Wednesday, September 24, 2008

Young, Rich, and Calling Their Own Shots

By: Angus Loten

While there's no magic formula for success in business, it never hurts to be quick on your feet, able to brush aside fears, and come armed with a fresh perspective. It's no wonder we're seeing more and more young entrepreneurs these days.

Take Aaron Hall, who was just 21 years old when he took over a struggling solar power firm from a family friend. Now 28, Hall sits at the helm of a rising star in the energy industry, poised to hit $60 million in revenue.

Then there's Tina Wells, who was a teenager herself when she started writing product reviews for young people. At 28, she now heads Buzz Marketing Group, which develops marketing research and strategy for SonyBMG, among other corporate giants.

And don't forget Leanna Archer, who was barely 10 years old when she launched a line of all-natural hair-care products. This year, she's set to bring in $150,000. In October, she turns 13.

That kind of early-life success has landed all three a spot on this year's 30 Under 30,'s annual ranking of the nation's top young entrepreneurs. As always, this year's group reflects the broad interests and skills of a tech-savvy generation connected to the world and its markets like no other in history. They range from a basement start-up offering cheap WiFi access in underserved communities from San Francisco to India, to a multimillion-dollar federal contractor providing IT services for the Pentagon.

In between, we have a pair of lobstermen selling lobster trap timeshares, and a group of college-age guys who will haul anything out of your home for a price.

Whatever your idea, starting a business at any age has its challenges. For young entrepreneurs like these, that can include juggling homework and making payroll. It can also mean convincing your parents, bankers, and other grown-ups to take you seriously. Yet despite the many pitfalls -- least of which is the current economic downturn -- a growing number of tweens, teenagers, and 20-somethings want to be their own boss.

Of 2,400 young people surveyed last year by the Kaufman Foundation, four out of 10 said they wanted to start their own business. And 63 percent told the Kansas City, Mo.-based non-profit group that through hard work, they could do it, too.

Most said running their own businesses would allow them to put their skills to work, build something for the future, and make money. Increasingly, those entrepreneurial instincts are being fostered at school -- and at an early age. According to the National Council on Economic Education, a growing number of states are adding entrepreneurship studies to K-12 curriculums, though the topic is also feeding into math, history, and other standard high school subjects. There are now more than 2,000 colleges and universities offering at least one course in entrepreneurship, compared to just 300 in the mid 1980s, studies show. Over the same period, the number of college departments dedicated to entrepreneurship has doubled to about two dozen and growing.

That's not to say these millennial CEOs are textbook business school grads. In fact, many put their degrees on hold to watch over their ventures. Aaron Levie, 23, and Dylan Smith, 22, both dropped out of college and moved to Palo Alto, Calif., to run, their online file sharing start-up. Levie describes the high-tech hub as a "haven for college dropouts looking to launch a business." Rahim Fazal, co-founder of Involver, started his first business when he was in high school, and actually told his parents he was dealing drugs -- just so they wouldn't find out about his company and make him focus more on his schoolwork.

Others, like 28-year-old Claire Chambers, transitioned seamlessly from school into the corporate world, only to leave behind an enviable career to do their own thing. "I've always been an entrepreneur at heart," says Chambers, the founder of Journelle, a lingerie company. "As a child, I started a dog-walking business."

So what do their parents think of all this? Where did they get the money? And what industries are they taking over? These are just a few of the questions we put to this year's group of junior overachievers, while catching up with a few of our past honorees. Get to know them -- they're going to be around for awhile, and, who knows, one of them may end up being your boss someday.

As 12-year-old Archer says, "I don't take no for an answer."

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Chris Dodd Stares Down Paulson

By: Ian Welsh
So there was "Goldman" Hank, holding a gun on the economy and staring Congress down. "Give me the 700 billion, or the economy gets it!" he threatened. For two days it looked like he was going to get away with it, 700 billion dollars to spend on the Wall Street gang, the boys who'd already shot the economy up so bad it was in danger of bleeding to death.

Then Marshal Dodd came swinging through doors, shotgun in hand, and said "not so fast Hank. Put the gun down, and back away from the economy. We're going to do this my way."

For a moment calm reigned, then from off one side came a high pitched squeak, "you just put down that gun Dodd," said Bush as he leveled his blunderbuss "the Veto" at Dodd, "and you let my good friend Hank walk away with the money or I'll use this gun." He swivelled and instead of aiming it at Dodd, put its muzzle right against the economy's head. "I'll do it. Don't think I won't! I've killed an economy before!"

