RICHARD WOLFFE – An award-winning journalist and political analyst for MSNBC television and sought after keynote speaker

February 28, 2012 in Political Speakers

CLICK HERE TO LEARN MORE ABOUT RICHARD WOLFFE SPEAKER, JOURNALIST & AUTHOR

He covered the entire length of Barack Obama’s presidential campaign for Newsweek magazine, traveling with the candidate and his inner circle from his announcement through Election Day, 21 months later.

His book about the Obama campaign, entitled Renegade: The Making of a President, was released in June 2009 in the United States and immediately hit the New York Times best-seller list for several weeks. It is published by Virgin Books in the United Kingdom, India, Australia, New Zealand and South Africa and Law Press in China.

Wolffe appears frequently on MSNBC’s Countdown with Keith Olbermann and Hardball with Chris Matthews. On NBC, he has featured as a political commentator on Meet The Press and TODAY. Prior to his exclusive contract with NBC, he appeared on CNN and Fox News, as well as international media including British, Canadian and Australian television.

He features prominently in the forthcoming HBO documentary on the Obama campaign, By the People, and played a leading role in the HBO documentary of the 2000 Bush campaign, Journeys with George. In April 2009, he joined Public Strategies as senior strategist at the business advisory firm that serves some of the world’s largest corporations, non-profits and associations.

As Newsweek’s senior White House correspondent, his cover stories included What He Believes (on Obama’s faith) Black & White (about Obama and racial politics), Bush In The Bubble (about the president after Hurricane Katrina) and Weight of the World (the behind-the-scenes story of how Bush handled the Lebanon war).

Wolffe joined Newsweek in November 2002 as diplomatic correspondent, covering foreign policy and international affairs. In the 2004 presidential election, he covered the chaotic Howard Dean campaign before switching to John Kerry. Before Newsweek, Wolffe was a senior journalist at The Financial Times, serving as its deputy bureau chief and U.S. diplomatic correspondent in Washington D.C. In that capacity, he managed coverage of business and political affairs in the nation’s capital, and reported on U.S. foreign policy at the State Department and National Security Council.

He first started reporting on George W. Bush and his Texas team in 1999, at the start of the presidential campaign. He travelled with then-Governor Bush for more than a year, through the extraordinary election of 2000. His earlier work for The Financial Times included extensive coverage of the Microsoft antitrust trial and the Clinton administration’s plans to break up the company. His work on regulatory and business issues in Washington included covering Treasury, the Federal Trade Commission, Securities and Exchange Commission and the Commodity Futures Trading Commission.

Richard Wolffe’s Speach Tiopics Include:

? Change in Washington
? From Renegade to Revival: the Making and Unmaking of President Obama

Richard Wolffe is the Author of:

ROBERT BRYCE on WIND ENERGY, NOISE POLLUTION

February 28, 2012 in Guest Bloggers

Robert Bryce, Energy Expert, speaker and Author

February 2, 2012
National Review

In his State of the Union address last week, President Barack Obama touted renewable energy and declared that he would “not walk away from workers” such as Bryan Ritterby, who is employed by a wind-turbine manufacturer in Michigan.

But in their rush to embrace the wind-energy business, Obama and numerous other politicians are walking away from rural residents such as David Enz and his wife, Rose. A year ago, the couple abandoned their home near Denmark, Wis., because of the unbearable low-frequency noise produced by a half-dozen 495-foot-high wind turbines that were built near the home they’ve owned since 1978. The closest was installed about 3,200 feet from their house.

Shortly after the Shirley Windproject’s turbines began operating, the couple began experiencing numerous symptoms, including “headaches, ear pain, nausea, blurred vision, anxiety, memory loss, and an overall unsettledness,” says Mr. Enz, 68. Today, the Enzes are living in their RV or staying with friends. “We didn’t expect any of this stuff,” says Enz, who spent more than 30 years working as a millwright at a paper mill in Green Bay.

Policymakers and health experts are casting a hard eye on wind energy at the same time that the wind industry is desperately trying to convince Congress to pass a multi-year extension of a tax credit that supports it. Without the subsidy, the domestic wind business, which is already being hammered by falling natural-gas prices, will be forced to downsize even further. In December, the American Wind Energy Association issued a report predicting that some 37,000 wind-related jobs in the U.S. could be lost by 2013 if the tax credit is not extended.

That possibility doesn’t faze Wisconsin Republican state senator Frank Lasee, whose district includes the Enzes’ 41-acre property. Last October, Lasee filed legislation that would require the state to investigate the health effects of the noise produced by industrial wind turbines. If passed, the bill– the first of its kind in the U.S. — will impose a moratorium on new wind projects until the study is completed. “I’ve heard and seen enough from people I represent to know that we need a factual study,” Lasee told me recently. In addition to the Enzes, Lasee says he knows another family among his constituents who have abandoned their home because of wind-turbine noise. “We shouldn’t be embracing an agenda that hurts people’s property values and their health,” he said. In mid-January, Lasee filed another bill that could allow cities and counties to establish minimum setback distances between wind projects and residences.

It’s tempting to dismiss the complaints about wind-turbine noise as little more than NIMBYism. And to be clear, not every wind project is causing problems. Further, the most problematic noise generated by the turbines — low-frequency sound (20 to 100 hertz) and infrasound (0 to 20 Hz) — has varying effects. Some individuals feel the effects of the noise quickly and compare it to motion sickness. Others may not feel it at all. That said, the harmful effects of infrasound are well known. A 2001 report published by the National Institutes of Health said that exposure to infrasound can cause vertigo as well as “fatigue, apathy, and depression, pressure in the ears, loss of concentration, drowsiness.”

Furthermore — and perhaps most telling — are the news reports. And there are lots of them. Newspaper stories fromMissouri, Oregon, New York, Minnesota, Wisconsin, Britain, Australia, Canada, Taiwan, and New Zealand indicate that the wind-turbine-noise problem is global and that the frustration among rural landowners is growing.

The wind-energy lobby desperately wants to downplay the problems associated with low-frequency noise and infrasound. That’s not surprising. The industry has no solution for the noise problem, except, of course, to increase the setbacks between wind turbines and residential areas. But doing so would dramatically reduce the industry’s ability to site turbines (and collect fat taxpayer subsidies).

In 2009, the American Wind Energy Association and the Canadian Wind Energy Association commissioned a group of doctors to review the available literature on wind turbines and noise. The two lobby groups published a paper that concluded, “There is no evidence that the audible or sub-audible sounds emitted by wind turbines have any direct adverse physiological effects.” It also said that the vibrations from the turbines are “too weak to be detected by, or to affect, humans.” However, that same study also said that extended exposure to unwanted noise can cause a number of symptoms, including “dizziness, eye strain, fatigue, feeling vibration, headache, insomnia, muscle spasm, nausea, nose bleeds, palpitations, pressure in the ears or head, skin burns, stress, and tension.”

To bolster its claims that turbine noise is not harmful, the wind-energy lobby is touting a study released in mid-January by the Massachusetts Department of Environmental Protection that largely dismissed complaints about wind-turbine noise. But the authors of the Massachusetts report did not interview any of the homeowners who’ve left their houses because of turbine noise. Instead, they did a cursory review of the published literature.

