Matthew B. Crawford, 06.17.09, 04:55 PM EDT
The skilled trades--carpenters, electricians, plumbers--can't be outsourced to China, and the work can be deeply satisfying.


When I graduated from college with a degree in physics, I moved to Los Angeles to look for work in the aerospace industry. But I got no response to the many résumés I sent out. My time in college began to seem less like an investment and more like a form of consumption--an expenditure of four years and a fair bit of money with no clear economic rationale (though it certainly had other attractions).

My savings depleted, I found myself going around the parking lot of a home improvement store, putting fliers on the windshields of cars to advertise my services as an electrician: "unlicensed but careful." This was work I had done throughout high school and college. The flayers generated immediate response; there was clearly more demand for my services as an unlicensed electrician than as a credentialed physicist. Further, I always took pleasure in the moment, at the end of a job, when I would flip the switch and see the lights come on.

These days, most people are grateful to have any job. But since the economy is currently getting reshuffled, this is also a good time to reconsider some basic assumptions about what a good job looks like. In the last 30 years, we have learned that manufacturing jobs are insecure in a global economy because anything that can be put on a container ship will be made wherever labor is cheapest.

In the last 10 years, a similar logic has emerged for the products of intellectual labor that can be delivered over a wire, as Princeton economist Alan Blinder has pointed out. Accountants, editors and architects in the U.S. find themselves competing with educated, English-speaking people in other countries. But some services can be performed only on-site. The Indians can't fix our cars--they are in India. Nor can the Chinese build you a new deck.

The work of electricians, plumbers and auto mechanics cannot be outsourced. That is reason enough for a young person to consider going into the trades. But let's take a broader view of the matter and consider also the possibility for real satisfaction, which may or may not be present in the work we do. Human beings seem to be built in such a way that we want to see a direct effect of our actions in the world and feel that these actions are genuinely our own.

Consider the striking fact that when Henry Ford introduced the assembly line in 1913, most workers simply walked out. His biographer, Keith Sward, wrote, "So great was labor's distaste for the new machine system that toward the close of 1913 every time the company wanted to add 100 men to its factory personnel, it was necessary to hire 963."

Obviously, the men who walked out had other options. Early on, the automotive industry had recruited people from carriage shops and bicycle shops--all-around mechanics who took pride in their skill and knowledge. To merely pull the same lever over and over on an assembly line was stultifying, and insulting too. Eventually Ford raised wages enough to keep the line staffed, and people got used to it.

This story has a parallel in our own time. White-collar work too gets routinized and dumbed-down. This fact often gets obscured by the fact that you may need an academic credential to get the job. I went to graduate school in the early 1990s and loved every minute of it. With my new master's degree, I landed a job as an "indexer and abstractor." I was to write brief summaries of articles in scientific and other academic journals.

It sounded really challenging. But my quota, after 11 months on the job, was 28 articles per day. The only way to meet the quota was to stop thinking, and in fact I was given rules for writing these summaries that were based on the supposition that it could be done in a routinized, unthinking way. The job paid $23,000 a year. I never did get used to it.

As far back as 1942, Joseph Schumpeter wrote that the expansion of higher education beyond labor-market demand creates for white collar workers "employment in substandard work or at wages below those of the better-paid manual workers." What's more, "it may create unemployability of a particularly disconcerting type. The man who has gone through college or university easily becomes psychically unemployable in manual occupations without necessarily acquiring employability in, say, professional work."

The current glut of college graduates, many of them with heavy debt loads, may need to overcome this problem of being "psychically" (not physically) unemployable in manual occupations, a disability acquired from sitting in classrooms from age 5 to age 22. I am happy to report that it is possible. After getting a Ph.D. from the University of Chicago, followed by another prestigious-sounding but soul-killing job at a think tank, I opened a motorcycle repair shop.

Motorcycles are made on assembly lines, but the work of fixing them isn't too far removed from what those craftsmen in the bicycle and carriage shops were doing. There's a lot of thinking involved, and it is always my own thinking. In fact, the work of diagnosing mechanical problems is often more intellectually challenging than my think tank job was. "Motorcycle mechanic" is a less prestigious answer to give at a cocktail party when someone asks what I do, but in saying it, I feel more genuine pride.

Entrepreneurship in the trades carries certain hazards. It helps to have a spouse with health insurance and a steady paycheck. All around, it's a mixed bag. But so is the white-collar job market. The most compelling reason to consider the trades is that there is a basic human satisfaction to be had from taking a tool in hand, and seeing a direct effect of your actions in the world.

Matthew B. Crawford is the author of Shop Class as Soulcraft: An Inquiry Into the Value of Work.

A Number of Countries Are Suddenly More Affordable to American Travelers

The latest resident of the recession-era bargain bin: a private island in Fiji. Paul De Domenico, a former food industry executive who'd been asking $35 million for his 800-acre slice of paradise, is lowering his price by nearly 20%.

Krakow Royal Wawel in Poland. Poland is one of more than a dozen countries that are now considerably more affordable to American travelers, according to Forbes magazine.

(Bruno De Hogues/Getty Images)

"The good old days are over," says De Domenico, 74. "I'm at the age now where I'm trying to liquidate some assets."

Fortunately for the rest of us, a trip to Fiji can be had without making such a pricey commitment, thanks to a sagging local currency. Though roundtrip airfare will set you back about $1,600, the greenback gained 40% on the Fiji dollar over the past year--which means that once you get there, everything is on sale at a deep discount.

Fiji is just one of many places that's suddenly more affordable to American travelers.

Top on our list is Hungary, buoyed both by airfares in the $590 range and a currency that the dollar has gained 30% on over the past year. Sweden, our second-ranked country, offers nearly identical currency perks. The dollar has gained a full 50% on Poland's zloty, meaning that $100 can now get you a $150 hotel room in Warsaw.

On top of the dollar's increased value, Americans will find tremendous deals on rooms as hotels around the world try to entice reluctant visitors.

"Middle-range hotels have definitely been lowering rates," says Michelle Finkelstein, vice president of sales at Our Personal Guest, a San Francisco-based travel agency. "A lot of high-end hotels haven't lowered their rates because it's hard to get them back up. So they've been throwing in free nights and other perks."

Behind the Numbers

To figure out which countries are cheapest to visit in this recession, we looked at all the non-North American currencies against which the U.S. dollar has gained 15% or more over the past year. We then ranked these 28 countries by the dollar's value in local currency, and by airfare. We based the latter on prices from Kayak.com for a roundtrip coach flight from a New York-area airport to each country's capital, departing on Friday, June 12 and returning Sunday, June 21. Ties in the overall rankings were broken by lowest airfare.

Last year, Forbes predicted that the dollar, which had been pummeled by steady rate cuts by the Fed, was poised for recovery--and that high-flying foreign currencies were in for a rude awakening. We suggested that countries like Brazil and Poland would see their currencies drop as the dollar recovered. Indeed, the greenback is up 26% on Brazil's real and 50% on Poland's zloty.

And now, instead of paying exorbitant exchange rates abroad, American travelers are reaping the benefits of a strong dollar.

Iceland on Sale

Of all industrialized nations, Iceland has been perhaps the hardest-hit by the global recession. Starting in 2003, Iceland's financial industry metastasized, growing from a few billion dollars in assets to nearly 50 times that amount by 2008.

Unfortunately for Icelanders, that included a plethora of highly leveraged deals made at the top of the market, much of it in foreign real estate. Unlike the U.S., the island nation of 300,000 had no strong federal safety net to save it when everything came crashing down. The country's stock market is off 95% over the past 12 months.

That's bad news for Iceland, but great news for American travelers, whose dollars are worth 60% more in Iceland than they were a year ago.

"The economic collapse has brought hardship on many people," says Urdur Gunnarsdóttir, spokeswoman for Iceland's Ministry for Foreign Affairs. "But it has made life much easier for tourists, that's for sure."

Though peak nonstop fares from New York to Reykjavik exceed $1,000, midweek fares are often available for less than $600. Once in Iceland's capital, a beer in a swanky downtown bar is about $5; a posh hotel room can be had for $80 or so. It's not exactly cheap, but the dollar goes twice as far in Reykjavik as it does in Europe's cosmopolitan capitals like London and Moscow.

Keep taking discount vacations, and you might just be able to save up enough for an extreme vacation in Sierra Leone, which doesn't make our list but will certainly be affordable--though far from luxurious--upon arrival.

"It's a really good buy," says De Domenico of his 800-acre, $35 million island. "People pay that much for a condo in Manhattan."

Evan Hessel, 04.27.09, 12:01 AM EDT
A parade of new automated ad platforms aim to reshape digital media.

Tim Cadogan pities the plight of the digital advertiser.

Big brands would love to advertise on small, niche-focused Web sites--think Mountain Dew on blogs about windsurfing, or Gerber baby food on sites about vegetarian parenting--but don't have the manpower to screen every site for quality content, let alone negotiate thousands of deals with different buyers.

