Monday, January 31, 2011

Math Education Spending Does Not Add Up

One part of math that is often overlooked is the fact that teaching math requires only a teacher, a blackboard, some chalk and a math book. No expensive laboratories. No costly equipment or other special environment is necessary. Yet it seems teaching and learning math leads to mountains of anxiety and terrible fears about nothing of consequence.

However, the real challenge and failure comes long before students tackle "mathematics." It comes during the period they're expected to become proficient with basic arithmetic. Adding, subtracting, multiplying, dividing and working with fractions. For most kids, math ends there, before they start the real mathematics. By that time they are so uninterested and so bored with the subject that they never get into algebra, geometry, trigonometry and the dreaded calculus.

Does it matter? Probably not. As long as kids are able to handle the most basic functions of arithmetic, they'll get along in life. Only people who are truly interested in the subject and aiming for a future that makes use of mathematics need to know more than the basics.

Meanwhile, because learning math requires so little, a person can overcome his defiency with ease. And at any time in his life. It boils down to the purity of the subject. Until a student reaches the frontier, which is unlikely for more than a handful, the principles are universal and available to all. It is the common language

Money for Math Dummies Won't Ensure Einsteins

Jan 30, 2011

U.S. presidents are always yammering about the need to “invest in education” to prepare our children to compete in the 21st century.

Barack Obama succumbed to the temptation last week in front of a huge, attentive audience for his State of the Union address. The president told the American people every child deserves a chance at an education. He said we have to “win the race to educate our kids.” And he reminded us that the quality of math and science education in the U.S. “lags behind many other nations.”

Whose fault is that? Last time I looked, the Department of Education was a government agency. If Obama believes in top-down policy, all he has to do is tell his bureaucrats to fix it.

The function of the Department of Education, according to its website, is to establish policy for education and to assist the president “in executing his education policies for the nation and in implementing laws enacted by Congress.”

Better education for our kids is a goal, not a policy.

The Education Department’s mission is to promote student achievement and prepare our youth for global competitiveness. Inspirational, to be sure. Where’s the policy to accomplish it?

Running in place. Between 1970 and 2007, inflation-adjusted spending for grades K-12 increased 190 percent without any noticeable improvement in academic achievement, according to Andrew Coulson, director the Center for Educational Freedom at the libertarian Cato Institute in Washington.

Education’s Cost/Benefit

“After $2 trillion and 45 years in the business of education, you’d think we’d have something to show for it,” Coulson said in a telephone interview last week. Instead of better student performance, all that money bought us “a lot more public school employees,” he said.

The U.S. spends more per pupil than most countries, according to the National Center for Education Statistics. In its latest report, “The Condition of Education 2010,” the NCES said the U.S. spent $10,267 per pupil for primary and secondary education, 41 percent more than the average for developed countries. (Data are for 2006.) That amounts to 4 percent of gross domestic product, also above the average.

As for student performance, the U.S. ranked about average in reading literacy and science, and below average in mathematics, compared with other developed nations, according to the Program for International Assessment (PISA), which is coordinated by the Organization for Economic Cooperation and Development.

Constitutional Questions

It sure sounds as if education spending should undergo some of that rigorous cost-benefit analysis Obama plans to apply to federal regulations.

Most of the money for education comes from the state and from local property taxes. Historically the federal government’s share has been 8 percent, doubling with the fiscal stimulus.

“Education is a state and local responsibility,” said Russ Whitehurst, director of the Brown Center on Education Policy and a senior fellow at Washington’s Brookings Institution.

The federal government has no constitutionally enumerated power to determine how to educate our children. (Tea Party Caucus, take note!) Ever since LBJ’s Great Society and the Civil Rights Act, the federal government has taken on the responsibility for providing equality of opportunity through education, Whitehurst told me in a phone interview. No Child Left Behind (Bush) and Race to the Top (Obama) are recent examples of the federal government setting goals and standards and, in the second case, doling out rewards (money) for meeting them.

“The goal is to homogenize education,” Cato’s Coulson said.

Definition of Insanity

Most of us would agree that every child deserves an opportunity at an education, as Obama said in his speech. So why did the president sign a law phasing out the D.C. Opportunity Scholarship Program, begun under George W. Bush? The OSP provided scholarships for children in very low-income districts to attend private schools.

By any metric, the program was a success. “A higher proportion went to college, parents were widely enthusiastic, it cost a lot less than public education in D.C.,” Whitehurst said.

The Democratic-controlled Congress said the money could be better spent on D.C. schools.

Liberals think the answer to underperforming inner city schools is more money. Isn’t that the definition of insanity, doing the same thing over and over and expecting a different result?

Libertarians and conservatives say the solution for improving education is more competition and choice. Who’s right?

Free to Choose

The old way hasn’t worked. Why not try something different? How about tempting the education system with the incentives of the marketplace to see if that will shake it out of its torpor?

Liberals want to spend money more wisely, but the only way that’s going to happen is by introducing the choice and competition teachers’ unions oppose. Low-income parents should be able to make the same kind of choices affluent parents do when they decide to buy a home in an upscale suburb with a good school system, Whitehurst said.

“A surer way over the long term to spend money wisely is a system that is competitive, gives parents the opportunity to choose and has public funds following them to schools selected by parents,” he said.

Forget all that stuff about “investing in education.” That would be money well spent.

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Friday, January 28, 2011

The Imams are Coming

Give us your poor, your tired, your unwanted imams. No matter who they are, they want to come here.

Controversial Muslim cleric caught being smuggled into U.S. over Mexico border

28th January 2011

U.S. border guards got a surprise when they searched a Mexican BMW and found a hardline Muslim cleric - banned from France and Canada - curled up in the boot.

Said Jaziri, who called for the death of a Danish cartoonist that drew pictures of the prophet Mohammed, was being smuggled into California when he was arrested, along with his driver Kenneth Robert Lawler.

The 43-year-old was deported from Canada to his homeland Tunisia in 2007 after it emerged he had lied on his refugee application about having served jail time in France.


Jaziri had allegedly paid a Tijuana-based smuggling group $5,000 to get him across the border near Tecate, saying he wanted to be taken to a 'safe place anywhere in the U.S.'
His fire and brimstone sermons and rabble-rousing antics catapulted him into the public eye during his short tenure as imam at a Montreal mosque.

He branded homosexuality a disease and led protests over cartoonist Kurt Westergaard's illustrations poked fun at Islam and were published in a Danish newspaper in 2006.
He also caused anger when he campaigned for a bigger mosque to accommodate Montreal's burgeoning Muslim population.


Jaziri was arrested being smuggled across the San Diego border crossing, along with his driver Kenneth Robert Lawler

But after his deportation he complained that he had been physically and mentally tortured during the 13-hour flight repatriating him to Tunisia, a claim Canadian authorities deny.
He was being held as a material witness in the criminal case against Mr Lawler, who has been charged with immigrant smuggling.

Jaziri had allegedly paid a Tijuana-based smuggling cartel $5,000 to take him across the border near Tecate, saying he wanted to be taken to a 'safe place anywhere in the U.S.'
According to the court documents, a Mexican guide led Jaziri and a Mexican immigrant over the border fence near Tecate.

They then trekked across the rugged terrain under cover of darkness to a spot popular for drivers who pick up immigrants for smuggling runs into San Diego.
He allegedly told officials he had flown from Africa to Europe, then to Central America and Chetumal, Mexico, on the Mexico-Belize border, where he took a bus to Tijuana.

