8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 1/76

BizConDDI 2008 SS

 Fadi

Index

Contents

Index ................................................................................................................................................1

BIZ CON 1NC ................................................................................................................................4

BIZ CON 1NC ................................................................................................................................5

Bizcon Uniqueness .........................................................................................................................6

Bizcon Uniqueness .........................................................................................................................7

Bizcon Uniqueness .........................................................................................................................8

Bizcon Uniqueness .........................................................................................................................9

Investor Con Stable ......................................................................................................................10

Investor Con High ........................................................................................................................11

Investor Con High- Mortgage Lenders ......................................................................................12

Investor Con Stable ......................................................................................................................13

Invester Con Brink ......................................................................................................................14

Consumer Confidence Stable ......................................................................................................15

Link- RPS .....................................................................................................................................16

....................................................................................................................................................... 17

Link- Regulations .........................................................................................................................17

Link – Regulations .......................................................................................................................18

Link – Regulations .......................................................................................................................19

Link – Regulations .......................................................................................................................20

Link – Regulations .......................................................................................................................21

Link – Regulations .......................................................................................................................22

Links- Mandates ..........................................................................................................................23

Links- Emission Reductions ........................................................................................................24

Link- Emissions Reductions ........................................................................................................25

Link- Emissions Reduction .........................................................................................................26

Links- Regulations Cause Blackouts ..........................................................................................27

Link – Kills Investment ...............................................................................................................28

1

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 2/76

BizConDDI 2008 SS

 Fadi

Link- Kills Investment .................................................................................................................29

Link - Litigation ...........................................................................................................................30

Link - Litigation ...........................................................................................................................31Link - Litigation ...........................................................................................................................32

Link- Permits ................................................................................................................................33

Links: Cap and Trade ..................................................................................................................34

Links: Cap and Trade ..................................................................................................................35

Regulations Kill FDI ....................................................................................................................36

AT: Election Kills Bizcon .............................................................................................................37

Bizcon Spillover- Domestic ..........................................................................................................38

Bizcon Spillover- Domestic ..........................................................................................................39

Consumer Confidence Spillover- Domestic ...............................................................................40

Biz Con s/o - Tech .........................................................................................................................41

Biz Con Spillover – Domestic ......................................................................................................42

Biz Con Spillover - Global ...........................................................................................................43

AT: Regulations Help Businesses ................................................................................................44

Flight Bad – Econ/Environment .................................................................................................45

AT: No Flight ................................................................................................................................46

Consumer Con Key to Econ ........................................................................................................47

Biz Con Key to Growth ...............................................................................................................48

Investment Key to Econ ...............................................................................................................49

Investment Key to Econ ...............................................................................................................50

Foreign Investment Internal Link ..............................................................................................51

Foreign Investment Internal Link ..............................................................................................53

AT: RegulationsCompetitiveness ............................................................................................54

Bizcon key to Econ .......................................................................................................................55

Indo-Pak war ................................................................................................................................57

2AC Biz Con Frontline ................................................................................................................58

2AC Biz Con Frontline ................................................................................................................59

Small business confidence low ....................................................................................................60

Election Kills Bizcon ....................................................................................................................61

2

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 3/76

BizConDDI 2008 SS

 Fadi

BIZ CON CYCLICAL ................................................................................................................62

Bizcon declining - flooding ..........................................................................................................63

Biz Con Low .................................................................................................................................64Biz Con Low .................................................................................................................................65

Consumer Confidence Down ......................................................................................................66

Investor Confidence Low ............................................................................................................67

Consumer Con Low .....................................................................................................................68

Consumer Con Low .....................................................................................................................70

Consumer Con Low .....................................................................................................................71

Aff – No Effect on Investment .....................................................................................................72

Regulations Increase FDI ............................................................................................................73

Aff – T/ Increases Productivity ...................................................................................................74

Energy prices -> inflation ............................................................................................................75

Impact Defense .............................................................................................................................76

3

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 4/76

BizConDDI 2008 SS

 Fadi

BIZ CON 1NC

A. Investor confidence is on the brink – rescue of financialinstitutions shored up confidence, but any erosion cascades globally

