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Obama hopeful and grateful about China

Obama: $45B deals show China's rise can help US
By MATTHEW PENNINGTON, Associated Press – Thursday January, 2011
WASHINGTON – President Barack Obama is looking to assure Americans that they should not fear China's economic rise, using Chinese President Hu Jintao's high-profile state visit to announce job-creating business deals worth billions of dollars to U.S. companies.

On another big American concern, human rights, Hu conceded that "a lot still needs to be done" to improve China's record.

The business deals and Hu's human rights comments were among the highlights of a ceremony-packed day seen as key to building trust between the world's top two powers.

Five years after his last visit to the White House, one that was marred by protocol blunders, Hu was feted Wednesday with the full pomp of a state visit, including a lavish dinner with some of Washington's most powerful figures and other luminaries.

The two sides played down differences and stressed areas of cooperation, ranging from a plan to cooperate on nuclear security to an extension of the loan of two Chinese pandas to Washington's zoo.

On Thursday, Hu could face a tougher audience when he meets with U.S. lawmakers — a few of whom skipped the dinner and have been deeply critical of China's authoritarian government.

Senate Majority Leader Harry Reid, D-Nev., called Hu "a dictator" in an interview Wednesday, although he later tried to recant the comment. In the House, several Republican lawmakers assailed the Chinese government's record on human rights, military expansion, financial strategy and weapons sales.

Later Thursday, Hu was to address trade and economic concerns at the U.S.-China Business Council in Washington.

Economic ties, long seen as a source of stability in the often rocky U.S.-China relationship, have caused friction in recent years. U.S. manufacturers assert that China undervalues its currency by as much as 40 percent, making its exports cheaper at the expense of those from the United States, contributing to high U.S. unemployment.

Obama bluntly restated that concern Wednesday, saying China's government had "intervened very forcefully" in the currency markets to the tune of $200 billion "just recently." He also highlighted intellectual property rights violations, citing Microsoft CEO Steve Ballmer as saying that only 1 customer in 10 of Microsoft products in China is actually paying for them.

But Obama also stressed the importance of the growing economic bonds between the two superpowers and said China was taking significant steps to curtail the theft of intellectual property and expand U.S. investment.

He said the newly announced business deals worth $45 billion — which include a highly sought-after $19 billion deal for 200 Boeing airplanes — would help create 235,000 U.S. jobs, in addition to the half-million U.S. jobs already generated by the United States' annual $100 billion in exports to China.

"I absolutely believe China's peaceful rise is good for the world, and it's good for America," Obama told a joint news conference, addressing a major concern in Beijing that the United States wants to see China's growth constrained.

"We just want to make sure that (its) rise occurs in a way that reinforces international norms, international rules, and enhances security and peace, as opposed to it being a source of conflict either in the region or around the world," Obama said.

Standing alongside one another at podiums, against a backdrop of U.S. and Chinese flags, the two leaders vowed closer cooperation on critical issues such as increasing trade and combating nuclear proliferation. But they also acknowledged their differences, especially over human rights.

Obama has faced criticism for granting the state dinner to the Chinese communist leader, whose visit comes just a month after jailed Chinese dissident Liu Xiaobo was awarded the Nobel Peace Prize. Obama won the prize the previous year.

At the news conference, Obama described the rights of freedom of speech, religion and assembly as "core views" for Americans and said he drove that home forcefully in his discussions with Hu.

Hu responded that human rights should be viewed in the context of different national circumstances but, in an unusual concession for a Chinese leader on the world stage, acknowledged, "A lot still needs to be done in China on human rights."

He said China was willing to engage in dialogue with the U.S. and other nations on the issue, but countries must exercise "the principle of noninterference in each other's internal affairs" — hinting at China's customary resistance to debate on it.

Rights activists welcomed Hu's comments but said they needed to be backed up by action to ameliorate a host of concerns, including mass detentions without trial in China, persecution of rights activists and ethnic minorities and crackdowns on Falun Gong practitioners.

"It's good to hear him make such an acknowledgment, but they are no more than words until we see serious changes in policy and practice," said Sophie Richardson, Asia advocacy director for Human Rights Watch.

She noted that China had issued "similar rhetoric" in the past.

And China typically defines human rights in terms of improvements in quality of life such as higher incomes and better living conditions, rather than civil liberties such as freedom of speech that define such values in the West.