Yet publishers have it even worse, says Cadogan, Yahoo!'s ( YHOO - news - people ) former head of global advertising. Editors who run small Web sites are so consumed producing content that titillates readers that they turn over their ad inventory to one of hundreds of resellers in exchange for pennies per view.

Through his Pasadena, Calif., start-up OpenX, Cadogan is working on an application to alleviate the anxiety of both beleaguered ad buyers and frustrated Web publishers. OpenX recently unveiled Market, an application that allows advertisers to automatically bid on access to narrow niches of readers across an array of small Web sites.

OpenX is one of many outfits seeking to automate the selling of hyper-targeted digital ads on the Web. A slew of firms--ranging from tiny start-ups to Web giants like Google ( GOOG - news - people )--have rolled out applications purporting to analyze online ad opportunities and help publishers and advertisers figure out how to allocate their respective ad inventories and budgets.

Many of these new applications promise to deploy demographic, geographic and personal interest data to identify attractive readers for advertisers wherever they land on the Web. Such micro-targeting may seem like a potential invasion of privacy, but user data analysis is an established practice. Most data collectors skirt privacy complaints by allowing Web users to block their tracking software.

The boom in new advertising optimization tools could reshape the $7.6 billion market for Internet display advertising. Leery of attaching the brand to sketchy Web content, big advertisers have historically preferred to deal with large Web publishers, such as the digital arms of newspapers and consumer magazines.

But ad tech executives and media planners say the new ad sales tools promise a cheap and efficient way for brands to screen and buy ads on smaller Web sites and blogs.

"These systems help advertisers cut through the clutter online, which will clearly help the 'long tail' publishers,'' says Kelly Twohig, a senior vice president at media planning agency Starcom ( SCME.PK - news - people ) in Chicago, whose clients include Allstate ( ALL - news - people ) and Capital One.

The potential for a reallocation of ad budgets from big publishers to smaller rivals comes at a stressful time for media giants. The New York Times Co. ( NYT - news - people ) announced this week that Web ad sales fell 6% and overall ad revenues dropped 28% year-over-year during the first quarter of 2009.

Earlier this month, Gannett ( GCI - news - people ), publisher of 85 daily newspapers including USA Today, reported that quarterly revenue decline 18% compared to last year.

Publishers participate in the OpenX Market by entering their advertising inventory--the spaces on their Web pages where ads can appear--into an online database and set a floor price for each slot. If an advertiser bids above that minimum, their ad appears on the Web site.

Along with buying on specific Web sites, Cadogan says that ad buyers will be able to use third-party data on Web users' personal interest, browsing history and demographics to find desirable segments of readers across all publishers participating in the market. Web sites currently use OpenX's software to deliver an estimated 300 billion impressions each month.

In addition to the challenge of convincing marketers to spend their ad budgets in a drastically different way, outfits like OpenX have to figure out how to emerge as leaders in an already competitive field.

"We've seen half a billion dollars of venture capital poured into building optimization and planning companies,'' says Matthew Hulett, chief executive of ad network and analytics firm Mpire.

This week, Hulett's firm unveiled an application to help advertisers track on which Web sites networks place ads, where on the actual screen the ad appears and if Web surfers pause their cursor over the ad. The tool is intended to help marketers better figure out how much of their ad spending is essentially worthless.

Google and Yahoo! both operate advertising exchanges that allow publishers to analyze how much revenue different ad sales techniques attract and help advertisers secure the best ad placement for the cheapest prices.

Rubicon Project, a two-year-old Los Angeles start-up that processes 40 billion impressions each month, helps Web sites compare ad prices delivered by different third-party ad brokers. This week, the company unveiled OnDemand, a service that lets advertisers automatically buy ads delivered to specific geographic, demographic and personal interest groups across a network of publishers.

PubMatic, a Silicon Valley start-up known in the ad world for publishing market reports on trends in ad prices, offers a similar optimization product aimed at big media companies' digital arms.

It's too early to say whether advertisers embrace the automated ad buying tools en masse. As people spend more of their lives online, marketers are desperate to reach them cheaply and efficiently. But, as Starcom media planner Twohig says, a human salesperson and trusted media product go a long way in attracting ad dollars.

Evan Hessel and Taylor Buley, 04.29.09, 01:00 AM EDT

A start-up says it can figure out what's powerful or pointless. Time for struggling online publishers to worry?

LOS ANGELES -- Advertisers spend nearly $8 billion annually pumping trillions of ads into boxes and banners across all other corners of the Internet.

Who actually looks at all that stuff?

Other ads get better placement, Hulett says, but suffer from such confusing text or dull graphics that readers never so much as pause their cursor on them.

Mpire, Hulett's Seattle start-up, just unveiled a new Web application designed to help marketers cut out such wasteful and pointless ad spending. The service, called AdXpose, allows advertisers to track precisely where on individual Web pages their ads land, how long they are visible and whether readers' cursors linger over any particular ad box.

Jones Soda ( JSDA - news - people ) and Viacom's ( VIA - news - people ) MTV Networks are among the first advertisers to use AdXpose to track their online marketing expenditures.

Mpire's ad analytics are among the latest and most powerful in a growing market for applications tracking how marketing dollars are spent online. Since 2004, the Interactive Advertising Bureau has maintained technical standards mandating how display ads should be tracked online. PricewaterhouseCoopers, Deloitte & Touche and ABC Interactive offer tools for auditing online ad campaigns.

Outfits like Mpire may prompt a reshuffling of online ad dollars at a time when many Web publishers are fighting to stay alive. Microsoft ( MSFT - news - people ) just announced a 16% drop last quarter in online ad revenue, compared to a year ago. At the New York Times Co. ( NYT - news - people ), Web ad sales dipped 6% compared to 2008.

The demand in ad tracking outfits is a direct result of gradual changes in the way ads are bought and sold online. During the early days of the Web, advertisers knew exactly where their ads appeared because they negotiated directly with Web sites' salespeople. Direct sales practices still dominate at big Web publishers, such as the digital arms of newspapers and broadcast television networks, but they are losing market share to third-party ad brokerages.

For legions of small Web publishers, ad sales occur through one of 400 or so networks, which purchase bulk ad space from Web sites and resell it to advertisers. Today, 80% of Web ads are sold through such brokers.

Advertisers often use several different networks to reach their target consumers across countless niche Web sites, blogs and social networks. Keeping track of where every ad lands and who sees it is a seemingly impossible task.

Launched in 2005, Mpire first developed WidgetBucks, an application that helps Web publishers compare cost-per-click prices among advertisers to find the most lucrative ad deals.

Hulett recently offered advertisers in the WidgetBucks program complimentary ad auditing tools. Marketers used the tool so much that he decided to rebrand it as AdXpose and offer it to advertisers unaffiliated with WidgetBucks.

Mpire is far from the only enterprise pitching ad-tracking products. Still, Hulett bets he can win over advertisers with sophisticated analytical technology. AdXpose embeds a Javascript tag into each ad and tracks the Web address of each page where the ad appears, along with the placement on the page.

The tool also measures if the Web users let their cursor wander over the ad. Hulett calls this procedure "heat-mapping," and provides the resulting data to advertisers in real-time.

How will new insight into the precise placement of ads affect the fate of digital media companies?

Hulett says his product is unlikely to suck significant Web revenue out of big publishers like the digital arms of newspapers, magazines and TV networks, as those firms collect the bulk of their revenue from direct sales of premium ads placed at the top of Web pages.

The biggest impact could be on social networks like Facebook and News Corp.'s ( NWS - news - people ) Myspace, as well as blogs, Hulett says. Purveyors of so-called "user-generated content" are among the booming ad network industry's biggest suppliers of inventory. Once advertisers realize how much of their Web budget goes to ads running at the bottom of humdrum personal profiles and blog posts, Hulett predicts brands will find other places to spend their money.

Tara Weiss, 04.15.09, 10:41 AM EDT
It will be jammed with job-seekers--so follow these steps to set yourself apart as someone to hire.


When Monster.com held a career fair in Manhattan in March, 3,700 job-seekers packed the place. A recent job fair held by General Dynamics Information Technology in Fairfax, Va., attracted 1,000. And Targeted Job Fairs, a company that holds fairs across North America, reports that traffic to its events is up by 64% in the first quarter of this year over a year before.

With so many people crowding job fairs, are they even worth attending?

"Absolutely," says Eric Winegardner, vice president of client adoption at Monster.com, which is sponsoring more than 100 job fairs across the country. "It cuts out the Internet way of recruiting and brings people together face to face."
In Pictures: How To Stand Out At A Job Fair

Yes, but you sometimes have to wait in line for an hour just to get in. How promising can that be? Well, consider this: At the General Dynamics fair, about 30 candidates were offered jobs on the spot.

How did those lucky few break through the sea of job-seekers?

"They had the right combination of skills, and they presented themselves well," says Tim Strike, senior manager of recruiting and staffing at General Dynamics. "They fit our opportunities exactly, and they were professional and prepared."