Lise Garon, a professor of communications at Laval University in Quebec City, told the Los Angeles Times: 'His nickname in Quebec was the controversial imam.

'I think he was deported because people hated his ideas.'

His case drew support from the Muslim community as well as Amnesty International after he claimed he would be tortured if sent back to Tunisia.

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Ex-muslim Obama Stymied by Islamic Unrest

The timid Obama administration is at a loss for what to do. Rather than fuel the fires now spreading in the world's Islamic theocracies, Obama is probably looking at his Koran and wondering how to avoid offending Muhammad.

Revolution is in the air but US sticks to same old script

January 29, 2011

Washington appears addicted to propping up tyrants

Events in the Middle East are moving too fast for the Obama administration to think it can get away with Plan A and Plan B reaction strategies according to the regimes or leaders it wants to keep in and out of power.

Consider the response of the US Secretary of State, Hillary Clinton, to Hezbollah tightening its grip on power in Lebanon this week - Washington might have to pull its funding worth hundreds of millions for Lebanon, her office warned.

But as democracy demonstrators were confronted by thousands of baton-wielding policemen in the streets in Cairo, there was no mention of pulling the $US2 billion-plus cheque that Washington writes for the octogenarian President, Hosni Mubarak, each year.

Instead, a rhetorical nugget that Mubarak's mouthpieces would use in their defence - ''our assessment is that the Egyptian government is stable'' and then some namby-pamby words about how Mubarak was ''looking for ways to respond to the legitimate needs and interests of the Egyptian people''.

That response came on Wednesday - more thugs in and out of uniform in the streets, more tear-gas and 860 more young Egyptians banged up in prison because, Oliver-like, they had the audacity to stand in the streets and to ask for more. Such is stability.

Undaunted, Clinton tried again on Wednesday, when she called on the Egyptian authorities to cease blocking the communications on which the demonstrators relied. But on Thursday the Twitter and Facebook websites were inaccessible and mobile-phone users in Cairo said that it was difficult or impossible to sent text messages.

Clinton uttered the ''stability'' line early in the week - before the seriousness of what is unfolding in the streets of Cairo and Alexandria came in to focus. Consider how it might be interpreted by ordinary Egyptians - the human rights of 80 million people have been trampled for 30 years but what the US Secretary of State is most concerned about is the stability of the state.

And, even as the focus sharpened, the administration refused to tell the truth about the despot upon whom Washington relies - ''Egypt is a strong ally,'' the White House press secretary, Robert Gibbs, replied when asked if the administration still supported Mubarak.

And, in a week in which the Middle East's historic self-started wave of democracy protests came to a head, Barack Obama might have used his State of the Union address to cheer along all the protesters; and perhaps to warn all the leaders, country by country, of the fate that awaits them.

Instead he confined his specific remarks to Tunisia, saying: ''The United States of America stands with the people of Tunisia and supports the democratic aspirations of all people.'' So, in a region of 333 million people, where to varying degrees a good 325 million are under the heel of unelected leaders, the US President addressed only little Tunisia.

The lame excuse offered to reporters was that Cairo erupted late in the drafting process of the speech but that last ''aspirations of all people'' phrase was a recognition that ''what happens in Tunisia resonates around the world''.

By current American thinking it would never do to have Islamists in power in the Palestinian Occupied Territories or in Lebanon and therefore they heed every despot's warning that the Islamists are waiting in the wings across North Africa and the Middle East.

But lost in the lunge to protect US strategic and commercial interests by propping up the region's dictator class is any realisation that that support is what leaves the youth of the region under-educated and under-employed and, thereby, ripe for the picking by Islamist and other underground movements.

In Tunisia the revolutionaries are still searching for a leader who can articulate their demands. And this week a leader flew in to Cairo - searching for a revolution. That was the former International Atomic Energy Agency chief Mohamed ElBaradei, whose return to Egypt underscores a challenge brought on across the region as much by the local community as the international community - the grooming of those who might form a half-decent opposition.

Tracing an arc through Obama's approach to the Middle East, the Johns Hopkins School of Advanced International Studies professor Fouad Ajami described the President's foreign policy pragmatism as ''a break of faith with democracy''.

Alluding to the suppression of demonstrations in Tehran after the contested 2009 presidential election, he wrote in Lebanon's Daily Star: ''American diplomacy was not likely to alter the raw balance of power between the regime and its democratic oppositionists. But the timidity of American power and the refusal of the Obama administration to embrace the cause of the opposition must be reckoned one of American foreign policy's great moral embarrassments.''

The Mubarak machine's contempt for popular aspirations and whatever the US might think of them was on full display yesterday when Safwat el-Sherif, the head of the ruling National Democratic Party, feigned obliviousness to the reality of political power in Egypt as he lectured the protesters - ''democracy has its rules and process - the minority does not force its will on the majority''.

Abdel Moneim Said, a stooge government-appointed publisher, echoed Hillary Clinton's midweek ''stability'' comment when he told reporters: ''I can't think of anybody that I know that has any concern about the stability of the regime.''

Finding the right policy mix to influence events without being accused of interfering is a fine balance that some observers have concluded eludes the Obama administration.

''It's about identifying the US too closely with these changes and thereby undermining them; and not finding ways to nurture them enough,'' Aaron David Miller, of the Woodrow Wilson International Centre for Scholars, told The New York Times.

Meanwhile, observers on the ground in the region shake their heads. ''People want moral support,'' said Shadi Hamid, of the Brookings Doha Centre. ''They want to hear words of encouragement - right now they don't have that. They feel the world doesn't care and is working against them.''

His point seems to be this: it is time Washington thought in terms of investing in people in the region, not in dictators.

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Wednesday, January 26, 2011

ETFs, the new Mutual Funds

The number of ETFs continues to climb, giving investors more and more ways to approach the stock and bond markets. However, the advantage that gave ETFs their biggest edge was their low management fees, which were often 25 basis points. However, the growing acceptance of these vehicles has led to a creeping increase in fees, which, for many funds are now often 65 to 75 basis points.

I'm reminded of the early promise of Cable TV -- no advertising. Subscribers paid their monthly fee and watched movies and shows uninterrupted by commercials. Hmmm. Where did that go? The same reversion to old practices is underway in ETF-land. The trend of higher fees has ETFs looking more and more like the mutual funds they were designed to beat.

Seven ETF Launches for the New Year

January 26, 2011, 12:59 am EST

Dan Pritch submits: As firms continue to launch new ETFs at a dizzying pace, I thought it would be instructive to take a look at 7 new ETFs launched in January of 2011 across a broad spectrum of asset classes and strategies:

1) – Global X Russell Emerging Markets Value - This ETF will rely upon the benchmark Russell Emerging Market MegaCap Value Index, delving into an already heavily populated space in emerging market hot money flows. While many emerging markets and high beta strategies are focused on growth or momentum stocks, the value focus will add a new tilt to a frothy strategy, perhaps opening the way for some different weighting from the likes of smaller outsourcing firms, manufacturers and financials compared to the large-caps and multinationals from more popular emerging markets ETFs.

2) (NYSEArca: EWAC - News) – Rydex MSCI All Country World Equal Weight ETF – This one takes a stab at multiple attractive strategies, combining a broader world market approach with the equal weight strategy. Many investors like the equal weight strategy since it doesn’t rely so heavily on individual issues that tend to monopolize an entire index. Take the Nasdaq for in stance – Apple (NasdaqGS: AAPL - News) represents an astounding 20% of the Nasdaq ETF (NasdaqGM: QQQQ - News). This ETF would then provide both increased regional, currency and sector diversification while ensuring returns aren’t dominated by large-caps. As evidenced by an existing Equal Weight ETF on the S&P500, we’ve seen prolonged outperformance over its benchmark (NYSEArca: SPY - News). Whether this ETF can deliver similar outperformance remains to be seen, but keep your eye on it.