Reasons for unemployment

Source: The Guardian
Wednesday 19 January 2011 12.36 GMT

Unemployment: What the experts say

Unemployment figures show the UK labour market is extremely fragile, economists say

City experts have warned that the UK labour market is extremely fragile, after youth unemployment hit a record high. Data released today showed that the claimant count dropped by 4,200 in December, but the wider ILO measure rose by 45,000 in the three months to November to just under 2.5m.

Hetal Mehta, UK economist at Daiwa Capital Markets

Today's labour market statistics are slightly better than expected, with the fall in the claimant count welcome. However, surveys such as the services PMI suggest that employers are continuing to shed jobs, and the public sector job losses are yet to bite. In our view, unemployment is set to rise, with the ILO rate increasing to over 8% in the coming months.
And with so much slack in the labour market, earnings growth continues to remain subdued. This of course means negative real wage growth, something that will constrain further household spending. So, with no signs of an emerging impact on wage growth from the persistent above-target inflation, today's data provide the Bank of England with further reasons to refrain from any policy tightening in the near term.

Alan Clarke, UK economist at BNP Paribas

The ILO data was rather disappointing. The ILO measure of employment fell by 69,000 in the last three months, while the ILO measure of unemployment rose by 49,000. To some extent the deterioration in these is payback for the strong readings towards the end of 2010.
Nonetheless, the deterioration is probably also related to the slowdown in the wider economy since the middle of last year. With GDP growth likely to be rather more subdued for at least the next two quarters, we suspect that there will be more reports like this one in the months ahead.
Wage inflation was 2.1% on a headline basis and 2.3% excluding bonus.
Sky high consumer price inflation coupled with subdued wage inflation and falling employment means that household real incomes are being squeezed. This reaffirms our belief that consumer spending growth will be much weaker than consensus expectations this year.

David Kern, chief economist at the British Chambers of Commerce

These figures are disappointing and once again slightly worse than expected. For the second month in a row unemployment is up, employment is down and the level of inactivity has seen a marked increase. Employment has declined for both full time and part time jobs and the number of people working part time because they could not find a full time job rose to its highest level since comparable records began in 1992. In addition, a record number of young people are out of work.
While longer-term trends still show that the UK labour market remains relatively robust, the new figures highlight the challenges facing the economy in the months ahead when the austerity programme is implemented more forcefully.
In light of these figures, we reiterate our forecast that unemployment is likely to increase to 2.6 million over the next year, a further net rise of around 100,000. With the prospect that private-sector employment could decline over the next year, it is critical that private-sector businesses are able to create new jobs.

Howard Archer at IHS Global Insight

The labour market data are a mixed bunch, but overall they do not significantly change our suspicion that unemployment is likely to rise in 2011 in the face of slower growth and increasing job losses in the public sector.
Major job losses will occur in the public sector as the government slashes spending, and we doubt that the private sector will be able to fully compensate for this. Indeed, we suspect that firms will become increasingly cautious in their employment plans, reflecting slower growth and concerns that the intensified fiscal squeeze will hold back economic activity for an extended period. There are also likely to be significant job losses in private companies supplying services or goods to the public sector. In particular, many firms are likely to try to meet any increase in business through making greater use of the workers they have already or through using part-time staff, and they are likely to be reluctant to take on any more permanent staff unless they are really convinced that sustained improvement in their business is probable.

Chris Williamson, chief economist at Markit

Today's labour market numbers are of heightened importance, given yesterday's rise in inflation to an eight-month high of 3.7%. In particular, the rate of pay growth held steady at 2.1%, suggesting that rising prices show little signs of feeding through to pay negotiations. Such so-called 'second-round' effects are likely to be key to any rise in interest rates by the Bank of England, and today's numbers will therefore alleviate pressure on the Bank of England to hike interest rates in the face of a temporary spike in inflation while the economic recovery remains fragile.
More up-to-date survey data suggest that employment trends deteriorated at the end of last year, with private sector job growth stagnating and the public sector likely to have cut payroll numbers in the drive to reduce spending. It is therefore likely that job insecurity will remain high for some time during 2011, meaning pay pressures are set to remain weak. This should help keep core inflation down in the medium term, offsetting rising energy and food prices.

