Financiers and Sex Trafficking

 THE biggest forum for sex trafficking of under-age girls in the United States appears to be a Web site called Backpage.com.

This emporium for girls and women — some under age or forced into prostitution — is in turn owned by an opaque private company called Village Voice Media. Until now it has been unclear who the ultimate owners are.

That mystery is solved. The owners turn out to include private equity financiers, including Goldman Sachs with a 16 percent stake.

Goldman Sachs was mortified when I began inquiring last week about its stake in America’s leading Web site for prostitution ads. It began working frantically to unload its shares, and on Friday afternoon it called to say that it had just signed an agreement to sell its stake to management.

“We had no influence over operations,” Andrea Raphael, a Goldman Sachs spokeswoman, told me.

Let’s back up for a moment. There’s no doubt that many escort ads on Backpage are placed by consenting adults. But it’s equally clear that Backpage plays a major role in the trafficking of minors or women who are coerced. In one recent case in New York City, prosecutors say that a 15-year-old girl was drugged, tied up, raped and sold to johns through Backpage and other sites.

Backpage has 70 percent of the market for prostitution ads, according to AIM Group, a trade organization.

Village Voice Media makes some effort to screen out ads placed by traffickers and to alert authorities to abuses, but neither law enforcement officials nor antitrafficking organizations are much impressed. As a result, pressure is growing on the company to drop escort ads.

After my last column on this issue, 19 U.S. senators wrote the company, asking it to stop abetting traffickers. On Thursday, antitrafficking campaigners protested outside the Village Voice newspaper (which is owned by Village Voice Media). A petition on Change.org criticizing the company has gathered 220,000 signatures.

In Washington State, the governor signed a bill into law on Thursday that could expose Backpage to criminal sanctions if it advertises under-age girls for sex without verifying their ages. (There’s some uncertainty about the constitutionality of the law.)

Village Voice Media has been able to resist pressure partly because, as a private company, it doesn’t disclose its owners. But I’ve obtained documents that, with some digging, shed light on who’s behind it.

The two biggest owners are Jim Larkin and Michael Lacey, the managers of the company, and they seem to own about half of the shares. The best known of the other owners is Goldman Sachs, which invested in the company in 2000 (before Backpage became a part of Village Voice Media in a 2006 merger).

A Goldman managing director, Scott L. Lebovitz, sat on the Village Voice Media board for many years. Goldman says he stepped down in early 2010.

Let’s be clear: this is a tiny investment by a huge company, and I have no reason to think that Goldman’s top executives knew of its connection to sex trafficking. Goldman prides itself on its work on gender: its 10,000 Women initiative does splendid work supporting women in business around the globe. Full disclosure: Goldman’s foundation was one of about 15 funders of a public television documentary version of a book that my wife and I wrote about the world’s women.

That said, for more than six years Goldman has held a significant stake in a company notorious for ties to sex trafficking, and it sat on the company’s board for four of those years. There’s no indication that Goldman or anyone else ever used its ownership to urge Village Voice Media to drop escort ads or verify ages. Elizabeth L. McDougall, chief counsel for Village Voice Media, told me Friday that she was “unaware of any dissent” from owners.

Several lesser-known financial companies also hold significant stakes in Village Voice Media, and one person close to the company says that there are about a dozen owners in all. One is Trimaran, an investment company in New York. It wouldn’t disclose the size of its stake but told me that it had “no influence whatsoever” on management and is now trying to sell its shares.

Two other companies, Alta Communications and Brynwood Partners, did not respond to my repeated inquiries about ties to Village Voice Media (Brynwood may be an asset manager rather than an owner). One thought: If the minority shareholders, Goldman included, worked together instead of rushing for the exits, they might be able to pressure Village Voice Media to get out of escort ads.

There are no easy solutions to sex trafficking. I think the most important single step is for prosecutors to focus more on pimps and johns. Closing down the leading Web site used by traffickers would complicate their lives, and after so many years of girls being trafficked on this site, it’s time to hold owners accountable.