3) (NYSEArca: WDTI - News) – Managed Futures Strategy Fund – Managed Futures were hot when the market was quite volatile and heading downward. With equities rallying and volatility low, these segments haven’t done so well. But, with the focus on commodities in the news and fears over a weak dollar, it’s no surprise that another managed futures ETF would launch. This particular ETF will seek to track the long/short Diversified Trends Indicator. Another facet to the underlying holdings includes currencies. Since 2004, the DTI has beaten the S&P500 with less volatility, but that isn’t saying much in the face of 2008-2009′s unprecedented market conditions. The Fact Sheet can be found here.

4) (NYSEArca: ALUM - News) – Global X Aluminum ETF – With emerging economies consuming Aluminum in record amounts with their infrastructure build-outs, it’s timely to see the launch of an Aluminum-focused ETF. Of course, this isn’t a direct play on the metal itself, but rather, miners that have a heavy presence in dealing with the material like Alcoa (NYSE: AA - News) and others. As such, expect to see some overlap with other mining ETFs and commodities ETFs.

5) (NYSEArca: SCHH - News) – Schwab U.S. REIT ETF – The ETF universe already abounds with various REIT ETFs, yet we have another now from Schwab. Seemingly, the only benefit over existing popular REIT ETFs will be an extremely low expense ratio of 0.13%. This is a major trend in the industry, using price as a value proposition. Many institutions have gone so far as to actually offer FREE ETF trading in dozens of ETF issues (79 and counting). The selling point for the REIT sector in general is often the high current yield given the pass-through tax structure, as well as a play on a rebounding economy for a sector that was hammered to heavily during the recent downturn.

6) (NYSEArca: AGOL - News) – ETFS Physical Asian Gold Shares Trust – With no shortage of conspiracy theories circulating amongst the gold bug crowd, “physical” gold ETFs have started to sprout up. The intent is to provide investors with an added level of assurance that the gold an ETF purports to represent is actually physically held in trust – in Asia for this particular ETF. The Sprott Gold (closed end) Fund (NYSEArca: PHYS - News), for instance, allows investors to actually redeem their holdings. This has led to some strange premiums that are easily exploited with pairs trades now and then when they deviate too far from the norm. Regardless, I can see little value in this addition to the crowd; whether it’s held in Asia, in Canada, or on paper by legitimate financials, AGOL doesn’t seem to present a compelling investment thesis. There are actually a few precious metals ETFs that tend to beat gold returns in an up market, while of course declining rapidly on the way down.

7) (NYSEArca: VIXY - News) – ProShares VIX Short-Term Future – Often referred to as the fear index, the VIX tends to rally when equities sell off and it drops when stocks perform well, as complacency sets in and volatility drops out as measured by put/call ratios. Previously, investors had the opportunity to play the VIX via various ETNs (exchange traded notes) like (NYSEArca: VXX - News), which subject investors to solvency risk of the parent issuer. So, the selling point here is that these new instruments are structured as ETFs, not ETNs, thus removing that liability.

One could reasonably expect value decay over time due to contango just like what we saw with VXX, USO and other ETFs/ETNs that rely on futures rolls monthly. The only typical entry point for routine retail investors may be for those looking to take a long position in anticipation of, or during, a rapid decline like the recent flash crash or the 2008-2009 financial collapse. Long term, I would expect VIXY to slowly degrade over time as mentioned previously.

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Tuesday, January 25, 2011

Death before Dishonor

Millions of Americans believe one of a few conservative talk show hosts -- Limbaugh, Hannity, Beck or O'Reilly -- spoke the words that triggered Jared Loughner's bloody attack in Tucson. However, there's absolutely no evidence that the control of Loughner's mind by media gasbags was a factor.

On the other hand, there is an endless number of stories about killings committed in the name of Islam. Both individual killings and mass murder. Stunningly, Americans seem to have far less interest in these clear-cut cases of murder due to warped thinking inspired by a single book (the Koran, if you're wondering) than in the idiotic claims that a couple of people committed lethal crimes because conservative talk show hosts made them do it.

Murder Trial Begins for Iraqi Immigrant Accused of Daughter's 'Honor Killing'

Jan 24, 2011

She had shunned an arranged marriage and gone to live with her boyfriend. And Noor Almaleki ended up dying in an "honor killing" carried out by her own father, prosecutors say.

Faleh Almaleki, who had moved the family from Iraq to Arizona, apparently felt his 20-year-old daughter had become too Westernized, according to prosecutors. He allegedly crashed his Jeep into his daughter and her boyfriend's mother in 2009 as they walked across a parking lot. The daughter died from her injuries after two weeks in a coma. The mother lived.

Prosecutors charge that Faleh Almaleki carried out an "honor killing" by slamming his Jeep into his 20-year-old daughter in 2009. His trial began Monday in Phoenix.
Almaleki, 50, goes on trial today on charges of murder, attempted murder, aggravated assault and leaving the scene of a serious accident, after weeks of plea negotiations failed, The Associated Press reported. He faces life in prison if convicted.

Almaleki said he was angry at his daughter for becoming "too Westernized" and believed she was acting against Iraqi and Muslim values, Jay Davies, a spokesman for the Peoria, Ariz., police department, told Reuters. Police say she didn't want the arranged marriage and was living with her boyfriend and his parents.

Prosecutors called the death an"honor killing" after Almaleki said his daughter brought dishonor to the family, the AP said. He wanted his daughter to stay true to Iraqi traditions, but she wanted the life of a typical American young woman.

He regularly harassed his daughter and told the boyfriend's family that if she didn't move out of their home, "something bad was going to happen," the AP said, citing a court document.

Honor killings -- the practice of killing a relative over perceived shame -- have been documented by the United Nations in Egypt, Iraq, Turkey and other countries. They are rare in the U.S.

The defense has not commented on its strategy.

A year ago, Almaleki's previous lawyer said the defendant didn't understand the court proceedings and may need a mental health checkup, The Arizona Republic reported in July. He had been treated at a psychiatric unit as of late December 2009 and had been under suicide watch before that, the paper said.

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Monday, January 24, 2011

Seeing the Laser Light

Sometimes it's just best to duck and cover, especially if a Marine Corps Apache Helicopter and its crew are hunting for you.

Northrop Grumman Announces 2000th Production Viper(TM) Laser Will be Delivered Ahead-of-Schedule to Support U.S. Department of the Navy Program

ROLLING MEADOWS, Ill., Jan. 24, 2011 (GLOBE NEWSWIRE) -- Northrop Grumman Corporation (NYSE:NOC - News) today announced the ahead-of-schedule delivery to the U.S. Navy of the company's 2,000th Viper(TM) laser which provides the jamming energy for the company's battle-proven infrared countermeasures (IRCM) applications.

The Department of the Navy Large Aircraft IRCM (DoN LAIRCM) system currently employed on U.S. Marine Corps helicopters protects aircrews and aircraft from the threat of shoulder-launched, heat-seeking missiles. Program deliveries were made several months ahead-of-schedule.