That's the key.

There are several ways you can find out about job fairs in your area. Targeted Job Fairs' Web site, targetedjobfairs.com, lets you search by city or ZIP code, and you can sign up to receive e-mails when something's happening in your area. Monster.com offers a list of upcoming career fairs on its homepage, and nationalcareerfairs.com also allows a search by region or ZIP code. Also check your state's Department of Labor Web site. It too will list upcoming fairs

When possible, pre-register. In so doing, you will learn what companies will be there, which means you can research those companies and get a sense of what jobs they'll be trying to fill.

"If you come to my table and say, 'I read about your company, and I understand you're hiring for customer service positions,' that says you took the time and found out about us," says Gregg Fiorentino, human resources manager at DGA Security Systems, a New York City company that provides security and fire systems for commercial properties. "That makes you stand out for sure."

Once you're in front of a recruiter, you'll have five or 10 minutes to deliver your sales pitch. "Prepare five key talking points about your experience," says Tom Silver, senior vice president and chief marketing officer of Dice Holdings, the parent company of Targeted Job Fairs. Explain what kind of position you're looking for, how your experience fits that job and what you've achieved in past jobs. For example, talk about money you saved a company or initiatives that got clients.

"It's your time to shine, so tell us your success stories," says Fiorentino.

Don't try to be a jack of all trades, Fiorentino says: "So many people came up to our table, and when we asked what kind of opportunity they were interested in, they said, 'What kind of opportunity are you hiring for?' That tells me you don't know what you're looking for."

Recruiters say they're very often surprised by how unprofessional candidates are in their personal presentation. Even if you're looking for a job that doesn't require business attire, a man should wear a suit, and a woman a blouse with either a skirt or slacks. Also, when you meet a recruiter, offer a firm handshake, and always look him or her in the eye.

"That tells me this is a person who is confident and has a personality," says Fiorentino.

While at the job fair, visit as many employers as possible. Start with the ones you're least interested in. That will enable you to practice your pitch, which will boost your confidence for the ones you most want to impress.

After meeting with a recruiter, ask what the next step is and when it will occur. Take their business card, and be sure to follow up with a thank-you e-mail or handwritten letter.

That step is very important, says Tim Strike: "It sets you apart as someone who is confident and serious and eager to become part of a company."

It's a growing field without enough people going into it.

At 51, Ray Pettigrew is the oldest student in his nursing school B.A. program at the University of Kansas. He's also one of only six men in a class of about 130.

That doesn't bother him. Pettigrew is a firefighter who started thinking about nursing school a few years back when he noticed that his body didn't recover after fires as fast as when he started 15 years ago. He'll be eligible to retire and collect a pension in two years, but he doesn't want to rely on that income, especially since his wife's corporate job might disappear like so many others.
"With the economy the way it is, I need to work," he says. He has two children, ages seven and nine. "I need to transition to something where I can work for a long time, and I think my job prospects in nursing are excellent."

He's right. About 30,000 registered nurses need to enter the workforce each year to meet the nation's growing health care needs, according to the Council on Physician and Nurse Supply, an independent group of health care leaders with offices at the University of Pennsylvania.

The need is great because the aging population will require more and more health care, and retiring baby boomers will leave thousands of vacancies in the field over the next 10 years. The shortage is exacerbated by a lack of educators to teach in nursing programs.

The good news for people like Pettigrew, who want to work while attending school, is that there are several ways to get training. Associate programs at community colleges take about two years to complete, and many schools offer a variety of courses online, in the evenings or on weekends.

"Many of our students work 40 or more hours a week while going to school," says Jean M. Wortock, dean of the College of Nursing at St. Petersburg College, near Tampa, Fla.

Another option is an accelerated nursing program, which compresses all the training into about 18 months. Here is a list of accelerated nursing programs.

There are also B.A. programs like the one Pettigrew is in. The advantage of a B.A. is that you can then go on to get an M.A. or even a Ph.D. and become a nurse anesthetist or another kind of nursing specialist, or teach nursing yourself.

All programs require you to complete some number of clinical hours. You typically can do so with eight-week rotations at a hospital or community clinic. At St. Petersburg College, students are required to do more than 600 hours of clinical time. They can complete 25% of it using a human patient simulator. The simulator can do things like suffer a cardiac arrest that requires CPR and the administration of drugs.

Before you begin your formal training, you must complete certain prerequisites. They vary from school to school, but often they include courses in anatomy and physiology, psychology, microbiology, statistics and ethics. For Pettigrew, who had a liberal arts degree, that meant about three and a half years of coursework. He spread it out, taking some online, some in the evenings and some on weekends.

Before landing a job, all beginning registered nurses must pass a universal licensing exam. Once that's completed, there are many paths they can take. "Throughout your life, this career gives you so many options," says Karen L. Miller, dean of the nursing school and senior vice chancellor at the University of Kansas Medical Center. "Not only are there many specialties to get into, but you can have a variety of choices in terms of how much you work, how many hours and where you work."

Many nurses choose to work three 12-hour shifts a week. Some sign up with a traveling nurse agency that sends them to spots all over the world for varying periods. Salary depends on your specialty and where in the country you work. Miller says that in the Midwest, where most of her students work, starting salaries range from $45,000 to $50,000. In California, she adds, a new nurse can make more than $80,000.

There's even more money to be made for nurses who work three days in one hospital and then a day at another facility on the weekend.

It's that flexibility that Pettigrew is looking forward to. "The great thing about nursing is you don't have to be bedside nurse," he says. "I can be a teacher, a nurse practitioner or an administrator. I'll be 52 by the time finish, and I'll be able to work in the field another 10 years and still teach after that."

This is the first installment of a new feature that will look at career choices that provide strong job opportunities across the country right now.
Forbes

Melanie Lindner, 03.24.09, 05:15 PM EDT
Social-lending sites pair willing lenders with cash-strapped borrowers. Here's how.


Credit remains as tight as springtime sinuses. But rather than wait for the Federal Reserve's maneuvers to get things flowing again, antsy borrowers are asking their neighbors for a little help online, thanks to a rash of so-called social- lending Web sites. These operators charge fees to broker and service the loans--about 1% from the lender and 2% to 4% from the borrower--as well as penalties for late payments to cover the costs of chasing deadbeats.

While still tiny, the social-lending business is gaining serious momentum. The dollar amount of outstanding loans jumped 41.7% in 2008 to $102 million, according to Jim Bruene, founder of Seattle-based NetBanker, which tracks the online finance world. Bruene figures that figure could hit $1 billion by 2013.

Credit that growth to locked-up credit markets--and potentially rich returns for lenders. While social-lending outfits like to crow about saving borrowers money, lenders through those sites can command interest rates up to 30%, better than even some of the steepest credit cards.

With reward comes risk, of course: Late payments and defaults on loans facilitated by social lenders have crept up recently due to the economic climate. At Prosper.com, the oldest social-lending site, launched in 2005, nearly 17% of all the loans since inception have been charged off--meaning that Prosper had not received a payment in more than four months and has since written down the value of those loans to zero on its books.

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Social-lending sites come in different flavors. Some, like GreenNote, aimed at the student-loan crowd, connect lenders and borrowers directly. At GreenNote, students roust backers by posting engaging profiles to its site; interested beneficiaries lend a hand by lending $1,000 to $50,000 at a fixed 6.8% interest rate, in line with the federal Stafford loan program. The funds flow straight to the school--not into students' late-night Domino's pizza fund. Students must pay down their debt within six months of leaving school and must pay the aggregate amount within a decade. GreenNote collects 2% of the loan amount off the bat when the deal is struck and also charges 1% of the outstanding loan amount every month as a servicing fee.

Other social lenders run online auctions, a la EBay (nasdaq: EBAY - news - people ). One of these, called Lending Club, matches borrowers and lenders based on loan size, risk tolerance and social familiarity (think co-workers, fellow alumni and hometown residents).

In an auction model, borrowers don't borrow directly from lenders. Instead, they receive loans from a third party--in this case, a bank--with which Lending Club has contracted. Lenders purchase promissory notes, backed by the interest on the loans, from Lending Club. (The site also runs a secondary market online where investors can trade those notes.) As for default rates, 2.4% of borrowers have fallen 31 to 120 days behind in their payments, while 3.6% are more than 120 days behind.
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"The problem with this industry is that the borrowers most desperate for loans who turn to these companies are often the ones who are likely to [default]," says Bruene. "The upside is that it's pretty powerful to be able to go to a Web site and tell your story to thousands of potential lenders rather than a handful of banks. If the industry can properly manage the risk involved, there's a lot of potential for success."

The growth of auction sites--and their potential risks to lenders--has since caught the glare of the U.S. Securities and Exchange Commission. While there's no law against borrowing money from friends, family members or even strangers, the SEC had a bone to pick with lenders generating a return on those security-like notes.