I invite you to comment on this column on my blog, On the Ground. Please also join me on Facebook and Google+, watch my YouTube videos and follow me on Twitter.

New round of mass layoffs in North America

The US electronics retail chain Best Buy on Thursday announced it would close 50 stores this year and lay off 400 corporate and support workers as part of a plan to cut $800 million in costs and restructure its business. The Minnesota-based firm was one of a series of American and Canadian companies that announced major layoffs this week.
Best Buy announced the downsizing and cost-cutting plan on the same day it reported a $1.7 billion loss for its fourth quarter, which ended March 3. The company, which has 1,450 locations nationwide and 2,900 globally, is seeking to avoid the fate of its former rival Circuit City, which went out of business in 2009, wiping out tens of thousands of jobs.
Best Buy’s announcement follows last month’s announcement by the retail giant Sears Holdings of plans to sell off 1,250 of its Sears and K-Mart stores in a bid to raise $770 million, following a $2.4 billion quarterly loss. Sears did not give an estimate of job losses, but the scale of the downsizing suggests the elimination of between 10,000 and 20,000 positions.
The crisis of these retail giants is indicative of the deepening impact of economic slump and mass unemployment three-and-a half years after the Wall Street crash of September 2008. It underscores the fragile and marginal character of the jobs “recovery” of which President Barack Obama has boasted over the past several months. Obama is seeking to boost his reelection chances by presenting himself as a job creator.
While the official jobless rate has declined from 9.1 percent to 8.3 percent since last September and US payrolls have, according to the Labor Department, netted a total increase of 774,000 jobs over the past three months, there are still 5 million fewer private-sector jobs than at the official start of the recession in December 2007.
Nearly 13 million Americans are without a job, long-term unemployment is at post-World War II highs, and the uptick in employment has been largely based on a nationwide campaign of wage- and benefit-cutting, spearheaded by the administration’s imposition of a 50 percent wage cut on all newly hired General Motors and Chrysler workers.
Recent data shows that real median household income in the US fell 2.3 percent in 2010, and US manufacturing labor costs per unit of output that year were 13 percent lower than a decade earlier. While poverty, hunger and homelessness are rapidly rising, corporate profits are setting new records and the financial elite is monopolizing a bigger share of the national wealth than ever before.
On Friday, another major retailer, Home Depot, said it would lay off 225 workers over the next 18 months at its customer support and distribution center in Baton Rouge, Louisiana. This followed an announcement last October of the layoff of 400 workers at the firm’s Baton Rouge call center.
Also on Friday, ATK Sporting Group, a maker of tactical gear and shooting supplies, said it would scale back operations and lay off 325 employees in Fenton, Missouri. The layoffs are to take effect within the next 60 to 90 days. Earlier in the week the company announced the permanent closure of a manufacturing facility in Onalaska, Wisconsin, eliminating 130 jobs.
Other companies announcing major layoffs this week include:
• Television shopping network QVC, which said it was laying off more than 600 employees at its call center in Chesapeake, Maryland. The first group of targeted workers will be phased out by June.
• American Ordnance, a producer of military explosives, which said it will lay off 500 workers at its arsenal in Milan, Tennessee beginning this month.
• Cincinnati-based Convergys Inc., a large business services firm, said it would close its call center in Baton Rouge, Louisiana and cut 300 jobs.
• The Siltronic Fab 1 silicon wafer plant in Portland, Oregon, which will release 350 workers over a three-month period this summer.
• Aerospace Corp., based in El Segundo, California, which notified 306 people, or 8 percent of its work force, that they will be terminated, effective May 31.
• Lockheed Martin cut 150 jobs at Hampton Roads, Virginia, in response to cuts in US military spending.
• Oxford Mine Company cut 120 jobs at two coal-mines in western Kentucky.
• Rogers, the Toronto-based telecommunications giant, which confirmed that it is laying off 300 workers, about 1 percent of its work force.
The previous week saw an even bigger toll in job cuts. T-Mobile announced it was closing seven call centers around the US, slashing 1,900 jobs. Centers slated to be closed were in Allentown, Pennsylvania; Fort Lauderdale, Florida; Frisco, Texas; Brownsville, Texas; Lenexa, Kansas; Thornton, Colorado; and Redmond, Oregon.
AMR Corp., the parent company of American Airlines, said it was cutting annual spending at its trunk line American Eagle by $75 million and cutting up to 600 jobs. Last autumn, American Airlines filed for bankruptcy in order to rip up existing labor contracts and impose drastic cuts in jobs, pay, conditions and pensions on its 78,000 employees.
In Canada, Aveos Fleet Performance began liquidating its aircraft maintenance business, wiping out the jobs of 2,600 workers across the country. Nova Scotia-based printer Transcontinental said it would eliminate some 500 jobs, closing two of its plants by the end of June.
At the end of February, Procter & Gamble, the largest US consumer products manufacturer, said it was eliminating 5,700 jobs over the next 18 months, on top of a cut of 1,600 jobs announced earlier in the month.
Despite the ongoing assault on jobs, the Obama administration and both parties in Congress have used the supposed recovery in the labor market as justification for slashing jobless benefits for the long-term unemployed. Last month the White House and the Republicans reached an agreement to cut the maximum duration of unemployment benefits from 99 weeks to 73 weeks in the hardest-hit states, and from 93 weeks to 63 weeks in many other states. This cruel measure will drive untold thousands into destitution. It was aimed at paring the federal deficit at the expense of the working class and using the threat of being laid off and reduced to poverty to blackmail workers into accepting even deeper wage and benefit cuts.
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The Obama recovery

