking about the largest economy in the world and a large number of financial institutions and retailers that have to make this shift.  A little like herding cats. 

GOOD NEWS! WE’RE GETTING NEW CARDS. SOON. PROBABLY.

“Now is the time that the U.S. should upgrade to chip technology,” says Mastercard’s Senior Vice President for U.S. Product Delivery, Carolyn Balfany. 

Mastercard has been pushing the new technology in the U.S. for several years, and in 2012 issued a “roadmap” for the country to migrate. 

Many credit card companies have started to issue the new cards, in small batches.  “They’ve started with international travelers,” says Balfany, since it can be inconvenient to use the U.S. backwards cards abroad.  “But they’re rolling that out more broadly.” 

On the merchant side, some larger retailers are already installing new cardreaders.  “They’ve been in the process of beginning that for some time now and will continue on over the next couple of years.”

One tool to push the process along is a “liability shift” which will start taking place in October, 2015 for Mastercard, a year later for Visa.  Usually, a bank has to cover a bogus purchase.  But starting in October  2015, a retailer will have to suck it up if it hasn’t changed its card reader. 

“Many of the larger retailers and banks have come out in industry conferences expressing their intent to migrate around that October 2015 time frame,” says Balfany.  “I think we’re gonna see some really good movement.”

Why Bernanke would want a think tank - and why a think tank would want Bernanke

Tue, 2014-01-21 12:16

Think tanks have become more and more prominent in Washington.   They’re attracting big money -- and big names.  There's speculation that Fed Chairman Ben Bernanke could end up at a think tank.  

According to tax filings, the top five richest think tanks in the US have more than $1.5 billion in assets.  That’s about the GDP of Liberia.

“Let’s face it.  There’s a lot of money at stake here,” says Peter Metzger, vice chairman of CT Partners in Washington and a a think tank headhunter. 

Metzger says even if you’re not a famous Washington wonk like Ben Bernanke, think tanks pay very well.

“Some in the neighborhood of three-quarters of a million to a million dollars or more depending upon their experience and what they can bring to the effort," he says.

But what do the big names do for a think tank?  Why are they so prized? 

The best known wonks are big moneymakers. They might make an appearance at a fundraiser.  If they make a speech, the think tank can charge admission.  

James McGann, who runs the Think Tanks and Civil Societies Program at the University of Pennsylvania, says sometimes just having a really big name on a think tank’s letterhead is enough to get donations  flowing. 

He says, “Those that have a strong brand, which is connected to the rigor of their research, are key.”

Think tank donors include foundations, interest groups, and, increasingly, corporations -- which see the influence of think tanks as a way to pierce Washington gridlock.  Some think tanks have even set up separate arms that can lobby Congress, according to Jack Pitney, who teaches political science at Claremont McKenna College. 

“A lot of the organizations are really conglomerates of different kinds of groups depending on what kind of contributions they’re trying to draw," he says.

But Pitney says, for all the money involved, think tanks aren’t trying to make a profit. They're more interested in the real currency of Washington: power and influence.  

Rising demand for oil: 'Growth is easy when you've been in the pits'

Tue, 2014-01-21 12:16

The International Energy Agency tracks which countries use how much oil -- and the United States is always at the top of the list.

“Every single day, just over 19 million barrels of oil are consumed in the U.S.,” says Matt Parry, senior oil market analyst for the agency. That accounts for about 20 percent of global oil use. China comes in second, using about 10 million barrels a day.

In recent years, China’s demand has been growing, while demand here has been slouching. But not in 2013. For the first time in more than a decade, demand for oil in the United States grew faster than China’s.

“The strength of it has exceeded everyone expectations,” says Parry.

Why? In part, the answer has to do with the recession. Growth is easy when you’ve been in the pits.

“As the economic activity picks up, there’s a lot more transportation going on,” says Peter Hartley, an economist at Rice University. There are more people driving to more jobs. There are more trucks, delivering more things.

And, the U.S. is drilling more of its own oil and natural gas. Supply is up. Prices are down. “And that’s really stimulating a renaissance of the petro-chemicals in the United States,” says Hartley. Plastics, chemicals, fertilizers. We’re making more of them here now.

But, don’t expect U.S. demand to continue rising. The energy agency says petrochemical companies in this country are pretty maxed out. Our cars are only going to get more fuel efficient. 

“Over time we think that U.S. demand is going to be flat at best, or probably trending a bit down,” says Mark Schwartz, president of PIRA Energy group, a consulting firm. China, on the other hand, likely has a whole lot of growth in its future. More people there are looking to buy cars, to travel, and to consume more like we do here in the United States.

