Ron Paul: How Long Will the Dollar Remain the World’s Reserve Currency?

Posted on September 5, 2012. Filed under: Markets, U.S. |

By Ron Paul
September 4, 2012

We frequently hear the financial press refer to the U.S. dollar as the “world’s reserve currency,” implying that our dollar will always retain its value in an ever shifting world economy. But this is a dangerous and mistaken assumption.

Since August 15, 1971, when President Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold, the U.S. dollar has operated as a pure fiat currency. This means the dollar became an article of faith in the continued stability and might of the U.S. government.

In essence, we declared our insolvency in 1971. Everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it– not even a pretense of gold convertibility!

Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC in the 1970s to price oil in U.S. dollars exclusively for all worldwide transactions.

This gave the dollar a special place among world currencies and in essence backed the dollar with oil.

In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite radical Islamic movements among those who resented our influence in the region.

The arrangement also gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as the dollar flourished.

In 2003, however, Iran began pricing its oil exports in Euro for Asian and European buyers. The Iranian government also opened an oil bourse in 2008 on the island of Kish in the Persian Gulf for the express purpose of trading oil in Euro and other currencies.

In 2009 Iran completely ceased any oil transactions in U.S. dollars. These actions by the second largest OPEC oil producer pose a direct threat to the continued status of our dollar as the world’s reserve currency, a threat which partially explains our ongoing hostility toward Tehran.

While the erosion of our petrodollar agreement with OPEC certainly threatens the dollar’s status in the Middle East, an even larger threat resides in the Far East.

Our greatest benefactors for the last twenty years– Asian central banks– have lost their appetite for holding U.S. dollars. China, Japan, and Asia in general have been happy to hold U.S. debt instruments in recent decades, but they will not prop up our spending habits forever.

Foreign central banks understand that American leaders do not have the discipline to maintain a stable currency.

If we act now to replace the fiat system with a stable dollar backed by precious metals or commodities, the dollar can regain its status as the safest store of value among all government currencies. If not, the rest of the world will abandon the dollar as the global reserve currency.

Both Congress and American consumers will then find borrowing a dramatically more expensive proposition. Remember, our entire consumption economy is based on the willingness of foreigners to hold U.S. debt.

We face a reordering of the entire world economy if the federal government cannot print, borrow, and spend money at a rate that satisfies its endless appetite for deficit spending.

This article first appeared on Ron Paul’s House website


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How These Small-Time Brands Made It Big

Posted on August 15, 2012. Filed under: Business, Editorial |

by Catherine Kaputa  |   7:00 AM August 15, 2012

If you’re an entrepreneur, you know that things rarely go as planned. Many don’t survive the “Valley of Death” stage, when start-ups scramble for funding, resources, and customers, while still trying to get traction for their business idea. And yet some entrepreneurs hit it big and transform a business idea into a big brand. What do they do differently?

For my book, Breakthrough Branding, I studied a range of entrepreneurs and their branding habits. I learned that whether you’re an established or aspiring small business owner, the best apply a bold and powerful simplicity to the branding process.

Here’s what the successful brands I studied did to execute that simplicity:

They focused on a small idea. Everyone talks about finding a big idea, but a small idea is more powerful. Kevin Systrom‘s original app, Burbn, did a lot of things. It was a mashup of location check-in sites like FourSquare, social gaming sites like Zynga, and photo-sharing sites like Flickr. Then Systrom focused on the one small thing that had the greatest traction, its photo-sharing app, which gives low-quality camera pictures a trendy retro look. He gave it a new (and better name): Instagram.

They deployed a powerful visual. Find a visual something — a shape, a color, a logo, a design that signifies your brand and cuts through the clutter of today’s marketplace. Think Twitter’s bird logo, Christian Louboutin‘s red soles, and POM Wonderful‘s hourglass bottle. With a name like Twitter and a communication service based on short, 140-character messages, using a bird as a logo was a natural. Mindful of money in the start-up phase, the founders originally used a simple bird graphic from iStock photo that cost around $15. Twitter’s founders gave the logo design a distinctive turquoise blue color, and in time the bird came to universally signify the brand.

They treated the name as a strategic creative decision. You want to lock in your brand’s identity with a name that resonates with customers and can travel well (on the Internet and in global markets). It should be short, easy to spell, and easy to say. For fourteen years, Phil Knight called his athletic shoe company Blue Ribbon Sports. Then, a friend suggested that he name the brand after the Greek goddess of victory, and Nike was born.