WSJ (Wall Street Journal), 7-15-08, “The Multifront War Over Investor Confidence”,

http://online.wsj.com/article/SB121610307854153963.html?mod=googlenews_wsjThat seemed to help, at least temporarily, since investors yesterday bought $3 billion in short-term debt in a Freddieauction that drew more bids than usual and thus allowed the company to offer lower yields and keep down its borrowing costs, as The Wall Street Journal notes. This confidence stems from the powerful promise TreasurySecretary Henry Paulson essentially made to back Fannie and Freddie on Sunday, however much he expressed a preference for keeping their shareholder-owned structures. As BusinessWeek's Michael Mandel argues, the twoseem to be "on the inevitable road to being bailed out, nationalized, and shrunk," since the placement of "the fullfaith and credit of the U.S. government behind two private financial companies" can't be undone. Still, if Mr.Paulson's weekend moves helped shore up short-term confidence in Fannie and Freddie's ability to keep pumpingmoney into the housing market, they didn't solve long-term worries about their capitalization, the Journal says. Therescue of Fannie and Freddie came "after Wall Street executives and foreign central bankers told Washington thatany further erosion of confidence could have a cascading effect around the world," officials tell the New York Times. And yet, the start-and-stop market cascades tied to the mortgage crisis that began early last year were at itagain today. Yesterday's fall in U.S. banking stocks today is translating into hefty losses in Shanghai, Singapore,Hong Kong and Japan, and in London, Frankfurt and Paris, too. The dollar reached a new low against the euro,which was buying more than $1.60, and U.S. stock futures are down ahead of the market open in New York.

B. Government regulation causes investors to wait to invest –uncertain about the future of the laws and the company

Alain Verbeke, Director of MBA Studies - Solvay Business School, University of Brussels, 4 Dec 1998.[“Corporate strategies and environmental regulations: an organizing framework,” Strategic Management Journal,Volume 19 Issue 4, Pages 363 – 375]

In our view, many firms at present fear a quadrant 1 scenario. They do not invest in developing green capabilities because of the high uncertainty regarding leveraging effects associated with these investments. In many cases it is,for example, unclear ( a ) how government regulation, both in terms of command and control regulations andmarket-based instruments will evolve over time, ( b ) to what extent the impact of ‘green consumerism’ willincrease in terms of affecting purchasing decisions of buyers, ( c ) what the industry standards and benchmarks will be in the area of environmental protection. This is consist- ent with Jaffe’s analysis, which demonstrated the benefit of waiting to make irreversible invest- ments in clean technologies until better technol- ogies becomeavailable ( Jaffe et al, 1995 ).

4

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 5/76

BizConDDI 2008 SS

 Fadi

BIZ CON 1NC

C. Lack of business confidence destroys the economy

John Braithwaite, Australian Research Council Federation fellow, 2004, The Annals of The American Academy of Political

and Social Science, March, “Emancipation and Hope,” LexisThe challenge of designing institutions that simultaneously engender emanci- pation and hope is addressed within theassumption of economic institutions that are fundamentally capitalist. This contemporary global context gives more force to thehope nexus because we know capitalism thrives on hope. When business confidence collapses, capitalist economies head for recession. This dependence on hope is of quite general import; business leaders must have hope for the future before they will build new factories; consumers need confidence before they will buy what the factories make; investors need confidence beforethey will buy shares in the company that builds the factory; bankers need confidence to lend money to build the factory;scientists need confidence to innovate with new technologies in the hope that a capitalist will come along and market their invention. Keynes’s ([1936]1981) General Theory of Employment, Interest and Money lamented the theoretical neglect of “animal spirits” of hope (“spontaneous optimism rather than . . . mathematical expectation” (p. 161) in the discipline of economics, a neglect that continues to this day (see also Barbalet 1993).

D. Economic stagnation leads to nuclear war

 Walter Russel Mead, fellow, Council on Foreign Relations, 1992, NEW PERSPECTIVES

But what if it can’t? What if the global economy stagnates—or even shrink In that case, we will face a new period of internationalconflict: South against North, rich against poor. Russia, China, India—these countries with their billions of people and their nuclear weapons will pose a much greater danger to world order than Germany and Japan did in the ‘30s.