The Davos World Economic Forum: A lot of 'hot air'?

Tue, 2014-01-21 09:56

Some  2,500  of the world’s most powerful  business and political leaders will make their annual pilgrimage to a mountaintop in the Swiss Alps this week. They won’t be seeking a religious experience (well, most of them won't). They’re headed for the small ski resort of Davos for the 44th annual  World Economic Forum -  four days of economic discussion and debate.

Not everyone is expecting many major revelations.

"There will be a lot of bloviating," says David Rothkopf of the Carnegie Endowment for International Peace.  "There are a lot of people there who love to hear themselves talk, that go on at length. That mountaintop in Switzerland each year  is warmed by quite a bit of hot air."

Anthony Hilton, Financial  Editor of the London Evening Standard is another Davos skeptic: "They go on about the 'Spirit of Davos' and how they’re shaping the world. But  they’re not. They’re actually revelling in their own self-importance and smugness. It’s  an exercise in self-preening and group think."

The gigantic agenda seems well-meaning enough. Among the 250 subjects under discussion over the next four days  are:  climate change, the future of healthcare, the nightmare of  youth unemployment and the challenge of scientific innovation.

But some items appear gloriously misplaced in this well-heeled assembly: "One of the big themes this year is – I kid you not – income inequality," points out John Reeves of The Motley Fool financial services group. "It’s ironical: Income inequality is the theme, and you’ve got to pay $40,000 to go there and weigh in." ($40,000 is  the  estimated average cost per attendee– including travel, accommodation, and getting into the event.) 

Forget all that guff about making the world a better place, says Anthony Hilton. Once investment bankers got involved, he claims, Davos went downhill: "They started throwing parties obviously to get business. And it now has become a competition to see who gets invited to the most exclusive parties.  So the whole spirit of it has gone by the board."

But Davos must be doing something right. A thousand corporations keep it afloat, pumping in around $200 million a year. And Martin Wolf of the Financial Times asks: So what if it is a gabfest? He believes that  Davos may have helped the world weather the financial crisis by forging contacts between politicians and businesses people around the world.   With forty heads of state, 20 central bank chiefs, and  numerous tycoons and Nobel Laureates attending this year, maybe Davos is a talking shop we cannot afford to ignore.      

 "I happen to believe that talking is quite a good thing to do," Wolf says.

Stressed out by the Davos World Economic Forum?

Tue, 2014-01-21 08:58

This week, the who’s who of the...world ... will gather in Davos, Switzerland, to set the economic agenda for 2014.

Now the summit isn't just dull economics. This is the Alps after all, so skiing and partying also seems to be on many agendas during the week. (Though not on everyone's agenda, this year:)

Matt #Damon says he won't be skiing in Switzerland after #Davos2014 as he's a broken collarbone from falling off his mountain bike

— Joanna Partridge (@JoannaPartridge) January 21, 2014

Setting the global economic agenda isn't a small task for a four-day confab.

But when sessions such as "Rethinking Ocean Economies" and "Responding to Global Risks" get stressful, organizers have attendees' backs. For the price of the cost of membership in the World Economic forum -- that's $70,000 -- you can also attend any of the following:

  • Let Goldie Hawn convince you to meditate. She's giving a talk on the ways "neuroscience, mindfulness training and social and emotional learning can change the world"
  • Make jewelry. Attend a workshop on "precision fabrication of unique components, such as jewellery and optics."
  • Hear a special concert by the St Petersburg Mariinsky Theatre Orchestra.
  • Track how well you sleep. Sign up in advance for a Jawbone "health tracker." Keep track of your rest and exercise. 
  • Meditate with a Buddhist monk. Matthieu Ricard will lead recurring 8 a.m. sessions on how to "learn and experience the benefits of meditation."
  • See a special Screening of "Mandela: Long Walk to Freedom". Hors d'oeuvres will be served.
  • Muse upon the meaning of happiness. A session entitled "The Importance of Being Happy" promises to answer "Why is the pursuit of happiness so critical for ourworld andthat of future generations?
  • Celebrate with friends "new and old" at the "Jazz and Dance Soirée". Black tie, of course.

Video of Mariinsky Orchestra

Stressed out by the Davos World Economic Forum?

Tue, 2014-01-21 08:58

This week, the who’s who of the...world ... will gather in Davos, Switzerland, to set the economic agenda for 2014.