Sara Blakeley came up with shapewear for women and named it Spanx — a name that certainly gets to the point. Blakely reflects on the decision: “The name is edgy, fun, extremely catchy, and for a moment it makes your mind wander (admit it)…” In the early days when Blakeley mentioned the name of her product line, many an offended retailer hung up the phone. But as the founder persisted, it was her customers who embraced the saucy name and the way her shapewear made them look and feel.

They didn’t overwhelm customers. And simplified everything from product offerings to the way they market. Warby Parker is an online glasses shop that sells trendy, vintage-inspired frames for $95. They offer just 50 variations, so customers are not overwhelmed with hundreds of frames like in your typical eyeglass store. To make it easy for customers, you can even “try” on frames virtually by uploading your picture on the site and trying on the different styles; or you can have up to five pairs mailed to you (shipping is free). The company has even embedded in the brand is a philanthropic tie-in: “Buy a Pair. Give a Pair.” For each pair that you buy, a free pair is given to someone in need. To keep innovating their brand, every week culminates with Inspiration Friday, when employees bring in photos, ideas, videos, or articles that caught their attention. One of these sessions led to Warby Barker, where your dog can find frames for itself (probably with your help).

That’s how these small-time entrepreneurs built powerful, pervasive brands. By focusing on the details, they created an easier, more memorable experience for the person who will appreciate simplicity the most — the customer.

More blog posts by Catherine Kaputa

Catherine Kaputa

Catherine Kaputa

Catherine Kaputa is the brand strategist behind SelfBrand, and author of Breakthrough Branding: How Smart Entrepreneurs and Intrapreneurs Transform a Small Idea into a Big Brand. Previously she was senior vice president at Smith Barney and taught at New York University’s Stern School of Business. She also supervised the “I ❤ NY” ad campaign.

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The 2 Billion Dollar Loss By JP Morgan Is Just A Preview Of The Coming Collapse Of The Derivatives Market

Posted on May 14, 2012. Filed under: Business | Tags: |

When news broke of a 2 billion dollar trading loss by JP Morgan, much of the financial world was absolutely stunned.  But the truth is that this is just the beginning. 


This is just a very small preview of what is going to happen when we see the collapse of the worldwide derivatives market.  When most Americans think of Wall Street, they think of a bunch of stuffy bankers trading stocks and bonds.  But over the past couple of decades it has evolved into much more than that. 


Today, Wall Street is the biggest casino in the entire world.  When the “too big to fail” banks make good bets, they can make a lot of money.  When they make bad bets, they can lose a lot of money, and that is exactly what just happened to JP Morgan.  Their Chief Investment Office made a series of trades which turned out horribly, and it resulted in a loss of over 2 billion dollars over the past 40 days.  But 2 billion dollars is small potatoes compared to the vast size of the global derivatives market. 


It has been estimated that the the notional value of all the derivatives in the world is somewhere between 600 trillion dollars and 1.5 quadrillion dollars.  Nobody really knows the real amount, but when this derivatives bubble finally bursts there is not going to be nearly enough money on the entire planet to fix things.


Sadly, a lot of mainstream news reports are not even using the word “derivatives” when they discuss what just happened at JP Morgan.  This morning I listened carefully as one reporter described the 2 billion dollar loss as simply a “bad bet”.

And perhaps that is easier for the American people to understand.  JP Morgan made a series of really bad bets and during a conference call last night CEO Jamie Dimon admitted that the strategy was “flawed, complex, poorly reviewed, poorly executed and poorly monitored”.

The funny thing is that JP Morgan is considered to be much more “risk averse” than most other major Wall Street financial institutions are.

So if this kind of stuff is happening at JP Morgan, then what in the world is going on at some of these other places?

That is a really good question.

For those interested in the technical details of the 2 billion dollar loss, an article posted on CNBC described exactly how this loss happened….

The failed hedge likely involved a bet on the flattening of a credit derivative curve, part of the CDX family of investment grade credit indices, said two sources with knowledge of the industry, but not directly involved in the matter. JPMorgan was then caught by sharp moves at the long end of the bet, they said. The CDX index gives traders exposure to credit risk across a range of assets, and gets its value from a basket of individual credit derivatives.

In essence, JP Morgan made a series of bets which turned out very, very badly.  This loss was so huge that it even caused members of Congress to take note.  The following is from a statement that U.S. Senator Carl Levin issued a few hours after this news first broke….