When the agency came after Prosper.com, the largest auction-style player, last year, Chief Executive Chris Larsen pushed back, arguing that given the site's transparency, lenders knew full well the risks they were taking. Still, in November, the SEC served Prosper with a cease and desist order, asserting that it violated the Securities Act of 1933 by selling as much as $174 million in unregistered securities. Days later, a group of 20 states filed a class action lawsuit against Prosper for selling unregistered securities. The company has since paid $1 million to settle that suit and is now in a quiet period while it registers as a broker of securities.

GlobeFunder Ventures is yet another breed of social lender, one that acts as a liaison between borrowers and traditional lenders like banks and hedge funds. Say you want to buy a deep fryer for your restaurant. The equipment retailer plugs your information into GlobeFunder's online system; if your profile matches a willing lender's specs, you get the loan right there on the spot, forgoing a trip to the bank. Each lending institution sets different minimum FICO scores and debt-to-income ratios.

Borrowers pay only the stated interest rate, 7% to 20%, while GlobeFunder takes an undisclosed cut of the sale from the retailer. If Globefunder services the loan, it charges the lender 1% to 2.5% of the loan amount; if the lender services it, Globefunder charges a one-time (again, undisclosed) brokerage fee.

Social lending alone can't thaw out the credit markets, but every little bit helps. "Now, even those with excellent credit are having trouble getting traditional loans," says James Van Dyke, founder of Javelin Strategy & Research, a Pleasanton, Calif.-based financial services consultancy, who has high hopes for social lending. "With new regulatory clarity, we should see a pop soon."

That would be nice.
Forbes

David Serchuk, 03.24.09, 06:00 AM EDT
Not all credit is alike. Investors should think twice about using plastic for discretionary items, but remember that all debts aren't bad debts.

This January saw Americans rekindle, in a small way, their romance with credit. As measured by the Federal Reserve, total consumer credit totaled $2.56 trillion, up 0.8% from December 2008. Prior to that, though, the consumer had been on something of a borrowing diet, as the fourth quarter of 2008 saw consumer credit spending fall 3.2% versus the third quarter. November, in particular, saw a steep 4.2% contraction in consumer credit; not coincidentally, November also saw the markets crash and market volatility skyrocket.

The catalysts for such savings are clear: market volatility and fear. When people are unsure about the future, they run for the banks. As measured by the Bureau of Economic Analysis, Americans' personal savings rates topped 3% in the fourth quarter of 2008, the highest its been since the third quarter of 2001.

Back in the third quarter of 2001, a few factors converged to motivate people to save out of fear. The obvious are the terrorist attacks of Sept. 11, 2001. But what most people might not know is that markets were afraid even before the bombings. On Sept. 10, the CBOE Volatility Index (VIX) was at 31.8, quite high, as anything above 20 is considered excessive volatility. By the time of the next VIX reading, Sept. 17, the index spiked to 41.8, and it topped out at 43.7 on Sept. 20, right around when the market experienced its bottom for the year.


Today we are experiencing similar savings rates, in addition to high levels of market fear. Until Jan. 9, the market bottom for the past five years has been on Nov. 20, 2008, when the VIX hit 80.9. Late 2008 also saw people running to the banks, despite the irony of a bank meltdown being one of the main factors in why people were so afraid of markets to start with.

But the multitrillion-dollar consumer credit market isn't going to truly shrivel soon. Indeed, it seems to move in lockstep with spending, as January saw U.S. consumer spending rise 0.6%, nearly inline with the increase in consumer credit. The consumer may be fearful, and they may even be saving, but the death of borrowing is premature.
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With this in mind, we asked the Forbes.com Investor Team how consumers should best use credit. After all, it can be enormously useful when it comes to financing homes and educations. But you might want to pay for that second flat-screen TV in cash.

Ken Shubin Stein, founder and managing member of Spencer Capital Management, says homeowners they should be prepared to put down 20% deposits; anything less and they shouldn't get a mortgage. He also advises against using credit to get a car. If you can't pay upfront, you should either get a cheaper car or buy it used.

Marc Lowlicht, head of the wealth management division at Further Lane Asset Management, recommends consumers use a credit card for financing purchases, but not as actual credit. He also noted that many of the people now being trapped by bad credit payments failed to plan. They didn't have enough cash and became overextended.

But P. Brett Hammond, chief investment strategist for TIAA-CREF Asset Management, sees things from a slightly different perspective. While it's commonplace to look at consumer credit issues from the demand side, he sees it from the supply side. During most of this decade credit was all too available to nearly everyone, leading to inevitable gorging. It couldn't happen any other way.

This observation lead to the most fruitful part of the discussion, as Shubin Stein, a medical doctor as well as an investor, noted that certain investment products are designed to act as the financial equivalent of high fructose corn syrup; i.e. a product known to create demand instead of sate it. What we ended up with, in a sense, was the monetary version of our national obesity epidemic.

One thing investors should know are the credentials of those pushing the credit. For example, mortgage brokers are pushing a product, not giving financial advice. Investors also need to know how their advisers and financial planners are paid.

Investors also need a good, healthy dose of financial self control, because even if credit is too easy, we allow ourselves to fall prey to it. Lowlicht says that telling investors "no" is often the hardest part of his job. "I think there are too many people in the business who give the client what they want, so they continue to be a client and they're placated," he says. "For the clients who are not going to listen, you are not doing them justice by giving them what they want. Because you're going to harm them more over the long term."

Credit Rules

Forbes: What should be the role of credit for the small fry? Should we borrow money for mortgages? For college? What about for investing? What are sound uses of credit for individual investors?

Marc Lowlicht: I believe that would be a client-specific question, depending on the client's circumstances, and you know, their liquid funds. And what they'd be using their other assets for. And the cost of borrowing for each individual. You know, I mean, obviously college loans, depending on whether they're subsidized or not, are fairly standard.

So, it's going to be across the board. You know, a mortgage is going to depend on your credit rating and the terms of the mortgage. So, I believe that if you're going to look at who should have credit, and who shouldn't, versus what--you really need to consider the client you're dealing with, the age, their income, their cash flow, their credit rating, the cost of credit, vs. other sources, uses, sources of capital. I would say that would be the first step in determining any of that.

Credit cards, I think, should almost never be used for consumer credit. Outside of that, the other forms of credit, I believe you should pay off the balance, obviously, immediately. But consumer credit, I think, to buy a TV on credit is ludicrous. If you can't afford it, wait.

Ken Shubin Stein: My opinion on credit is, if you need to use credit for your home, if you can buy a home and put down 20% and take a 30-year fixed rate mortgage, then that's an appropriate use of credit. I personally think people should try to avoid, unless they have to, buying a home that they can't meet that criteria for. Because if they need more lenient types of mortgages with earlier teaser rates or different structures that allow them to own the home, then they're essentially engaging in types of investing and decision making they may not be aware of, and putting themselves at risk for catastrophic outcomes they may think of as very improbable. But in today's environment, we've certainly learned, everybody's learned that very unlikely but severe outcomes do happen a few times over a lifetime.

So, credit for a home and for college, or other types of education, if necessary, seems perfectly reasonable. And I personally think people should avoid using credit in all other circumstances. I don't think people should finance cars unless they have to. And if you need a car to get to work, and the only way you can do it is to finance it, then you have to. But I would recommend to people that they buy a less expensive or a used car before buying a new car that's financed.
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I also don't think people should ever have credit card debt. You should have credit cards, because you need them for emergencies or for unforeseen circumstances. But I believe that's the purpose of credit in a day to day life. Try to have a great credit rating, try to have credit availability, so you have availability to borrow when you need it. But don't use it unless it's absolutely necessary. And then pay it off and get back to not having it. Because it's really a safety net.

Brett Hammond: Well, I could kick in a different perspective on this. These have been terrific comments from, in essence, a demand side. And they stimulated me to think about the supply side, as well as a macro view. From the supply side, I think that we have to add that in, in the sense that, the decision about credit is certainly up to the individual, you know, with advice. But the supply of credit does create demand. We've seen that happen in the last few years--the explosion of credit availability. And so, in many ways, the decision about credit is in the context of: Is credit tight or easy? And when it's easy, you can't necessarily depend on people to be their own best advisers.

And you can't depend on people to be able to hire somebody or to figure out how to get somebody who's going to tell the kinds of wonderful advice we just heard. So, I think that's sort of one aspect to it. You know, credit gets pushed, it doesn't just get pulled. So, the second thing is the macro question. Which is, that credit is great for the economy when times are good. The economy expands, etc., etc. And now we're seeing the other side of it in the sense that, as credit contracts the whole economy falls apart.

And so, in a macro sense, if everybody were to stop buying cars on credit, as they have, if everybody were to stop taking out credit card debt, which they should, I don't disagree. We have had a huge economic contraction and a bad economic situation for quite some time. And I think we're experiencing that.