Now the summit isn't just dull economics. This is the Alps after all, so skiing and partying also seems to be on many agendas during the week. (Though not on everyone's agenda, this year:)

Matt #Damon says he won't be skiing in Switzerland after #Davos2014 as he's a broken collarbone from falling off his mountain bike

— Joanna Partridge (@JoannaPartridge) January 21, 2014

Setting the global economic agenda isn't a small task for a four-day confab.

But when sessions such as "Rethinking Ocean Economies" and "Responding to Global Risks" get stressful, organizers have attendees' backs. For the price of the cost of membership in the World Economic forum -- that's $70,000 -- you can also attend any of the following:

  • Let Goldie Hawn convince you to meditate. She's giving a talk on the ways "neuroscience, mindfulness training and social and emotional learning can change the world"
  • Make jewelry. Attend a workshop on "precision fabrication of unique components, such as jewellery and optics."
  • Hear a special concert by the St Petersburg Mariinsky Theatre Orchestra.
  • Track how well you sleep. Sign up in advance for a Jawbone "health tracker." Keep track of your rest and exercise. 
  • Meditate with a Buddhist monk. Matthieu Ricard will lead recurring 8 a.m. sessions on how to "learn and experience the benefits of meditation."
  • See a special Screening of "Mandela: Long Walk to Freedom". Hors d'oeuvres will be served.
  • Muse upon the meaning of happiness. A session entitled "The Importance of Being Happy" promises to answer "Why is the pursuit of happiness so critical for ourworld andthat of future generations?
  • Celebrate with friends "new and old" at the "Jazz and Dance Soirée". Black tie, of course.

Video of Mariinsky Orchestra

'Dear subscriber, you are registered as a participant in a mass disturbance'

Tue, 2014-01-21 08:50

The Ukrainian government may be using mobile phone location data to intimidate protesters during ongoing civil unrest. Ukrainians have taken to the streets in recent days criticizing President Viktor Yanukovych's seeming refusal to move towards further integration with the European Union. In the capital of Kiev, some protesters have been receiving menacing text messages, apparently from the government, reading "Dear subscriber, you are registered as a participant in a mass disturbance." Andrew Kramer of The New York Times is on the ground in Kiev, and tells Marketplace Tech host Ben Johnson about the story.

PODCAST: Oil demand booming

Tue, 2014-01-21 07:44

A new International Energy Agency report out Tuesday says global oil demand will rise by 1.3 million barrels per day this year, higher than its previous forecast. That number tells a story about the global economy and will also have impact in America.

The annual meeting of the World Economic Forum kicks off this week, in Davos, Switzerland. The global elite -- executives, politicians, media moguls, and academics -- will gather in the Alps for a four-day confab. This year, one of the items on the agenda is inequality. 

We’ve all heard of websites like Kickstarter, where you can donate to projects you believe in. Well what if, instead of just donating, you could go online and buy an equity slice of a small business? This crowdfunding of investment is what the JOBS Act is trying to promote. And it’s how one real estate company in Washington D.C. wants to shake up local development.

What growing global oil thirst means for economy

Tue, 2014-01-21 07:09

A new International Energy Agency report out Tuesday says global oil demand will rise by 1.3 million barrels per day this year, higher than its previous forecast. That number tells a story about the global economy and will also have impact in America.

“It’s definitely a positive sign,” Fadel Gheit, an Oppenheimer managing director and senior energy analyst. “Higher demand for energy in general and for crude oil in particular is an indication the global economy is back on track.”

More oil demand means more shipping and more production and hopefully more jobs. On the down side, more oil use and production also means higher environmental impact.
America is having an oil boom, but energy companies can only profit so much. Current law allows export of only a tiny fraction of crude. As the domestic boom continues, expect a stronger push to change that.

“The producers who are producing that are saying, well, gosh, let us export,” explains Sarah Emerson, president of Energy Security Analysis, Inc. “So 2014, in that sense, is a bit of a tipping point.”

Now that America’s using more and more of its own oil, more companies here will be looking to sell abroad.

Mark Garrison: There are lots of ways to read a boost in oil demand. Here’s one, from Oppenheimer senior energy analyst Fadel Gheit.

 

Fadel Gheit: It’s definitely a positive sign. Higher demand for energy in general and for crude oil in particular is an indication the global economy is back on track.

 

More oil demand means more shipping and more production, hopefully more jobs. On the down side, more oil use and production also means higher environmental impact. America’s having an oil boom, but energy companies can only profit so much. Current law allows export of only a tiny fraction of crude. As the domestic boom continues, expect a stronger push to change that. Sarah Emerson is president of Energy Security Analysis, Inc.

