Q&A: Why Michael Moore Hates Capitalism

By Bill Saporito Saturday, Sep. 26, 2009

Michael Moore, director/writer/producer/star of the documentary Capitalism: A Love Story

Chris Pizzello / AP

Since his debut in 1979's Roger and Me, documentary filmmaker/agitator Michael Moore has aimed his blunderbuss of a lens against large American corporations and the institutions that he believes have flat-out screwed the working class. In his latest film, Capitalism, Moore ridicules the business philosophy that has blown up the economy, resulted in 6 million job losses and required more than a $1 trillion in bailout money to keep the banks afloat — while millions of people have lost their homes to foreclosure. He's a man who has made perpetual outrage an art form in every sense of the word. He had some choice words for TIME's business editor, Bill Saporito.

What brought you back to a film about the economy?
I've been thinking about this for about the entire 20 years I've been making movies. Most of the subject matter all comes back to the simple theme of an economic system that is unfair and unjust, in which a few people with a lot of money are making decisions that cause a lot misery and heartache for millions of people.

So it wasn't a specific incident?
The Republicans and the Right Wing gave permission for all of us to use words we haven't used before: capitalism and socialism. So let's have a discourse. They called Obama a socialist because he told Joe the plumber he wanted to spread the wealth around. Then we had the crash and a month later Bush is talking about the glories of capitalism. I don't' remember in my lifetime where the President starts off a speech says, "And now class, today's topic is capitalism." They started using these words, so now it's on the table. Let's talk about it.

Bank of America wants to give back the TARP money it borrowed. In one very funny sequence in Capitalism, you back up an armored truck to various banks and demand the return of our money. Maybe you were just a tad early?
And the AIG money? I don't think we're going to see any of that. You cannot steal money, and then invest the money and then give it back. You can't, let's say you are the president of the Kiwanis. You can't take the organization's money, go make a profitable investment and then slip it back. It's a felony. It's as if you beat up your spouse and then take your spouse to the hospital and then say: 'How about that: I took her all the way down to the hospital. That's the kind of guy I am.'

You've called the TARP program part of a financial coup d'etat. But if we get our money back, with interest, and the banking system reverts to doing what it should do, haven't the citizens won?
If you give me $700 billion per year, hey I have some good ideas. I can make some money with that, for me and for you. I'm going to have my best quarter if you gave me that money. I wonder how many people in the inner cities would love a little bailout money to get out the hole they are in and have one of their best years ever. This wasn't a gift; it was a theft. They stole the people's money by gambling with it. They took the pension funds of working people and gambled away their money, and went back to the same working people and asked for $700 billion more of their money.

Capitalism documents, very powerfully, sheriffs departments evicting families after their homes have been sold in foreclosure. Clearly, lots of people got put into bad mortgages by sleazeball operators. But didn't ordinary homeowners get greedy too?
That's a completely a diversionary tactic— how greedy can you get that you'd want a roof over you head? The FBI has said that 80% of mortgage fraud has been instituted by banks, not the people, not the home buyer; that's an FBI's statistic. The No. 1 cause of bankruptcies is medical bills. The mass media has done a pretty good job of placing blame on lower income people. For two hours this week I'm going to give the other side and here's the other side: don't blame the victim.

Real wages have not increased in a decade. You would think that labor unions would have been able to take advantage of the situation and recruit more members? Why haven't they?
This is the crux of the problem: because the Republicans and the right wing have been successful in almost eliminating unions, everyone else has suffered as a result. Because unions fought for good pay and benefits, so many other people who weren't union members benefited. By decimating the working class the corporations may have increased profits short term. But what they found is that [by forcing down wages] they couldn't sell their products to their employees three years down the road. The wealthy have never liked to pay for the labor that enriches them. Ever since slavery was eliminated, they have been trying to keep it as close to slavery as they can without violating the slave laws. When you have a United or a Continental pilot having to walk dogs as a side job [to supplement their salaries], you have admitted on the spot that capitalism doesn't work. What will historians and anthropologists call it? They are not going to call us employees or associates. They are going to call us wage slaves.