Brian Johnson, insolvency practitioner at HW Fisher

The latest figures show that the recent trend of increasing unemployment is continuing. The future prospects for unemployment in 2011 remain bleak, particularly as the effects of any Government cut-backs are still not being felt within the job market.
These are anxious times for many employees and anyone unfortunate to have lost their job but it is also a terrible time for graduates and school leavers entering the jobs market.
Companies are risk-averse and risk-averse companies are less inclined to take on staff with little or no experience, especially when existing staff are prepared to be more flexible or take reduced hours as they are at present.
Over the past few years we have lost businesses and banks and now, before our very eyes, we are losing an entire generation.

Jim Hillage at the Institute for Employment Studies

Two areas are of particular concern. Long-term unemployment continues to rise, with 836,000 now out of work for more than a year. While economic inactivity is also up as people decide to retire early and leave the labour market altogether. Secondly, the unemployment rate for those aged 16-24 increased by 32,000, to reach 951,000, the highest level since comparable records began. This is deeply worrying given what we know about the scarring effects which periods of unemployment can have on young people. The figures also again highlight the amount of spare capacity in the labour market. The number of people working part-time because they cannot find full-time work grew by 26,000, stands at 1.16 million, the highest level since comparable records began.

Ian Brinkley, associate director of The Work Foundation

The labour market recovery has come to an abrupt halt as accelerating job losses in the public sector and lack of overall growth in jobs in the private sector start to bite. Women's employment has been especially badly hit. The consequent rise in unemployment would have been worse but for the fact that many women have become "economically inactive" and stopped looking for work.

China reconsidering relationship with US

Source: Wall Street Journal
Wary Powers Set to Square Off
By LORETTA CHAO, JASON DEAN and BOB DAVIS
China's President Hu Jintao landed in Washington for a summit that will help to define a new relationship between the world's longtime superpower and its rising Asian rival, at a time when their bonds have been frayed by mutual suspicions and an ideological gulf.
Since Mr. Hu last visited the White House in 2006, his country's influence has surged and its relationship with the U.S. is now widely recognized as the world's most important bilateral matchup. In some ways ties have strengthened, as in the growing trade and business evident in a series of big commercial deals signed this week. But the two also seem increasingly buffeted by disagreements including Beijing's handling of North Korea, China's own military expansion, its exchange-rate policies and its treatment of foreign businesses.

Mr. Hu's arrival—for China's first state visit to the U.S. since 1997—was accompanied by a Chinese advertising blitz meant to showcase its "soft power," using images of ordinary Chinese citizens and celebrities like NBA star Yao Ming, Web tycoon Jack Ma, and a quartet of fashion models in a minute-long ad. The Chinese-produced video—to run on television and 300 times a day in New York's Times Square for a month—is aimed at showing Americans a different face of China. Rather than a rival accused of manipulating its currency and siphoning U.S. jobs, Beijing wants Americans to think of sports stars, Internet entrepreneurs, and astronauts.

The Obama administration also has been pressing China to make big investments and splashy joint ventures as a way to demonstrate concrete achievements. On Tuesday, it orchestrated a series of energy-related announcements by U.S. and Chinese business leaders intended to show the upside of working together.

Also, as Mr. Hu arrived, documents viewed by The Wall Street Journal showed that a Chinese firm has agreed to invest $2 billion in a North Korean industrial zone, challenging U.S. policy isolating North Korea and serving as a reminder of the potential limits of Chinese cooperation there. Beijing suggested Tuesday the U.S. needs to remove barriers to Chinese companies' investment, even as a survey of U.S. businesses in Shanghai underlined corporate anxiety about lack of a level playing field in China. Multinationals have grown increasingly frustrated that Beijing has adopted policies that threaten to co-opt their technology and favor Chinese companies that have become competitive globally.

Mr. Hu, in responses this week to questions from The Wall Street Journal and the Washington Post, suggested he wanted to move past such tensions with the U.S. where possible. "The strategic significance and global impact of China-U.S. relations have been on the rise," Mr. Hu wrote. "We both stand to gain from a sound China-U.S. relationship, and lose from confrontation."

Mr. Hu landed late Tuesday afternoon at Andrews Air Force Base outside Washington, was greeted by Vice President Joe Biden, hugged a small boy and shook a few hands. He was scheduled to dine Tuesday night with President Barack Obama and Secretary of State Hillary Clinton among others.

On Wednesday, the two presidents were to meet again and then join business leaders from Microsoft Corp., General Electric Co. and Boeing Co., among other firms, near the White House. More deals are expected to be announced. On Wednesday night, the first state dinner for China since President Bill Clinton hosted Chinese President Jiang Zemin will be a black-tie affair.