“The enormous loss JPMorgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too big to fail’ banks have no business making.”

Unfortunately, the losses from this trade may not be over yet.  In fact, if things go very, very badly the losses could end up being much larger as a recent Zero Hedge article detailed….

Simple: because it knew with 100% certainty that if things turn out very, very badly, that the taxpayer, via the Fed, would come to its rescue. Luckily, things turned out only 80% bad. Although it is not over yet: if credit spreads soar, assuming at $200 million DV01, and a 100 bps move, JPM could suffer a $20 billion loss when all is said and done. But hey: at least “net” is not “gross” and we know, just know, that the SEC will get involved and make sure something like this never happens again.

And yes, the SEC has announced an “investigation” into this 2 billion dollar loss.  But we all know that the SEC is basically useless.  In recent years SEC employees have become known more for watching pornography in their Washington D.C. offices than for regulating Wall Street.

But what has become abundantly clear is that Wall Street is completely incapable of policing itself.  This point was underscored in a recent commentary by Henry Blodget of Business Insider….

Wall Street can’t be trusted to manage—or even correctly assess—its own risks.

This is in part because, time and again, Wall Street has demonstrated that it doesn’t even KNOW what risks it is taking.

In short, Wall Street bankers are just a bunch of kids playing with dynamite.

There are two reasons for this, neither of which boil down to “stupidity.”

  • The first reason is that the gambling instruments the banks now use are mind-bogglingly complicated. Warren Buffett once described derivatives as “weapons of mass destruction.” And those weapons have gotten a lot more complex in the past few years.
  • The second reason is that Wall Street’s incentive structure is fundamentally flawed: Bankers get all of the upside for winning bets, and someone else—the government or shareholders—covers the downside.

The second reason is particularly insidious. The worst thing that can happen to a trader who blows a huge bet and demolishes his firm—literally the worst thing—is that he will get fired. Then he will immediately go get a job at a hedge fund and make more than he was making before he blew up the firm.

We never learned one of the basic lessons that we should have learned from the financial crisis of 2008.

Wall Street bankers take huge risks because the risk/reward ratio is all messed up.

If the bankers make huge bets and they win, then they win big.

If the bankers make huge bets and they lose, then the federal government uses taxpayer money to clean up the mess.

Under those kind of conditions, why not bet the farm?

Sadly, most Americans do not even know what derivatives are.

Most Americans have no idea that we are rapidly approaching a horrific derivatives crisis that is going to make 2008 look like a Sunday picnic.

According to the Comptroller of the Currency, the “too big to fail” banks have exposure to derivatives that is absolutely mind blowing.  Just check out the following numbers from an official U.S. government report….

JPMorgan Chase – $70.1 Trillion

Citibank – $52.1 Trillion

Bank of America – $50.1 Trillion

Goldman Sachs – $44.2 Trillion

So a 2 billion dollar loss for JP Morgan is nothing compared to their total exposure of over 70 trillion dollars.

Overall, the 9 largest U.S. banks have a total of more than 200 trillion dollars of exposure to derivatives.  That is approximately 3 times the size of the entire global economy.

It is hard for the average person on the street to begin to comprehend how immense this derivatives bubble is.

So let’s not make too much out of this 2 billion dollar loss by JP Morgan.

This is just chicken feed.

This is just a preview of coming attractions.

Soon enough the real problems with derivatives will begin, and when that happens it will shake the entire global financial system to the core.

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8 Habits of Highly Productive People

Posted on November 29, 2011. Filed under: Business |

By Alexandra Gekas

While your co-workers start every day enjoying a cup of coffee together in the break room, you’re barely able to find time to call your doctor. While they’re taking lunches, you’re rushing through another meal at your desk. Sound familiar? Here’s the good news: This apparent discrepancy may not mean you’ve got a bigger workload or that you’re a harder worker. Instead, it may mean that they’ve mastered certain time-saving skills and habits that you haven’t-until now. From prioritizing your workload to learning which projects don’t need to be perfect, read on to discover eight workplace habits that’ll boost your productivity and lower your stress levels