Shortly after the Massachusetts report came out, Jim Cummings of the Acoustic Ecology Institute, a non-profit organization that tracks noise issues, wrote that the authors of the Massachusetts report “dropped a crucial ball” because they did not “provide any sort of acknowledgement or analysis of the ways that annoyance, anxiety, sleep disruption, and stress could be intermediary pathways that help us to understand some of the reports coming from Massachusetts residents who say their health has been affected by nearby turbines.”

Over the past few months, a spate of reports have been released that provide credence to the complaints being made by the Enzes and people like Janet Warren, who raised sheep on her property near Makara, New Zealand, until a wind project was built near her home. Noise from the turbines caused “loss of concentration, irritability, and short-term memory effects” that forced her and her husband, Mike, to leave their property in early 2010.

Among the most important of the recent reports is a decision issued last July by Ontario’s Environmental Review Tribunal regarding a wind-energy facility known as the Kent Breeze Project. Although the Canadian officials allowed the facility to be built, they said that

this case has successfully shown that the debate should not be simplified to one about whether wind turbines can cause harm to humans. The evidence presented to the Tribunal demonstrates that they can, if facilities are placed too close to residents. The debate has now evolved to one of degree.

In other words, Canadian regulators have stated, on the record, that wind-turbine noise can harm human beings if turbines are built too close to homes. That finding was corroborated, again, in August, in a peer-reviewed article published in the Bulletin of Science, Technology & Society. Carl V. Phillips, a Harvard-trained Ph.D. who now works as a researcher and consultant on epidemiology, concluded that there is “overwhelming evidence that wind turbines cause serious health problems in nearby residents, usually stress-disorder type diseases, at a nontrivial rate.” That same issue of the journal carried eight other articles that addressed the issue of health and wind-turbine noise.

In October, a peer-reviewed study of wind-turbine-related noise in New Zealand found that residents living within two kilometers of large wind projects reported

lower overall quality of life, physical quality of life, and environmental quality of life. Those exposed to turbine noise also reported significantly lower sleep quality, and rated their environment as less restful. Our data suggest that wind farm noise can negatively impact facets of health-related quality of life.

Alec Salt, a research scientist at the Cochlear Fluids Research Laboratory at the Washington University School of Medicine in St. Louis, has written extensively about the health effects of wind-energy projects. He flatly concludes that wind turbines “can be hazardous to human health.”

Dr. Robert McMurtry, a Canadian orthopedic surgeon, is also pushing for more study; he is among the leaders of a large anti-wind contingent in Ontario. Try as they might, McMurtry’s opponents cannot dismiss him or his credentials. He is a fellow of the Royal College of Surgeons of Canada and was recently named a member of the Order of Canada, the country’s highest civilian honor.

Ontario has become ground zero in the fight against the wind-energy sector. In September, a Canadian family filed a $1.5 million lawsuit against the owners of a wind project in southwestern Ontario. That same month, CBC News reported that Ontario’s Ministry of the Environment has logged “hundreds of health complaints” about the wind projects there. According to the Society for Wind Vigilance, a group of doctors, acousticians, academics, and health professionals that is focused on the adverse health effects of wind turbines, about 40 families in Ontario have moved out of their homes because of turbine noise. Last month, the Ontario Federation of Agriculture, the province’s biggest farm organization, said that the push for wind energy had “become untenable” and that “rural residents’ health and nuisance complaints must be immediately and fairly addressed.”

Finding people in Canada and elsewhere who are being victimized by turbine noise is easy. Over the past two years, I’ve personally interviewed, by phone or e-mail, homeowners in Wisconsin, Missouri, New York, Nova Scotia, Ontario, and England who’ve had wind turbines built near their homes. Their health complaints are nearly identical to those made by the Enzes. For instance, Darrel Capelle, a 34-year-old farm hand, lives in De Pere, Wis., with his wife and their two young boys. In October 2010, two large wind turbines were built within a quarter mile of their home. “Sleeplessness with the kids started right after the turbines went in,” says Capelle. His wife, Sarah, now suffers from frequent, intense headaches.

Although the federal government has yet to undertake any broad studies of infrasound and wind turbines, other countries are responding to the surging resistance against land-based wind projects. Among those countries: Denmark, which has become the Green Left’s favorite example of the merits of wind energy. Alas, the Danes themselves aren’t so enthusiastic.

In 2010, the Copenhagen Post reported that “state-owned energy firm Dong Energy has given up building more wind turbines on Danish land, following protests from residents complaining about the noise the turbines make.” The newspaper quoted Dong CEO Anders Eldrup as saying, “It is very difficult to get the public’s acceptance if the turbines are built close to residential buildings, and therefore we are now looking at maritime options.”

The controversy over wind-turbine noise has been raging in Australia for more than two years. Much of the fight has focused on the noise generated by the Waubra wind project in the state of Victoria. Residents near the project began complaining of health problems shortly after the 192-megawatt facility began operating in 2009, and several residents near the project abandoned their homes. Australia’s mainstream media have paid serious attention to the turbine-noise issue, including a 2010TV report by the Australian Broadcasting Corporation that focused on the problems at Waubra.

In mid-2011, Victoria’s state government responded to the problems at Waubra by announcing that it would enforce a two-kilometer (1.25-mile) setback between wind turbines and homes. The state’s planning minister said the setback was needed for health reasons. In December, government officials in the state of New South Wales issued guidelines that give residents living within two kilometers of a proposed wind project the right to delay, or even stop, the project’s development. The rules also will impose strict noise limits.

The backlash against the wind-energy sector is particularly fierce in Europe, where the European Platform against Windfarms now lists 518 signatory organizations from 23 countries. In the U.K., where fights are raging against industrial wind projects in Wales, Scotland, and elsewhere, some 285 anti-wind groups have been formed. Last May, according to the BBC, some 1,500 protesters descended on the Welsh assembly, demanding that a massive wind project planned for central Wales be halted. Meanwhile, here in the U.S., about 140 anti-wind groups have been formed.

The growing resistance to large-scale wind projects raises a number of questions that must be addressed before Congress approves any further subsidies.

The most important one is also the most obvious: If the noise generated by wind turbines isn’t a health problem, why are so many people, in so many different countries, complaining about the noise in nearly identical terms? And why are some of them going so far as to abandon their homes?

Another question: Why isn’t wind-turbine noise getting more attention from the Environmental Protection Agency? The EPA has plenty of resources to investigate complaints about the oil-and-gas sector on the issue of hydraulic fracturing. Meanwhile, the wind industry is getting a free pass, even though tens of thousands of wind turbines could be built in the U.S. over the coming years thanks to the renewable-energy mandates that have been instituted in 29 states and the District of Columbia.

The Green Left is so married to the notion that wind energy might help reduce carbon-dioxide emissions that they are blithely ignoring the “energy sprawl” and noise problems that come with large-scale wind projects. Never mind if dozens, or even hundreds, of rural homeowners are being euchred out of their homes and property. They can be ignored. They can easily be sacrificed in the quest to appear to be doing something — anything — in the push to reduce carbon-dioxide emissions, no matter how small or inconsequential those reductions might actually be.

That same mindset prevails in the White House and at the Department of Energy. Indeed, despite the panoply of evidence that shows wind-turbine noise causes health problems, President Obama has made it clear that he wants lots more renewable energy. In his State of the Union speech, he said that he wants to impose a national standard requiring the use of “clean energy,” and that he wants to “double down” on the “clean-energy industry.”