The White House hopes the visit will establish the groundwork for deeper relations. Meanwhile, China's advertising blast is part of a broader push by Beijing to try to put the relationship in human terms and highlight its culture and people to ease fears about its rise.

That use of "soft power"—as scholars describe it, in contrast to the hard power afforded by economic, geopolitical and military clout—will also be highlighted during Mr. Hu's next stop in Chicago starting Thursday. He'll visit a Chinese government-sponsored language-learning center at a local high school, part of a global network of so-called Confucius Institutes designed to spread the use of Mandarin.

China's government was long neglectful of its image overseas, but in recent years it has invested billions of dollars to promote its viewpoints and polish its reputation. Chinese state-run media companies are expanding overseas as well. China Daily, the government English-language newspaper, launched a U.S. edition in 2009. Xinhua news agency started an English-language TV news service last year, and state broadcaster China Central Television recently announced a new English-language documentary channel that will showcase films about China for foreign audiences.

Those efforts come as China's policies and actions are coming under increasing international scrutiny, including its handling of deadly antigovernment riots in Tibet in 2008 and the 11-year prison sentence it gave dissident Liu Xiaobo, who as awarded the 2010 Nobel Peace Prize in absentia at a December ceremony.

The image push has expanded enormously in just the five years since Mr. Hu last visited the White House. For instance, China had fewer than 10 Confucius Institutes in the U.S. that year. Today, there are more than 100 institutes and similar Confucius Classrooms in the U.S., and hundreds more in other countries. They are sponsored, and partly funded, by an arm of China's Ministry of Education called the Hanban, which cooperates with schools and universities around the world.

But like so much in China, the soft-power push is led by the government, and it is unclear how much impact it is having wooing U.S. hearts and minds. A survey of 1,503 Americans by the Pew Research Center for the People & the Press found that 58% want to build a stronger relationship with China, but 65% see China as either an "adversary" or a "serious problem."

Marketing experts say the state-led soft-power approach has its limits. While Beijing recognizes the value of soft power, it should promote things "which are happening culturally and spontaneously" within the country, such as its vibrant art scene, says Ogilvy & Mather Worldwide Chief Executive Miles Young. He says South Korea and Japan have gained global cultural influence that way.

The Times Square ad was ordered up by China's State Council Information Office and produced by ad agency Shanghai Lintas Advertising, which is 20% owned by Interpublic Group of Cos. Chinese officials couldn't be reached and Lintas Advertising declined to comment.

Write to Loretta Chao at loretta.chao@wsj.com, Jason Dean at jason.dean@wsj.com and Bob Davis at bob.davis@wsj.com

Are your personal data secured with the iPad ?

Source: Wall Street Journal
Two Arrested in iPad Security Breach
By CHAD BRAY
Two computer hackers have been arrested for allegedly using a security breach of AT&T Inc.'s servers to gather email addresses and other personal information of about 120,000 users of Apple Inc.'s iPad, including corporate chiefs, U.S. government officials and Hollywood moguls.

Andrew Auernheimer, 26, and Daniel Spitler, 25, were taken into custody on Tuesday, according to federal prosecutors. They have each been charged with conspiracy to access a computer without authorization and fraud in connection with personal information.

AT&T acknowledged in June that a flaw in its website made it possible for iPad users' email addresses to be revealed and said it had fixed the problem. Mr. Auernheimer, part of a hacker group calling itself "Goatse Security," claimed at the time it had discovered the flaw.

According to a criminal complaint unsealed Tuesday, Messrs. Auernheimer and Spitler allegedly breached the security of AT&T's servers in order to do damage to the telecommunications company, while simultaneously promoting themselves and Goatse Security.

U.S. Attorney Paul Fishman said there was no evidence the two men used the information they acquired for criminal purposes.

Mr. Auernheimer was expected to appear in federal court in Fayetteville, Ark., Tuesday, while Mr. Spitler was expected to appear in federal court in Newark.

A phone call to the contact number for Goatse Security wasn't immediately returned Tuesday. An AT&T spokesman declined comment.

Mr. Auernheimer, who identified himself as Escher Auernheimer in media interviews, told The Wall Street Journal at the time that AT&T had a "egregious lack of thought" at the time by not requiring a password to access Web pages with email addresses.

The Federal Bureau of Investigation launched an investigation after the flaw in AT&T's website was revealed last year.