Hand still on the trigger, Dodd glanced over at Reid. The old man's fighting days, some said, were long gone. Dodd hoped Reid had one big fight left in him. If he didn't, the economy was done, and Paulson would get away, scot-free.

So yeah, the Dodd plan. Good plan. Buying up mortgages for 15% less than the current market value of the house, then reissuing a clean mortgage to homeowners helps the banks while still giving them a slight haircut (but only slight, odds are home prices will drop more than 15% before the slide is over.) It helps homeowners stay in their houses. It sets a market price so that banks know what mortgages are worth and thus what the derivatives based on houses are worth. And giving the mortgages bought to the FDIC, one of the few agencies that Bush didn't cripple, is genius.

Giving the government stock equal to the value of any bailout for the company is also only fair. If they get bailed out, taxpayers should have a chance to get their money back. If they don't like that, well, beggars, and they are beggars, shouldn't be choosers.

Having a review board is a good idea, though having the Treasury Secretary, Fed Chairman and FDIC chief on it is perhaps unwise. Still Congress chooses two of the members. I'd prefer direct oversight through the Congressional Budget Office, which reports directly to Congress, but this isn't too bad.

Clawing back compensation based on fraudulent financial reporting is a stroke of genius and may be what Dodd put in so that he could eventually trade it for something else, because fact is, almost all of these bastards have used dubious accounting to inflate their earnings and therefore their bonuses and salary. They're all guilty and they know it. Under a vigorous Department of Justice (say, oh, an Obama one) they could all be prosecuted.

Allowing bankruptcy judges to modify the terms of mortgages is both humane and reasonable, so many mortgages were sold under false pretenses. Banks really, really hate this provision, as it takes away part of the bankruptcy bill, but when they themselves are asking for all their contracts to be, in effect, modified by government (what's buying for 15% less than face when you couldn't get 30 cents on the market but modification?) they don't have a leg to stand on.

There appear to be other details, but those are the highlights. It's a good plan and it helps more than just the banks. It includes a lot of what outsiders were suggesting, especially with respect to help mortgage holders. It doesn't go quite as far as I would have liked—I would have preferred to just buy up entire failed corporations rather than their assets, but if the share program is done properly the government could wind up with effective control of many corporations anyway. This is only reasonable, if the government has to bail you out for more than half your value, the government should own you.

There is a provision that might let corporations pay off the government with superior bonds, I don't like that. However, I suspect most companies won't go for it unless they're in relatively good shape already (you want to owe more money when you might be bankrupt?)

Dodd deserves a lot of credit for putting this bill forward, as does Leahy. Leahy put back in the most important thing—no dictatorial powers for Paulson without court review. Anything Paulson or anyone else does can be reviewed by judges during or after the fact. No man should be above the law in America.

The question now is how much of this will survive negotiations and if Bush will veto a good bill. Also in question is if Republicans will vote against a good bill, handing Democrats a club to beat them with. I do wish that Dodd had put in more poison pills he could trade away, to improve his bargaining position, but in my opinion Dodd, Leahy and the Democrats still have the stronger hand here and should use it to beat the Republicans into submission. No one on Main Street liked Paulson's bill, and even most Wall Street workers, unless at the very highest levels, didn't like it either. Force the Republicans to vote for Dodd's bill or they can take huge losses in November.

Good work Marshal Dodd. Now finish the job. Make sure that the Bush gang's last attempted raid on the treasury goes down in flames.

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Commentary: Bailouts will lead to rough economic ride

By Ron Paul

Editor's note: Ron Paul is a Republican congressman from Texas who ran for his party's nomination for president this year. He is a doctor who specializes in obstetrics/gynecology and says he has delivered more than 4,000 babies. He served in Congress in the late 1970s and early 1980s and was elected again to Congress in 1996. Rep. Paul serves on the House Financial Services Committee.

Rep. Ron Paul says the government's solution to the crisis is the same as the cause of it -- too much government.

Rep. Ron Paul says the government's solution to the crisis is the same as the cause of it -- too much government.

(CNN) -- Many Americans today are asking themselves how the economy got to be in such a bad spot.

For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.

Unfortunately, the government's preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention.

Ever since the 1930s, the federal government has involved itself deeply in housing policy and developed numerous programs to encourage homebuilding and homeownership.

Government-sponsored enterprises Fannie Mae and Freddie Mac were able to obtain a monopoly position in the mortgage market, especially the mortgage-backed securities market, because of the advantages bestowed upon them by the federal government.

Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks.

These governmental measures, combined with the Federal Reserve's loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering.