When Dave Enz heard the president’s proposal, his response was simple: “I don’t think he cares about people like us.”

Original file here:

http://www.nationalreview.com/articles/289920/wind-energy-noise-pollution-robert-bryce

GEOFF COLVIN – Can Wall Street Thrive Again?

February 27, 2012 in geoff colvin

Geoff Colvin Speaker & Author

The financial industry is besieged by protesters. It’s also facing a slow-growth world and a wave of new regulation. To flourish again, the big firms must change in painful ways.

By Geoff Colvin, senior editor-at-large

FORTUNE — The brighter side of financial cataclysm wasn’t easy to see in late 2008 — the crisis was at its most acute, and no one knew if Armageddon lay ahead — but Barney Frank was upbeat. He told a consumer lobbying group, “Next year will be, I believe, the best year for public policy since the New Deal.”

For anyone on Wall Street, that cheery forecast from the proudly big-government chairman of the House Financial Services Committee was not good news.

Frank was wrong only on the timing: It took until 2010 to enact the Dodd-Frank law, the most sweeping regulation of Wall Street since the New Deal. (With his crowning achievement in place, Frank recently announced he won’t seek reelection next year.) The new law is so vast that it nearly equals all federal regulation of financial services from the previous 75 years.

That alone would have transformed the industry, but it’s only part one of a double whammy. The other element is an awful economic environment — slow growth in the U.S., slowing growth in Asia, and a European crisis so severe that, for all we know, Armageddon could be creeping up on us again.

Combine those forces, and Wall Street is a deeply different place from what it was three years ago. The changes are a mixed bag for investors and even for customers, who were supposed to benefit from the massive regulatory overhaul. Though the new rules are far from complete, Wall Street is already becoming smaller and less adventurous.

It’s also despised. The Occupiers may have begun to disperse, but the fury that fueled them hasn’t. The latest Trust Barometer compiled by Edelman, a communications firm, finds that the three least trusted industries in the world are insurance, banking, and financial services — Wall Street.

10 best stocks for 2012

The industry’s most immediate problem, worse even than its lousy reputation, is the terrible business climate. “The big firms are overextended, bloated in regions that are shrinking,” says Meredith Whitney, the analyst who forecast the subprime disaster in 2007. “In past years, 70% to 80% of Wall Street revenue has come from the U.S. and Europe. Both continents are in the process of multiyear deleveraging. The firms have gale-force headwinds against them.”

Today’s ultralow interest rates are another headache — a fact that surprises many people. Some think the Fed is keeping rates low in order to rescue the banks by enabling them to obtain funds at low cost. Trouble is, the rates at which banks lend those funds are also hitting record lows. The spread between rates produces what bankers call net interest income, and “it’s very hard to come by in this environment,” says a former top bank executive. That’s especially painful because “it goes straight to the bottom line.” Many Wall Streeters would actually love to see long-term rates rise.

Regulatory upheaval, meanwhile, is only getting started. Dodd-Frank requires hundreds of new rules to be written, and Washington is way behind schedule — partly because Wall Street is lobbying aggressively to shape those rules. Expect another two to five years before they’re finished. To see what’s taking so long, and why Wall Street is nervous about what’s coming, consider the new regulation with the highest profile of them all, the momentous Volcker Rule.

In concept it can be stated in one short sentence: Banks can’t trade for their own account. In practice, the current draft is 288 pages and includes over 1,000 questions to which banks and anyone else may respond. The Federal Deposit Insurance Corp. will announce a final rule sometime next year. Then the banks and the FDIC can start arguing over what it means.

As currently drafted, the Volcker Rule is “a complete game changer,” says Whitney. Beyond the ban on proprietary trading, for example, banks may no longer hold securities in inventory on the chance that a customer might want them; a customer must first state an intention to buy them. “I can’t have anything in the dairy case. When you order, I’ve got to go out and find the cow,” says Whitney. And that “slows the business down dramatically.”

So will other new rules, especially the higher capital requirements that regulators are imposing. The effects of entirely new regulatory bodies created by Dodd-Frank are still mostly unknown. The Financial Stability Oversight Council is just getting started. The Consumer Financial Protection Bureau doesn’t yet have a director. They, and the hundreds of new rules still to be written, will shorten Wall Street’s reach and hinder its speed. That’s what they’re meant to do.

The best and worst of Wall Street 2012

What is Wall Street’s business model in a world like that? The phrase you keep hearing is “back to the future” — making money on fees for underwriting, M&A advice, and investment management rather than on highly leveraged proprietary trading. Good news for high-net-worth individuals: You’ll be feeling lots more love. “Each of these firms is looking at wealth management,” says a former top executive at one of them. No wonder: It’s a high-return, low-volatility business. But building it is hard because those well-off clients are far more attached to their advisers than to the firms those advisers represent. Recruiting and developing an army of top-quality advisers take time.

A bigger challenge for Wall Street is that its turf is no longer the center of the financial universe. In 2005, five of the world’s 10 most valuable banks were American, including four of the top five, led by No. 1 Citigroup (C) and No. 2 Bank of America (BAC); none of the top 10 were Chinese. Today four of the top 10 are Chinese, led by No. 1 Industrial & Commercial Bank of China and No. 2 China Construction Bank. Only four are American, the most valuable of which, Wells Fargo (WFC), is No. 4. David Rubenstein, managing director of the giant Carlyle Group private equity firm, poses the key questions: “Is the U.S. still able to dominate global financial markets? We were 46% of the world’s GDP in 1960. Now we’re 21%. Can we still have virtually 100% of the world’s investment banks?”

The answer — no — is obvious. More broadly, Wall Street has to change in painful ways. The major firms, gloriously profitable just a few years ago, are not earning their cost of capital. They’re failing, and everyone seems to agree on their near-term future: lower returns and lower profits. The firms have to get smaller, cut expenses, live less large, pay people less. The glory days are over.

But hold on. Wall Street’s glory days are over every 10 years, like clockwork. They were over at the end of the ’70s, after a decade of market stagnation; again at the end of the ’80s, when takeovers and LBOs faded; at the end of the ’90s, with the dotcom bust; and now with the subprime disaster. Every time, Wall Street comes back in new ways that no one imagined.

That pattern is hopeful for the firms. For Barney Frank and the legions of new regulators he helped to create, it’s worrisome.

This article is from the December 26, 2011 issue of Fortune.

JAMES MAPES on The Paradox of Paradigms

February 27, 2012 in James Mapes

Click here to learn more about James Mapes Speaker and Author

Blockbuster, Eastman Kodak, and Borders – what do they all have in common?  All these business giants failed, but why?  Like many analysts, you could come up with a number of logical reasons for their plight – they did not create new products that kept them competitive, failed to embrace the power of the Internet or were not willing to take bigger risks.  But, the bottom line is they were unable to recognize and overcome the underlying paradigms that sabotaged them from quickly recognizing opportunities and quickly adapting to the changing marketplace.

What is a paradigm?

The word “Paradigm” comes from the Greek “paradeigma” which means model, pattern or example.”  Thomas S. Kuhn, a scientific historian and author of “The Structure of Scientific Revolutions” (1962) first brought the concept to the scientific world.

Adam Smith defines paradigm in his book, “The Powers of the Mind” as “A shared set of assumptions.  The paradigm is the way we perceive the world; water to the fish.  The paradigm explains the world to us and helps us to predict its behavior.”