According to the criminal complaint, the hackers created a computer script known as the "iPad 3G Account Slurper," which attacked AT&T's servers over several days in June 2010.

The computer program was designed to mimic the behavior of an iPad 3G, so that AT&T's servers were fooled into believing they were communicating with an actual iPad, prosecutors said in the complaint. Once deployed, the program would randomly guess the unique identifier for each iPad. Each correct guess would result in the iPad's email address being displayed on AT&T's website, prosecutors said.

Based on Internet chat logs, the FBI determined that Mr. Auernheimer and Mr. Spitler, who went by the name "JacksonBrown" were responsible for the data breach, according to the criminal complaint.

In one chat on June 5, Mr. Auernheimer allegedly said, "this could be like, a future massive phishing operation" after the security flaw was discovered and said it was "valuable data."

The next day, Mr. Spitler asked that Mr. Auernheimer protect his identity after Mr. Auernheimer suggested they reveal the security flaw to the press, prosecutors said in the complaint.

"Dunno how legal this is or if they could sue for damages," Mr. Spitler allegedly said.

Mr. Spitler proceeded to write the computer script to harvest the email addresses, prosecutors said in the complaint.

Later on June 6, 2010, Mr. Auernheimer allegedly wrote to Mr. Spitler: "if we get 1 reporters address with this somehow we instantly have a story," prosecutors said in the complaint. Mr. Spitler then allegedly provided Mr. Auernheimer with the email address for a member of the board of directors of News Corp., which owns The Wall Street Journal, prosecutors said.

On June 10, Mr. Auernheimer and Mr. Spitler allegedly discussed destroying evidence because they were fearful of the criminal repercussions of their actions, prosecutors said in the complaint.
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"I would like get rid of your (expletive) like are we gonna do anything else with this data?," Mr. Auernheimer allegedly said.

"No should I toss it?," Mr. Spitler allegedly responded.

"I dont think so either might be best to toss," Mr. Auernheimer allegedly said.

Why Facebook may not be a good investment

Source: The Washington Times
Facebook: Not a good investment?
Tuesday, January 18, 2011 - 21st-Century Pacifist by Mario Salazar
MONTGOMERY VILLAGE, Md. — January 15, 2011 — Several days ago there was a report about how Goldman, Sachs had invested $500,000,000 in Facebook and that only investors that had available a couple of million dollars would be eligible to get in on the bonanza. Following the report was the statement that this investment would make Facebook worth about $50,000,000,000 (fifty BILLION dollars).

There is no doubt that the history of Facebook is impressive. Someone with very little or no capital starts with an idea and he becomes a billionaire. One could say that almost anyone with some knowledge of the Internet, relational databases and computer programming (of
which there are very many of us), could have done it, having come up with the right idea.

But is this an idea worth investing in long term, or one that will be gone as soon as the next big idea comes along?

Remember that in the early 1990s during the “dot.com” era, quite a few people became millionaires with single ideas. AOL is the most extreme example. For a while AOL was the bee’s knees. We all read how its membership kept increasing almost geometrically. It had taken advantage of the new technology that was being made available to more people for the first time. AOL even bought Times – Warner, the huge media corporation. Then the dot.com bubble burst, and AOL has has been fighting to stay afloat since then.

I remember the conversation that we had in our car pool on our long commute to downtown DC in the 1990s. Some of us thought there was not a real basis for the high value of the dot.com companies at that time. Our minds were still using the paradigm that there had to be something concrete for things to have value. A service, like AOL and most other dot.com companies, did not have a “real” product as its base. In many cases we were proven correct. The bubble burst and those that didn’t get out in time, or continue to innovate, lost a lot of money.

This tough wake-up call should have told us that while ideas are very important, not having something tangible to show for them is risky. Instead, we continued our service-based economy full throttle. Thus, we let countries like China, India, Japan and Brazil actually make things - without our competition - and be the heirs to the 21st century economic treasure chest.

The first time I was asked to join Facebook I was reluctant. What did this site give me that I already didn’t have?

After I finally joined and gave them my information, I was pleasantly surprised to hear from people I hadn’t heard from for a long time. I even rediscovered extended family living in Ecuador and Venezuela. This was delightful. In addition, it allowed me to fill out my family tree, a hobby that I took up after finding out I was the descendent of a Spanish conquistador (= cut-throat) named Sebastian de Belalcazar.

So what is Facebook, really?