1. They make it a point to take breaks.
Americans seem to think that constantly working is synonymous with being productive, but unless your brain is functioning at its maximum level, you may not be getting as much work done as you think. “[Taking breaks] is like hitting the reset button. It helps you empty out your ‘brain cache’ so you have room to refill it,” says Christine Hohlbaum, author of The Power of Slow: 101 Ways to Save Time in Our 24/7 World. First and foremost, she recommends taking lunch every day-and leaving your desk to do it. “When you have a ‘working lunch,’ it’s just not very efficient. At some point you’re going to lose attention,” she says. Ultimately, eating while you work will cause you to suffer on two fronts: you won’t be able to pay attention to your food-a surefire way to overeat-and you won’t be giving your work the proper attention it deserves. In addition to a “real” lunch break, Hohlbaum suggests allotting time for other breaks as well. She recommends taking five minutes in the morning, before starting work, and at least a 10- to 15-minute break in the afternoon. Whether you take a short walk, read a book or stare out of the window with a cup of tea, it’ll help you recharge and improve your overall productivity. “It’s really important to take time off because otherwise your brain will reach a saturation point,” Hohlbaum says, explaining that when this happens, it becomes hard to focus on even the simplest task. “At that point, you need to push away from your computer and take a break.”

Check out 8 ways to get ahead at work.

2. They start their day off on the right foot.
According to a recent study at the Fisher College of Business at Ohio State University, if an employee is in a bad mood when they arrive at work-whether because of familial problems or a stressful commute-it can decrease their productivity by as much as 10% that day. So unless you come in to the office every day in a great mood (and who does?), start your day with 5 to 10 minutes of time dedicated to decompressing. “Create a ritual. Maybe it’s meeting in the coffee break room or going around the office to greet everyone. It doesn’t matter what you do, as long as you foster a sense of connection [with your coworkers],” Says Holhbaum. “Swinging by to say ‘hi’ to your colleagues when you walk in gives you a sense of focus. When you feel you’re part of a bigger effort, you feel more connected to why you’re there and that can make all the difference in the world.” Re-focusing your mind at the beginning of the day will also create a sense of calm, helping you to disregard outside stressors and zero in on your daily tasks. “If we’re actually able to start the day centered, then we’ll have a longer tolerance period  before we get off track,” Holhbaum says.

3. They make mindful food choices.
You are what you eat, and eating a heavy mid-day meal will often make you feel lethargic for the rest of the afternoon. “Consider what you’re eating at lunch. If you’re having that post-pasta slump at 2 p.m., and need java or cookies to pep back up, maybe you should try a salad or something a bit lighter so you won’t lag,” suggests Hohlbaum. The key is keeping your blood sugar levels  steady throughout the day, according to Kari Kooi, RD, corporate wellness dietician at The Methodist Hospital in Houston, who recommends three light meals and two snacks at regular intervals. “Heavy meals can make you feel sluggish because they require more energy to digest,” Kooi says. “[A quality lunch] will consist of a fiber-rich carbohydrate, like water-rich veggies, and a lean protein, like chicken or fish,” she says. And what does Kooi suggest you avoid? “A highly processed meal, like some of the frozen meals in the grocery store, will not give you the sustainable energy you need. The less processed the better when it comes to keeping your energy levels up.” When you hit that midday slump, Kooi suggests going for proteins like mixed nuts and fruit instead of the usual energy-zapping pretzels, cookies or candy, which cause your blood sugar levels to spike and then drop and may even make you hungrier, according to Kooi.

Discover 7 foods that boost every type of bad mood.

4. They keep a flexible to-do list.
Making a daily list of to-dos is a great way to stay on top of your work. However, there is one pitfall-it can make you inflexible. “A lot of people feel their day’s been wrecked if they have to change their plan, but the most effective people understand that’s part of the job,” says Vicki Milazzo, author of Wicked Success Is Inside Every Woman. “I always start my day with a plan, but by 9 a.m. I’ve busted that plan.” However, according to Paula Rizzo, a master list-maker and founder of, it’s important to keep some form of a to-do list, no matter how much your day changes. For example, Rizzo begins her days with a master list, which she continually updates throughout the course of the day to note the items that haven’t been done or to add tasks as they crop up. Before leaving work, Rizzo will make a fresh list for the next day. The key, she says, is referencing the changing list throughout the day to keep herself on course. “Just putting a little extra work into it will keep you on track.”