There are cultural paradigms or unstated, deeply entrenched rules underlying or guiding our behavior.  Stephen R. Covey, the author of “The 7 Habits of Highly Effective People” wrote, “We see the world, not as it is, but as we are – or, as we are conditioned to see it.”

It might be helpful to view paradigms as the internal “maps” we carry with us.  They predict how we see the world, the way we believe things “should be.”  These maps provide us with our reality and create our “judgments.”

Our paradigms are formed by our early experiences including the belief systems of our parents, family and culture.   They form a set of rules, mind-sets, regulations or procedures that create boundaries or limitations and tell you how to conduct your behavior (make your choices) within those boundaries or limitations in order to meet with success.

A perfect example is a game of chess.  You cannot suddenly take your pawn and start jumping over the other chess pieces as if you were playing a game of checkers.  You must stay within the rules to play the game.  In fact, all games are paradigms and these paradigms regulate our actions.  This is positive when the rules support us to live as a coherent society.  But, as with Blockbuster, Kodak, Borders, as well as many individual failures, that is not always the case.  Sometimes we stay within these invisible boundaries even when the boundaries and rules are self-defeating.

Forming a new paradigm is extremely challenging.  In order to create a new game, whether it is marketing a product or shedding a negative habit, you must first identify and change a restricting paradigm.  Consider someone who takes on a system of rules to lose weight but continues to cheat on a diet or an individual commits to achieving a goal but procrastinates.  Something else is going on.  When an unacknowledged paradigm or rule goes against what we consciously choose to change, the subconscious rule will win.

The antidote is to create a “paradigm shift.” A paradigm shift is a radical change in underlying beliefs or theory.  The shift happens when a majority of people accept a changed belief, attitude or way of doing things.  Personally it is stepping “out of the box” and creating a new game with a new set of rules – a transformation.  It does not magically happen, but is driven by agents of change.

You can trace major paradigm shifts throughout history.  For example, primitive Indians existed for centuries roaming the earth, hunting and gathering.  The paradigm shifted.  By 2000 B.C., Middle America was transformed with a landscape of small villages surrounded with fields of corn and vegetables.

Scientific history is ripe with paradigm shifts.  A major paradigm shift in scientific theory happened when the Ptolemaic system (where the earth was seen as the center of the universe) shifted to the Copernican system (where the sun is at the center of the universe).  There was the paradigm shift from Newtonian physics to Relativity and Quantum Physics.

Culture was changed with the invention of the printing press.  Today both the personal computer and the Internet have created massive paradigm shifts in the flow of information.  We are still in the midst of transformation as we shift from a mechanistic, manufacturing, industrial society to an organic, service-based, information-centered society and increases in technology will continue to impact us globally.

Change is inevitable and it is the only true constant.  Although change is difficult and Human Beings resist change on a genetic level, growth and forward movement demands shifting self-restricting paradigms.  As Kuhn states, “Awareness is prerequisite to all acceptable changes of theory.”   It all begins in your mind by indentifying and changing limiting paradigms. There are three ways to identify a paradigm.

The easiest to identify and the most visible are the paradigms (rules) that are imposed on you that you disagree with.  Example: – talking on the cell phone while driving – knowing it is against the law.

The second easiest paradigms to identify are the paradigms (rules) imposed on yourself, by yourself – that you say you agree with, but actually disagree with – and – don’t follow.  Example: – dieting, exercising or stopping an addiction such as alcohol or tobacco.

The most difficult paradigms to identify and the ones that have the greatest impact are the ones you agree with.  In a sense, these paradigms are invisible because you believe your present reality is the way “things should be” and is the real “truth.”
Joel Barker, the creator of The New Business of Paradigms, the first person to popularize the concept of paradigm shifts for the corporate world, wrote, “What may be perfectly clear and visible to one person is invisible to another because of differing paradigms. This is the Paradigm Effect.  Old paradigms block our ability to view new paradigms. What is obvious to one is not to another. Paradigm-enhancing innovations are easy to see, but paradigm-shifting innovations blind us because they don’t follow our paradigm. It just means we must trust others and put ours aside so we can see theirs.”

This is hard to do because it requires you to really listen to what other people say that may be the polar opposite of what you believe – without getting defensive. There is almost always more than one right answer. Both eliciting advice and listening to others allows for more perspectives. Two people see the same thing two different ways.   The other person may identify a limiting paradigm in your thinking or the collective thinking of a group.

Uncovering limiting paradigms to personal or professional growth is tricky.  You must become a “paradigm detective” using a stealth-like approach.  You must shake up your thinking by using your imagination and asking the right questions.  Only then can you uncover hidden paradigms.

Following are variations of two strategies that I have successfully used both in my private coaching and in business breakout sessions.  Play the game.  They work.

Strategy #1: What measure of performance FOR YOU, either personally or professionally, would be extraordinary, but virtually impossible to achieve?  Next, ask yourself: If I achieved that level a year from now, what did I do differently?  Write down the answers.  Don’t lay the change challenge on your company, your budget, the economy, or anything else outside your control. What could YOU be doing different to get to that level?  Finally, after each answer, write the phrase: “According to my paradigm.”

Strategy #2: Project 3 years in the future and imagine you, your team or your company has failed in achieving your goals.  Write a short article, no more than two paragraphs, as to why.  After you have completed your article, ask yourself, “Do I see any of these reasons for failure happening in my life now?”  If so, what action steps can you take to prevent failure from happening?

Uncover your limiting paradigms and you will enhance your ability to live an exceptional life.

James Mapes is the Author of Quantum Leap Thinking

ROBERT BRYCE on The Blow Back from Big Wind

February 24, 2012 in Guest Bloggers

Click here to learn more about Robert Bryce Speaker, energy authority and journalist

February 13, 2012
Counterpunch

After years of successful marketing and lavish subsidies from taxpayers, the global wind industry now finds itself facing an unprecedented backlash. And that backlash – largely coming from rural landowners – combined with low natural gas prices, and a Congress unwilling to extend more subsidies, has left the American and Canadian wind sectors gasping for breath.

A new and thoughtful look at the fight against Big Wind is Laura Israel’s new film, Windfall, a documentary that focuses on the fight over the siting of wind turbines in the small town of Meredith, New York. Indeed, Israel’s film underscores an essential question: what, exactly, qualifies an energy source as “green” or “clean”? If you listen to President Obama, nearly every energy source qualifies as “clean” with the notable exception of oil.

For liberals here in the US, along with groups like the Center for American Progress, Greenpeace, Sierra Club, and Natural Resources Defense Council, wind energy has been deemed “clean” because it is renewable. But that belief requires a steadfast and prolonged decision to ignore a lot of inconvenient facts. It also requires the dismissal of rural residents like those in Meredith. Why? Well, the logic is obvious: any rural resident who opposes having a source of “clean” energy near their homes – never mind that it’s a 45-story-tall wind turbine that flashes red-blinking lights all night, every night — must be a NIMBY, right?

Indeed, Windfall provides a good representation of the rural-urban divide on the wind-energy issue. Lots of city-based environmental groups and lobby organizations actively promote the concept of renewable energy. (It’s healthy! It’s green! No smokestacks!) But they are not the ones who have to endure the health-impairing noise that’s created by the turbines, nor do they have to see them.