5

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 6/76

BizConDDI 2008 SS

 Fadi

Bizcon Uniqueness

US business confidence is expected to increase continually over the next fiveyears

GBCI (Global Business Confidence Index) ; ’06; http://globalbusiness.info/newsrelease.php

One of the key findings of the survey is that American respondents are more confident in today’s market (37.7%) than their non-American

counterparts (28%). More respondents from non-U.S. companies (33.9%) said their confidence was lowest during the past five years compared to their Americancounterparts (25.5%). Stephen Coelen, managing director of the World Institute for Strategic Economic Research (WISER), developed the algorithm used to create theindex. “We formulated the survey questions in order to measure both current levels of confidence and changes in confidence over time,” he said. “The result is a newand unique perspective on global business confidence as it relates to key economic factors.” The Index is published by ThinkGlobal Inc. in partnership with WISER,

The Center for International Business Education Research (CIBER) at the University of Connecticut and Commercial News USA. “The Global BusinessConfidence Index survey is designed to measure the business “confidence” of U.S. exporters as well as importers of products and

services from the United States,” said Gregory Sandler, president of ThinkGlobal Inc., publisher of the index. “The survey data will be updated quarterly, andthe results will allow us to gauge global business perceptions about the current condition of the world economy, as well as historical trends and anticipated changes.”

According to the Index, the overall confidence in the world economy increased by 35 points during the past two years, and is projectedto continue increasing before leveling off in 2009. More than one-third of survey respondents (34.5%) said their confidence in world marketsis higher today than it has been during the past five years, and 43.6% said their confidence in the market was lowest three to five yearsago. Both U.S. and non-U.S. respondents ranked the U.S. exchange rate as the most significant factor affecting confidence. In addition to measuring levels of 

confidence, The Global Business Confidence Index also measures key factors that affect changes in confidence over time and identified variations in perceptions between U.S. and non-U.S. respondents. “Knowing what influences confidence is not the same as knowing what factors make the level of confidence grow or shrink,”said Coelen. “We analyzed what factors influenced the increase or decrease in confidence to see the relative importance of various potential influences. While the

exchange rate is an important factor in the level of confidence, it does not appear to be an important factor in determining the movement of the Index. ” Overall, theIndex shows that U.S. business confidence in the global economy increased more rapidly than non-U.S. confidence during the pastfive years. Conversely, non-U.S. confidence is projected to increase more rapidly during the next five years.

Business confidence has increased 14% despite concerns of a slowing

economy; small investors realize we’re on the brink 

Metrics.com; ’07; http://www.metrics2.com/blog/2007/01/10/global_business_confidence_up_for_2007_india_tops.html

Medium to large privately held businesses around the world are considerably more optimistic about the prospects for their economies in

2007 - with an optimism/pessimism balance percentage of +45%, up from +39% last year, according to International Business Report (IBR) from Grant Thornton

International published today. EU business optimism overtook US for first time in the survey's five year history, with the EU balance at +46%, compared to a US balance of +14%. The global average was +45%. India remained at the top of the optimism/pessimism league table as it strengthened to an record +97% up from

+93% in 2006, as the Asian business owners continue to be the most confident in the world. India, the Philippines, Mainland China and Singapore take the top 4 positions in the survey for 2007. Other Highlights: Japan's figures reflect a steady economic recovery over the past five years from an optimism/pessimism balance of -71% in 2003 to just -5% in 2007. Overall, the International Business Report shows businesses in 29 out of 32 countries are optimistic about their economy's

 performance in 2007 with 24 being more optimistic than last year. Turkey has shown a massive drop in optimism in the past year from +58% to 0%, probably reflecting

frustrations it has faced in its negotiations to join the EU. Expectation for Business Growth in 2007: The  positive outlook for the global economy is also reflected in business owner attitudes towards expected growth in turnover for their businesses in 2007, with a balance of +69%. India leads

the way in expectations of growth in turnover with a balance of +90%, followed by Mainland China at 85%. The EU at +57% falls behind the US at +77%. "Thefindings from the International Business Report show a rebalancing of the global economy with increasing optimism in Europe and amore pessimistic outlook from US business owners. However, their level of confidence cannot match the emerging economies, especially India and

Mainland China," said Alex MacBeath, Director of privately held business services for Grant Thornton International. *The confidence figure is the percentage balanceof the respondents who are optimistic less those who are pessimistic. The highest possible figure countries are able to record is +100% and the lowest is -100%.