But aren't you really a model capitalist? You raise money. You hire people. You create a product and sell it to the public, bearing the risk and gaining the rewards that goes along with it.
Capitalism would have never let me be a filmmaker, living in Flint, Michigan with a high school education. I was going to have to make that happen myself. My last movie, I gave it away for free on the Internet: Slacker Uprising. If I were a capitalist I would not give my employees health insurance with no deductible, which I do, including dental, and paid pregnancy leave. That's not called capitalism, that's called being a Christian and someone who believes in democracy, so that everyone should get a fair slice of the pie.

What do you want people to feel when they walk out of the theater?
I want what all filmmakers want: I want people to walk out and say to each other: 'Wow, that was great way to spend two hours. That was exhilarating. I haven't seen anything like that in a while.'

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Thought Bonds Were Safe? Think Again

By Justin Fox Monday, Oct. 05, 2009

Illustration by Harry Campbell for Time

Investors have spent the past year or so relearning an important lesson: stocks are risky. From May of last year to March of this one, stocks in the U.S., as measured by the S&P 500 index, lost more than half their value. Many overseas stock markets did even worse.

After being burned, we humans tend to avoid what singed us and seek something soothing. High-quality bonds — in particular, the "risk free" ones issued by the U.S. government — were the most soothing investments of all during the financial crisis. While stocks were losing more than half their value, 10-year Treasuries returned more than 10% during that May-to-March period. And so — big surprise — investors have poured $240 billion into bond mutual funds so far this year, according to the Investment Company Institute. Stock funds — despite a big rebound in stock prices since March — have taken in less than $15 billion. (See 10 things to buy during the recession.)

Makes sense, right? Stocks, risky. Bonds, safe. Or at least safer. But risk in financial markets has an irritating habit of following investors around. The big rush into bonds — especially high-quality, low-risk bonds such as Treasuries and government-guaranteed mortgage securities — may have created a situation in which most of today's bond investors are bound to lose money. Not 50% losses, as in the stock market, but losses nonetheless. Which for many newcomers to bonds will be a big shock.

"They lost money on their house, they lost money on stocks," says Tom Atteberry, co-manager of the FPA New Income mutual fund. "They put money in bonds because they think it's safe. Then interest rates are going to rise on them, and they're going to lose money on bonds too."

The first time I heard Atteberry say this, I thought my ears needed cleaning. You see, FPA New Income is a bond fund — a very successful one. The mutual-fund raters at Morningstar named Atteberry and his co-manager and boss, Robert Rodriguez, 2008's fixed-income managers of the year. Yet Atteberry sees only trouble ahead. "I've got a bull market in bonds that's unsustainable," he contends. "It might last another six months. It might last another year. Is it going to last another three to five years? I don't think so."

Before we get into the details, it's worth going over the difference between stocks and bonds. When you buy stock, you get part ownership of a company. If it does well, you share in the gains. If it flounders, you lose money. Bonds, on the other hand, represent a promise from a company or government or other borrower to pay you back, with interest. When you buy a bond, you're making a loan. Sometimes bond issuers (a.k.a. borrowers) renege on their promises. The financial crisis originated with a rash of defaults on subprime mortgages that had been packaged into bonds. But the bond risks that vex Atteberry have little to do with that default risk — Uncle Sam will make the payments. The worry is over rising interest rates. (See pictures of retailers which have gone out of business.)

Right now the interest rate on a 10-year Treasury bond is about 3.5%. That could go lower — in fact, it did go lower at the height of the panic last fall, to just above 2%. But the likeliest future path for Treasury yields, Atteberry figures — on the basis of history and the fact that rates have been kept low this year by Federal Reserve purchases, investor demand and other factors — is up. If you own a 10-year Treasury bond yielding 3.5%, interest rates rising to 4% or 5% or higher mean your bond (with its rate stuck at 3.5%) falls in value. That's the logic of bonds: when interest rates rise, bond prices fall. Since 1981, when the 10-year Treasury rate topped 15% amid fears of runaway inflation, the interest-rate trend has been downward, bringing on a long bull market in bonds. One of these days, the trend will shift.