Lest you think that NIMBY claim is only being uttered by brain-dead liberals and wind-energy lobbyists, consider this: last summer, Energy Secretary Steven Chu used that same smear. During a brief conversation with Chu about renewable energy, I mentioned the growing rural opposition to large-scale wind projects. Chu didn’t waste any time before he dismissed those objectors as “NIMBYs.”

That kind of lazy thinking – which is truly lamentable in a person who’s been awarded the Nobel Prize — is all too typical. But a myriad of examples are available that demonstrate how the backlash against Big Wind is playing out both here in the US and around the world.

Robert is the Author of Gusher of Lies.

CHIP BELL on Sea Wall Thinking

February 24, 2012 in Chip Bell

Click here to learn more about Chip Bell Speaker, Author and business expert.

The wooden sea wall around my lake front home finally lived out its usefulness.  Since wooden sea wall on an active lake only last about ten years before requiring pricy repair, we elected to replace it with a permanent granite sea wall.  And, building a new sea wall on a full lake is a fascinating process.

The construction crew first created a wall of sandbags six feet in front of old wall.  All the water in between the walls was pumped out and the old wooden wall removed.  Then a concrete footing was poured laced with steel rods and a concrete wall was build.  The granite was veneer on the visible side and top of the sea wall and fill dirt poured in the land side of the new wall.  Once the construction was completed, the sandbag wall could be removed.

Service has a sandbag wall side that protects the core part of service.  A clean parking lot in front of the restaurant protects the customer from worrying about the quality of the food.  A competent-sounding nurse protects the customer from anxiety.

Chip Bell  is the author of the new book Wired and Dangerous:

JOE CALLOWAY on Culture Drives Results

February 22, 2012 in Guest Bloggers

A project doomed to fail.

click here to learn more about Joe Calloway Speaker and Author

Some people look at employee engagement as a project…something that they need to occasionally do.

If employee engagement is a “project” to you, then it’s doomed to fail.

Is employee engagement important enough to demand your constant time and attention?  Some make the mistake of thinking that engagement is part of that “soft stuff” that they don’t have time for.  Hey – that “soft stuff” is what drives your bottom line.  Get your culture wrong and you don’t have a chance.

I recently talked with two masters of building great cultures and employee engagement, Scott Kriscovich and Heather Scheiderer of TrueBridge Resources.

Here are 10 great ideas on engagement that emerged from our conversation:

  1. It’s about being engaged.  Engagement isn’t something you “do“ - it’s something you are.
  2. It’s not about acting like you’re interested.  It’s about being interested.  There’s a difference.
  3. Don’t underestimate the value of the water cooler.  It’s where relationships get developed by just talking about things every day.
  4. You can do our business virtually, but we’re big on being present.  Technology is great, but unless you are physically in the same space, it’s hard to get past the business piece and get to forming relationships.
  5. If you are physically present, you can sense that someone is struggling.  That’s when you can show that you care.
  6. As a leader, do my actions and interactions reinforce our purpose?  Engage by example.
  7. You have to take the pulse of your people all the time.
  8. When we hire, we look for people who demonstrate characteristics that show they engage with others naturally.  The people who we’ve hired who didn’t show those characteristics – didn’t work out.  When we hire that way then engagement becomes self-perpetuating.
  9. One of our challenges is our growth, which is good.  But the accompanying complexities make it even more important to be sure we’re engaging all employees at every level and be mindful of it.

Look again at idea #1 -it’s about being engaged.  Engagement isn’t something you “do” – it’s something your are.

GEOFF COLVIN – The Leadership Interview: Wal-Mart’s Makeover

February 22, 2012 in geoff colvin

In the smiley-face years, Wal-Mart marketing was frankly amateurish. CMO Stephen Quinn tells how he’s transforming it.

click here to learn more about Geoff Colvin Speaker and Author

FORTUNE — What happened to the smiley face? It’s long gone from Wal-Mart marketing after years as the corporate symbol, and its disappearance is part of a much larger story. It’s hard to believe, but for decades the world’s largest retailer wasn’t much of a marketer. It spent little on marketing, and its efforts, epitomized by the grinning circle, could be charitably called down-home and realistically described as amateurish. Change finally began four years ago when Stephen Quinn was made chief marketing officer of Wal-Mart U.S. He exiled the smiley face to the land of e-mail emoticons and developed a new theme — “Save money. Live better” — that became a statement of corporate purpose. Current TV commercials actually include some wit while hammering home the message.
Quinn, 52, is a Canadian who spent 13 years as a marketer at PepsiCo’s (PEP, Fortune 500) Frito-Lay division before joining Wal-Mart (WMT, Fortune 500). The company, No. 1 on the Fortune 500 with 2010 sales of $422 billion, increased profits through the recession by adding stores; U.S. same-store sales suffered until recently. Quinn talked with Fortune’s Geoff Colvin about marketing in today’s “hourglass economy,” how Wal-Mart stores are reversing their decluttering initiative, why the company just launched 3,500 new Facebook pages, and much else. Edited excerpts:

Q: Overall retail sales were up smartly over Thanksgiving weekend. What did Wal-Mart’s experience tell you about the state of the U.S. consumer?
A: It really fits with a trend we’ve been seeing for several years, which is that customers have become incredibly smart about how to save money. All our research is showing that the number of people looking to save money is at an all-time high, at least in our lifetime. What we’re seeing on the big shopping weekend around Thanksgiving is just a lot of people in there trying to get deals.
That ties into something you’ve talked about before, which is that the U.S. has an hourglass economy. What’s that concept?
The population is bifurcating. Some people have said we’re seeing the middle class being hollowed out a little bit. In the lower half we’re seeing real incomes dropping — that’s been well reported. One of the more tragic pieces of that is that at the very bottom we’re actually seeing poverty rising in this country. A lot of those customers in the lower half would absolutely fall into our core customers. So it’s critically important that we serve those customers very well as they go through a challenging economic time.
A challenge for retailers is that at the other end of the spectrum people are doing relatively well. Unemployment is under control, and those people are even seeing some income growth. A lot of folks in that other half of America are looking for certain products that we’ve got to carry, but they’re still very value-oriented. That’s an overall theme — there is still an ethic of value that may have changed forever, based on this recession.
That’s a big marketing issue. You’ve got to communicate with both ends of the hourglass. How do you do that?
A lot of retailers used to be defined by what they sold. More and more — and we’re certainly an example of this — retailers are defined by whom they serve and how they serve them. In our case, the people we serve are value-oriented. We’ve done a lot of segmentation studies and other work, and we’ve learned that there obviously are people who have to be on a budget, and Wal-Mart plays a critical role in helping them stretch their dollars. But there are also a lot of people who just love to save money, and some of them are actually quite well off, but it’s still important to them to save money. With those customers, the key is to have the merchandise they really want to buy. They still want to save money on it, but you’ve got to have it. That’s why, in areas like our general-merchandise area, we’re expanding assortments to make sure we can appeal to both groups of customers.
What’s an example of expanding the assortment to broaden the appeal?
Several years ago we really reduced our fishing area, and it hurt us. In the past 18 months we’ve dramatically improved the assortment we have there — many more price points, a lot more brands have been added — and then we’ve really focused on communicating that to customers. And we’ve seen a real dramatic turnaround in that business. Perhaps in this economy people are looking at more ways to just spend quality time with families. Fishing is a very inexpensive pastime, and we’ve really benefited from that expanded assortment. We’ve got numerous examples of this, done or in progress, across the store.
More broadly, Wal-Mart reduced the number of items it carried store-wide a few years ago — the decluttering initiative — because it appeared that’s what customers wanted. Now you’re bringing the items back, thousands of them. What’s the lesson to take out of that experience?
The thing that’s great about retail is that if you get the assortment right and the value right, customers do respond. In our case, people are in our stores, and it’s really up to us to make sure we have the right stuff for them. What we’ve learned through this whole recession is just how incredibly resourceful and smart our customers are. Certainly we made some mistakes in assortments where we overly reduced them, more from an efficiency standpoint, and it ended up causing customers to shop elsewhere. Fortunately for us, there is some forgiveness there, because as we’ve put some of those things back — fabrics were a very well publicized example of an area we really reduced — the customer is responding dramatically.
It’s clear that value has to be the heart of your messaging. What have you found really works?
Our messaging really falls into two categories. My boss, Bill Simon, CEO of the business in the U.S., talks about how we have the broadest assortment, at the lowest prices. From an advertising and communications standpoint, my job is to make sure that, first and foremost, people have trust and confidence that we have the lowest prices, and that we have the assortments they’re looking for. It’s challenging because we have to communicate things like, when we put this fishing assortment back, that in fact it is back, that we’ve got the brands you’re looking for and you can trust us to have the right assortment. A lot of shopping is very habitual for customers, so if they stop thinking of us as a place for fishing, as an example, they may not even look over there anymore.
What’s the meaning of the Wal-Mart brand, and what have you learned about where it works and where it doesn’t work?
Most of my background before I came to Wal-Mart was in building brands, and one of the things I help bring to Wal-Mart is thinking of the company not just as a company but also as a brand. We relaunched the brand four years ago based on something Sam Walton said, that if we work together, we’ll give the world an opportunity to see what it’s like to save and to have a better life. In the marketing department we worked on taking those words and crafting them into our purpose, which is to save people money so they can live better, and you see that in our advertising save money, live better.
Fundamentally, this is a brand that has a purpose, and our associates are very committed to making sure we can save people money so they can live better, and that’s the main vector of marketing communication we have. More important, it’s become everybody’s job to own that, and that’s one of the big differences between a retailer and a packaged-goods business like I came from, where you’re managing a brand image. As a retailer you’re interacting with millions of customers every day, and how you interact with them becomes your brand to the people you serve. So the brand has been critical to getting everybody on the same page about who we are and what we do, and then my job is to communicate that to customers.
Same-store sales in the U.S. were down for nine quarters in a row, but in the most recent quarter they went up. While the economy is better than it was, it still isn’t great. What’s the explanation?
What I’m most proud of in the last couple of years is that it has not been an external change that has helped us move into positive territory in comp-store sales. Our leader, Bill Simon, and Mike Duke, our CEO, really drove us to get back to the core basics of what Wal-Mart stands for and the families we serve. We had to take a look at assortments, which we’ve already talked about; the reason to come to Wal-Mart for some people had been removed. And then, importantly, we did not watch our costs as closely as we should have, and we’re back into making sure we lower our costs so we can lower our prices while at the same time serving shareholders. Everything goes well if you get that promise right at its core.
You have more customers than any other retailer on earth. How do you sense what they want and need?
A couple of ways. First is something unique to retailers, in that we have hundreds of merchants in our merchandising area, and each of them tries to think of their business as their own business, so they’re constantly trying things. That’s why you’ll hear people talk about the data that Wal-Mart has. It’s really data about sales, and as we are trying things, we’re seeing the customer likes this, they want more of that; they really don’t like this other thing, and we should probably do away with that. The insights-driving machine at the core of retail is the ability to look at our data and bring some kind of meaning to that.
The second way is more traditional, and that is market research. We’ve amassed an enormous amount of data. Like almost everybody, we’re trying to figure out how to get all that data into the same place so we can see how these data interact with each other. And that includes some of the newer areas like social media, where we’ve got almost 11 million Facebook fans, and they’re constantly giving us feedback because that’s the very nature of that medium.
How a retailer uses social media has become a huge issue. When people go to an e-commerce site from a Facebook page, they’re twice as likely to buy something than if they go there some other way. Is there a way to use this to build sales?
Absolutely. We’re obviously looking at the interaction between Facebook and our social media strategy, and how that ties into our e-commerce, which is one way we can trigger sales. But more important for us is how we use that to build communities, even local communities, around our stores. We’re a retailer that is very committed to our stores, our bricks and mortar. How do we reflect that in how we interact with people on Facebook and in social media, and how does that translate into doing a better job at the store level?
You’ve just launched 3,500 new Facebook pages for individual stores.
Right, and that is based on this commitment to local communities. It’s a little clichéd, but people talk about retailing being fundamentally a local business. As a customer, what you experience is your Wal-Mart and the other retailers you can choose from. So how we interact at a local level is really important to us, and that’s why we’ve launched these local Facebook pages. Our goal is to integrate into the things that are happening in a local community and to make us better merchants through that.
What’s some non-Wal-Mart marketing that you admire?
The marketing I really admire is marketing that goes beyond an advertising message. McDonald’s (MCD, Fortune 500) has done an unbelievable job over a long period of time. As we’re seeing their beverage strategy emerge, it’s really impacting customer behavior in terms of the frequency of trips. I love that, because it’s a marketing insight into the customer that ended up changing what the company did. Hyundai is another example. You may not have to be a genius marketer to communicate the Hyundai assurance guarantee, but where did that idea come from? What a great idea for customers. One of the things I look for at Wal-Mart is how we do marketing that makes a difference in the lives of customers and doesn’t just build an image.
It goes beyond messaging.
Way past. In fact, if you have something compelling enough that will make a difference in the lives of customers, the marketing part of it, the communication to customers, is relatively easy.
There’s only one major U.S. market that Wal-Mart isn’t in, and that’s the one we’re sitting in right now, New York City. What’s the plan?
I can’t really let you in on the specific plans in New York. We want to serve customers here. It has become a pillar of our strategy to give people more access to everyday low prices, and that includes being much more flexible about the kinds of formats we’re willing to put the Wal-Mart name on and how we’re working with cities to find a way to serve those customers.
If a young person told you that he or she wanted to become the chief marketing officer of a big corporation, what would your advice be?
First, it starts with the customer. You’ve got to be incredibly customer-focused nowadays because — it’s been said many times — the customer is in control. All the technology and the societal trends we’re seeing point to that control just growing and growing. Second, marketing ought to be active inside the organization at breaking bureaucracy and getting the company to serve customers, to do the things we need to do to be successful with the customer. Way too many marketers get focused on the advertising and the marketing communications messages, even if all that is becoming more complex today with social media and so on, and they don’t play enough of an activist role inside the company to get the company to do the things we know we have to do to be successful for the customer.
The Leadership Series: Formerly called “C-Suite Strategies,” this is the latest interview with a top executive by Fortune senior editor-at-large Geoff Colvin. See video excerpts of this interview at fortune.com/leadership — plus find Colvin interviews with Charles Schwab, the team of Jeff Immelt (GE) and A.G. Lafley (P&G), Pimco’s Mohamed El-Erian, Harry Brekelmans of Shell, Nils Andersen of Maersk, and many more.
This article is from the December 26, 2011 issue of Fortune.