5. They use technology with intent.
In today’s 24/7 all-access world, it’s hard to get a handle on technology use. While it’s impossible to avoid it altogether, you can be disciplined about how much time you spend perusing the Web. Set aside a specific time, say 15 minutes after lunch, to scroll through your social networking sites or other favorite websites-and stick to it. Or try something like Google Chrome’s website blocker, which allows you to set restrictions to your online time by either totally blocking your favorite websites or just restricting the timeframes within which you are allowed to check them. In addition to surfing the Internet, it’s important to watch your email habits. Whether you give yourself 15 to 30 minutes at a set time each day to check your personal email, or you allow yourself brief intervals between tasks, Holhbaum says the key is to be very mindful of the time you’re spending checking your non-work inbox. “Have a very clear distinction between what’s personal and what’s work. If that’s a part of your ‘OK I need to zone out for a little bit’ time, that’s fine. But you need to be clear and be mindful of what you’re doing.” Even work-related emails can become a distraction if not properly managed. Ask yourself if email is the best method of communication, or if you’re better off calling the person. “Sending 100 emails isn’t [always] going to be the most productive thing. And as we know, emails beget emails. They’re like little rabbits,” Hohlbaum jokes. “If it’s a one-way communication, for example forwarding an airplane itinerary, you don’t need to have any answer [so email works]. But if you want detail or you know the person won’t respond right away by email, pick up the phone,” she says.

Learn 15 keyboard shortcuts you probably don’t know.

6. They balance their workload.
Different tasks require different levels of concentration, which you can use to your advantage. Start by identifying-and placing-the tasks you have into two categories: weeds and intensive work. Weeds are small, manageable things such as handling email, phone calls and minor organizational tasks. Intensive work is anything that requires an extended period of concentration, such as management tasks, preparing presentations, writing or editing. “Miscellaneous routine tasks are like weeds in your garden; we all have them, and no matter how often we try to get rid of them, they never go away,” says Milazzo. “Yet they do have to be handled, and pulling a few weeds can provide a restorative break from more intensive work.” Milazzo recommends splitting up long sessions of intensive work with regular 15- to 30-minute intervals of weed pulling. This way, you’ll accomplish a variety of tasks while not burning out on one type of work.

7. They put perfectionism in its place.
While turning in perfect work has been encouraged since kindergarten, that attitude can be counterproductive if it’s not managed. It’s important to pick your battles. “Women, by nature, are somewhat perfectionist,” says Milazzo. “So we need to distinguish what requires perfectionism,” she says. Of course you want to put your best foot forward in all situations, but if you’re strapped for time, prioritize. If, for example, you’re writing an informal memo or email to a co-worker, give it a quick look and spell-check it, but resist the urge to re-read it three times over. If, on the other hand, you’re creating a brochure for your company or preparing an important presentation, then that’s the time to put all of your perfectionist tendencies to good use.

8. They know how to say “no.”
It’s easy to get distracted or overwhelmed at work. But one of the secrets of highly productive people is that they learn when and how to say “no.” For starters, say “no” to whiners, complainers and distracting people. One way to do that, according to Rizzo, is by wearing headphones. “That sends the message that you’re busy and it drowns out the noise as well,” she says. When it comes time to say “no” to the boss, tread lightly but firmly. You don’t have to spell out n-o per se; rather, ask her to prioritize what’s most important given what’s on your plate. “When an employee does that, the boss usually comes to their senses and they get it,” Milazzo says. “You don’t want to make your boss the enemy; you want your boss to know you’re there for the company, and that you’re there for them. If they know that, they’re more likely to listen to what you say.”

Photo: © Thinkstock

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Tools Explained

Posted on October 15, 2011. Filed under: Business, Editorial |

 DRILL PRESS: A tall upright machine useful for suddenly snatching flat metal bar stock out of your hands so that it smacks you in the chest and flings your beer across the room, denting the freshly-painted project which you had carefully set in the corner where nothing could get to it.

WIRE WHEEL: Cleans paint off bolts and then throws them somewhere under the workbench with the speed of light . Also removes fingerprints and hard-earned calluses from fingers in about the time it takes you to say, ‘Oh shit!’

SKIL SAW: A portable cutting tool used to make studs too short.

PLIERS: Used to round off bolt heads. Sometimes used in the creation of blood-blisters.

BELT SANDER: An electric sanding tool commonly used to convert minor touch-up jobs into major refinishing jobs.

HACKSAW: One of a family of cutting tools built on the Ouija board principle… It transforms human energy into a crooked, unpredictable motion, and the more you attempt to influence its course, the more dismal your future becomes.

VISE-GRIPS: Generally used after pliers to completely round off bolt heads. If nothing else is available, they can also be used to transfer intense welding heat to the palm of your hand.