So, I guess the summary of what I'm saying is, and I think I pointed out, that there are enormous dilemmas from the point of view of the supply side and from the macro point of view to taking a much more conservative attitude toward credit. Which many individuals should do.

Shubin Stein: Is that a version of sort of the paradox of the thrift concept?

Hammond: Exactly. What we've seen in the last few months is the savings rate skyrocket. I mean, in the American context the skyrocketing is now 3% to 5%. Whereas in the Chinese example, it's a 40% household savings rate. We all think that's great. Oh my gosh, we're actually saving again. Of course, the problem is that means we're not spending. And the consumer has been 70% or more of U.S. gross domestic product growth.

And so, if the consumer is spending less, then we're putting a big hit on our GDP. And that's basically the paradox. Individuals should save. Right now, in order to keep the economy going or to keep it from falling further behind, in a macro sense, we shouldn't be saving.

Shubin Stein: But don't you think, as a follow-on concept, clearly we've had a very abrupt transition. Kind of like, we were driving a car at 100 miles an hour and then we slammed on the brakes. And the car at 100 miles an hour represents people borrowing a lot of money to buy things they couldn't afford, and not saving for inevitable, but unexpected, problems.

For instance, significant health care costs. And unexpected health care costs are one of the big contributors to people going bankrupt in this country. Unexpected job losses combined with health care costs lead to people losing their homes and other sort of very uncomfortable and painful things that are occurring now. But if the car never got to 100 miles an hour, because we didn't finance so much of our consumption with debt instead of saving it, do you think it would've been easier and a better long-term policy in any case?

Lowlicht: I agree with that. I mean, I feel that we had this conversation at a roundtable not long ago. People don't plan. They're reactive more than anything.

So, you change the way you handle it. You know, there are certain figures that are utilized that determine what's an appropriate amount of credit based on your net worth or your income. And they've been standards for years. People treated them almost with disregard when credit got cheaper. If people had planned for this, people wouldn't be suffering as much. The massive unwinding you're seeing is for people who didn't have enough of an emergency cash cushion, overextended themselves and didn't prepare properly.

Shubin Stein: Well, in fairness, those people got bad advice, too. Because people thought mortgage bankers were actually giving them advice, as opposed to selling them a product. And you know, famously, mortgage bankers don't have any duty of care to the consumer, right?

Lowlicht: Yeah, and I'm noticing this in the current environment. In environments like today, even though you're providing advice that's appropriate for the client, you receive a good amount of resistance. Because they feel like it's not working currently. And it isn't. But what tends to happen with a lot of people in the business is--because a lot of people in the business are compensated by commissions rather than fees--there are a lot of people in business who are trying to just hang on for whatever they can to keep the business alive, and instead of doing what's best for the client, they do what the client wants. And that's not always what's best. It's almost like going to your doctor, and your doctor saying, you should do this. And doing the opposite, because you don't want to.

Hammond: I think the medical analogy is really a good one. Because when you were talking, it made me think I completely agree with you. It made me think about obesity in America. You know, most of us are not as fit as we'd like to be. And we all know what we'd like to be. But when we see the availability of things that we shouldn't eat, and the not just the types of things but the amount of things. Some of the theorists have, in the medical field, been talking about how it isn't just willpower. It's the fact that there's so much stuff around, compared to you know, 50 years ago, or compared to other countries. That we gorge ourselves. And we've gorged ourselves on credit because it was so available.

Shubin Stein: We did. And I think a very fair analogy between the medical world and the obesity, specifically the obesity argument and the lending argument, I think are really good analogies. Because our brains are wired to crave certain things, right? So, if there are certain types of chemicals in foods, that will stimulate overeating. We know that. Like, high fructose corn syrup directly stimulates overeating. And similar to your argument about, you know, pushing credit vs. pulling credit; if we offer people lots of credit with terms that are opaque at best, they're going to use as a group, as a population, we will use that credit. And probably unwisely, right?

So, I think one of the most helpful things we can do as a society, because we don't want an Orwellian society where people dictate precisely what we're doing, but I think truth in lending is a really important concept, right? Having people really understand the impact of the difference between an adjustable rate mortgage with the teaser rate, and a reset pause vs. a fixed, certain payment over 30 years.

I think the No. 1 way to judge human behavior is to look at incentives. Where are the incentives in the system? And part of the trouble with finance, part of the problem people are having interacting with the financial system is, incentives are often not clear to people.

We could, as a system, make it much more explicit. Where people know when they're interacting with a mortgage broker, or a real estate agent, or a wealth manager of some type, you know, exactly how do we get paid. And I think if we make it very clear to people exactly how we get paid, they can make better decisions, because they'll at least understand where the incentives lie.

Lowlicht: The hardest part in our business is to consistently continue to provide advice, especially during stressful times. And for the clients who are not going to listen, you are not doing them justice by giving them what they want. Because you're going to harm them more over the long term.

Forbes

Rebecca Ruiz, 03.11.09, 01:00 PM EDT

It seems that the recession has touched every corner of American life. From factory workers to those in finance, Americans have been shaken by a contracting economy that has shed 4.4 million jobs since December 2007.

But a report released this week by Gallup and disease management company Healthways suggests that reality is less grim in certain states. In these places, residents enjoy their jobs, express deep optimism about future prospects and even manage to stay healthy.

Utah earned the highest marks. Here residents reported a high level of satisfaction in several areas, including work environment, emotional health and their local communities. One major factor for Utah's strong performance might be its unemployment rate: When last reported in January, it was 4.6% compared with a national rate of 7.6%.

Hawaii ranked second, followed by Wyoming, Colorado and Minnesota. West Virginia ranked last, and manufacturing-reliant states like Michigan and Ohio also landed in the bottom 10.


The results were based on a year-long, random-dial telephone survey of 355,000 Americans. Though the sample size for each state varied widely--with 37,000 Californians polled vs. 950 North Dakotans--each was controlled to reflect population and demographics.

In addition to state rankings, Gallup and Healthways also measured quality of life in congressional districts. The 14th district, which stretches from south San Francisco to just north of Monterey, Calif., ranked as the most content.

Amy Neftzger, director of surveys and assessment for Healthways (nasdaq: HWAY - news - people ), says the survey is meant to draw attention to quality of life beyond the standard indicators, which have traditionally included statistics like median income, poverty rates and life expectancy.


"When you look at well-being," Neftzger says, "you have to look at [the] whole person and all facets of their life."
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Behind the Numbers
Using that approach, the Gallup-Healthways team came up with six important measures: life satisfaction, work quality, healthy behavior, physical health, emotional health and basic access to necessities like food and shelter.

Participants were asked a range of questions that addressed each area, including if they were satisfied or dissatisfied with their job, if they had health insurance and if they'd laughed or smiled the previous day.

Dr. George Loewenstein, a professor of economics and psychology at Carnegie Mellon University, says the survey's strength is its mix of subjective and objective measures. But he also warned that the grouping all of the indicators into one index might produce misleading results.

Hawaii, for example, scored in the top 10 in every category except for work environment, where it placed last. So while Hawaiians may have an excellent quality of life with respect to physical and emotional health, life satisfaction and basic needs, that's despite poor job prospects. In fact, Hawaii's 6.1% unemployment rate has reached a 10-year high.

A similar lopsided trend appeared in the states at the bottom of the list. Work environment in Ohio and Michigan unsurprisingly ranked 44th and 47th, respectively, but those states received better marks in the basic necessities category, ranking 30th and 23rd.

West Virginia ranked last in life satisfaction, physical health and emotional health, but surprisingly came in 13th for work environment, perhaps due to a 5.3% unemployment rate. Matt Turner, communications director for the governor's office, says the rankings also don't reflect recent progress in areas like declining youth obesity rates and increased spending on infrastructure.

Dr. Betsey Stevenson, an assistant professor of business and public policy at the University of Pennsylvania, says the differences across states could reflect a number of factors, including policy, social services and even the types of people who choose to live there. Social scientists also established long ago that per capita gross domestic product and happiness are linked.

Best Places To Raise A Family

The median incomes in the top and bottom three states reinforce that point: Those at the top range from $50,000 to $62,000 while states at the bottom range from $36,000 to $40,000, which is significantly lower than the national median income of $50,000.

Still, Stevensen warns against relying on that sole indicator. "A lot of things go into happiness," she says, "and it's not all income."

Revising the American Dream
If the Gallup-Healthways survey and other new polls are any indication, Americans are becoming acutely aware of other factors they might have neglected in years past when the economy was much better.

In a MetLife (nyse: MET - news - people ) online survey of 2,200 people released this week, participants expressed changing opinions on what matters most when trying to achieve the American dream. In years past, "financial security trumped family by a long shot," says Beth Hirschhorn, senior vice president and chief marketing officer for MetLife. This year, 44% of respondents reported spending more time with friends and family.

The trend isn't generational either. More than a quarter of Gen-Xers said that marriage was important to achieving the American dream, up from 18% in 2008.