The Spanish Riotcam Has Arrived

As Spain faces further austerity measures to fend of a sovereign debt crisis that threatens the same fate as Greece, protests in the street turn violent.

The Spanish Riot Cam Has Arrived

Spain’s honeymoon with its new government is over.
Following months of hope that Spain will somehow tiptoe around the sensitive topic of austerity, despite promises of such and slow leaking of bond yields wider, yesterday the government promised to generate savings of €27 billion of about $36 billion (Spanish GDP is less than one tenth of America’s, so an equivalent US cut would be about $400 billion), as demanded by Europe, but which will leave a harsh aftertaste with the general population. As Reuters notes: “The central government could meet its target but there’s still a risk from the regions and the social security budget,” economist at Madrid-based think tank Funcas Angel Laborda said. “I get the impression the central government has created a budget it can meet but has left everyone else in a rather difficult situation.” Well, technically no. After all what Spain is doing is following the Greek playbook page by page, as expected back in October 2011 – first Spain sabotages its economy, then it demands more money, then it promises austerity, then it never keeps its promises but in the meantime, Germans are on the hook for hundreds of billions in more bailout cash. At the end of the day (for the euro), it will be they who are in the worst position, but since they get to retain their export partners (whose current account deficits the Bundesbank funds), all is well. That is, at least, until this latest unsustainable bubble pops.
Furthermore, as noted yesterday, it will be Spain’s regions that are about to become front and center for the bond vigilantes:

The regional authorities, which account for around half of the total spending budget and were responsible for a large part of the fiscal deviation last year, must slash their own deficits in half this year.
But, with few details on Friday of how the central government cuts will affect the regions – a full breakdown will be published on Tuesday – it is still unclear if Madrid’s austerity comes at the cost of the 17 autonomous communities.
What is clear is the regions, which hold the purse strings of the much treasured state health and education systems, will be forced to make unpopular cuts which could fuel growing public anger like that seen during the general strike on Thursday.
Marches across the country saw violent flashes for the first time since the crisis began last week as frustration erupted at the government’s failure to address the 23-percent unemployment rate which rises to almost 50 percent for under-25s.
…
The economy is expected to shrink by as much as 2.7 percent this year and could find little to spark growth if the government is forced to raise taxes to meet this years 5.3 percent deficit goal and the target of 3 percent in 2013.
Rajoy was wrong to push Brussels for a loosening of the original deficit goal of 4.4 percent of GDP for this year and should have asked instead for a two year extension of 2013 target, an editorial in the left-leaning El Pais wrote.