OXYACETYLENE TORCH: Used almost entirely for lighting various flammable objects in your shop on fire. Also handy for igniting the grease inside the wheel hub out of which you want to remove a bearing race.

TABLE SAW: A large stationary power tool commonly used to launch wood projectiles for testing wall integrity.

HYDRAULIC FLOOR JACK: Used for lowering an automobile to the ground after you have installed your new brake shoes , trapping the jack handle firmly under the bumper.

BAND SAW: A large stationary power saw primarily used by most shops to cut good aluminum sheet into smaller pieces that more easily fit into the trash can after you cut on the inside of the line instead of the outside edge.

TWO-TON ENGINE HOIST: A tool for testing the maximum tensile strength of everything you forgot to disconnect.

PHILLIPS SCREWDRIVER: Normally used to stab the vacuum seals under lids or for opening old-style paper-and-tin oil cans and splashing oil on your shirt; but can also be used, as the name implies, to strip out Phillips screw heads.

STRAIGHT SCREWDRIVER: A tool for opening paint cans. Sometimes used to convert common slotted screws into non-removable screws and butchering your palms.

PRY BAR: A tool used to crumple the metal surrounding that clip or bracket you needed to remove in order to replace a 50 cent part.

HOSE CUTTER: A tool used to make hoses too short.

HAMMER: Originally employed as a weapon of war, the hammer nowadays is used as a kind of divining rod to locate the most expensive parts adjacent the object we are trying to hit. It is especially valuable at being able to find the EXACT location of the thumb or index finger of the other hand.

UTILITY KNIFE: Used to open and slice through the contents of cardboard cartons delivered to your front door; works particularly well on contents such as seats, vinyl records, liquids in plastic bottles, collector magazines, refund checks, and rubber or plastic parts. Especially useful for slicing work clothes, but only while in use.

SON-OF-A-BITCH TOOL: (A personal favorite!) Any handy tool that you grab and throw across the garage while yelling ‘Son of a BITCH!’ at the top of your lungs. It is also, most often, the next tool that you will need.

Hope you found this informative.

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Priceless Financial Advice For Recent Graduates

Posted on May 8, 2011. Filed under: Business, Lifestyles |

If you could rewind your life to graduation from high school or college, what would you have done differently with your money?

Confession: I’m a financial voyeur. For as long as I can remember I’ve been fascinated by the unique relationships people (and especially women) have with their money. So when I was recently asked by my Alma Mater, Wellesley College, to serve as a Financial Fellow in residence and create some unique personal finance programming for students and alums, I jumped at the chance.

One of the most popular events we held was called ‘Powerful Women & Their Pocketbooks’. In this session, I asked three VERY successful Wellesley alums (C-suite level, corporate board member, business founder, etc.) what their best and worse financial moves were right out of college.

By design, we did not compare notes before-hand. Alums were from the classes of –”68, –˜73, and –˜90 ’“ so spanning various stages in businesses receptivity to women leaders. What struck me the most was how incredibly similar our best tips (& worst trip ups) were despite very different ages, career choices, and life experiences. The top three pieces of advice every one of us gave were:

Learn to live within your means right out of the gate – and understand that means your life likely won’t look like mom & dad’s right away.
Bow down and respect the incredible power of compounding – start saving right out of school no matter how hard it hurts & how unpleasant the tradeoffs.
Be an advocate for your own financial security – whether in the workplace or on the home front.

The biggest mistake all four of us –˜fessed up to, had to do primarily with points 2 & 3. In my case, my dad had to drag me kicking and screaming in my early 20s to move my hard-earned long-term savings into equities (I’m incredibly risk adverse). My other big mistake was thinking that if I just kept my head down, was a “nice girl”, and worked my backside off”, my work would speak for itself and there was no need to proactively negotiate my salary.

So, if you have a young grad in your life –  I’d like to ask you a favor. Please share with them some of your best and worst financial moves. The more intergenerational dialogue we have about the basics of personal finance the better off this country will be. And if you are looking for a practical graduation gift, I highly recommend GENERATION EARN, written by Kimberly Palmer, Senior Editor of Money & Business for US News & World Report. To get your mind marinating about possible topics you can talk about with the young grads in your life, Kimberly kindly shares below some very powerful tips. Note the common themes! [For more of Kimberly you can follow her on Twitter at @AlphaConsumer, visit her book’s website, and read her column in US News & World Report]

7 Money Mistakes Today’s College Grads Make (and how to avoid them)
by Kimberly Palmer of US News & World Report

This year’s college graduates face a particularly daunting array of financial challenges: Hefty student loan debt. A tough job market. Complicated financial options, from Roth IRAs to consolidating student loans. It’s overwhelming, but not insurmountable. These seven mistakes and their solutions, adapted from my book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back,are designed to help college grads bypass common hiccups and take control of their financial lives.