From my perspective, Facebook is a site that gets your information, relates it to information that others have provided, and presents the result back to you. It also allows you to promote yourself (hey look at me, don’t I look great?, don’t I write great?, don’t I have great ideas and support great causes?). So what I see is that Facebook’s main value is the information that they receive from us so that we can show off.

Is being able to possess, manipulate and repackage information that valuable?
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Am I going to call Goldman – Sachs tomorrow and ask to be included in the great opportunity of investing in Facebook?

Would my $2,000,000 (that I don’t have) be reasonably safe?

While I have always considered myself a man of ideas, living through the dot.com bust made me a skeptic when it comes to ideas-only businesses, like Facebook. (Maybe that is why I am not, and will never be, a millionaire.) This skepticism makes it easy for me to envision a future virus that could attack the databases that give Facebook its value. I can also easily imagine the emergence of (currently unknown) information that for some reason would make people unhappy with, or afraid to use, Facebook. Either event could result in millions of members deciding to leave Facebook.

In our not-too-distant past, a corporation would have hard assets to back itself up. Besides its product, which was a tangible object, the company would have real estate and machinery that would support refinancing during hard times.

Does Facebook have those? More importantly, will I ever be a millionaire?

A look at why companies are reluctant to hire

Source: Business Week
Why the Private Sector Still Isn't Hiring
CEOs don't want to increase employment until they know the recovery is real—and it won't be until they hire
By Ian Katz
President Barack Obama's 2011 charm offensive aimed at American business leaders is ready to roll. The President plans to travel outside the Washington cocoon more often to talk up the recovering economy and exhort U.S. companies, now sitting on a pile of cash, to hire and hire some more. After a contentious 2010, Obama is also extending an olive branch to business leaders with White House staff changes, a Feb. 7 address to the U.S. Chamber of Commerce, and talk of reforming corporate taxes—all in hopes of bringing down the unemployment rate.

None of this matters unless chief executive officers such as Cheryl Merchant are convinced the economy is poised to take off. Merchant runs Hope Global, a Cumberland (R.I.) company founded in 1883 as a textile mill that now manufactures niche items like shoestrings for Timberland (TBL) boots, auto parts for Detroit, and weather stripping for home renovators. Situated on the banks of the Blackstone River, closely held Hope Global was slammed by the recession in 2008 and 2009, laying off 25 percent of its 590 employees and shutting operations in Detroit, France, Ireland, and Brazil.

Today, business is rebounding: Revenue in 2010 rose 10 percent, to about $50 million, after falling from about $55 million in 2008. Still, Merchant isn't ready to start hiring again. "I'm not going to bet on the economy," says Merchant, 47, Hope Global's CEO since 1999. "I'm not putting in people believing it's going to happen. It's got to happen first." Meantime, she's "taking care of the people who are here" by restoring a 5 percent pay cut and benefits such as paid holidays.

Merchant's attitude mirrors those of CEOs across the country. They want to make sure the economy is growing robustly before they commit to new hiring. Yet the economy won't achieve liftoff unless consumer demand picks up, and that won't happen until unemployment falls.

Labor Dept. figures released on Jan. 7 underscore the dilemma. The U.S. added 103,000 jobs in December, and the unemployment rate fell to 9.4 percent from 9.8 percent. While that is the lowest unemployment rate since May 2009, the number of new jobs came in well below the 150,000 that economists forecast in a Bloomberg survey, and the rate declined only because a record number of people abandoned the job hunt, government figures show.

Payrolls need to grow at twice December's rate to drive down joblessness and keep pace with new entrants in the workforce. "The economy is adding workers, but there are no reliable signs the pace of hiring is improving," says Julia Coronado, chief economist for North America at BNP Paribas in New York.

That's why small manufacturers and exporters like Hope Global are crucial to Obama's goal of lowering unemployment, in part by doubling U.S. exports over the next five years. Besides concluding a recent trade accord with South Korea, the Administration on Jan. 13 was set to announce that it would increase financing for small business exporters to $9 billion annually by the end of fiscal 2014 from $4.5 billion in 2009, in partnership with HSBC (HBC), Wells Fargo (WFC), Bank of America (BAC), and PNC Bank.