Atteberry is hoping to navigate the minefield ahead by holding only bonds that come due soon, which are less sensitive to changes in interest rates (but also have a lower yield than longer-dated bonds). He may ask FPA New Income's board for permission to increase the fund's limit on foreign bond holdings from its current 10%. And he has positive things to say about the inflation-indexed bonds that Treasury has issued since 1997, although he doesn't think they're a particularly good deal now.

Most bondholders, though, will find it hard to avoid losses. And what will retail investors do once bonds have burned them too? Atteberry thinks many will just put their money in the bank. The trade-off there is a measly return: the highest savings-account rate in the land is currently just 1.83%, according to Bankrate.com and most banks pay far less. Less than inflation. But hey, at least the money's safe.

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Gut worms protect against allergy

Hookworms have infected humans for thousands of years

Parasitic gut worms, such as hookworm, might aid the development of new treatments for asthma and other allergies, a study in Vietnam suggests.

Infection with hookworm and other parasitic worms is endemic in Vietnam, but rates of asthma and other allergies are low.

British and Vietnamese scientists gave local children treatment to clear their body of worms.

They found this led to an increase in dust mite allergy among the children.

The next step is to understand exactly how and when gut parasites programme the human immune system Dr Carsten Flohr University of Nottingham

Thanks to improved hygiene, practices parasitic worms have been mostly eradicated among human populations living in developed countries.

However, experts believe that over millions of years of co-evolution worms have found methods to dampen down host immune responses to prolong their own survival inside humans.

This relationship seems to have become so intertwined that without gut worms or other parasites, our immune system can become unbalanced, which, in turn, could contribute to the development of asthma and other allergies.

The latest study was conducted in a rural area of central Vietnam where two in every three children have hookworm and other gut parasite infections, and where allergies are extremely rare.

More than 1,500 schoolchildren aged six to 17 took part.

Regular tablets

Some of the children were given repeated tablet treatments to clear their body of gut worms.

The treatment did not produce any conclusive effect on rates of asthma or eczema.

However, those children who received the tablets did have a significantly increased risk of developing allergies to the house-dust mite.

Up to 80% of people with asthma also have allergies to house-dust mites and other environmental allergens.

The researchers said this strongly suggests that gut worms have the potential to tone down human immune responses.

Researcher Dr Carsten Flohr, of the University of Nottingham, said: "The next step is to understand exactly how and when gut parasites programme the human immune system in a way that protects against allergies, and for such studies, follow-up from birth will be essential."

The hope is that the work could aid the development of new treatments which work in the same way as gut parasites, by dampening down or rebalancing the immune system so that the body does not respond to allergens and trigger asthma attacks.

Dr Elaine Vickers, Research Relations Manager at the charity Asthma UK, which funded the research, said: "The prospects of further studies in this area are very exciting as we could see groundbreaking treatments for asthma and other allergies developed as a result."

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My own allergies were cured after I went on a trip to the middle east 5 years ago in 2004.

I was on flonase, clairiton, and zyrtec. Breathing wasn't really my issue, as was using my nose. My nose seemed to always be stuffy. I also had a serious allergy to dust. Since then though, after the trip, I haven't been on any of those medications and I'm perfectly fine.

Just goes to show how important germs, parasites, and bacteria are for a healthy immune system.

Twitter confirms major cash boost

There are an estimated 45 million users of Twitter

Social networking website Twitter has confirmed that it has closed a "significant round of funding".

Co-founder Evan Williams said in a blog post that the site had secured money from five investment firms.

However, he did not confirm earlier reports that suggested the firm had managed to secure $100 million (£62m), which would value the firm at $1bn.

The site, which allows users to write and share 140-character messages, has more than 45 million users worldwide.

The site had previously raised $35m in February in a deal that valued the business then at $255m.

"It was important to us that we find investment partners who share our vision for building a company of enduring value," wrote Mr Williams.

"Twitter's journey has just begun."

Industry watchers have pointed out that the firm still has no way of making money.

However, earlier this month the site revised its terms and conditions to allow advertising on its service.