1. The Problem: Taking on too much debt – or not enough. Too much debt can weigh down recent grads, forcing them to spend more money on interest and fees than on fun and other goals. The new credit card regulations make it harder for anyone under the age of 21 without their own income to take out cards of their own, which could make post-graduation overspending even more tempting and as intoxicating as frat parties are to college freshmen. At the same time, the recent recession has led many young people take the debt-is-bad message too literally. Avoiding loans altogether, however, can hurt college grads. Sometimes, student loans for graduate school or a mortgage are good investments. Being responsible for credit accounts also allows 20-somethings to build their credit history, which is required if one day they want to take out a mortgage, auto loan, or other type of loan.

The solution: Build your credit history slowly and steadily, by opening up accounts in your own name and then paying them off on time.

2. The Problem: Becoming victim to rapid lifestyle inflation. You’re a recent college grad, so that means you probably need a new car, new apartment, new sofa, and a new…¦ Wait a minute. Not only do you not need all those things, but you probably won’t appreciate them much, either. A little theory called the ‘hedonic treadmill’ explains why. We adapt all too quickly to improvements in our lifestyle. That 60-inch television that you drooled over at Best Buy will soon start blending in with the rest of your furniture, along with your top-of-the-line coffee maker and pillow-top mattress.

The solution: Instead of using your first paycheck to make your new digs look like a sitcom set, spread out your purchases over time. Maybe you need a bed right away, but that embroidered duvet cover from Pottery Barn can wait.

3. The Problem: Falling into bad money habits. Bi-weekly $20 happy hours, daily $15 lunches, and nightly take-out are just a few of the bad habits that eat into new grads’  bank accounts. While the occasional lapse isn’t a problem, repeatedly wasting money on a weekly basis for years will cost you big-time.

The solution: Learn to cook, by enlisting the help of friends, family members, or your favorite celebrity chef (via the Food Network). The habit can save you hundreds, if not thousands, of dollars a year, and turn your home into a popular destination for friends. It’s a skill that lasts a lifetime.

4. The Problem: Waiting to save and invest. Sure, you don’t feel like you have an ‘extra’  money yet, and you’re still getting used to seeing your name on a paycheck. But that makes it the perfect time to start saving at least one-quarter of your income for your future goals, including retirement. The first priority is to establish an emergency savings account with at least three months of expenses that can get you through any unexpected bumps, from unemployment to a car accident. Then, start saving for retirement. If your employer offers any type of 401(k) matching program, take advantage of it –  – passing it up is like saying no to a pay increase. Then, open an after-tax savings account for your other goals, from traveling to homeownership.

The solution: If saving any money seems daunting, then start by funneling a modest 2 percent of your income into a high-yield saving account or money market fund. Then, slowly raise that percentage. Once you have your three-month emergency fund stored away, then consider investing a portion of your longer-term savings in low-fee index funds and other more aggressive investment vehicles.

5. The Problem: Failing to negotiate for a higher salary. Even in this economy, employers expect some haggling over salary and benefits. In fact, doing so is a sign of professionalism shows that you, a recent college grad, understand how the working world works. A simple request after expressing enthusiasm and appreciation for the job offer can eventually lead to hundreds of thousands of dollars more in lifetime earnings. (Linda Babcock of Carnegie Mellon University calculates that not negotiating your first job offer can result in a loss of up to $1.5 million in lifetime earnings.)

The solution: Practice your job offer conversation in advance of receiving any potential offers so you’re ready to land a better deal and research your field ahead of time so you know what to expect. If the salary really is fixed, then consider focusing on other benefits, which can be worth as much as a third of the salary but job seekers often overlook. What are the health care benefits? Retirement account perks? Vacation days? Work-at-home flexibility? Decide what’s important to you and get ready for some professional haggling; it usually just takes one round of back-and-forth.

6. The Problem: Thinking you’re done studying. Sure, you have your degree, but unless you attended one of the few schools that teach personal finance, you probably know relatively little about how to build wealth. That makes the post-graduation period the ideal time to take matters into your own hands.