When interest rates are lowered to below what the market rate would normally be, as the Federal Reserve has done numerous times throughout this decade, it becomes much cheaper to borrow money. Longer-term and more capital-intensive projects, projects that would be unprofitable at a high interest rate, suddenly become profitable.

Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is malinvestment, a misallocation of resources into sectors in which there is insufficient demand.

In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically.

This lowering of prices brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however that there are some winners -- in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers -- builders and other sectors connected to real estate that suffer setbacks.

The government doesn't like this, however, and undertakes measures to keep prices artificially inflated. This was why the Great Depression was as long and drawn out in this country as it was.

I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.

Additionally, the government's actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.

Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.

The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.

It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place.

The government must divorce itself of the albatross of Fannie and Freddie, balance and drastically decrease the size of the federal budget, and reduce onerous regulations on banks and credit unions that lead to structural rigidity in the financial sector.

Until the big-government apologists realize the error of their ways, and until vocal free-market advocates act in a manner which buttresses their rhetoric, I am afraid we are headed for a rough ride.

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Finnish college gunman kills 10

The scene outside the school

A gunman has killed 10 people at a college in the town of Kauhajoki in Finland before shooting himself and later dying in hospital.

Media reports named the gunman as Matti Juhani Saari, 22, a trainee chef at the vocational college.

The suspect posted a video of himself on the internet last week firing a gun.

As a result of this, police interviewed him on Monday but decided they did not have enough evidence to revoke his licence, the interior minister said.

Matti Juhani Saari fires a pistol in a photo posted on his website before the killings
Saari's YouTube postings had alerted the authorities to him

The minister, Anne Holmlund, said an investigation would now try to determine whether mistakes were made.

Prime Minister Matti Vanhanen said this was a "tragic day" for Finland.

The attack echoed a shooting spree at a Finnish school last year which left nine dead, including the gunman, who had also posted an internet video.

Ski mask

The shootings in Kauhajoki, some 330km (205 miles) north of the capital, Helsinki, began just before 1100 local time (0800 GMT).

An estimated 150 students were thought to be in the college buildings at the time.

The gunman, dressed in black and wearing a ski mask, was seen entering the building with a large bag. Shots were fired soon afterwards.

School caretaker Jukka Forsberg told AFP news agency that two girls had told him a man was shooting.

"I saw a guy leaving a big black bag in the corridor and going into classroom number three and closing the door," he said.

"I looked through the window and he immediately shot at me. Then I called the emergency number. Thank God I was not hit, he fired at me but I was running zigzag. I ran for my life."

Mr Forsberg added: "I heard constant shooting. He changed another case in the gun. He was very well prepared. He walked calmly."

Police ordered an evacuation and called for reinforcements as fires blazed in the building.

The gunman remained at large within the college grounds for some time.

Map showing school location

Mr Vanhanen confirmed the gunman had shot himself.

Media reports said the gunman was treated for a bullet wound to the head at Tampere University Hospital but later died.

One victim also died in hospital, raising the initial toll from nine.

College headmaster Tapio Varmola told AFP: "Police have told me they suspect [the gunman] to be Matti Juhani Saari. He is a second year culinary arts student at our school."

Mr Vanhanen expressed condolences to the families of the victims and declared Wednesday a day of national mourning.

"We all as a society must be united so that events like these will not happen again," he said.

Ms Holmlund said police questioned the man about the YouTube video, which showed him shooting at a firing range.

On the video, the gunman says "you die next" before firing three times at the camera.

Ms Holmlund said: "Police were aware of this and spoke to him on Monday, September 22. However, the police officer on duty decided there was no need to terminate his gun licence."

The gunman was given a "temporary licence" for a .22-calibre firearm this year, Ms Holmlund said.

In November 2007, eight people and the gunman died in another school attack in Tuusula, Finland.

The gunman, Pekka-Eric Auvinen, posted a video on YouTube as a preview of his attack, pledging to "eliminate" those he saw as "unfit".

In the wake of that attack, Finland's government pledged to raise the minimum age for buying guns.

But the country has a long tradition of hunting and weapons-bearing, with about 1.6 million firearms in private hands.

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Data Show Big Dip in Migration To the U.S.

Washington Post Staff Writer

The number of immigrants coming to the United States slowed substantially in 2007, with the nation's foreign-born population growing by only 511,000, compared with about a million a year since 2000, according to Census figures released today.

In 14 states, the foreign-born population declined, including in such traditional immigrant gateways as New Jersey and Illinois and such newer destinations as Nebraska, South Dakota and Kansas.

The Washington area's immigrant population continued to grow, but much more slowly, increasing by 25,916, compared with average yearly increases of 37,091 since 2000.