Viper(TM) is a small, lightweight multi-band laser that draws minimal power from the aircraft, yet provides the jamming power output required to protect rotary-wing aircraft, large transport aircraft and fast jets whose infrared (IR) signatures make them especially vulnerable to IR-guided missiles. All Viper(TM) components fit in a 13-inch diameter by two-inch high chassis, weighing less than 10 pounds, the lightest laser available for IRCM applications.

"Protecting our troops in combat is our number one mission," said Carl Smith, vice president of infrared countermeasures programs at Northrop Grumman's Land and Self Protection Systems Division. "This latest milestone, a result of our recently doubled manufacturing capacity, further demonstrates our commitment to our warfighting customers and the confidence our customers have in our technology and capabilities."

Northrop Grumman's IRCM systems are the only such aircraft protection systems currently in full scale production and installed on over 500 military aircraft to protect approximately 50 different rotary-wing platforms and large fixed-wing transports from heat-seeking missile attacks. The system functions by automatically detecting a missile launch, determining if it is a threat to the aircraft and activating a high-intensity laser-based countermeasure system to track and defeat the missile.

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Live Long and Prosper -- Jack LaLanne

LaLanne proved that eating right and exercising can lead to a long and happy life. Imagine if that idea caught on? What would that do for our national healthcare bills? If we stopped practicing our suicidal behaviors, it is estimated our national heathcare expenses would DROP by One-Third.

No other approach to healthcare can save us as much -- and do it free.

Jan 24 2011

Jack LaLanne, Fitness Pioneer, Dies At 96

Famous for encouraging people to exercise regardless of their age, LaLanne passed away Sunday at his California home.

Before Jazzercise, before spinning, before kettle bells, Pilates, Wii Fit, Zumba or the Shake Weight, there was Jack LaLanne. The seemingly tireless fitness guru who taught the world how to get in shape for nearly 80 years died on Sunday afternoon at his home in Morro Bay, California, due to respiratory failure resulting from pneumonia. He was 96.

"He was surrounded by his family and passed very peacefully and in no distress ... and with the football game on Sunday, so everything was normal," daughter Yvonne LaLanne, 66, told Reuters.

LaLanne spent his life encouraging couch potatoes to be fit, helping to jump-start the modern fitness movement while proving that it's never too late to get in shape. Though a modest 5' 6", LaLanne had an oversize personality and the monster heart of a salesman when it came to promoting exercise. From swimming from Alcatraz Island to Fisherman's Wharf while handcuffed and pulling a 1,000-pound boat at age 60 to slapping the cuffs on again and pulling 70 people in 70 boats for more than a mile through Long Beach Harbor a decade later, LaLanne never stopped encouraging Americans to push themselves and their bodies in search of peak fitness.

Born Francois Henri LaLanne in San Francisco on September 26, 1914, to French immigrant parents, The New York Times reported that LaLanne spent his early years on his parents' sheep farm in Bakersfield, California. Pimply and nearsighted at age 15, LaLanne described himself as a junk-food-junky-scarfing high school dropout whose life was changed one day when his mother took him to a women's club for a talk on nutrition and health.

Inspired, LaLanne began hitting the local YMCA to lift weights, ditched the sugary snacks and began studying Gray's Anatomy to learn about the body's muscles. By the time he was 21, he opened his first fitness studio and launched "The Jack LaLanne Show" in 1951 in the San Francisco area, going national eight years later with the workout program in which he used such primitive props as broomsticks, a chair and a stretchy rubber cord.

The show aired in various incarnations through the mid-1980s and LaLanne became a favorite guest on late-night and radio talk shows, where he would eagerly show off his physical prowess, doing fingertip push-ups and other stunts most men half his age could not perform. In addition to the TV show, LaLanne opened a string of fitness studios across the country, invented and sold exercise machines, and in recent years famously marketed the Power Juicer, a mixer that blends raw vegetables and juices into healthy shakes.

LaLanne was such an institution that he was often asked to do cameos in films and TV shows, including "The Addams Family," "Mr. Ed," "Arli$$," "The Simpsons" and the 1990 Leslie Nielsen horror spoof "Repossessed."

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Pandora's Box to Arrive Soon in Havana

This oughta be good. Cuba is about to a get high-speed broadband Internet, a gift from Venezuela. With the arrival of this portal to the world, Cubans will discover things at home are worse than they ever knew.

How much of the content can Cuban censors block? Probably a lot. But not all, which means the deprived people of Cuba will swallow another dose of the reality imposed on them by the dictatorial Castro regime that exists only to perpetuate itself.

Broadband cable on its way to unplugged CubaFibre-optic cable laid from Venezuela brings the promise of speedy internet to one of the world's least connected countries

Sunday 23 January 2011

Cuba is set to join the high-speed broadband era with an undersea fibre-optic cable laid from Venezuela, bringing the promise of speedy internet to one of the world's least connected countries.

A specialised ship sailed from Camuri beach, near the Venezuelan port of La Guaria, this weekend, trailing the cable from buoys on the start of a 1,000-mile journey across the Caribbean sea.

Venezuelan and Cuban officials hailed the project as a blow to the United States' embargo on the island. It will make Cuba's connection speed 3,000 times faster and modernise its economy.

"This means a giant step for the independence and sovereignty of our people," Rogelio Polanco, Cuba's ambassador to Caracas, said at a pomp-filled ceremony in tropical sunshine.

The ship, Ile de Batz, owned by the French company Alcatel-Lucent, will lay the cable at depths of up to 5,800 metres and is expected to reach eastern Cuba by 8 February. Cuba's government said the cable should be in use by June or July.

Cuba has some censorship restrictions but the impact could be profound. The country has just 14.2 internet users per 100 people, the western hemisphere's lowest ratio, with access largely restricted to government offices, universities, foreign companies and tourist hotels.

The 50-year-old US embargo prevented Cuba tapping into Caribbean fibre-optic cables, forcing it to rely on a slow, expensive satellite link of just 379 megabits per second.

Venezuela's president, Hugo Chávez, Havana's closest ally, funded the $70m (£43.8m) cable and named it Alba-1, after the region's Caracas-led leftwing alliance. Improved communication is necessary to effect "historic, political and cultural change", said Ricardo Menéndez, Venezuela's science, technology and industry minister.

The cable should boost President Raúl Castro's drive to modernise Cuba's centrally planned economy and make state enterprises slimmer and more efficient. About 500,000 state workers will lose their jobs this year. In addition to broadband, the cable will let Cuba's creaky telephone system handle millions of calls at once. It will be extended to Jamaica next year.

Cuban officials said the priority would be improving communications for those who already had access to the island's intranet, a government-controlled version of the internet. Broadband would mean higher quality communication but not necessarily "broader" communication, said the communist daily newspaper Granma, dampening hopes of an information explosion.

Most Cubans would still have to rely on state media for news,, meaning a diet of propaganda about government successes and distorted reporting of the outside world, said Antonio González-Rodiles, 38, a scientist in Havana. "I think it's pretty unlikely they are going to let Cubans access this immense information source, given there's no clear [state] desire to democratise our society and reduce censorship. A lot of things are going to have to change before Cubans will be able to navigate this sea of information."

The recent lifting of a ban on mobile phones and personal computers means more information is bypassing state channels, especially through the use of memory sticks, but high costs and state monitoring may have limited the impact.

Bloggers such as Yoani Sánchez have won attention and plaudits abroad for their chronicles of daily life, but they remain a marginal force at home.

Cuba's usual form of international communication – post – received a setback at the weekend when Havana suspended all deliveries to the US.

Authorities said sacks of mail were being returned from the US because of tighter counter-terrorism restrictions, following an attempt to smuggle explosives in cargo from Yemen.