GEOFF COLVIN – Here comes the big profit lie

February 21, 2012 in geoff colvin

Wall Street expects corporate miracles in 2012, and that means trouble.

Brace yourself for an increase in stupid, misleading, or illegal action by U.S. companies. The trend is inevitable. In fact, odds are it’s already under way.

The problem is an old one, but we haven’t seen it in a while, and memories are short. It’s profit expectations — they’re insanely optimistic. Companies and the Wall Street analysts who follow them are forecasting profit increases that make Pollyanna look like Nouriel Roubini, which is not a pleasant image to contemplate. As managers strive desperately to make their impossible numbers, some will go astray. When reality catches up with them, investors will suffer. We saw it in 2006 and 2007, when analysts expected the global economic boom to go on forever. We saw it at a historic scale in the late ’90s.

Now analysts and companies are projecting that after rising at rates of over 30% a year, profit growth will moderate — not a blinding flash of insight given America’s creeping economy, slowing growth in Asia, andpotential cataclysm in Europe. Nonetheless, even in that profit-hostile environment, they’re still forecasting strong, double-digit profit growth next year.

It makes no sense. Corporate profits as a percent of GDP are near their post-World War II high of about 10%, which was reached at the apex of the last boom. Are they really going to gallop ahead from that level? Their postwar average is about 6% of GDP. Long term, profits can’t grow faster than the economy. Of course some of those profits come from regions growing much faster than the struggling West, but that provides little comfort. The World Bank’s forecast of 2012 world GDP growth is all of 3.6%. Yet analysts surveyed by Thomson Reuters expect S&P 500 profits to grow 10% next year.

It’s not that the analysts are oblivious. It’s that they’re forecasting profits for individual companies, not for the whole market, and they still tend to fall in love with the companies they’re covering. They also still rely heavily on guidance from those companies. So they repeatedly fool themselves into believing that even if the economy is going nowhere, the company they’re analyzing will blow the doors off. And occasionally they’ll be right. The result is that individually they think they’re being reasonable, yet collectively they’re nuts.

Managers get punished harshly for failing to meet expectations, even unrealistic ones, so in growing numbers they’ll try to hit their targets by doing things they shouldn’t. Think of them in three categories:

Stupid: The easiest way to hit profit targets is to cut expenses. Trouble is, many of the expenses that managers most frequently cut — R&D, marketing, and employee training — are expenses only under accounting rules; they’re actually investments that pay off later. Unfortunately for those managers, investors aren’t as clueless as they think. Research shows that markets whack the stocks of companies that cut today’s costs in ways that hurt tomorrow’s performance.

Misleading: Worse than misguided slashing, because it’s harder to detect, is playing the accounting rules like a fiddle. Think of Enron’s special purpose entities, which enabled it to increase profits through outfits in which it owned only a 3% stake.

Illegal: Various federal crimes can boost earnings impressively. HealthSouth (HLS) fraudulently adjusted its estimates of how much it would collect from customers; five CFOs went to prison. Capitalizing expenses makes costs magically disappear; that’s what WorldCom did in a bigger way than any company before or since.

All those moves were committed by managers trying to meet profit expectations that couldn’t be reached responsibly. Companies can at least reduce the temptation by refusing to make forecasts of their own, but for most the prospect of publicly dialing down expectations is just too painful. So the expectations live on, and managers keep trying to meet them. Most harmfully, many investors believe them — even when, as now, they’re clearly in fantasyland.

Click here to read more about Geoff Colvin  Senior Editor-at-Large, FORTUNE Magazine, Author, Talent is Overrated and speaker

Geoff Colvin – speaker and author

February 16, 2012 in geoff colvin

Are the bankers to blame for our woes?

FORTUNE — It’s a bit odd that the most popular Occupy Wall Street sign says, WE ARE THE 99%. The statement doesn’t make accusations or demands. It just sits there, loaded with a narrative that the viewer has to unpack. Much is revealed by unpacking it, so if the protesters had more room on their signs, here’s what they’d say:

“We’ve been through the worst recession in 70 years, and the economy is still terrible. Millions of us can’t find jobs, and millions more are taking any low-wage, part-time, no-benefits job we can get just to make ends meet. All this was caused by a financial crisis that originated right here on Wall Street through the slimy machinations of you financiers, you who make more money than 99% of all Americans. When your incompetently built financial system blew up, you got bailed out while we got fired and foreclosed on. A vast crime has been committed, and you got away with it. Now you’re getting rich while we suffer.”

The heart of the narrative, the source of the Occupy rage, is that last assertion: that Wall Street committed economic murder and not only got away with it but also was rewarded. Which leads to an obvious, critical question: Is it true?

In finding the answer, let’s not be constrained by legal niceties, asking whether specific persons violated statutes. The central issue is whether Wall Street—the biggest investment banks, commercial banks and brokerages—deserves the Occupiers’ rage for collectively causing the financial crisis and subsequent economic misery. To get started, we have to be clear on exactly what Wall Street did.

What happened on Wall Street

The big-picture answer is not complicated, even though some of the details are. Over the past two decades, Wall Street bought millions of mortgages from banks and other lenders around the U.S., then combined them, thousands at a time, into securities that investors could buy. To make the securities more attractive, the banks divided them into tranches (French for “slices”), representing levels of risk. The riskiest loans—those to borrowers who put the least money down or had the lowest incomes or credit scores—were in the lowest tranche, which thus paid the highest interest to investors. Each ascending tranche was less risky and so paid a lower interest rate. Investors could buy whatever mix of tranches they liked.

Excerpted from What Is Occupy? Inside the Global Movement, a new book from the editors of TIME. To buy a copy as an eBook or paperback, go to time.com/whatisoccupy.The basic idea wasn’t new. Salomon Brothers had invented the business of securitizing mortgages in the 1980s. But this time around, several elements of the business were unprecedented. One was the nature of the mortgages; in the old days they were mostly plain-vanilla, fixed-rate loans to borrowers who had put down at least 20%, but now far more of them were exotic instruments with floating rates, interest-only options and other features that enticed borrowers who couldn’t qualify for a traditional loan. More broadly,  lending standards declined sharply; lenders were giving mortgages for more than the value of the property (“We pay you at closing!” said the ads) and giving them to borrowers without even checking their incomes. Subprime loans exploded from $35 billion in 1994 to $795 billion in 2005.

Why were banks willing to make such obviously dodgy loans? Because Wall Street was begging to buy them. How come? Because investors in the U.S. and around the world—not mom-and-pop but sophisticated institutions—were crazy in love with those mortgage-backed securities that paid returns 2 to 3 percentage points higher than more traditional securities, the risks be damned. In 1996, $493 billion of mortgage-related securities were issued; by 2003 the volume had mushroomed to $3.2 trillion. Mutual funds, pension funds and other investors sent word to Wall Street: Give us more of those mortgage bonds. Wall Street, in turn, said to America’s mortgage lenders: Give us more mortgages to repackage. If you have to lower standards … well, just do what you have to do.

Occupy Wall Street: Yes, there is organization

When those mortgage-backed securities went bad, precipitating the disastrous financial meltdown, investors screamed: How could you sell us this junk? Wall Street responded, Look, before we sold you a bond we gave you a massive prospectus. It told you everything we’re supposed to tell you. The decision to invest was yours—nobody forced you. Sorry it didn’t work out.