Financing is helpful, but the real issue for Hope Global is a rise in consumer demand for products such as Timberland boots. On a brisk late autumn day, plant manager Joe Silva removes his yellow foam earplugs and shouts over the drone of 800 braiding machines to explain how it makes shoestrings for the Chinese makers of the high-end boots. Silva says the braiders, spinning at 300 revolutions per minute, heat the shoelace tips so they don't fray—as opposed to attaching plastic ends that are less durable. Timberland demands that the strings be sturdy and waterproof. They also must come in hundreds of color combinations. Timberland uses Hope's laces in China and for a factory in the Dominican Republic because "their quality, cost, and delivery meet our standards, and having one trusted source ensures consistency," says Tom Conneen, director of nonleather materials for Stratham (N.H.)-based Timberland.

One ray of hope for Hope Global may be the auto industry. More than two-thirds of its revenue comes from the sale of auto parts such as components for the insides of car seats and the netting for cargo holds of sport-utility vehicles. Auto sales are climbing again but remain well below pre-recession levels.

Merchant draws from years of experience on assembly-line floors at General Motors (GM), Mazda, Ford Motor (F), and parts maker Lear (LEA). A native of Ithaca, Mich., she got a job as a supervisor in the paint shop for the Cadillac Fleetwood Brougham after graduating from Alma College in Alma, Mich. She was often the only woman on her shift. She ran a Ford seat-making plant in Mexico and moved to Lear when the parts manufacturer bought the operation in 1993. After supervising Lear factories in Canada and Eastern Europe, Merchant was recruited by David Casty, Hope's owner. Casty died in 2003, and his son Ronald now leads Hope's board of directors.

Hope's advantage is its ability to shift production to low-cost countries when price is a big issue. It does that now with the SUV cargo nets. Workers at the Rhode Island plant, who earn more than $11 per hour, produce the basic material, then send that to a plant in Leon, Mexico, where workers making about $3 an hour hand-weave the finishing touches. The nets are then sold to auto parts suppliers.
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If Merchant hires this year, it will be largely at Hope Global's plants abroad. She added 20 workers in Mexico in December. If the economy picks up, she hopes to open a plant in Shanghai to make knitted steel that's used to reinforce the rubber seals of car doors and trunks. "People ask me how I maintain an American company," she says. "We're not doing it with a wall around ourselves. We're doing it by being global."

And for now, that means hiring new U.S. workers isn't a sure thing. "We're very solid. The banks love us," Merchant says. "You start adding a bunch of headcount without the sales, and all you're doing is taking from your bottom line."

The bottom line: For the U.S. to reduce unemployment, companies like Hope Global need to be sure the economic recovery is real.

With Bob Willis. Katz is a reporter for Bloomberg News.

Haiti moves toward corruption trial for Duvalier

By JONATHAN M. KATZ, Associated Press  –Tuesday January 18, 2011

PORT-AU-PRINCE, Haiti – A judge will decide whether former Haitian dictator Jean-Claude Duvalier will be tried on charges that include corruption and embezzlement for allegedly pilfering the treasury before his 1986 ouster, a lawyer for the ex-strongman said Tuesday.

A judge questioned the former dictator known as "Baby Doc" in an hourslong, closed-door court session, defense attorney Gervais Charles said. The decision to move toward a trial makes clear that whatever Duvalier's reasons were for returning to Haiti on Sunday, the government is poised to take the opportunity to seek justice for his 15-year regime, widely regarded as brutal and corrupt.

Charles said the case is now in the hands of a judge of instruction who will decide whether there is enough evidence to go to trial, a process that can take up to three months.

Several hundred Duvalier supporters gathered outside the court, burning tires, chanting slogans and calling for the arrest of President Rene Preval, then cheering as Duvalier left the courthouse and headed to his hotel under police escort. Earlier, some supporters had tried to block streets with overturned trash bins and rocks to keep police from taking Duvalier from his hotel to the courthouse.

There are no signs of widespread support for Duvalier, however. Demonstrations on his behalf have been relatively small by Haiti standards. More than half the nation's people are too young to have lived through his government.

Haiti's system allows for pretrial detention, but Duvalier was allowed to remain free, though he cannot leave the country. His longtime companion Veronica Roy had said Monday that Duvalier expected his trip from France, where he has lived in exile, would last three days.

"If he has to leave (the country), he will ask and he will leave," Charles said. "As of now, he doesn't even have a passport."

Duvalier has been accused in the past in Haiti of stealing hundreds of millions of dollars in public money and overseeing the torture and killing of political enemies. He was not in handcuffs as he arrived at the courthouse Tuesday with Roy, nor was he handcuffed when he left.