Returning the packages was costing Cuba's postal service, prompting the abrupt suspension until further notice of a service which only resumed in 2009 after a 42-year gap during the cold war. The Obama administration lifted the postal ban in what was seen as a cautious effort to improve ties with Havana.

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Wednesday, January 19, 2011

Jobs Report -- Grim

In short, it looks like the end of the road for Steve Jobs. What will that mean for the future of Apple? Hard to say. On one hand the company has a number of extraordinary products making big money these days, and those products are likely to keep the cash piling in for a couple more years. The question is whether or not Apple will lose something irreplaceable if it loses its Chief Visionary -- Steve Jobs.

Other visionaries will emerge. But will any of them lead Apple? Probably not. They'll start their own firms because they were inapired, in part, by Apple and Jobs. In my view that means Apple will lose it position as leader and join the large and changing pack of competitors that are in the game, but never dominant for long.

Jobs's Cancer Combined With Transplant Carries Complications

Jan. 18 -- Apple Inc. Chief Executive Officer Steve Jobs' health condition has forced him to take a leave of absence from the company. Jobs’s medical troubles first became public after a 2004 statement, when he indicated he had neuroendocrine tumor that was caught and removed. In 2009, he underwent a liver transplant.

The form of cancer that Apple Inc. Chief Executive Officer Steve Jobs announced he had more than six years ago grows and spreads slowly and, in some patients, the migrating cells aren’t detected for years, doctors said.

Jobs, who announced yesterday he was taking a leave of absence, had a liver transplant in 2009. That’s a strategy sometimes taken to stop neuroendocrine tumors that have spread to that organ, said John Fung, chairman of the Digestive Disease Institute at the Cleveland Clinic in Ohio. The disease recurs in about half of those patients, he said.

“That would be the major concern,” said Fung, who hasn’t treated Jobs and doesn’t know the details of his case, in a phone interview yesterday. “It wouldn’t be a total surprise.”

Neuroendocrine cancer, which strikes about 3,000 Americans a year, produces high levels of hormones that disrupt digestion and other body functions. Jobs’s medical troubles first became public after a 2004 statement, when he indicated his tumor was caught and removed. The Apple chief hasn’t given a reason for the liver transplant he underwent.

The leave of absence taken by Jobs yesterday was his third since 2004. He has been unable to keep on weight as he undergoes treatment for his conditions, according to a person with knowledge of the situation who requested anonymity because the matter is private.

Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment beyond a company statement that didn’t include specifics on Jobs’s health.

Infections, Side Effects

“Whether the weight loss is suggestive of a recurrence of the cancer, that’s speculation,” Fung said, noting that weight loss may result from a variety of causes, including viral infections or drug side effects.

In the e-mail to Apple employees, Jobs said he will remain CEO while Chief Operating Officer Tim Cook will take over the company’s day-to-day operations.

Patients who undergo liver transplants can experience “countless” difficulties for years afterwards as they undergo drug treatment and face possible organ rejection, said Linda Sher, a surgeon at the University of Southern California Liver Transplant Program in Los Angeles, who hasn’t treated Jobs and doesn’t know the details of his case.

“The number of complications that can occur are from here to the sky,” Sher said yesterday in a phone interview. “I could spend all day listing them.”

The Apple chief received the liver transplant at Methodist University Hospital in Memphis, Tennessee. The surgeon who performed the procedure, James Eason, is an expert in treating recurrences of neuroendocrine tumor. He didn’t return a call to his office yesterday seeking comment.

Bile Duct

Liver surgery usually involves cutting and reconnecting the bile duct, a tube in the body that transports the digestive fluid. Blockages in the duct sometimes occur at the site where it was stitched back together, Sher said.

Other complications can occur long after the original surgery and can take a number of forms, according to Sher, who is conducting a study to determine which neuroendocrine tumor patients are most likely to benefit from getting a new organ.

Transplant patients must also take drugs to prevent the immune system from attacking and rejecting the new organ, she said. Because they dampen the body’s disease-fighting systems, drugs most commonly used, cyclosporine and tacrolimus, are associated with infections, tumors and kidney damage, Sher said. Patients sometimes take other drugs, such as steroids, that raise the risk of diabetes, she said.

While most cases of acute organ rejection occur within the first six months after surgery, the risk of rejection persists for years afterwards, Sher said. Patients must see their doctors frequently to adjust transplant medications, monitor liver function and diagnose complications, she said.

“There are any number of things that can happen,” she said. “Both the patient and the doctor have to be attentive and alert.”

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More Community Banks to Demutualize and Merge

Despite the cancellation of its merger plans last November, Naugatuck Valley Financial (NVSL) will undertake the second step of its conversion to a fully demutualized, stockholder-owned institution. In other words, the market for the stocks of community banks is getting better, and with the equity from a stock sale, Naugatuck Valley Financial will have enough capital to acquire another Connecticut thrift institution. Let the consolidation begin!

Naugatuck Valley Financial Corporation (NVSL) and Southern Connecticut Bancorp, Inc. (SSE) Mutually Agree to Terminate Merger Agreement

NAUGATUCK and NEW HAVEN, Conn., Nov. 12, 2010 (GLOBE NEWSWIRE) -- Naugatuck Valley Financial Corporation (Nasdaq:NVSL - News) and Southern Connecticut Bancorp, Inc. (NYSE Amex:SSE) announced jointly today that they have mutually agreed to terminate their merger agreement, citing inability to obtain regulatory approval of the proposed transaction.

John C. Roman, Naugatuck Valley Financial's President and Chief Executive Officer, said, "We are disappointed that we are unable to proceed with the proposed transaction. However, market conditions and the regulatory environment have changed significantly since we entered into the merger agreement in February, which has affected how the regulators perceive the financial metrics of the combined institution. Naugatuck Valley Savings and Loan remains a well-capitalized and profitable institution. Our Board of Directors remains dedicated to promoting the best interest of Naugatuck Valley Financial Corporation and its stockholders and other constituencies."

John H. Howland, Southern Connecticut Bancorp's President and Chief Operating Officer, said, "We share in Naugatuck's disappointment because we continue to believe that the proposed merger would have been in the best interests of Southern Connecticut and its stockholders and other constituencies. The Bank of Southern Connecticut remains a well-capitalized institution."

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Monday, January 17, 2011

Gravity of Jobs' Illness Says Apple to Fall

With a bad pancreas and a transplanted liver, it looks as though Jobs' days are numbered. However, it's most likely his days as Apple CEO are many fewer than his total days remaining. Without its Chief Visionary, Apple will drop from the lead to become one of the pack.

With Jobs on Leave, Will Apple Shares Stay Healthy?

Oh, brother.

The news that Steve Jobs is taking another medical leave from Apple is ominous.

Everyone wishes the Apple chief executive the very best. Let's hope this is temporary and he will make a speedy recovery. Apple says Mr. Jobs plans to continue as chief executive while on leave. That sounds hopeful. We will may find out more tomorrow, Tuesday, when the company reports its latest earnings.

But right now investors are flying blind. Just how sick is Mr. Jobs? How long will he be out? We don't know. Apple won't say. Mr. Jobs has asked for privacy. On a personal level, anyone can understand that. But it's no help for stockholders.

Apple stock fell about 6% in overseas trading Monday following the news. But this was a light day for the European markets. Wall Street was closed for Martin Luther King Jr. Day. One can expect a more meaningful reaction here in the U.S. when the markets reopen. Investors will have to digest the news about the chief executive as well as the latest earnings for the Christmas season.