6

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 7/76

BizConDDI 2008 SS

 Fadi

Bizcon Uniqueness

Increasing employment expectations have buoyed small business productiondecreases resulting in a short term Bizcon increase with doubts as soon asemployment flattens out

Business Network; ’07; http://findarticles.com/p/articles/mi_m0EIN/is_2007_Sept_24/ai_n20512988

The overall prospects for revenue increases for the next 12 months also contributed to the lower SBCI with 53% of the participantsacknowledging they believe their sales will grow, a decrease of the 58% who said the same the previous quarter. Business in the South and West showed

the greatest concern. One improvement in the nationwide study is in hiring where 39% of the participants said they expect employment toincrease during the next 12 months. This 2% increase from the summer 2007 poll was mostly supported by businesses in the westernstates where 45% believe they will add to their staff levels (up from 29%) and in the Midwestern states where 38% will boostemployment (up from 36%). "When looking at small business confidence from the start of 2007 and into the third quarter, two of the three most important indicators

are flat or down," said Gregg M. Steinberg, President of IPA, based in Buffalo Grove, Il. IPA is the largest privately-held provider of management consulting services to

small and medium-size businesses in North America. "Only increases in hiring plans in each of the three reporting periods have buoyed theSBRB Small Business Confidence Index. Significantly, it might portend that businesses have had to and will increase hiring even though revenue is flat just

to offset productivity decreases. As a result, the real crunch will be on operational efficiency," Steinberg added. The opinions and projections about thestrength of the economy, revenues and hiring looking forward 12 months are the three key ingredients to determining the SBCI and providing the basis for these quarterly and annual comparisons.

US Small Business confidence up nearly 10 points since beginning of 2008;next quarter is crucial in determining the strength of this rebound

Reuters; 5-9-08; http://www.reuters.com/article/pressRelease/idUS137507+09-May-2008+MW20080509

Increases in all key indicators raised the Small Business Research Board (SBRB) U.S. Small Business Confidence Index (SBCI) to 43.67 duringthe first quarter of 2008, according to the latest report issued today. As previously reported, the SBRB Small Business Confidence Index

(SBCI) from The fourth quarter of 2007 survey was set at 33.67, nearly 10 points (29.5%) lower than the current index of 43.67. More than

1,000 owners and managers participated in the nationwide SBRB poll co-sponsored by International Profit Associates. Small business owners and managersthroughout the U.S. reported slightly Higher levels of expectations for the next 12 months in all three categories comprising theconfidence index. Only 37% of the respondents indicated they intend to increase hiring the Next 12 months, a slight increase of 13 points from the 24% who

reported increased hiring in the previous study. Of the participants, 42% said they believe the economy will improve, 13 points higher than thelast study. The current report also showed 52% of the businesses are projecting revenue increases, 4 points higher than the 48% lastquarter. The results for the four major U.S. regions mirrored the overall findings. Owners and managers in the West/Pacific region were most optimistic, recording a

regional SBCI of 59, 15.4 points higher than the national average. Small businesses in The Northeast states were most pessimistic with an SBCI of 33. The SBRB first began reporting a confidence index in the fourth quarter of 2005. When it was first introduced, the SBCI was set at 55.3.

7

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 8/76

BizConDDI 2008 SS

 Fadi

Bizcon Uniqueness

Business confidence rebounds with strong February, indicative of hope forfuture with a 90.6% consumer confidence rating

The Merchandise Group; 2-08;http://www.varietymerchandiseshows.com/vms/content_display/1615/industry/e3ife011b61a6a42c7025f13043db2a3790

After six months of declining confidence in the U.S. economy, small business owners' attitudes improved in February, according to the Discover  Small Business Watch. In February, small business owners' confidence index rose to 90.9, a 4.6-point increase over January and the first time confidence was up since July 2007. According to the survey, 34 percent of business owners said they see economic conditions fortheir businesses getting better over the next six month, while 33 percent said they would increase spending on business developmentactivities over the next six months. In February, 67 percent of respondents said economic conditions are getting worse, compared to 74 percent in January.