"We leave the door open for advertising. We'd like to keep our options open," wrote co-founder Biz Stone in a blog.

The new funding has come from new investors Insight Venture Partners and T Rowe Price, as well as existing backers Institutional Venture Partners, Spark Capital and Benchmark Capital.

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US welcomes Iran inspection offer

Mrs Clinton is in New York for the annual UN General Assembly

US Secretary of State Hillary Clinton has given a cautious welcome to Iran's announcement that it will open a newly revealed nuclear plant to inspection.

Speaking in New York, Mrs Clinton said it was always welcome when Iran decided to comply with international rules.

The US, France and UK accused Tehran of deception after it admitted to the existence of the facility on Monday.

Iran says the uranium enrichment plant, near the city of Qom, is in line with UN regulations.

It maintains it wants atomic power only for the production of electricity.

But the revelations have raised tension ahead of next Thursday's talks in Geneva between Iran and six global powers negotiating over Tehran's atomic programme.

IRAN'S NUCLEAR SITES Iran insists nuclear facilities are for energy, not military purposes Bushehr: Nuclear power plant Isfahan: Uranium conversion plant Natanz: Uranium enrichment plant, 4,592 working centrifuges, with 3,716 more installed Qom: Second enrichment plant, not yet operational Arak: Heavy water plant Key nuclear sites in detail Q&A: Iran and the nuclear issue Strategy fuels fears

The Western powers are hoping to persuade Iran to freeze its uranium enrichment programme, but are threatening new sanctions if it fails to do so.

Russia has also indicated that it may support new sanctions.

Low-enriched uranium can be used as fuel for power plants while highly enriched uranium can be used to make nuclear bombs.

Earlier Israeli Foreign Minister Avigdor Lieberman said the disclosure proved Iran wanted to equip itself with nuclear weapons" and that Israel wanted to see an "unequivocal" Western response to the development.

Iranian atomic energy chief Ali Akbar Salehi said on Saturday that inspectors from the International Atomic Energy Agency (IAEA) could visit the new site under Non-Proliferation Treaty rules.

'Very hopeful'

Mrs Clinton said after meeting foreign ministers from Gulf countries: "It is always welcome when Iran makes a decision to comply with the international rules and regulations, and particularly with respect to the IAEA.

"We are very hopeful that, in preparing for the meeting on October 1, Iran comes and shares with all of us what they are willing to do and give us a timetable on which they are willing to proceed."

Western powers have been urging Iran to allow access to the site

The secretary of state's remarks came hours after President Barack Obama said he remained open to "serious, meaningful dialogue" with Iran to resolve the issue.

Failure to comply with inspectors could lead to tough international sanctions, he said.

On Friday, President Obama, French President Nicolas Sarkozy and British Prime Minister Gordon Brown demanded that Iran allow UN inspectors into the second site.

Iran's President Mahmoud Ahmadinejad said on Friday that Tehran had conformed to IAEA rules, by informing the agency about the site a year earlier than it needed to.

But BBC world affairs correspondent Paul Reynolds says there is a dispute about the amount of notice that Iran is required to give the IAEA before a new nuclear facility becomes operational.

In 2003, Iran agreed on what is called a Subsidiary Arrangement, under which it is required to tell the IAEA at the preliminary design stage.

Iran later announced that it had repudiated this agreement, but the IAEA says that no unilateral repudiation is allowed.

On Saturday, the chief of staff for Iranian Supreme Leader Ayatollah Ali Khamenei said the second enrichment plant would "become operational soon".

Meanwhile Iranian media reported that the elite Revolutionary Guards would start missile defence exercises on Sunday, in a move which seems guaranteed to increase tensions further.

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Israel ex-PM's graft trial begins

Ehud Olmert resigned as Israeli Prime Minister following corruption allegations

The trial of the former Israeli Prime Minister Ehud Olmert on corruption charges has begun in Jerusalem.

Mr Olmert stands accused of fraud, breach of trust, falsifying corporate records and failing to declare income. He denies the charges.

It all relates to the periods when Mr Olmert was mayor of Jerusalem and a cabinet minister, but before he became the Israeli prime minister in 2006.