What can you expect? If this turns out to be a temporary leave of absence, for comparatively minor medical reasons, then this shouldn't have much effect on your shares. Who cares if Steve Jobs has to work from home for a couple of months?

But if the absence is longer and the problem more severe, it's another story.

How important is Steve Jobs to Apple? Ask yourself this: If you had woken up today and learned that Steve Jobs had left Apple to join Sony as chief executive, with a big stake in that company, would you be inclined to buy Sony stock? I bet you would.

If you had woken up to learn that Steve Jobs had moved to Motorola under similar terms, would you want to go out and buy some Motorola stock? I bet the answer's the same.

In the past 13 years, Steve Jobs has proved himself to be the most extraordinary chief executive in the world and among the most extraordinary in living memory. His leadership adds enormous value. Therefore his absence must subtract enormous value. That's grade-school arithmetic. There's no way around it.

Look at where Apple was before he resumed the helm back in 1997. When his predecessor, Gilbert Amelio, stood down in July 1997, the shares were the equivalent of $3.34 apiece in today's terms. On Friday: $342. A hundred times more.

Apple true believers may argue that the company will continue to succeed, regardless of its leadership, because of its superior technology. Yet Apple computers were better than PCs back in 1997, as they were in 1987 and as they are today. But the company was still heading for oblivion. Technological brilliance is not enough to make stockholders rich. You need management brilliance too. Steve Jobs has given Apple a focus and an edge that is matched by few other companies. This is a fast-moving, brutally competitive industry. Last year's cutting-edge gadget is next year's paperweight. The iPad is already heading into history, and though the iPad II is on deck, a boatload of rivals is just about to land.

The difference between winning and failing in this industry is paper thin. Companies like Nokia and Sony have struggled in recent years not because of a few, big, obvious blunders that were easy to avoid, but because of the cumulative effect of lots of small errors over time. Tim Cook, the interim chief executive, may do a perfectly good job. Whether he will prove as brilliant as Mr. Jobs is yet to be seen.

Two years ago, when Steve Jobs left to get a liver transplant, Apple stock briefly fell about 5% or so. It was a blip. The stock then quickly rebounded and hit new highs. Some investors may take heart from that and figure history will repeat itself.

But a lot has changed since then. The situation today is very different, and riskier.

Back then, Apple stock was a lot cheaper. It was only around $85 a share, or about 2.3 times sales, five times cash flow. Today, shares cost $340, five times sales, and 17 times cash flow. Then, Apple was valued at $50 billion net of cash. Today it's $294 billion.

Today all but one analyst on Wall Street has it as a "buy" - a degree of near-unanimity that is ominous. History has not been kind to the stocks that every analyst loves.

Naturally, the company enjoys enormous strengths with or without Steve Jobs at the helm. It effectively controls an entire technological ecosystem - iPhones, iPads, Macs, iTunes, and applications. At about 17 times forecast earnings, the stock is not grossly expensive. It has net cash and is a cash machine. Many customers are apparently impervious to price, and significant growth potential remains, especially overseas.

Yet Apple now carries a $300 billion price tag. It's pretty hard to make a company that big grow. Last week I confessed I had been too cautious on Apple stock in the past 18 months. And I asked what it would take for me to keep being wrong. If Apple continued to rise at the same rate, I wrote, it would be heading for $1,000 per share in a couple of years. Could that happen? If so, how?

Sheer numbers showed how big the challenge is. Apple investors would need an absolutely heroic performance from the company for something like that to take place. Bluntly, I wouldn't bet on it, although of course many will. (As I also mentioned, history suggests that "Could Apple could go to $1,000" is the sort of question people like me tend ask at the peak of a stock's fortunes.)

Steve Jobs's health has long been a concern in the background for Apple stockholders. If you are an investor in Apple, congratulate yourself on your good fortune, but be aware of the risks. They are rising, not falling. And this, alas, is another one.

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Saturday, January 15, 2011

Our Man in Havana

Okay. Maybe Obama is trying. But even though he reduced travel restrictions, he could have gone further. It's not easy to end the embargo, but he could simply let it be known that the government will not prosecute anyone who ignores it.

Obama to ease travel restrictions to Cuba, allow more U.S. cash to island

WASHINGTON -- The Obama administration Friday said it will allow for more U.S. travel to Cuba, making it easier for schools, churches and cultural groups to visit the island.

A senior Obama official told The Miami Herald the much-expected move to expand cultural, religious and educational travel to Cuba is part of the administration's continuing ``effort to support the Cuban people's desire to freely determine their own future.

President Barack Obama is also restoring the amount of money ($2,000) that can be sent to nonfamily members to the level they were at during part of the Clinton and Bush administrations. There will be a quarterly limit on the amount that any American can send: $500 per quarter to ``support private economic activity.''

The administration also will restore the broader ``people-to-people'' category of travel, which allows ``purposeful'' visits to increase contacts between U.S. and Cuban citizens.

Rep. Ileana Ros-Lehtinen, R-Miami, the new chair of the House Foreign Affairs Committee, assailed the revision, saying they ``will not help foster a pro-democracy environment in Cuba.

``These changes will not aid in ushering in respect for human rights,'' Ros-Lehtinen said. ``And they certainly will not help the Cuban people free themselves from the tyranny that engulfs them. These changes undermine U.S. foreign policy and security objectives and will bring economic benefits to the Cuban regime.''

But Tampa Democrat Rep. Kathy Castor hailed the news, and suggested Cuban Americans in her community would soon be able to travel directly from Tampa to Cuba if the airport secures authorization.

``The Tampa Bay region has one of the highest Cuban-American populations in this country, but for too long, families have had to travel to Miami in order to get to Cuba,'' said Castor, who sent a letter to Obama before he took office, ``requesting a fresh look at U.S.-Cuban relations and lifting travel restrictions for families.''

The changes could expand the number of U.S. airports from which charter flights to the island depart.

``We see these changes, in combination with the continuation of the embargo, as a way to enhance civil society in Cuba,'' said the administration official, who spoke on condition of anonymity, adding that increased contact between Cubans and Americans could ``support the independence of the Cuban people, making them less dependent on the Cuban state and on Cuban authorities.''

The official dismissed speculation that the administration delayed the changes until after the November election because Democrats in Florida feared it would hurt them among Cuban-American voters -- many of whom back tough sanctions against the Cuban regime.

``This package of changes was the result of an interagency process that has concluded only in the last couple of days,'' the administration official said. ``They are rolling out now that they are ready to be rolled out.''

The official underscored that the changes do not lift the economic embargo and that tourist travel to Cuba remains illegal, as does sending remittances to senior government or Communist party officials.

The White House said the changes do not require congressional approval and the changes will be published in the Federal Register.

Under the changes, religious institutions in the U.S. will be able to sponsor trips to Cuba by their members with a general license.

Friday, January 14, 2011

Bank Dividend Yields Soon to Beat CD Rates

Safety-minded investors have spent the last couple of years grumbling about bank CD rates, which have hovered slightly above ZERO percent since the bottom of our financial crisis. Investors will soon have an alternative to low CD rates if they're willing to get back into the stock market.

The Big Banks are about to increase their dividend payouts, and eventually those payouts will return to the levels of a few years ago. However, some smaller banks have never stopped offering high dividend yields. Consider First Niagara (symbol FNFG) with its dividend of well over 4%. Or New York Bancorp (NYB), which pays a higher rate. Or Hudson City (HCBK). All sound banks with great yields.