"Small business owners are seeing some of the larger efforts being made to improve the economy, such as the Fed interest rate cuts and

slowing down of downward momentum, so they appear to be less apprehensive," said Sastry Rachakonda, director of Discover's business creditcard, in a statement. "Not only are they more positive about their perceived notions of the economy, but they indicated this month morewillingness to start investing again in their businesses."

Business confidence and the stock market are rising now, reports are comingin of a stronger than expected month

Business Week; 7-25-08; http://www.businessweek.com/investor/content/jul2008/pi20080725_303110.htm?chan=search

Major U.S. stock indexes finished higher on Friday, getting an injection of investor optimism about the economy on better-than-expected durable goods orders and new home sales figures, with added support from another drop in oil prices.On Friday, the Dow Jones industrial average closed 21.41 points, or 0.19%, higher at 11,370.69. The broader S&P 500 gained 5.22 points, or 0.42%, to

finish at 1,257.76. The tech-heavy Nasdaq composite index was up 30.42 points, or 1.33%, at 2,310.53. Helping to fuel gains was Thursday's selloff,which provided investors with an opportunity to buy stocks at sharply reduced prices. But weakness in Fannie Mae (FNM), Freddie Mac (FRE),

Wachovia (WB) and some other names held the market in check, S&P MarketScope said. On the New York Stock Exchange, 18 stocks were higher for every 13 that

traded lower, while on the Nasdaq the ratio was 17-11 positive. Oil prices resumed their decline on Friday as bigger supplies are flowing in fromSaudi oil fields and due to growing confidence in ample supplies amid an absence of adverse weather conditions. August WTI crude oil

futures settled ng $2.23 lower at $123.26 a barrel on Friday.

8

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 9/76

BizConDDI 2008 SS

 Fadi

Bizcon Uniqueness

Bizcon is increasing in the squ due to small business successBusiness Wire, “Administaff Announces Results of Business Confidence Survey

http://findarticles.com/p/articles/mi_m0EIN/is_2008_May_12/ai_n25408031, May 12th 08

 Nearly 78 percent of owners and managers of small businesses say their companies are either growing as planned or at a

faster pace than forecast at the beginning of the year, according to results of a Business Confidence Survey releasedtoday by Administaff (NYSE:ASF), a leading provider of human-resources services for small and medium-sized businesses.Survey respondents also are actively filling open positions with 44 percent saying they are hiring full-time employees

and 11 percent planning to bring in part-timers. Administaff also released compensation data compiled from its client baseof more than 6,000 small and medium-sized businesses throughout the country. A comparison of first-quarter data against thesame period in 2007 shows that average compensation is up 4.9 percent and average commissions have increased 6.8

percent. In addition, overtime pay is running 9.5 percent of regular pay.

Buisness confidence up in squoTIER, “Domestic and international business confidence rising”, http://investintaiwan.nat.gov.tw/en/news/200706/2007062101.html  , June 21, 2007

Business confidence is rising, as companies are holding a more optimistic outlook for the second half of 2007, according tothe Taiwan Institute for Economic Research (TIER). TIER based these conclusions on the results of its latest survey of themanufacturing and service sectors. Nearly 50% of the surveyed manufacturers said that they were "optimistic" about

economic performance in the second half of the year. The survey was presented at a meeting hosted by TIER presidentDavid Hong and researcher Chen Miao. As organizations such as the UK's Economist Intelligence Unit (EIU) and the United

Nations have revised their economic growth forecasts upwards, the global economy should remain strong, which meansTaiwan will continue to maintain strong exports, said Chen. Although manufacturers were less positive about business performance in April in comparison to March, they held an optimistic outlook for the next three to six months -- the

percentage of manufacturers who said they were "positive" about their business outlook rose from 44.3% to 49.2%,

according to Chen.