Recall:

Is Spanish Regional Debt Out Of Control?
Spanish regional debt currently stands at 13% of GDP and has surged from EUR60bn in 2006 to over EUR140bn currently. As Credit Suisse points out, the top four regions account for the majority of GDP, two-thirds of regional debt, and, with the exception of Madrid, substantially missed their deficit targets. What is more worrisome is the heavily front-loaded nature of the maturing debt with substantial refinancing needs in the next 2 years and this regional debt is split between bonds and loans – with many of the latter from Spanish banks – yet another illustration of the interconnected contagion that is building more rapidly. The growing crisis in refinancing (liquidity and costs) for regional debt developed the idea of Ponzibonos ‘Hispabonos’ - debt issued by regions but guaranteed by the central government. The conditionality of these guarantees with regard to deficit targets wil be critical but once they are issued, the risk is that the regions are unable to get their finances under control, the Spanish debtload increases, and there is no longer the flexibility for a regional debt restructuring, should one be necessary.
Spanish regional debt has grown dramatically in recent years…

But the refinancing needs are massively front-loaded (and rely not just on markets but the banks to roll loans also)…

As a reference, front-loaded means the can can not be kicked down the road. It has to be resolved soon.
So as Greece is supposedly fixed, at least until its 3rd bailout, which was hinted at yesterday by the PM, Spain has once again officially joined the fray.
In the meantime, the people are less than delighted with this latest episode of mean reversion, sometimes incorrectly called austerity, as can be seen on the following pictures from last week’s General Strike across Spain, which morphed into a less than general riot. Since more tax hike are imminent, we will very likely soon have to find a local version of the Syntagma square riot cam, preferably one situated in the middle of Plaça Catalunya.













Source: Zero Hedge

China Warns Against Joint Exercises in South China Seas

Photo: Reuters

A general view of the third international workshop on the South China Sea, Hanoi, November 4, 2011.

Chinese officials in Beijing are warning against any joint military patrols or exercises between Vietnam and the Philippines in the disputed South China Sea. 

Vietnam and Philippines military officials have discussed conducting joint exercises in the disputed region in meetings earlier this month. The exercises could include joint patrols of the Spratly Islands, which both countries and China claim as their own.

In Beijing, Foreign Ministry spokesman Hong Lei warned against any exercises in the Spratlys, which China calls Nansha.

China has indisputable sovereignty over the Nansha Islands, he said, and the adjacent waters. Hong also said China is opposed to foreign countries’ violation of China’s sovereign rights and interests.

There have been a series of run-ins involving fishermen, military patrols, and other vessels in the disputed region in recent months, increasing tension over the competing territorial claims. Philippine and Vietnamese officials have discussed establishing a communication hotline for possible disputes, as well as sharing shipbuilding expertise.

A visiting professor at the National University of Singapore, Huang Jing, a China foreign policy analyst, said Beijing is unlikely to back down on its claims to the resource rich waters.

“China is getting stronger and stronger, the so called peaceful rise, and the rise of nationalism in China on the one hand, and also the increasing demand for external resources and the market so all of a sudden the territory dispute in the South China Seas has become a kind of priority in the policy discussion and internal debate,” Huang Jing said.

China, Vietnam, the Philippines, Malaysia, Brunei and Taiwan all claim South China Sea territories. China has claimed the largest portion of territory

The various claims are expected to be on the agenda during Chinese President Hu Jintao’s visit Friday to Cambodia. The country is the head of the 10 member Association of Southeast Asian Nations, and Philippine officials have said they are frustrated by Chinese efforts to block discussion of the South China Seas issue in the organization.

China’s Foreign Ministry spokesperson said the focus of Hu Jintao’s visit will be strengthening China’s ties to Cambodia, where Chinese investment has grown rapidly in recent years.