Americans are also changing their attitudes about consuming. Four in 10 respondents expressed buyer's remorse about past purchases and wished they had spent less and saved more. Boomers also reported that the pressure to acquire more possessions was down significantly from last year.

The findings of a Northwestern Mutual survey, also released this week, were similar. Many of the 1,000 Americans polled online reported that spending more time with family and being healthy was more important than "owning the home of your dreams" or "earning a high income."

While the Gallup-Healthways index doesn't plan on tracking answers to these types of questions, it will continue to survey 1,000 Americans each night for 25 years in an effort to better understand how well-being changes over time.

Healthways' Neftzger says that circumstances might seem bleak at the moment, but survey participants have more optimistic thoughts about life five years from now.

"You might think it's terrible now," she says, "but a lot of people are hopeful about the future."

Forbes

Paul Maidment, 06.04.07, 6:00 PM ET

When we first looked at America's best- and worst-paying jobs a year back, we asked the question, "Why do financially pushy parents want their children to marry doctors?" Our answer then: Because, as Willie Sutton said of banks, that is where the money is. Still is.

The medical profession continues to dominate the top end of our list of the 25 best- and worst-paying jobs in America. Anesthesiologists have flipped places with surgeons to take the top spot, but the next eight places are firmly in the healing hands of various sorts of specialist practitioners.

Chief executives, at No. 10, and airline pilots, at No. 14, are the only two non-medical occupations in the top 15. Even lawyers don't make it. They're No. 16.

At the other end of the scale are jobs in restaurants, hotels and leisure businesses. The lowest paid of all? People who cook, prepare and serve in fast-food joints, followed by dishwashers, busboys and the folk who show you to your seat in coffee-shops and the like.

According to government data, the mean annual salary for America's 29,890 anesthesiologists is $184,340; for its 2.5 million fast-food preparers and servers, $15,230. The mean annual pay for all jobs is $39,190. In all, the lowest-paying 25 occupations employ 15.6 million people in America; the best-paying jobs employ 3 million.


Our numbers are drawn from the U.S. government's National, State and Metropolitan Area Occupational Employment and Wage Estimates. The latest ones available use 2006 data and are based on a national survey of employers of every size and in all industry sectors. They examine 800 occupations.

The survey covers full- and part-time workers who are paid a wage or salary. It does not include the self-employed, owners and partners in unincorporated firms, household workers and unpaid family workers.

It asks about basic pay, incentive bonuses and commissions, but not overtime pay or non-wage compensation, such as stock options.

That helps explain why mean annual wages appear lower than one might have expected at the top end and higher at the bottom, where undocumented workers are unlikely to be counted accurately.

Remember, too, that these are mean salaries and that they give no indication of how distant the outliers at either end of the salary scale for any occupation might be. There are plenty of lawyers that earn a lot more than the average $113,660, and surely there are dishwashers who earn a lot less than $16,190.

The total compensation of the best-paid (salary and bonus excluding stock options) chief executive on our most recent CEO Compensation list, Bob R. Simpson of XTO Energy (nyse: XTO - news - people ), was $32.2 million last year, 223 times as much as the average chief executive. And then there was Apple's (nasdaq: AAPL - news - people )Steven P. Jobs, who earned a nominal $1 salary--but, thanks to stock options, earned $646.6 million last year.

Earnings can vary widely for the same job in different industries and in different places. Laundry and dry-cleaning workers employed by the federal government, for example, earn almost two-thirds more than the average for the occupation. Ditto cafeteria servers employed by state governments.

In certain occupations, the discrepancy occurs because they are niche jobs in generally high-paying industries. The handful of souls employed to cook for corporate dining rooms, who make $33,620 on average, earn 50% more than the 647,070 cooks working in full-service restaurants.

Where you live can also have a huge impact on what you make. The states and metropolitan areas in the high-wage Northeast pay top dollar in many occupations, as do employers in similarly pricey Silicon Valley.

Parking lot attendants and fast-food preparers and servers in the San Francisco/San Mateo/Redwood City metropolitan area earned, at $24,620 a year and $21,200 a year respectively, one-third more than the national average. Laundry and dry cleaning workers in Framingham, Mass., did even better relatively, earning, at $28,400, 50% more than the national average.

Remote states, particularly Alaska and Hawaii, also pay well for needed skills. On average, Hawaii pays best for busboys, bartenders and lifeguards; Alaska for short-order cooks, personal and home care aides and parking lot attendants. Oregon pays above average for podiatrists; Maine pays more for dentists.

There was little change in the occupations that make up the 25 best- and worst-paid lists. Astronomers fell off the bottom of the best-paying jobs list, to be replaced by financial managers. Service station attendants replaced some sorts of food preparers on the list of worst-paying jobs.

On average, earnings went up--in the best-paid group by 4.2% and in the worst-paid by 3.2%. Yes, the doctors get richer.

Forbes

Rebecca Ruiz, 03.19.09, 05:00 PM EDT
Until the nation's system is fixed, try these tips to ensure your groceries are protected.

In his weekly radio address on Saturday, President Obama roundly criticized the nation's food safety system, citing a recent outbreak of salmonella as the latest example of why reform is necessary. The outbreak originated in contaminated peanut butter products and has sickened nearly 700 people and killed nine since it began last year.

While experts know how the outbreak began, they aren't much closer to stopping future ones. The Food and Drug Administration, which oversees 80% of the nation's food supply, a $466 billion business, inspects roughly 5% of the nation's 150,000 food processing plants.


The limited oversight has been a problem of expense. Inspecting each of the domestic food companies the FDA regulates would cost $524 million, according to a report issued last year by the Government Accountability Office. By comparison, the agency received $662 million in 2008 to fund all food safety efforts.
In Depth: Eight Food Safety Basics

President Obama has allocated an additional $1 billion to boost such efforts. On Saturday he said the agency's new priorities would include modernizing labs and increasing the number of food inspectors. A newly created Food Safety Working Group will also develop specific recommendations on regulatory issues.

It's a promising start, yet no reassurance for Americans worried about unexpectedly falling ill. But consumers have more power than they might realize, says Shelley Feist, executive director of the nonprofit organization Partnership for Food Safety Education.

Of the estimated 76 million cases of foodborne disease that occur each year, only a small fraction are due to widespread outbreaks. Poor food handling practices are responsible for the majority of cases. The good news is that common errors like cross-contamination and insufficient heat and refrigeration can be remedied easily with consistent habits.

"Consumers see things like the peanut butter outbreak and feel like it's out of their control," says Feist. In reality, your food is often as safe as your preparation practices.
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Food Safety Basics
There are four cardinal principles of food safety: clean, separate, cook and chill. In other words, wash with soap and water anything that comes into contact with food, including hands, utensils and cutting boards.

Then be sure to separate raw meat and seafood from produce and cooked ingredients. Temperature is very important to preparing food safely. Meat, poultry and seafood each have optimal temperatures at which they should be cooked to effectively kill pathogens.

It's also crucial to refrigerate food appropriately. This means defrosting frozen items in a microwave or refrigerator instead of on a countertop since pathogens are more likely to breed at room temperature. Never let food sit out in the open for longer than two hours.
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Those preparing food should be particularly careful when feeding the young and elderly, populations that may have compromised immune systems and are often more susceptible to foodborne pathogens.

Such guidelines seem obvious, but Feist says consumers tend to be erratic in their practices. People also often blame what they ate earlier that day, not realizing that diseases can take several days or weeks to manifest. If lunch or dinner came from the nearest take-out joint, it can be easy to overlook your own poor food handling practices.

The Truth About Outbreaks
Of course, even the best practices may not matter if ingredients are already tainted. And it’s important to remember that the nation's sprawling food system regularly sends one item into thousands of products, meaning that outbreaks aren't limited to a single crop or animal. For example, the improperly roasted peanuts responsible for the latest outbreak were included in peanut butter, paste and meal. These ingredients ended up in everything from cookies to ice cream to candy. By mid-March, nearly 3,500 products had been recalled by the FDA.

Outbreaks are also notoriously difficult to track, says Kirk Smith, supervisor of foodborne diseases at the Minnesota Department of Health. Victims must visit a doctor, who then has to properly diagnose the problem and take a stool sample, which is sent to county or state labs for analysis. If diseases like salmonella or E. coli are confirmed, health officials interview victims, whose memories of their diet at the time are often foggy.

Smith also says that for every case of salmonella that's confirmed, there are 38 more that go unnoticed. And while Minnesota's Department of Health receives about $1 million annually to investigate possible outbreaks, many states work with far less resources.

In sum, it is almost impossible for consumers to know if an outbreak is happening in their community until it is identified by officials, and that often depends on the level of funding programs receive.

There is hope that President Obama's plan will significantly improve food safety. John Sheehan, director of the office of plant and dairy foods at the FDA's Center for Food Safety and Applied Nutrition, says that despite recent setbacks, the agency is working to identify "lessons learned".