Business confidence up in squo – at: floodsDayton Business Journal, “Survey: Midwest floods dampen business confidence level”,http://www.bizjournals.com/dayton/stories/2008/06/30/daily1.html?surround=lfn , June 30, 2008

 National City's monthly business confidence survey hit a record low in June, helped along by growing gloom in its

territories affected by recent flooding, the bank said. Only 57.8 percent of respondents expressed confidence in the

economy, down from more than 60 percent in May, National City said in a news release. States affected by flooding had

the largest drops: Missouri's economic outlook results fell to 59 percent from 77.4 percent over the month; Illinois' to 61.7 percent from 71.2 percent; and Indiana's to 66.9 percent from 70.7 percent.

Bizcon increasing – real estateMark Zandi , http://www.zey.com, “Survey of Business Confidence”, 2008 

Global business confidence has remained in a tight range since late May, consistent with a global economy that is barelygrowing. Developed economies, including the U.S., Europe and Japan, are contracting moderately, while most developingeconomies are expanding moderately. This is an improvement since late April, however, when global business confidence fellto a record low. The most measurable improvement has been among real estate operations, financial services companies, and business service firms. These firms are still dour, but not nearly so. As has been the case for the past year, the most negativeresponses are to the broad questions concerning present conditions and the outlook.

9

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 10/76

BizConDDI 2008 SS

 Fadi

Investor Con Stable

Investor confidence spikes up 27% amongst Hurricane Dolly’s miss of the gulf coast as well as dropping oil prices

Schaefer, Steven (analyst for Forbes.com); 7-22-08; http://www.forbes.com/markets/2008/07/22/briefing-closer-oil-markets-econ-

cx_ss_0722markets32.html

Falling oil prices were the tonic the stock market needed Tuesday to turn a negative opening into modest gains. The August crude contract, which was

due to expire Tuesday, fell $3.79, to $127.25 a barrel. The drop was partly attributed to evidence that Tropical Storm Dolly will miss major oiland gas installations in the Gulf of Mexico. In a broader sense, demand destruction brought on by the expectation of a slowing global economy has been to

 blame for the recent decline of crude. The September contract, which saw much of the action on Tuesday, settled at $128.42. The dollar was stronger, with theeuro down to $1.5779 from $1.5899 late Monday, after President Charles Plosser of the Federal Reserve Bank  of Philadelphia said the U.S. central bank needs to

reverse course on monetary policy and start hiking its short-term interest rate sooner rather than later. Meanwhile, Treasury Secretary Henry Paulson said the stability of

government-sponsored enterprises Fannie Mae and Freddie Mac are crucial to the recovery of the housing market. (See "Paulson Calls For Confidence.") Investorswere also pulling out of bonds, as the 10-year note yield reached up as high as 4.12%, from 4.07% Monday. On July 15, the yield closed at

3.87%.

The American Securitization Forum is coming together to try and restore currently shaky investor

confidence through the Project RESTORE initiative

Housingwire.com; 7-16-08; http://www.housingwire.com/2008/07/16/group-looks-to-rebuild-investor-confidence-in-private-party-rmbs/

Holding out for a rebound in the mortgage securitization market hasn’t worked out so well for many of Wall Street’s finest; a year ago, many were suggesting publiclythat the lock-up in the non-agency securitization market was a temporary affair, and that the markets would soon rebound. Some former subprime lending giants evenwent so far as to pay to take out private conference rooms at an industry conference in February to tout a planned re-entrance into subprime securitization — onetimesubprime mortgage presence Accredited Home Lenders, Inc. among them, for those curious to know. At the time, the mood among many industry participants was asomber-yet-optimistic mix, based on the belief that such a huge market would never merely lay down and die. Those beliefs appear to have since faded somewhat, with

months passing and virtually nothing re-emerging at all in the non-agency RMBS space. On Wednesday, the American Securitization Forum said it had officially launched an initiative called Project RESTART — that’s Project on Residential Securitization Transparency and Reporting  — aimed at restoring investor confidence in the ABS/MBS markets and bringing capital bank into the space. Central to the new

initiative is the development of a set of industry-standard transparency, data and diligence standards for residential mortgage backedsecurities offerings; while RMBS is the initial focus of the collaborative effort, ASF official said they expect the initiative to extendinto other major asset classes over time. “ASF Project RESTART has been undertaken to help restore confidence in the securitization process, with the fundamental goal of ensuring that securitization will continue to serve as a widely used and beneficial means of  providing low cost credit to borrowers,” said Tom Deutsch, deputy executive director of the American Securitization Forum. “[The initiative] is an important,