As he arrived in court, Mr Olmert insisted he was not guilty.

"I came here as an innocent man and I believe I will leave here as an innocent man," he said.

Mr Olmert said he had been subjected to "an almost inhumane campaign of mudslinging and inquiries" for the past three years.

His lawyers have described the prosecution case as ridiculously weak.

Ehud Olmert was forced to resign last September over allegations that include taking hundreds of thousands of dollars in cash payments from an American businessman, Moshe Talanksy.

It is alleged the funds were used to fund Mr Olmert's election campaign when he was mayor of Jerusalem, but Mr Olmert insists he never took a penny for himself.

EHUD OLMERT'S POLITICAL LIFE 1993: Begins 10-year stint as mayor of Jerusalem 2005: Leaves right-wing Likud party with former Prime Minister Ariel Sharon to form Kadima 2006: Takes over as leader when Ariel Sharon suffers a stroke 2007: Helps re-launch Israeli-Palestinian peace talks after seven-year hiatus 2008: Announces plans to resign March 2009: Replaced as PM by Benjamin Netanyahu Corruption allegations Olmert talks to BBC Profile: Ehud Olmert

The prosecution also alleges that Ehud Olmert defrauded a number of Israeli charities, including Yad Vashem, the Holocaust museum and memorial.

The prosecution will state Mr Olmert charged Israeli charities $92,000 (about £60,000) for business travel which had already been paid for by the government.

The money was allegedly kept in a secret account by the Rishon Tours travel agency and used to pay for the Olmert family's holidays, says the BBC's Paul Wood in Jerusalem.

He scoffed at suggestions he might go to prison.

Some reports estimate that the case may last as long as four years. If found guilty Mr Olmert faces a lengthy prison term.

Ehud Olmert became prime minister in May 2006, after serving a number of months as acting prime minister following the stroke and subsequent coma of then PM, Ariel Sharon.

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Trial HIV vaccine cuts infection

Developing an HIV vaccine has proved difficult

An experimental HIV vaccine has for the first time cut the risk of infection, researchers say.

The vaccine - a combination of two earlier experimental vaccines - was given to 16,000 people in Thailand, in the largest ever such vaccine trial.

Researchers found that it reduced by nearly a third the risk of contracting HIV, the virus that leads to Aids.

It has been hailed as a significant, scientific breakthrough, but a global vaccine is still some way off.

The study was carried out by the US army and the Thai government over seven years on volunteers - all HIV-negative men and women aged between 18 and 30 - in some of Thailand's most badly-affected regions.

The vaccine was a combination of two older vaccines that on their own had not cut infection rates.

Half of the volunteers were given the vaccine, while the other half were given a placebo - and all were given counselling on HIV/Aids prevention.

The results found that the chances of catching HIV were 31.2% less for those who had taken the vaccine.

"This result is tantalisingly encouraging. The numbers are small and the difference may have been due to chance, but this finding is the first positive news in the Aids vaccine field for a decade," said Dr Richard Horton, editor of the Lancet medical journal.

"We should be cautious, but hopeful. The discovery needs urgent replication and investigation."

The findings were hailed by the World Health Organization (WHO) and the Joint United Nations Programme on HIV/Aids (UN/Aids).

They said while the results were "characterised as modestly protective... [they] have instilled new hope in the HIV vaccine research field".

Some 33 million people around the world have HIV.

Research into a vaccine has been made difficult because HIV is very good at hitting the immune system, the BBC's health correspondent, Jane Dreaper, reports.

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Ten Big Companies That Are Veering Toward Bankruptcy

Posted Sep 18, 2009 12:21pm EDT by Vincent Fernando and Joe Weisenthal in Investing, Media, Products and Trends, Recession

Related: AMD, LVS, S, M, GT, MYL, HTZ

From The Business Insider, Sept. 18, 2009:

Despite a few green shoots in the economy and a rocketing stock market, many large companies are still struggling to avoid bankruptcy.

A new report by Audit Integrity identifies some high-profile names "that have the highest probability of declaring bankruptcy among publicly traded firms."