While that response sounds evasive, plenty of evidence says it wasn’t. The warning signs were visible well before the crisis, and some people recognized them. Hedge fund manager John Paulson saw what was coming and made $3.7 billion personally by betting the right way. Analyst Meredith Whitney and money manager Steve Eisman shouted from the rooftops that cataclysm was ahead; so did economist Nouriel Roubini. None of them had access to insider information. They just had those prospectuses and publicly available data, same as everybody else. If more people had studied as hard as the Cassandras did, there wouldn’t have been much demand for Wall Street’s mortgage-backed securities, so lenders wouldn’t have pushed mortgages on every grownup with a pulse. The subprime debacle and subsequent crisis would have been a minor event, not a major one.

It takes two groups of willing parties to make a financial crisis. One group is lenders of money and sellers of securities—Wall Street—but the other is borrowers and buyers. If either group refuses to play, there’s no crisis.

Not that they did it alone. Several other players were required in a crisis as big as this one. Rating agencies had given those mortgage-related securities high marks, in some cases triple-A, which is why the investors who bought them believed they didn’t have to bother reading the fine print. The agencies later explained that the ratings are merely opinions that happened to be off the mark in this case; the agencies didn’t mention that they’re paid to rate securities by the companies that sell them.

Mortgage brokers, mostly small-time operators, got paid whenever they persuaded someone to borrow, regardless of whether the loan proved good or bad; some of them misled borrowers or plain lied, and many others just worked extremely hard originating mortgages. Washington policymakers, Republican and Democrat, created government incentives for mortgages to low-income borrowers, people who’d have a hard time making their payments if the economy tanked. Regulators failed to anticipate a once-a-century, system-wide blowout. Accounting rulemakers encouraged rampant lending by letting mortgage originators report profits as if they were getting all the income from a mortgage’s entire life—up to 30 years—in the year the mortgage was written.

What happened on Main Street

And then there were the borrowers: Americans of every station, from top executives to housekeepers. They bet that home prices would never stop rising or interest rates falling—knowing that if either trend turned on them, then their no-down-payment, interest-only, adjustable-rate mortgage could wipe them out. But they took the loans anyway. When the carousel stopped turning, they went to new websites like YouWalkAway.com, which explained how to abandon a home that had negative equity and stick the bank with the loss.

All those players combined to form a giant system that required each of them in order to function. Every player gained by being a part of the system, at least until 2007. None of them individually worried much about what the system as a whole was doing, which was just one thing: creating debt. Way too much debt.

American Express CEO: Pay attention to OWS

That is the economy’s fundamental problem now. Total U.S. mortgage debt increased from $3.8 trillion in 1990 to $6.8 trillion in 2000 to $14.6 trillion at its peak in 2008, a ballooning such as we’d never seen before. But we weren’t just bingeing on real estate. Other consumer debt grew almost as fast, from $800 billion in 1990 to $2.6 trillion in 2008. Falling interest rates fueled the debt party by making loans easier to afford, and our main assets, homes and stocks, were appreciating, so we could add debt yet maintain our net worth. Many Americans were also in denial about their stagnating incomes; borrowing kept their living standard on the rise, at least for a while.

To spiraling personal debt add government debt, which has exploded since 2001. America’s gross debt, meaning debt held everywhere in the economy, has risen from about 200% of GDP in 1990 to almost 400% today, as economist Kenneth Courtis points out. That “crushing debt load,” he says, is “the core of the problem facing the U.S. economy.”

It’s the main reason the economy can scarcely grow and unemployment won’t come down. We snap back quickly after old-fashioned inventory recessions (too much stuff and not enough buyers), but debt-based funks drag on. When virtually all the players in the economy are trying to reduce their debt at the same time, growth becomes almost impossible. And we’ve got ourselves deeper in the Valley of Debt than ever in our history.

With that perspective, it becomes clear what isn’t the problem. Though the Occupiers complain about Washington’s bailout of the banks, it didn’t bring us to where we are. It averted financial Armageddon, and the banks repaid the government with interest. As taxpayers, the Occupiers made money on the deal.

Nor is our problem the appalling malfeasance of various lenders and mortgage brokers around the country. Yes, some of them pressured poor and elderly people into taking loans they didn’t understand and couldn’t hope to repay. Some blatantly misrepresented the terms of loans. Some banks broke laws by improperly foreclosing on borrowers, and some even repossessed the wrong homes. They should be prosecuted, and some have been. But those activities didn’t cause the crisis and recession and 9% unemployment.

Buried by debt

Our problem is too much debt. When the growing burden became unsustainable, when the market finally read the prospectuses and the economic data and realized that some of that debt wasn’t worth much, we had a crisis and then a recession. We’re still suffering because the problem hasn’t even begun to go away. Consumers have reduced their debt slightly since the 2008 peak, but increased government borrowing has more than compensated. Gross debt is worse than ever. It’s still unsustainable and has to be cut back, and that’s the foundation of today’s economic misery.

So, are the bankers to blame? Of course they are. This couldn’t have happened without them. They were a major element in the giant system that produced so much debt. It’s clearly just as true that the system wouldn’t have worked without all the other players as well, so each of them is also to blame, at least to some extent. That raises the question of why the Occupiers are camped out in Wall Street’s front yard rather than somewhere else.

But the answer is obvious. The Occupiers are enraged by the perception of injustice. Wall Street got bailed out; we got laid off. Wall Street is making billions; we’re on unemployment benefits, which are running out. One could make a strong argument that the injustice isn’t quite so stark. Wall Street got whacked harder than any other industry, with two of the industry’s five major players (Bear Stearns and Lehman Brothers) out of business; just in New York City, tens of thousands of employees, from executives to secretaries, are jobless, the great majority of whom never went near a mortgage-backed security. The industry has made no more money over the past five years than it was making 15 years ago, and in 2007 and 2008 it suffered the greatest losses in its history.

Wall Street is now subject to the most massive new regulation to be imposed on it since the 1930s, the 2,300-page Dodd-Frank act. It mandates hundreds of new rules, many of which are still being written in late 2011. Industry lobbyists are pushing to soften those rules, further infuriating the Occupiers, but the end result will still constrain the industry in important new ways. One of the most significant new rules, the Volcker Rule prohibiting banks from trading on their own account, takes effect next year. It’s 300 pages long.

It’s worth noting too that the government bailed out plenty of the ordinary Americans who participated in the giant system, first through a federal mortgage-refinance program two years ago. Not many people signed up because it required evidence that borrowers could actually afford a mortgage, so a new program does away with all that. It offers new mortgages without proof of income at the lowest rates ever seen. If you were a responsible borrower and have more than 20% equity in your home, you don’t qualify. The program bails out the most irresponsible borrowers, among others. Sounds familiar.

Of course that doesn’t matter. Wall Streeters are the least sympathetic of any group in the giant system, and they don’t deserve sympathy; the surviving bankers still make tons of money and know their business is more volatile than almost any other. And they helped the system work. They bear responsibility.

As we watch and hear the Occupiers’ rage, let’s just remember why our economy is suffering. We have too much debt. Everyone who contributed to that is to blame.

Excerpted from What Is Occupy? Inside the Global Movement, a new book from the editors of TIME. To buy a copy as an eBook or paperback, go to time.com/whatisoccupy.

Click here to learn more about Geoff Colvin speaker