"Although the [peanut butter] foodborne illness outbreak underscores the challenges FDA faces," says Sheehan, "the American food supply continues to be among the safest in the world, if not the safest."

Forbes

Maurna Desmond, 03.20.09, 07:50 PM EDT
Claims of fraud in the subprime mortgage market illuminate a murky world.

When Texas billionaire Wilbur Ross sued a Connecticut hedge fund Thursday, he shined a light into one of the murkier regions of the subprime mortgage morass: loan servicing.

Ross' American Home Mortgage Servicing claims Carrington Capital asked it to block the sale of homes to siphon money away from other investors and enrich itself. Irving, Texas-based American Home services some of the loans related to mortgage-backed securities where Carrington is the junior investor. "Carrington resorted to fraud when the subprime market deteriorated," says Brian O'Tero, a lawyer at Hunton & Williams representing American Home. Carrington declined to comment.

The suit, first reported on Housingwire.com, underscores the complicated relationship that exists between servicers and mortgage investors, especially when the one collecting payments also has skin in the game. (See "Tranche Warfare.")

Loan servicers act as middlemen between the borrowers paying the loan and investors who own the mortgages. They are responsible for monitoring delinquencies and managing billions in monthly payments. Though they play a growing--and crucial--role in unwinding the subprime mortgage mess, they have virtually no oversight. American Home mortgage is the largest servicer of subprime and so-called "Alt-A" mortgages. Some of the biggest banks on Wall Street dominate the business. Citigroup (nyse: C - news - people ), Wells Fargo (nyse: WFC - news - people ), JP Morgan Chase (nyse: JPM - news - people ) and Bank of America (nyse: BAC - news - people ) service 55% of outstanding mortgage debt.

The four loan pools identified in the lawsuit were created from the remains of subprime lender New Century, which Carrington bought in 2007. American Home alleges the hedge fund tried to keep getting paid interest on the mortgages it held by insisting the homes be sold at above-market values, stalling the sales. At sale, the proceeds would have gone to investors senior to Carrington. American Home says the hedge fund has also been pulling more loans into its own servicing shop, called Carrington Mortgage, in order to keep its activities under wraps.

It's a twist on what critics complain is a major problem in the industry: Servicers are often investors on the mortgages they manage. "When someone is servicer and junior investor, they have a serious conflict of interest," says Jeff Gundlach chief investment officer of TCW, an L.A.-based money manager. "Their interest is supposed to be to that of the investor, but it can't be."

Delaying foreclosure or masking rising defaults can keep the money flowing to the junior investors. This hurts senior investors, often pension funds and life insurance companies, who paid a premium to buy up "Triple A" bonds which were supposed to be as safe as Treasuries.
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Says Joseph Mason, a professor of finance at Louisiana State University and fellow at Wharton Business School: "Investors are right to be skeptical of the servicing industry's capacity to walk the tightrope of modifying loans in both investors' and borrowers' joint interests."

Concern about servicer integrity is heightened by the key role that the Obama administration is hoping they'll play in the costly unwind of the subprime mortgage mess. The plan is for servicers to modify delinquent loans to more affordable levels, incentivized by taxpayer funds. (See "Loan Modification Plan Gets Sweeter.") Despite that fact that the servicers collect payments, monitor delinquencies and manage billions in cash flow, they have virtually no regulatory oversight. They only report as much detail as they choose to. Industry groups such as the American Securitization Forum have repeatedly called for increased transparency and regulation.

American Home isn't the only one crying manipulation. Carrington filed its own complaint in February against a loan servicer alleging it was selling properties at "fire sale" prices because it was short on cash. The defendant: American Home.

Forbes

Maurna Desmond and Daniel Fisher, 03.17.09, 11:30 AM EDT
Hiding in Obama's foreclosure bill are provisions to protect big investors from bankruptcy cramdowns.

Washington is finally realizing that there are two types of mortgage investors and you usually can't help one without hurting the other.

A last-second addition to the Helping Families Save Their Homes Act of 2009 would make it so that senior mortgage investors--often pension funds, foreign banks and life insurance firms--would fare better with a court-ordered loan modification than a voluntary one involving taxpayer subsidies.


Reducing a loan amount in bankruptcy court is called a "cramdown" and it's popular with spread-the-wealth types who argue home loans are the only ones that can't be adjusted in court. It's also gotten support from Citigroup--after the troubled bank got a bailout from the government--and now from certain investors who were previously terrified at the idea.



The legislative fix was imperative, says Frank Keating, president of the American Council of Life Insurers, in a late February letter to Congress. "Without clarifying language, top-tier mortgage-backed securities could be downgraded significantly, resulting in increased capital requirements for life insurers and a need to raise additional capital in a hostile environment," he wrote. "This issue by itself is of extreme importance to life insurers."

Here's the problem: Most so-called pooling and servicing agreements, or PSAs, currently say all losses in the event of a "cramdown" are shared pari passu, or equally among all investors. Here's how the House fixed it: Representatives voted to invalidate that part of the securities contracts, restoring the "waterfall" structure that insures top-ranked securities are paid in full before lower-level paper gets anything.

The contract language legislators found so offensive was designed to protect all investors against a very rare occurrence, since it was illegal for bankruptcy judges to cram down single-family mortgages, says Adam J. Levitin of the Georgetown University Law Center. As lawmakers were drawing up the anti-foreclosure bill, Levitin says, bankers and other holders of AAA paper realized that clause could bite them hard if millions more homeowners elected to go bankrupt instead of going through foreclosure.

A proponent of bankruptcy cramdowns, Levitin isn't exactly brimming over with sympathy for his beneficiaries, who he says should have predicted what would happen to their gold-plated investments if bankruptcy judges got the power to trim mortgage balances.

"This is a bullet (senior bondholders) have seen coming for over a year," Levitin says. "But the nature of doing bailouts means rewarding some people who shouldn't be rewarded and vice versa."

About $200 billion in mortgage-backed securities could be impacted by court-ordered loan modifications, according to Economy.com's Mark Zandi. If passed, the provision will protect the 401(k)s of countless Americans, but it will inevitably have intended consequences. "It's counter to what some politicians intended ... It will reduce the incentive for Triple-A security owners to go along with loan modifications under President Obama's plan," Zandi says.

At the same time, the bill tries to encourage servicers to keep borrowers out of bankruptcy court by modifying their loans first. (See "Loan Modification Plan Gets Sweeter.") That would benefit holders of riskier securities backed by lower-quality mortgages and second liens. Commercial banks, for example, sold many of the first liens they originated and have kept an estimated $400 billion of second mortgages on their books, equal to their entire capital base.

Jeff Gundlach, chief investment officer of TCW, a Los Angeles-based money manager, says that restoring the waterfall structure in court with juniors taking a hit is only fair. "They signed up for the first-loss risk," he says. "They should get it."

While sweetening cramdowns for senior investors might make the idea easier to sell, it still catches plenty of pushback. The measure would undermine the value of hundreds of billions of dollars in mortgage-backed securities by making it almost impossible for investors to predict what those mortgages will be worth if borrowers elect to file for bankruptcy instead of going through foreclosure.

The Mortgage Bankers Association says passage would tack an additional two percentage points onto borrowing costs for consumers and Barclay's estimates that cramdown legislation would double or triple the number of Chapter 13 bankruptcies filed in the U.S. as borrowers figure they will do better in bankruptcy than foreclosure.

Still, even if the cramdowns are bad for lending and bad for banking, don't expect too much bellyaching from Wall Street--at least not in public. Hedge funds and investment banks that bought up the junior debt are among the nation's most disliked institutions these days and they'd be flayed for grumbling about unfair treatment.

"It's a very interesting fact that we are not hearing complaints about this," says Zandi.


Forbes

Obama ''gets it,'' but Geithner clearly doesn't.

As we try to put the grand lunacy of AIG's grand larceny in some rational perspective, it might help to think of this latest bonus brouhaha as a reverse stress test--of the Obama administration's leadership, the political-financial complex as a whole and, ultimately, our very conceptions of capitalism. Is this really the economy that our leaders promised and the American people paid for? And are the elites who have been running and corrupting this system actually capable of changing it?



So far we are flunking on all counts. And, fitting for this most surreal of situations, this is the blessing in disgust. We now know what "the bottom" looks like. It looks like a company that perpetrated the biggest business loss in the history of the world handing out half a billion dollars in retention bonuses to the unit that almost singlehandedly destabilized the global economy--and a government that could not see this madness for what it was until millions of average Americans who could not tell a derivative from a Derringer called them out on it.

Herein is the silver lining of AIG's (nyse: AIG - news - people ) taxpayer gold digging. This most outrageous ripoff yet, as White House adviser Larry Summers called it, has ripped off the last remnants of the free-market mask on our economy and exposed the full extent of the broad fraud that American capitalism has become. Moreover, it's forcing all of us to confront our own complicity in this con--as well as the limitations of even our best-intentioned leaders to de-rig our degenerated economic system.