Demographers said the data, which were part of a diverse release of social, economic and housing characteristics, reflected the economic slowdown.

"I think this shows that immigrants are keeping an eye on the economy when they make their decision on whether to come or where to live in the United States," said William H. Frey, a researcher with the Brookings Institution who analyzed the numbers. "When the economy appears to be in decline -- particularly for the kind of construction, retail and service jobs that immigrants are inclined to take -- they are less attracted to us."

Although the slowdown coincided with a step-up in federal enforcement actions against illegal immigrants and their employers, Frey cautioned against drawing too close a connection. He noted that the influx of Asian and African immigrants slowed by more than 60 percent, compared with 36 percent for Hispanic immigrants, who are statistically more likely to be in the country illegally.

Even with the slowdown, the number of foreign-born people in the United States reached a high of 38.1 million in 2007, accounting for 12.6 percent of the population.

The Census data also offered some unexpected insight into the driving habits of U.S. residents. Despite rising gas prices, growing concern about global warming and a proliferation of carpool-only lanes, the percentage of U.S. workers who drove to their jobs on their own remained at 76 percent from 2000 to 2007. During the same period, the share who carpooled dropped from 12 percent to 10 percent because of a slight increase in the number of those working from home.

The statistics were only slightly better for the Washington region. About 68 percent of area workers drove alone in 2007 -- up from 67 percent in 2000 -- and 11 percent carpooled. (Perhaps it's not surprising, then, that a Car Free Day sponsored by the Metropolitan Washington Council of Governments yesterday drew only 5,269 pledges not to use cars.)

Mark Mather, a researcher at the District-based Population Reference Bureau, said the national aversion to carpooling was probably due to the nationwide shift toward suburban counties where housing is cheaper but access to public transportation is more limited and jobs are further away.

"If you're living outside the Beltway, you really do need a car to get around," Mather said. "So even when there's an increase in gas prices, people just don't have a lot of other options."

But Lon Anderson, spokesman for AAA Mid-Atlantic, predicted that this summer's price spike would cause a "sea change."

"Hitting that $4 at the pump was a psychological turning point," he said. "People are finally saying, 'It's time to change the kind of car I'm driving, or to take mass transit or to work from home.' . . . In the first seven months of this year, Americans have already driven 58 billion miles less compared to last year."

As in previous years, the Census data confirmed the Washington area's status as one of the wealthiest in the nation. Loudoun and Fairfax counties ranked first and second among all counties, with median household incomes of $107,207 and $105,241, respectively. Howard County ranked third, and seven other local counties were in the top 20.

The region also remains among the nation's most educated, with almost 38.3 percent of Arlington County adults over 25 holding advanced degrees, the highest share for any county in the nation.

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Russia engages in 'gangland' diplomacy as it sends warship to the Caribbean

The flagship of Russia's Northern Fleet, nuclear-powered guided missile cruiser Pyotr Veliky (Peter the Great)

(Alexander Nemenov/AFP/Getty Images)

Peter the Great is armed with 20 nuclear cruise missiles and is one of the world?s most formidable warships.

Russia flexed its muscles in America’s backyard yesterday as it sent one of its largest warships to join military exercises in the Caribbean. The nuclear-powered flagship Peter the Great set off for Venezuela with the submarine destroyer Admiral Chabanenko and two support vessels in the first Russian naval mission in Latin America since the end of the Cold War.

“The St Andrew flag, the flag of the Russian Navy, is confidently returning to the world oceans,” Igor Dygalo, a spokesman for the Russian Navy, said. He declined to comment on Russian newspaper reports that nuclear submarines were also part of the expedition.

The voyage to join the Venezuelan Navy for manoeuvres came only days after Russian strategic nuclear bombers made their first visit to the country. Hugo Chávez, the President, said then that the arrival of the strike force was a warning to the US. The vehemently antiAmerican Venezuelan leader is due to visit Dmitri Medvedev, the Russian President, in Moscow this week as part of a tour that includes visits to Cuba and China.

Peter the Great is armed with 20 nuclear cruise missiles and up to 500 surface-to-air missiles, making it one of the most formidable warships in the world. The Kremlin has courted Venezuela and Cuba as tensions with the West soared over the proposed US missile shield in Eastern Europe and the Russian invasion of Georgia last month. Vladimir Putin, the Prime Minister, said recently that Russia should “restore its position in Cuba” – the nation where deployment of Soviet nuclear missiles in 1962 brought Russia and the United States to the brink of nuclear war.

Igor Sechin, the Deputy Prime Minister, made clear that Russia would challenge the US for influence in Latin America after visits to Venezuela, Nicaragua and Cuba last week. He said: “It would be wrong to talk about one nation having exclusive rights to this zone.”