Sarah Emerson: The producers who are producing that are saying, well, gosh, let us export. So 2014 in that sense is a bit of a tipping point.

Now that America’s using more and more of its own oil, more companies here will be looking to sell abroad. I’m Mark Garrison, for Marketplace.

A former high-frequency trader turned critic

Tue, 2014-01-21 06:29

Marketplace Tech continues our Wall Street technology series with a look at high-frequency trading, where powerful computers can make hundreds of thousands of trades in milliseconds, making big money off tiny stock price differences. Dave Lauer is a former high-frequency trader, but he's now a critic of the business. He explains why to Marketplace Tech guest host Mark Garrison. Click the audio player above to listen to the interview.

American pollution: Made in China

Tue, 2014-01-21 06:11

A new study published in the Proceedings of the National Academy of Sciences says some of that bad air people breath in the American West is imported from China. A lot of the imported pollution has been specifically identified as coming from factories in eastern China that make goods purchased by Americans, which is raising fascinating questions about who is really to blame for the bad air. 

As American manufacturing has largely gone overseas, the prevailing attitude has been that the U.S. has also outsourced the pollution from that manufacturing. But this new study challenges that assertion, says Marketplace China bureau chief Rob Schmitz.

"They've made connections between that very intense pollution that's being emitted in much of China and our own economic role in this very pollution," Schmitz says. "Buying products made in China is not only contributing to China's dangerous air pollution problem, but while those cheap exports are being shipped over the ocean to us, above it all are clouds of pollutants that are also being exported to America."

To hear more about how China's pollution problem is a global problem, click the audio player above.

Bollywood booms in U.S. and overseas

Tue, 2014-01-21 05:49

"Dhoom 3" -- the word in Hindi means "blast" -- has set U.S. and worldwide box office records for Indian film since it opened in late December. The Bollywood action-thriller, set mostly in Chicago, has made more than $83 million at the box office internationally, and more than $8 million just in the U.S., according to Gitesh Pandya of BoxOfficeGuru.com.

"Dhoom 3" has all the ingredients for a Bollywood hit: top stars (including Aamir Khan, one of the top three male leads in Indian film, known collectively as the ‘three Khans’), big musical numbers, fast cars, sexy circus performers, ruthless bankers and tough cops.

Pandya consults with Indian film companies, and he says the South-Asian immigrant audience continues to grow. It now tops 3 million. The Indian company Big Cinemas has purchased over two hundred screens in the U.S. since 2007 -- many of them rundown movie theatres in mid-sized markets -- and renovated them to show films aimed at this community, which includes Pakistanis and Bangladeshis and people from several language-groups in India.

Pandya says immigrants (as well as the generation of Indian-Americans born here) closely follow what movies are released in India and go to see them in the U.S. as soon as they can. They also listen (and dance) to song sequences and music videos that are released to promote the movies, and are often played as remixes in dance clubs. All that extra marketing and promotion creates a consistent, engaged, lucrative market for movie houses. “You’re going to see more of the American multiplexes start to devote a screen or two to these Bollywood films,” he says.

But, aside from rare crossover hits like "Slumdog Millionaire," most American movie-goers don’t see, and wouldn’t understand, Indian movies, says Aseem Chhabra, a freelance journalist in New York who writes about film for the Mumbai Mirror.

“The market still remains predominantly South Asian,” says Chhabra. “And there’s a reason for that -- because for Bollywood, there’s a particular kind of formula for the songs and dances.”

Those song-and-dance numbers appeal to the huge audience in India and across the Indian diaspora, from the U.K. to the Middle East to the U.S. Midwest. It’s an audience that, in 2009, bought 1 billion more tickets than did audiences for Hollywood movies (3.6 billion tickets compared to 2.6 billion, according to Bloomberg). And even the biggest-budget Bollywood movies are much less expensive to make than Hollywood blockbusters (by a factor of 10).

All this, says Chhabra, means that Bollywood production studios are under no pressure to change up their entrenched formula of action scenes, romance, and music numbers, along with an intermission mid-way through the show, just to attract a bigger American audience and make more money.

Plastic money: bills that defy crumpling, boiling and counterfeiting

Tue, 2014-01-21 05:18

Britain will start issuing plastic money in 2016. Canada rolled out plastic $5 and $10 bills last November. Australia has used them since 1988. 