Which companies appear the worst off? We took the list and removed any company with a market cap under $3 billion. We then ranked the remaining names by a simple measure of the market's perceived bankruptcy risk - Market Cap (MC) divided by Enterprise Value (EV). The less MC vs. EV, the less residual shareholders' value (above what debt holders can claim) the market is pricing-in for the company. Thus a lower MC/EV means the market thinks the company is more likely to go bankrupt.

1. Hertz

When you have tons of debt financing your fleet of cars, falling rental demand really hurts.

While the company raised new capital in May for some breathing room, Fitch and Moody’s actually cut their ratings for the company in July.

Ignoring the downgrade, shares kept rallying and are now at over five times the March $2 low. Best of luck.

Market Cap (MC)/Enterprise Value (EV) = 32%

2. Textron

What a tough time to be selling business jets.

Textron wrote down $2.3 billion its backlog this year after it canceled a new jet design, and demand for its other aircraft-related offerings has plummeted.

Shareholders may be heartened by the company’s ability to push back some debt maturities lately, but deteriorating credit quality at the company’s leasing arm makes the outlook uncertain at best.

MC/EV=39%

3. Sprint Nextel

Sprint Nextel is bleeding customers, and could lose as many as 4.4 million net post-paid subscribers this year.

This is a huge problem when you have large amounts of maturing debt over the next few years.

A recent Deutsche Telekom acquisition rumor offered some hope, but that appears to have faded. Facing a difficult road ahead on its own, the company better keep its lawyers on speed-dial.

MC/EV=41%

4. Macy's

Does anyone even shop at department stores anymore?

Same store sales will likely keep falling at Macy’s right through 2009. With $2.4 billion of maturing debt over the next five years, the company is trying to cut costs, and has already reduced its dividend.

Hopefully the US consumer will bounce back soon, and actually want to shop at Macy's.

MC/EV=47%

5. Mylan

In a classic case of management empire building, Mylan overpaid big time when it bought Merck’s generic business back in 2007 and is now stuck with $5 billion of long-term debt as a result.

From 2007 – 2008, the company lost over $1.3 billion very much due to goodwill write-downs.

While the company could earn $300 million this year, they’ll have to earn far more than that in the future to make their debt manageable.

MC/EV=51%

6. Goodyear

Demand for Goodyear tires has sunk, and the company is saddled with massive debt and pension obligations.

It doesn’t help that The United Steelworkers union prevents the company from proper cost control by forcing factories to stay open.

Shareholders have to wonder how much value will be left of the company after bondholders and the union members have their way.

MC/EV=53%

7. CBS

Weak advertising and falling license fees have sent CBS's earnings off a cliff in 2009.

If they remain depressed for too long, the company could have trouble refinancing $3.2 billion of debt coming due over the next five years.

It will really come down to whether or not CBS’s earnings collapse is merely cyclical, or the result of structural trend whereby traditional TV is dying.

As a business blog, we can't help but feel partly guilty here.

MC/EV=55%

8. Advanced Micro Devices

When will AMD actually make money again? The question is becoming more important by the day since it carries over $5 billion in long-term debt.

After losing almost $3 billion from 2007 – 2008, analysts expect the company to lose more money in 2009 and 2010.

While the shares rallied from their February $2 low, they still appear stuck in a long-term down trend from $40 highs way back in 2006.

MC/EV=55%

9. Las Vegas Sands

Las Vegas Sands over-expanded and over-levered in the last few years and now has over $10 billion in debt to deal with.

Despite jumping 13 times from their March low, Las Vegas Sands shares still face an uphill battle.

Conditions in Las Vegas are horrible, Asian expansion isn’t enough, and if this lasts too long then LVS will end up in bankruptcy court looking like it bit off more than it can chew.

MC/EV=60%

10. Interpublic Group

As one of the largest advertising and marketing companies in the world, IPG was slammed by the global recession.

As the company’s CEO said during recent second quarter results, the downturn “is proving steeper and more lasting than expected”.

Revenues have fallen double digits and the company’s exposure to General Motors as its largest client hasn’t helped.

MC/EV=80%

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