Moreover, these banks are possible takeover targets, though First Niagara is about to complete the acquisition of NewAlliance (NAL), a Connecticut bank with 88 branches.

Banks Are Poised to Pay Dividends After 3-Year Gap

Financial analysts say the nation’s largest banks are ready to begin restoring their dividends in the first half of the year, after a three-year pause to repair their damaged balance sheets. The reversal could put billions of dollars in the pockets of pension funds and retirees who had viewed bank shares as dependable sources of income.

Clues to how big a payout is in store could come as early as Friday, when JPMorgan Chase announces its 2010 financial performance, the first of many earnings reports to come over the next week from the likes of Bank of America, Citigroup, Goldman Sachs and Wells Fargo.

If the big banks deliver a second straight year of rising profits, as many analysts expect, the conditions would be in place for regulators to approve dividend increases by as early as March.

As the financial crisis worsened in 2008 and 2009, all but a handful of financial institutions cut their once-lucrative dividends to just pennies a share, hurting ordinary investors who had come to see them as sources of income. JPMorgan, for example, now has a dividend of 20 cents a share annually, down from $1.52 before the crisis.

Over all, the financial sector of the Standard & Poor’s 500-stock index paid out $51 billion in dividends in 2007. By 2010, that figure had shrunk to $19 billion.

“It’s a significant milestone,” said Gerard Cassidy, a veteran bank analyst at RBC Capital Markets. “The return of dividends signals that the banks are back, and the Federal Reserve wants to inspire confidence in the marketplace so that banks lend more.”

The financial industry has returned to health much faster than expected, helped by an alphabet soup of federal aid programs totaling more than $3 trillion, ultralow interest rates and a surging stock market.

Banks are expected to record $70 billion in profits in 2010, according to Foresight Analytics, a financial research firm. That would be up from $12.5 billion in 2009 but remains about half the level reached in 2006, before the housing market collapsed and the financial system almost came undone.

The earnings reports for the fourth quarter of 2010 are also likely to show that corporate and consumer lending is starting to come back while losses on bad loans are continuing to ease.

Wall Street’s trading businesses are expected to turn in a strong performance because of an increase in deal-making activity late in the year.

This week the Federal Reserve began another round of so-called stress tests of the nation’s 19 largest banks, evaluating their ability to remain financially healthy in the face of a still-anemic economic recovery and tough new regulations that will cut deeply into revenues. Unlike the first round of tests, the findings this time will not be made public.

Before approving a dividend increase, regulators must sign off on a bank’s stress test and conclude that the bank can meet the higher capital requirements put in place by new international agreements and the recent overhaul of financial regulations in the United States. They also must have fully repaid any federal bailout funds they accepted at the height of the crisis.

While the return of dividends will be welcomed by ordinary investors, it remains a delicate issue for the banks as well as regulators and politicians in Washington, said Chris Kotowski, a bank analyst with Oppenheimer.

Many voters are still angry about the government-led bailout that rescued banks after the collapse of Lehman Brothers in 2008. More recently, the return of bonuses on Wall Street has stirred outrage.

“It’s purely a matter of making it palatable to the public,” Mr. Kotowski said. “Banks are fully capable of doing it. But everyone’s afraid of headlines that say just two years after the bailout, the fat cats are getting dividends again.”

Partly as a result, he said, dividends will probably be restored in stages, and it could be take until the end of 2012 for them to return to historical norms.

For decades, shares of banks, along with utilities, were the favored choice of retirees and other conservative investors who looked forward to a steady payment each quarter.

That all changed when the financial crisis struck, forcing Citigroup to cut its dividend as it braced for a wave of huge losses tied to loan defaults.

Although the federal bailout program did not require banks to lower their dividends in most cases, regulators all but forced many banks into making cuts by insisting that they hold more capital in reserve to cushion against losses.

By the spring of 2009, several of the largest banks — including JPMorgan, Bank of America and Wells Fargo — cut their dividend to just pennies a share each quarter.

Just as the banks cut their dividends at different rates over the course of months, the timing of dividend increases will probably also vary widely across the industry. The strongest banks, including JPMorgan, State Street, U.S. Bancorp and Wells Fargo, should be in the first wave this spring, several analysts said.

For Bank of America and Citigroup, which continue to suffer steep losses on mortgages and consumer loans, the analysts said higher dividends probably would not come until later this year or early next year.

Several regional lenders, including Fifth Third Bank, KeyCorp, SunTrust and Regions Financial, are barred by regulators from raising their dividends. None of these banks have repaid their bailout money in full.

In particular, analysts and investors are eagerly anticipating what the chief executive of JPMorgan, Jamie Dimon, will say on the company’s earnings call on Friday, looking for any hint of the bank’s dividend plan. JPMorgan emerged from the financial crisis in far better shape than most of its rivals, and Mr. Dimon has been outspoken about his desire to raise his company’s payout.

“We’re going to be building up a lot of excess capital,” he said in a CNBC interview on Tuesday. “So, we would like to restart a dividend.”

Eventually, JPMorgan’s restored dividend could equal $1.50 a share annually, said Michael Scanlon, senior equity analyst with Manulife Asset Management in Boston. That would equal a yield of 3.3 percent based on its closing price of $44.45 on Thursday.

That would be up from 0.5 percent now. More important, it would catapult the yield on JPMorgan shares to far above the 2.26 percent yield on certificates of deposit, a popular vehicle for investors seeking income.

“It won’t come right out of the chute at that level,” Mr. Scanlon said. “But it’s definitely the end of a long drought.”

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Wednesday, January 12, 2011

Banks Are Getting Together Again

The banks are restless. They're merging again, which is good news for bank investors, but probably bad news for some bank employees. Layoffs and staff reductions will follow.

First Niagara's Path Could Be Game-Changer

NewAlliance Bancshares (NAL) * Top-Rated Company

Buffalo, N.Y.-based First Niagara Financial Group (FNFG) has made two moves that could be seen as potential game changers.

First, the company gained approval from the Federal Reserve Board in April to change its classification from a thrift holding company to a bank holding company.

This cleared the way for First Niagara Financial to more easily expand through acquisitions.

The second potential game changer is an acquisition that's expected to wrap up in April, pending regulatory approval. On Dec. 20, shareholders approved a plan for First Niagara Financial Group to buy Connecticut-based NewAlliance Bancshares (NAL).

The move will make First Niagara a top-25 bank by assets.

First Niagara has 257 branches in New York and Pennsylvania. The NewAlliance acquisition will add 88 branches in Connecticut and Massachusetts.

First Niagara has acquired three insurance subsidiaries since August and bought Pennsylvania-based Harleysville National in April.

First Niagara's share price is up 19% since the NewAlliance merger proposal was announced Aug. 19. It was the largest merger of U.S. lenders since October 2008, according to Bloomberg.

First Niagara cleared a 13.89 buy point in a double-bottom base Wednesday. But it hasn't yet found strong volume. The stock is about 3% past the potential buy point.

Earnings grew 29%, 175% and 229% in the past three quarters, according to Thomson First Call. Loan losses dropped about 27% in the most recent quarter.

First Niagara pays a quarterly dividend of 15 cents a share. The annualized dividend yield is 4.2%.

One negative is the Dodd-Frank Act. The law is increasing bank costs and limiting activities that banks choose to take on.

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Tuesday, January 11, 2011

Bank on Bank Time

It wasn't long ago that in the US there were almost 10,000 banks and 2,000 Savings & Loans. The numbers of both types of institutions are going down.