In theory, that system, as we have been repeatedly told since the dawn of the Reagan Revolution, is supposed to be guarantor of the American Dream. The free market creates the ultimate level playing field, rewarding initiative instead of privilege. And it offers the ultimate accountability mechanism, allocating capital with ruthless efficiency to the opportunity seizers and profit makers, regardless of their status or connections.

That's the uniquely American bargain most of us have bought into--and which differentiates us from the political economies of most of our developed competitors. We like our basic regulations that disclose information, prevent crime and keep our investments safe. And while we debate it at the margins, we like the modest government safety net we have constructed to protect us in times of trouble. But otherwise, we embrace the tradeoff of democratic capitalism--equal opportunities, not equal outcomes.

The problem for most of us is not with that premise, which we have long accepted as flawed but functional and fair enough in practice. It's that, as we have learned over and over in the last several months, this idealized system is now total fiction, as phony as Bernie Madoff's returns and exponentially more damaging.

There is no meaningful transparency anymore, not when investors are pouring hundreds of billions of dollars into junk loans masquerading as triple AAA CDOs and banks are paying off ostensibly independent rating agencies to pimp their products. Nor is there any meaningful accountability left, not when Lehman Brothers (nyse: LEHMQ - news - people ) is handing out multimillion-dollar bonuses to the executives who drove it out of business and the heads of the Big Three car companies are rewarded for their incompetence with lavish pay and perk packages. All of which was compounded by the lack of transparency and accountability in the bailout deals that the crony capitalists in the Bush administration cut last year before leaving office.
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Today, we are so far from capitalism, in fact, that we have lost even the basic understanding of a contract. It was bad enough that the government-appointed CEO of AIG was foolish enough to believe he was legally obligated to pay a retention bonus to the people who bankrupted the company--i.e., the people who should have been fired once the company posted a $60 billion loss in the last quarter of 2008. But how it is possible that Treasury Secretary Tim Geithner and the rest of the Obama economic team were swayed by this ridiculous argument, when taxpayers own 80% of the company and it was our money paying the bonuses?

With more and more damaging facts like this coming out, some of our political leaders have tried to explain away the fiction of our economy with a fiction of their own. The meltdown of our markets, we are told, was the result of greed and the recklessness it inspired. But the truth is that greed has always existed and driven our markets. What is different now is that the core checks and balances we have long relied on to constrain excessive risk taking and protect the integrity of our markets--which are as essential to capitalism as money--have been systematically dismantled over the last generation.

This is where our complicity comes in. More than just buying houses we could not afford, average Americans bought into a mythology--one that the political-financial complex peddled--that held all regulation equally evil and an impediment to economic growth. This was, of course, a perversion of capitalism, not a promotion of it, led by a coalition of self-interested, rent-seeking businesses and their free market-idolizing enablers in Washington. But we as a people failed to see the difference and were glad to live inside the blinding bubble we helped blow out of proportion.

Now that bubble has burst, we are starting to appreciate just how warped and unbalanced our system has become and the costs of that to us all. Indeed, forget about the AIG bonuses for a moment and consider what happened before it crashed and burned us. How did our government let one insurance company get so big that its collapse would imperil the world financial system? Why was it allowed to sell a financial product--credit default swaps--that some financial analysts concede even they don't understand? And perhaps most important, why was it allowed to assume so much risk without carrying the reserves necessary to cover it?

We are also seeing the political bubble of our expectations for change in Washington burst along with the economic one. Many of us still believe Obama personally "gets it," as he said; but the actions of his administration are draining the country's confidence on a daily basis. Geithner, who was an architect of the stupid deal that the government originally cut with AIG last fall, is clearly to blame here--his hapless handling of the bonus issue proved that he is too much part of the problem, too compromised by the warped thinking of the status quo, to be part of the solution. But this troubling mindset goes much deeper than one cabinet secretary.

That is evident from the White House's new strategy for dealing with the AIG scandal. What they are now doing, trying to get AIG to pay back the taxpayer-funded bonus money with other taxpayer money, is a cheap political solution designed to quell a controversy, not fix the problem. The only real way to remedy the original mistake--allowing the bonuses to go forward in the first place--would be to demand the employees who already got bonuses to return them, sue those who don't comply and block the rest of the bonus money from being released. Then the public might be convinced that the president is prepared to fight for the fundamental values he so eloquently invokes.

At the same time, the response of the Republicans has been every bit as disappointing--and even more disingenuous. The fact that they are continually playing the socialist card in attacking the president is absurd and irresponsible on its face, but it is particularly so coming from the party that paved the way for the destruction and defrauding of American capitalism over the last generation, albeit with some occasional help from the Democrats. In that context, it is hard not to see the Republicans' tough talk on AIG and the other bailouts as a cynical cover for their lack of accounting for their past mistakes--not to mention their lack of ideas for restoring the regulatory equilibrium of our markets.

Suffice it to say, then, that change is not going to happen just because we voted for it. If we want to end capitalism as we know it--that is, the perverted form we are stuck with today--then we as investors, consumers and workers are going to have to demand it. That means more than just complaining about indefensible bonuses--we need to call on both parties to support a smart, tough, 21st century regulatory reform package that will free our markets of fraud and rebuild public confidence in their integrity.

That's arguably the most important lesson to be learned from the disastrous AIG bailout--it's time for a voter bail-in.

Dan Gerstein, a political communications consultant and commentator based in New York, is the founder and president of Gotham Ghostwriters. He formerly served as communications director to Sen. Joe Lieberman, D-Conn., and as a senior adviser on his vice presidential and presidential campaigns. He writes a weekly column for Forbes.

Just been pink-slipped? Here's what to do next.

Job cuts don't seem to be slowing in the U.S. In February, the ranks of unemployed Americans increased by 851,000, bringing the total number of jobless workers to 12.5 million.

Should you find yourself being handed the dreaded pink slip, here are the first steps to take.

Choke back tears, unclench fists, and before you walk out of your boss's office, know where you stand in terms of a severance package. Employers are not required to give you a severance, but if they do, review all the details with your boss or with the human resources manager.


You can negotiate to receive severance money all at once or over a period of time. Which is a better option depends on where you live and what sort of financial padding you have. While unemployment specifics vary state to state, if you'll be getting a check from your employer, you will probably not qualify for unemployment. If you opt to collect a lump sum, some states will even take into account how much you receive and then break that amount down into "paid" weeks. Decide whether you need the cash all at once, and if you'll budget it wisely if you do take a single payout.

Remember, even if you are offered a severance, you don't necessarily have to accept it. If collecting unemployment is going to get you more money, simply refuse the severance.

Typically, if you receive your severance as cash, you will have to pay taxes (yes, you still have to pay taxes!). If you're worried about your year-end tax bill, opt to spread out your payments over time. You could also ask about investing your severance into an annuity or IRA--but remember you'll still have to wait out the weeks until you can collect unemployment.

Also be sure to ask about potential for payment on any accrued vacation, overtime and sick days.

Taken from Forbes.

Spreading a message by word of mouth is all well and good. But how to find that first mouth?


Call it viral, buzz or word-of-mouth advertising: Getting customers to spread the word about a new product through their social or professional networks is a hot strategy in the marketing world. Its proponents insist that the technique--whether online or face to face--is sure to boost a company's return on investment.

But how can companies find the right individuals to deliver the message? Marketers may wonder if they are finding the best "seeding points"--that is, well-connected people at the hub of social networks who will latch on to a product and promote it widely among the people they know.

New research led by Wharton marketing professors Raghuram Iyengar and Christophe Van den Bulte, working with University of Southern California preventive medicine professor Thomas W. Valente, has found that traditional targets may not be as influential as previously thought. The pharmaceutical firm that sponsored the research for their recently published paper, "Opinion Leadership and Social Contagion in New Product Diffusion," had its "a-ha" moment when they found Physician No. 184 on a map.

The map was part of the researchers' presentation that reported the results to the sponsoring firm. Charted on the map was a tangle of points and lines representing physicians practicing in a large city and the connections between them. Researchers had tracked how prescriptions of a new drug spread from one physician to another, depending on who talked to whom and referred patients to whom.

Mapped out on the screen, the story became clear: The medical community was actually divided into two sub-networks split apparently by ethnicity, with one sub-network dominated by physicians with mostly Asian names and the other with mostly European names. Connecting the two, like a spider suspended on a thread between two webs, was the dot for Physician No. 184--a doctor the company's marketing department and salespeople barely knew.

Not only did the study indicate that word-of-mouth had been affecting physicians' prescription behavior--even after controlling for the effect of sales calls (referred to as "detailing visits" in the pharmaceutical industry)--but it also showed that converting the right individual could have a dramatic impact. And for executives in the conference room, it revealed something else: They had been overlooking some of the networks' most important social hubs.

"That was the biggest 'aha!' for the company," said Van den Bulte. Physician 184 "was not the most important in the number of connections he was getting, but he was vitally important in linking the networks."

Published in Forbes.