Moscow was infuriated when Washington sent US warships into the Black Sea to deliver aid to Georgia after the war. Analysts said that the Kremlin was engaging in gunboat diplomacy over the encroachment of Nato into the former Soviet satellites of Georgia and Ukraine.

Pavel Felgengauer, a leading Russian defence expert, told The Times: “It’s to show the flag and the finger to the United States. They are offering a sort of gangland deal – if you get into our territory, then we will get into yours. You leave Georgia and Ukraine to us and we won’t go into the Caribbean, OK?” He described the visit as “first and foremost a propaganda deployment”, pointing out that one of the support vessels was a tug in case either of the warships broke down.

Latin America was one of the arenas of the Cold War in which the US and the Soviet Union battled for ideological dominance. Russia has agreed to sell more than $4 billion (£2 billion) worth of armaments to Venezuela since 2005 and disclosed last week that Mr Chávez wanted new antiaircraft systems and more fighter jets.

Mr Dygalo denied any link with Georgia and said that Mr Chávez and Mr Medvedev had agreed on the exercises in July.

Sea power

— In the Battle of Tsushima in 1905 – the largest naval battle since Trafalgar – the Russian fleet sailed 18,000 miles (33,000km) to Port Arthur in the Pacific, where it was outmanoeuvred and destroyed by Japanese forces

— During the 1962 Cuban missile crisis, the Soviet Navy conducted 180 voyages on 86 ships to transfer weapons to Cuba

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Court orders release of Pentagon prisoner abuse pics

Nick Juliano

A federal appeals court on Monday ordered the Bush administration to hand over photos depicting abuse of prisoners held by the US military in Iraq and Afghanistan, handing the American Civil Liberties Union a victory in an ongoing public records lawsuit filed against the Pentagon.

“This is a resounding victory for the public’s right to hold the government accountable,” ACLU staff attorney Amrit Singh, who argued before the court, said in a news release. “These photographs demonstrate that the abuse of prisoners held in U.S. custody abroad was not aberrational and not confined to Abu Ghraib, but the result of policies adopted by high-ranking officials. Their release is critical for bringing an end to the administration’s torture policies and for deterring further prisoner abuse.”

The ACLU filed a Freedom of Information Act request for the photographs in 2003 and took the government to court after the Department of Defense failed to comply, arguing that releasing the photos would violate its obligations to prisoners under the Geneva Conventions.

It is not clear whether Monday's decision by the Second Circuit Court of Appeals, based in New York, will bring the requested photos to light immediately. An ACLU attorney tells RAW STORY the group doesn't know what administration's next steps will be, but the governemnt may request an en banc review by all 12 judges on the appeals panel or it could take its case all the way to the Supreme Court.

"It's anyone's guess as to what they're going to do," said Amrit Singh, who argued the ACLU's case before the appeals court.

The ACLU's ongoing FOIA lawsuits have compelled the release of more than 100,000 pages of documents, including memos authorizing CIA torture.

At issue in Monday's decision were 87 photographs the ACLU believed were taken by members of the military at facilities in Iraq and Afghanistan, including the Abu Ghraib prison that became synonymous with US abuses after humiliating photos from there first appeared in the New Yorker in early 2004.

Although the government stopped trying to fight the full release of Abu Ghraib photos after they all were independently published in 2006, the ACLU says the Pentagon continues to keep hidden 29 additional images from at least seven different locations in Afghanistan and Iraq.

More detail on the photos, from the 52-page court decision(pdf):

And while many of the Abu Ghraib photos depicted unclothed detainees forced to pose in degrading and sexually explicit ways, the detainees in the 29 photographs were clothed and generally not forced to pose. The photographs were part of seven investigative files of the Army’s Criminal Investigations Command (“Army CID”), and were provided to Army CID in connection with allegations of mistreatment of detainees. In three of the investigations, Army CID found probable cause to believe detainee abuse had occurred related to the photographs at issue here.
The appeals panel went on to overturn the government's attempt to use FOIA as "an all-purpose damper on global controversy" in finding that the exemptions to the public records law the administration had claimed were not valid.

“This is yet another case in which the administration used national security as a pretext to suppress information relating to crimes that were endorsed, encouraged or tolerated by government officials,” said Jameel Jaffer, Director of the ACLU National Security Project. “The appeals court was correct to recognize both that the administration’s suppression of the photographs was without legal basis and that disclosure will further the purposes of the Geneva Conventions by deterring the abuse and torture of prisoners in the future.”

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