His arrival Sunday was a surprise for a long-impoverished country, and comes as Haiti struggles to work through a dire political crisis following the problematic Nov. 28 first-round presidential election, as well as a cholera epidemic and a troubled recovery from the devastating earthquake of a year ago.

Amnesty International, Human Rights Watch and others have urged the Haitian government to arrest Duvalier for widespread abuses. Amnesty International issued a statement praising what it called "the arrest" of Duvalier but said it was just a start.

"If true justice is to be done in Haiti, the Haitian authorities need to open a criminal investigation into Duvalier's responsibility for the multitude of human rights abuses that were committed under his rule including torture, arbitrary detentions, rape, enforced disappearances and extrajudicial executions," the group said.

Bobby Duval, a former soccer star who was starved and tortured during the 17 months he was held without charge by Duvalier in the notorious Fort Dimanche, was outraged that Haitian authorities didn't immediately arrest the former dictator. He recalls seeing people beaten, tortured and executed by being clubbed in the back of the neck.

"He is a murderer and a thief," said Duval, who now runs an athletic training school for children. "A country that has no memory will repeat its same mistakes. I thought we were past that but I guess not since he hasn't been arrested yet."

Fifty-six-year-old Chal Christen, waved a flag of Duvalier's political party — one he said he'd had stored away since the one-time "president for life" was deposed in a popular uprising and forced into exile nearly 25 years ago.

"We don't have food, our houses collapsed, our children can't go to school. It's Preval that is the dictator," Christen said. "We want Duvalier for president. Under him we ate well, we were safe."

Fenel Alexi, a 31-year-old mechanic, watched the scene and denounced both Duvalier and Preval, a former anti-Duvalier activist.

"The citizens of this country have endured so much crime," Alexi said. "We haven't had a president who hasn't committed crimes."

Duvalier was removed from the hotel Tuesday after meeting in private with senior Haitian judicial officials inside his hotel room amid calls by human rights groups and others for his arrest.

The country's top prosecutor and a judge were among those who met with the former leader in the high-end hotel where he had been ensconced returning to Haiti.

Dozens of Haitian National Police officers were posted inside and around the hotel, some of them in riot gear or guarding the stairwells. A police vehicle for transporting prisoners was parked in front of the hotel's main door and all non-police traffic was halted at the driveway.

Henry Robert Sterlin, a former ambassador under Duvalier who has said in recent days that he was speaking as a spokesman for the former dictator, told reporters at the scene he was shocked by the developments. "Let's see if they put him in prison," he said.

Duvalier assumed power in 1971 at age 19 following the death of his father, Francois "Papa Doc" Duvalier. The father and son presided over one of the most brutal chapters in Haitian history, a period when a secret police force known as the Tonton Macoute tortured and killed opponents. The private militia of sunglasses-wearing thugs enforced the Duvalier dynasty's absolute power and lived off extortion.

At Fort Dimanche, a fortress prison, Haitians were executed or died of malnutrition during the 1957-1986 Duvalier dictatorships. Ripples of pain and violence stemming from the Duvalier family's dictatorship over 29 years still deeply scar many Haitians, including those who were forced into exile abroad.

Duvalier has also been accused of pilfering millions of dollars from public funds and spiriting them out of the country to Swiss banks, though he denies stealing from Haiti.

The U.N. High Commissioner for Human Rights spokesman Rupert Colville said Tuesday that Duvalier's return increases the chance that he could be charged with atrocities committed during his 15-year rule because it will be easier to bring charges in the country where the crimes occurred.

He cautioned, though, that Haiti's fragile judicial system may be in no position to mount a case.

Duvalier and his family spent years living in luxury on the French Riviera, driving fancy sports cars and staying in exclusive villas. Following financial difficulties, Duvalier moved to the Paris region in 1993. He allegedly lost a large part of his fortune when he was separated from his free-spending wife. The Duvalier clan has waged a long-running battle to retrieve at least $4.6 million frozen in a Swiss bank.

For most of his exile, the ex-despot was quiet. But in September 2007, Duvalier took to Haitian radio from abroad to apologize for "wrongs" committed under his rule and urged supporters to rally around his fringe political party.

A handful of loyalists campaigned to bring Duvalier home from exile, launching a foundation to improve the dictatorship's image and reviving his political party in the hope that he could one day return to power democratically.

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Associated Press writers Jacob Kushner in Port-au-Prince and Frank Jordans in Geneva contributed to this report.