What might the future look like? The extreme version is Canada. Canada is home to six banks. Six. But the population of Canada is about 34 million. If the population of Canada were equal to the 310 million in the US, then Canada would most likely have about 60 banks.

However, it's umlikely the US will see the waves of consolidation it would take to shrink the number of US banks to 60, or even 100. But even though the numbers of domestic banks and thrifts are shrinking, it's likely the US banking system will continue to suffer from huge redundancies.

More bank mergers expected in 2011

January 10, 2011, 5:00am EST Related:

Banking & Financial Services

An uptick in activity in the mergers and acquisitions in the banking industry during the end of 2010 is kicking off what analysts believe will be an active M&A period for banks in 2011.

December heralded not only high-profile purchases like Toronto-based Toronto-Dominion Bank’s (NYSE: TD) $6.3 billion acquisition of Farmington Hills, Mich.-based Chrysler Financial Corp., but also smaller deals like the $1.5 billion sale of New Orleans, La.-based Whitney Holding Corp. (NASDAQ: WTNY) to Gulfport, Miss.-based Hancock Holding Co. (NASDAQ: HBHC).

As increasingly more financial institutions repay their federal Troubled Asset Relief Program, or TARP, loans and effectively reduce their debt, speculation is rising about which banks will be at the forefront of the industry. A number of Dayton-area banks could be on the buying side of that 2011 mergers and acquisitions tale.

In a December report, Jefferson Harralson, an analyst with New York-based investment bank, Keefe, Bruyette & Woods, predicted increased activity in the 2011 mergers and acquisitions market.

“While it is difficult to identify which bank is next, we do believe the case for (mergers and acquisitions) is slowly building. More banks are either reaching a breaking point or are near the end of their cumulative losses, in our view,” Harralson said.

Harralson identified First Financial Bancorp. (NASDAQ: FFBC), Huntington Bancshares Inc. (NASDAQ: HBAN), PNC Financial Services Group (NYSE: PNC) and U.S. Bancorp (NYSE: USB) as potential buyers in 2011. Alternatively, his firm placed KeyCorp (NYSE: KEY) on its potential sellers list.

Potential buyers were identified as those banks with above-average profitability, strong capital and growth opportunities. Potential sellers were characterized as those trading below book value.

Also, Richard Bove of Rochdale Securities listed Fifth Third Bancorp (Nasdaq: FITB) as a potential buyer, according to

There were a slew of large bank mergers during the recession as some financial institutions were not able to continue on their own. Among the bigger deals were Bank of America (NYSE: BAC) acquiring Merrill Lynch and Wells Fargo (NYSE: WFC) acquiring Wachovia.

Of the local buyers, most in recent months have received votes of confidence from analysts.

Jefferies & Company,Inc., a New York-based securities and investment banking group, in November listed both Huntington and PNC with “buy” ratings. In October, Oppenheimer & Co., a New York-based investment advisory firm, upgraded U.S. Bank to “outperform” from “perform.” PNC and U.S. Bancorp are two of only three large cap banks on the list.

On the other side, Oppenheimer also downgraded KeyBank from “outperform” to “perform.”

Tom Mangan, senior vice president and portfolio manager for Beavercreek-based James Investment Research Inc., said the financial industry has two main choices. While banks could focus on acquisitions, they also could use their renewed stability to pay dividends to shareholders who have weathered the banks’ financial struggles.

Of the top 10 publicly-traded financial institutions with a local presence, only four (First Financial, Park National Bank (AMEX: PRK), LCNB (OTC: LCNB) and Wesbanco (NASDAQ: WSBC)) had annual dividend yields at least in the single digits.

Some banks, however, are positioned to do both, such as PNC and U.S. Bank, Mangan said.

Any efforts to acquire other banks, however, will be under the scrutiny of the federal government.

“There’s a lot of politics involved in this. They’d have to go on bended knee to the regulators to purchase anybody,” Mangan said.

However, for those able to make acquisitions, Mangan agreed KeyBank would be an attractive purchase, given its large network.

Foreign banks that bypassed the U.S. financial crisis are the most likely financial institutions to be on the acquisition hunt, Mangan said. However, regional banks with operations in the Rust Belt could be active buyers and positioned for growth because the area is making an economic comeback, he said.

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Tuesday, January 04, 2011

BP -- Big Producer of Black Gold

The hysteria of the Gulf Oil Spill has passed and oil is trading at more than $90 a barrel. That's good news for BP, but oil prices are impinging on drivers and others who are now paying more for refined petroleum products. Obama, with his moratorium on Gulf well-drilling, did his best to push oil prices higher. However, in a moment of clarity, he removed the drilling ban on some Gulf drilling. Of course if he were truly thinking of ways to stimulate the US economy he would remove all limits on domestic oil drilling and end all mileage requirements on US-made vehicles.

But Obama is a job killer, so empowering business leaders to decide how to build their businesses is out of the question -- unless the business involves sunshine, wind or batteries. Then the government tries to help. However, the word from consumers will arrive soon. They won't spend $40,000 for electric cars that travel only 40 miles on a single charge of the battery. And they do not want to pay more for electricity because it was made from sunlight.

BP is back. The stock price is up and will surpass its levels of last spring before the well catastrophe. This year the company will resume payments of dividends and hopefully it will find a way to extract oil from places that have been off-limits to oil drillers since the environmental nuts have been driving our energy policies.

BP shares hit 6-month high after Shell bid report

January 4, 2011

LONDON (Reuters) - Shares in oil major BP hit a six-month high on Tuesday after The Daily Mail newspaper reported rival Royal Dutch Shell had considered a takeover bid during the Gulf of Mexico oil spill.

BP shares were up 5.0 percent to 488.85 pence at 1000 GMT (5 a.m. ET).

The paper, citing sources close to the Anglo-Dutch group, reported Shell weighed an opportunistic bid for BP as crude gushed into the Gulf, but was discouraged by the potentially uncapped legal liabilities.

The newspaper said Shell could yet bid for BP if another suitor emerged but Europe's largest oil company by market value was unlikely to be the "first mover."

Mic Mills, head of electronic trading at ETX Capital said BP was also being boosted by comments late on December 31 from the lawyer running BP's gulf spill oil compensation fund that suggested damages payments could be half the expected level.

Ken Feinberg told Bloomberg Television about half the $20 billion fund set up by BP should be adequate to cover claims for economic losses.

One dealer said the news reports focused minds on the fact BP shares were cheap compared to rivals. "BP remains cheap and vulnerable at these levels but I do not think a bid is likely."

BP shares trade on a price-earnings ratio of 6.5 times, consensus 2011 earnings, while Shell trades at 8.9 times, partly reflecting the fact BP's actual earnings could be far lower if it was found to have been grossly negligent in causing the oil spill which would boost legal costs and fines.

However, Feinberg's comment highlighted how the picture could also be brighter than the company has predicted.

Analysts and industry sources said during the crisis last summer it was likely that both U.S. oil giant Exxon Mobil and Shell -- the only companies considered large enough to mount a bid -- would run the slide-rule over BP.

However, the two notoriously conservative companies were seen as likely to be discouraged by the open-ended nature of BP's liabilities.

Now BP's shares have rebounded 65 percent from their June low at 296 pence, to give BP a market value of around $140 billion, a bid would be much harder to mount, especially for Shell which is worth over $210 billion.

Exxon has a market value of almost $370 billion.

It is uncertain whether regulators on either side of the Atlantic would support a tie-up in top tier of the industry.

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