The solution: Look for ways to learn more about smart personal finance strategies, and it doesn’t have to be boring. Dozens of blogs, websites, and books make learning about money fun, and many local community colleges and universities offer personal finance courses for local professionals. You might also want to consider forming a money club with friends, where you meet up once a month to talk about your money questions, goals, and research.

7. The Problem: Getting buried in paperwork. There’s no avoiding the fact that being an adult comes with some secretarial duties. Suddenly, you have pay stubs, health insurance forms, tax documents, and credit card statements to keep organized. It’s easy to let them build up until you just want to shred the pile and toss it in the trash.

The solution: Take advantage of modern technology by going paperless whenever possible. Online accounts are easier to manage (and, bonus, better for the environment). New websites such as keep your receipts organized online, which is especially helpful at tax time. makes it easy to track your spending and establish a budget.

A big thanks to Kimberly for sharing these seven tips.

Is there anything you’d add to the list to help recent grads learn from your past experiences? If so, please leave a comment and share your wisdom!

[This post originally appeared at] Want more financial love? You can follow Women’s Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called ‘Money Rules’.

Manisha Thakor is the founder of the Women’s Financial Literacy Initiative and co-author of two critically acclaimed personal finance books for women: ON MY OWN TWO FEET and GET FINANCIALLY NAKED. Manisha blogs about personal finance at Forbes, teaches an innovative online personal finance course called “Money Rules… For Women,” and is a Financial Fellow at Wellesley College. Manisha’s financial literacy advocacy work for women has been featured in media outlets such as The New York Times, Reuters, Smart Money, Huffington Post, Glamour, Real Simple and Women’s Day. Manisha’s national TV appearances include CNN’s Weekend Newsroom, CNBC’s Power Lunch, PBS’ Nightly Business Report, and The Rachael Ray Show. Prior to this Manisha spent 15 years working as an analyst, portfolio manager and client service executive. Manisha earned her MBA from Harvard Business School, her BA from Wellesley College, and is a CFA charterholder. Manisha’s website is


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Christian Dior firing designer John Galliano

Posted on March 4, 2011. Filed under: Business, Fashion |

Associated Press – March 1, 2011 5:18 PM PST

The French fashion house showed the famed British designer the door Tuesday following a string of accusations of racist and anti-Semitic rants against patrons of at least one trendy Paris cafe. Hwould be asked to stay away from work pending the outcome of the police investigation, raising doubts over the Christian Dior fashion show planned for March 4.

PARIS – Christian Dior says it’s firing designer John Galliano after an online video showed him praising Adolf Hitler — a bombshell certain to rock fashion’s elite world as the latest Paris ready-to-wear shows begin.

Galliano’s ouster raises questions about where Dior will turn for direction next, and the mental state of one of the world’s top talents in an intensely creative and high-pressure industry.

Dior said Tuesday it has launched layoff proceedings for Galliano, just days after he was suspended as its creative director pending an investigation into an alleged anti-Semitic incident in a Paris cafe last week.

On Monday, a video posted online showed Galliano drunkenly telling a cafe patron “I love Hitler” in a different incident.

Christian Dior’s response was severe, chastising “the particularly odious nature of the behavior and words” of Galliano in the video.

Galliano’s lawyer did not immediately return calls seeking comment Tuesday.

Galliano’s ouster raises questions about where Dior will turn for direction next, and the mental state of one of the world’s top talents in an intensely creative and high-pressure industry.

Full Article Here


Jenny Barchfield in Paris contributed to this report.


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Mechanical Serfdom Is Just That

Posted on February 5, 2011. Filed under: Business, Technology |

I spent a day crowdsourcing for Amazon’s Mechanical Turk and all I have to show for eight hours in an online work marketplace is a measly $4.38

By Rachael King

It’s 8 a.m. on a Saturday morning and I’m ready to make some money. The coffee’s kicking in and I’ve logged on to’s (AMZN) Mechanical Turk. It’s an online marketplace that matches workers with employers willing to pay on a per-piece basis for such tasks as verifying addresses, transcribing interviews, and translating text. 

I’m no stranger to grunt work. I worked my way through college. Early in my subsequent career, I held stints as an editorial assistant—which meant a lot of typing, photocopying, and schlepping lattes for editors in exchange for the occasional byline.

None of that could have prepared me for Mechanical Turk, which posts jobs—known as “Human Intelligence Tasks”—in a format that resembles a job board.

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