I go to a nearby currency exchange to check them out. A Canadian $5 and Australian $5 set me back $9.24. The bills are decidedly plastic. Smooth. Foreign. 

“They’re a little bit more slippery,” says Russell White, a sales associate at Foreign Currency Express in Los Angeles, “so sometimes you get bills stuck together.” He says that can make them a little harder to count, “but they’re good.”    

White repeats a rumor I’ve seen online, “I’ve heard stories that if the plastic bills, the new Canadian, are in the heat too long, they actually melt. So you can have your money go away in one day if it gets too hot.”

Sounds like a challenge to me. I spread them on my car's dashboard, let them cook in the sun. Two hours later, on an 85-degree day in Los Angeles, the bills are fine.

I wash them. And dry them. I boil them. Freeze them. Crumple them.

They bounce back.

“It actually lasts about 2 and a half times longer than paper,” says Manuel Parreira from the Bank of Canada. He says these polymer bills are also good for stopping fakes; there are plastic windows, a frosted maple leaf with a transparent outline.  “It makes it more difficult to counterfeit but also easy to use,” says Parreira, “and that’s key to insure that people can check for counterfeit.” 

You’re not going to see George Washington on a plastic bill here in the U.S. any time soon. According to the Federal Reserve, the current paper blend is very secure. But, they say they’re always looking at options. Evaluating and revaluating. To stay a step ahead of counterfeiters. 

 

Inequality on the docket at World Economic Forum in Davos

Tue, 2014-01-21 05:06

The annual meeting of the World Economic Forum kicks off this week, in Davos, Switzerland. The global elite -- executives, politicians, media moguls, and academics -- will gather in the Alps for a four-day confab. This year, one of the items on the agenda is inequality. 

There is a lot packed into this conference. The program -- sorry, programme -- lists more than 250 panels and lectures, and there are plenty of opportunities for networking.

“I think there are real possibilities for concrete action to come out of a place like Davos,” says Katherine Klein, the Edward H. Bowman Professor of Management at the Wharton School of the University of Pennsylvania.  She went to Davos last year.

According to Klein, you feel like you are among the who’s who, “and if Davos and the World Economic Forum say this effort is important, that also gets folks’ attention.”

Daron Acemoglu, the Elizabeth and James Killian Professor of Economics at M.I.T., has never been to Davos, but he welcomes the World Economic Forum’s focus on inequality.

“It’s good that the media, policymakers, and academics are paying more attention to it,” he says.

Acemoglu notes there is an irony here: “They can spend a week in the most luxurious circumstances, flying in their private jets, precisely because of the inequality that we are talking about.”

But, Acemoglu says, if the economic and political elites in our society are genuinely interested in a social problem like inequality, they can attract attention to it and contribute resources to address it.

Crowdfunding for investors may soon get easier

Tue, 2014-01-21 04:54

We’ve all heard of websites like Kickstarter, where you can donate to projects you believe in. Well what if, instead of just donating, you could go online and buy an equity slice of a small business? This crowdfunding of investment is what the JOBS Act is trying to promote. And it’s how one real estate company in Washington D.C. wants to shake up local development.

Sharon Lewis is a hairstylist who’s lived along the H Street corridor for decades. When she describes how the neighborhood’s changed, she chooses her words very carefully.

“On H Street, it used to be a lot of hairdressers,” she says. “But now it’s a lot of bars.”

It used to be a black neighborhood, now it’s gentrifying. And booming. You can’t park on a Friday night. But developer Ben Miller says, until now, it’s been impossible for local people to invest in development right across the street.

“Who owns your environment? You don’t know,” he says. “Who’s building your environment, who’s building your city? Not you.”

Miller is co-founder of the group Fundrise, which has started selling shares of private real estate projects to the public online. A tiny slice of ownership for a hundred bucks a pop.

First they bought 1351 H Street with private capital, then crowdfunded about a third of it.

“This building has almost 180 owners,” Miller says.

It’s going to be an Asian night market. 906 H Street has 360 owners. And at 1300 H St, there’s a funky, shuttered library. Fundrise wants to buy the site from the city and turn it into apartments.

“It could have ten thousand investors,” he says.

To solicit small investors now, Fundrise goes through a lengthy review with the Securities and Exchange Commission. These equity shares are securities, after all, and the SEC wants to protect small investors.

But once the JOBS Act is implemented, crowdfunding could take off nationally. Companies will be able to crowdfund up to one million dollars a year from small, unaccredited investors. If they choose to qualify with the SEC the way Fundrise does now, they should be able to raise $50 million a year from small investors (up from $5 million currently).