China hopes through this visit China-Cambodia friendly relations and cooperation will be promoted, practical cooperation will be deepened and people to people exchanges will be enhanced, said Hong. He added that Beijing hopes for greater coordination in international and regional affairs.
China says its territorial claims in the South China Sea stem from 2,000 years of history when the Spratly Islands were an important part of China. Vietnam says China did not lay claim to this territory until the 1940s. 

The contested waters are rich in oil and natural gas reserves and serve as one of the busiest shipping lanes in Asia.

Massive $17 Trillion Hole Found In Obamacare

Two years ago, when introducing then promptly enacting Obamacare, the president stated that healthcare law reform would not cost a penny over $1 trillion ($900 billion to be precise), and that it would not add ‘one dime’ to the debt. It appears that this estimate may have been slightly optimistic… by a factor of 1700%. Because coincident with the recent Supreme Court debacle, in which a constitutional law president may be about to find that his magnum opus law is, in fact, unconstitutional, someone actually read the whole thing cover to cover, instead of merely relying on the CBO’s, pardon Morgan Stanley and Goldman Sachs’, funding estimates. That someone is Republican Jeff Sessions who after actually running the numbers has uncovered that the true long-term funding gap is a mind-boggling $17 trillion, just a tad more than the original sub $1 trillion forecast. This latest revelation means that total underfunded US welfare liabilities: Medicare, Medicaid and social security now amount to $99 trillion! Add to this total US debt which in 2 months will be $16 trillion, and one can see why Japan, which is about to breach 1 quadrillion in total debt (yen, but who's counting), may want to start looking in the rearview mirror for up and comer competitors. And while Obama may have been taking creative license with a number that is greater than total US GDP, he was most certainly correct when saying that Obamacare would not add a penny to US debt. Because the second the US government comes to market to fund a true total debt/GDP ratio of 750%, it is game over, and the Fed will have its hands full selling Treasury puts every waking nanosecond to have any time left for the daily 3pm stock market ramp.
What is it that brought about this discovery of some inverse cash under the rug? The Daily Caller explains.

The hidden shortfall between new spending and new taxes was revealed just after Supreme Court justices grilled the law’s supporters about its compliance with the Constitution’s limits on government activity. If the court doesn’t strike down the law, it will force taxpayers find another $17 trillion to pay for the increased spending.

The $17 trillion in extra promises was revealed by an analysis of the law’s long-term requirements. The additional obligations, when combined with existing Medicare and Medicaid funding shortfalls, leaves taxpayers on the hook for an extra $82 trillion in health care obligations over the next 75 years.

Regular readers are well aware that when it comes to US insolvency, the underfunded American welfare state, whose obligations now amount to $100 trillion!, is the primary cause of this country's ultimate downfall. This latest revelation only makes it that much more certain, and likely, faster.

Currently, the Social Security system is $7 trillion in debt over the next 75 years, according to the Government Accountability Office.

Also, Medicare will eat up $38 trillion in future taxes, and Medicaid will consume another $2o trillion of the taxpayer’s wealth, according to estimates prepared by the actuarial office at the Centers for Medicare and Medicaid Services.

The short-term cost of the Obamacare law is $2.6 trillion, almost triple the $900 billion cost promised by Obama and his Democratic allies, said Sessions.

The extra $17 trillion gap was discovered by applying standard federal estimates and models to the law’s spending obligations, Sessions said.

For example, Session’s examination of the health care law’s “premium support” program shows a funding gap $12 billion wider that predicted.

The same review also showed the law added another $5 trillion in unfunded obligations for the Medicaid program.

Of course, that this "discovery" happened two years after the law was originally proposed and enacted merely once again confirms that other banana republics have nothing on the US, and that America continues to live in a state of sheer chaos when it comes to understanding that every use of funds must ultimately have a source as well.
Jeff Sessions' full presentation.
As a reminder this is what One trillion looks like.

Watch This Video  http://www.zerohedge.com/news/massive-17-trillion-hole-found-obamacare
...Now multiply by 17.

Point Break: 'Spain last nail in Euro-coffin'