The whole idea is to create new avenues for small businesses to access capital. But there are risks to this deregulation.

“Do not invest money in crowdfunding that you can’t afford to lose,” says Rick Fleming, deputy general counsel of the North American Securities Administrators Association, the organization of state level securities regulators.

Fleming says crowdfunding can be an important tool. But he warns that most small businesses fail. Lighter regulation of crowdfunding to come could lead to more fraud. And you can’t sell your crowdfunded shares on the stock exchange.

“You’re not going to be able to get that money back anytime soon. These are going to be illiquid investments, because there’s no secondary trading market for these types of securities,” he says.

Still, a lot of people investing in Fundrise think it’s just fun and interesting. Elan Schnitzer lives on H Street. He expects a seven percent return.

“My first $7 dividend check, I will take right back to the restaurant that comes in and get a sandwich,” he says.

Actually, Schnitzer bought two shares, so he might be able to afford dessert. He won’t have much say in the property he owns, but at least he’ll get lunch.

Cheap seats anything but at the Super Bowl

Mon, 2014-01-20 13:58

This final note is about football. Nope, not about all that Richard Sherman hubub. C'mon people, this is a business show.

We're talking about ticket prices for the Superbowl.

If you're a Broncos or Seahawks fan and want to check out the big game in New Jersey on February 2, you better start saving now. The cheapest ticket options right now are $2,500 on StubHub. For $200 more, you can pick a pair up on the NFL's second-hand marketplace.

What do you get for that price? Good ol' fashion nosebleed seats at the Meadowlands.

We prefer the couch. It's free, mighty comfortable and the nachos are better.

The food chain of rodenticide

Mon, 2014-01-20 13:43

Alright, weak-stomached listeners, we've got a story for you now about rats. Well, actually about rodenticide, the chemical products people use to kill rats. Some of them are poised to come off the shelves since the chemicals can affect other wildlife.

Many rodenticides act as anticoagulants, killing pests by making them bleed internally. They're great at killing rats, but they're also killing animals that eat rats.

Stella McMillen, a scientist with the California Department of Fish and Wildlife, says lots of animals eat rodents: coyotes, foxes, birds of prey — and the chemicals are making it to the top of the food chain.

Scientists worry the compounds may be making predators more prone to disease or may be hurting reproduction. The most toxic are the second-generation anticoagulants, one of which is brodifacoum.

The products are at the center of a long and messy fight between the company that owns the product and the Environmental Protection Agency. The EPA's been trying to restrict second-generation anticoagulants to professional users. All companies but one have complied. Reckitt Benckiser has about a dozen products that would be canceled, and it's been fighting to keep them in homeowners' hands. That fight's been going for more than five years.

Reckitt did not respond to requests for comment for this story. Its appeal to the EPA could take years to decide. In the meantime, it's still on shelves.

 

 

 

Who's enrolling for health insurance? Not the uninsured

Mon, 2014-01-20 13:06

Citing a new survey from McKinsey & Co., the Wall St. Journal reports that only 11 percent of the 2.2 million Americans who have purchased health insurance on state or federal exchanges were previously uninsured. The U.S. Department of Health and Human Services hasn’t released any data on this yet.

The insurance companies aren’t thrilled. The industry expects the Affordable Care Act will ultimately lead to millions of new customers.

In a certain way, this could be seen as a positive for the companies. There’s a general concern that the uninsured will get coverage and need lots of procedures and tests, costing lots of money. If the number of uninsured patients remains modest that means that most of the customers have had insurance before. That means a potentially less expensive customer – which is what the insurance companies want.

In the report, 30 percent of consumers sited technical trouble purchasing plans. 52 percent said plans were cost prohibitive. Many healthcare observers expect previously uninsured people to sign up for plans prior to the March 31st enrollment deadline.

Even if they don’t, PricewaterhouseCoopers Ceci Connolly says insurers are well aware the new healthcare law is just beginning.

"They are really viewing 2014 as the learning year. It’s almost as if we’ve got our bicycle and our training wheels because so much of this is brand new territory,” Connolly says.

The history of coal as a brand

Mon, 2014-01-20 12:06

New numbers show that China's coal production will likely grow about 3 percent this year, despite a government campaign to cut air pollution.

Coal's history has been intertwined with growth, the industrial age, and lately, pollution and climate change. Barbara Freese is the author of Coal: A Human History, and discusses the history of coal as a brand.

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