collaborative effort by the securitization industry to identify and pursue specific and necessary steps towards actionable solutions that are designed to revive investmentnow, in response to the current crisis, and promote well-functioning markets over the long term as the securitization process evolves.” Starting with disclosure standardsTo kick off its public formation, the group simultaneously released a proposed set of RMBS disclosure guidelines, which it said “standardizes and expands existing

issuer disclosure to investors and credit rating agencies, particularly on mortgage loan-level information.” The proposed standards are now available for member comment, according to a press statement. ASF investors committee chair Ralph Daloisio, also managing director at Natixis,said that establishing a common set of standards around investor disclosures was a “critically important initial phase” for rebuildingconfidence in the battered non-agency RMBS market. While the project is industry-led, Bush administration officials and federal and state regulators have

 been involved as well, the trade group said; the ASF has already been working with the administration on its HOPE NOW foreclosure prevention efforts. “Events over the last year have created unprecedented dislocations in the credit markets, which has caused a shift from an overabundance of liquidity to an environment where many

 borrowers are unable to find affordable mortgage credit because originators cannot finance loans in the debt capital markets,” said George Miller, executive director atthe ASF. “Given extreme pressures on lenders’ balance sheets and the capital constraints they face, as well as macro factors such as broad-based housing price declinesand overall economic weakness, the need to restore the benefits of securitization to borrowers, lenders and the economy at large has never been greater.”

10

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 11/76

BizConDDI 2008 SS

 Fadi

Investor Con High

Despite inflation, investors are buying more than ever

Washington Post, 7/17/08. “Stocks Rebound Despite Big Jump In June Inflation; Financial Shares Post Double-Digit Gains,” Lexis

Other prices were also up in June, indicating that high prices for oil and other commodities are working their way through theeconomy. Transportation costs were up 3.8 percent last month; rents and the cost of education and other services rose briskly, too. Overall, core inflation -- which

excludes food and energy -- increased 0.3 percent in June, a substantial increase over the previous four months. But investors, buoyed by the Wells Fargonews, brushed off the inflation report and streamed to buy up stocks that were at the lowest level in years. The S&P 500 Banks Index rose 23 percent, the biggest jump since September 1989. Share prices of Fannie Mae and Freddie Mac more than erased steep losses from

Tuesday, with Fannie Mae surging 31 percent and Freddie Mac rising 30 percent. Shares of Washington Mutual, the largest U.S. savings and loan, jumped25 percent, while J.P. Morgan Chase and Bank of America, the nation's largest commercial banks, climbed 16 and 22 percent, respectively.

Wachovia, which holds more deposits from Washington area residents than any other commercial bank, gained 16 percent. Wells Fargo reported a second-quarter

 profit of $1.75 billion, or about 53 cents a share. That was 21 percent lower than its profit in the corresponding quarter a year earlier but exceeded the

expectations of most Wall Street analysts, who had predicted a profit of 50 cents a share. Even more encouraging to investors was the company'sannouncement that it would raise its dividend 10 percent, a move that reaffirmed a positive long-term outlook.

US investors are becoming optimistic after a drop in oil prices and higher-than-expected bank profits

The International Herald Tribune, 7/17/08. “Stocks rise in U.S. and Europe as oil declines;MARKET ROUNDUP,” Lexis

U.S. and European stocks rose Wednesday after oil prices fell sharply on news of an unexpected leap in U.S. crude supplies last week  and after a bigAmerican bank posted surprisingly strong results. All told, the events helped to ease investor fears about the battered financial sector.Spot gold prices tumbled about 2 percent as crude oil slid and the dollar extended gains after the Federal Reserve chairman, Ben Bernanke, Ben Bernanke said thatunder certain conditions currency intervention might be warranted. Shares in the beaten-down financial sector surged. The S&P financial index rose 6.3 percent, while

the KBW banks index gained 9.4 percent. Not all the news was positive. Data showed U.S. consumer price inflation accelerated to an annual rate of 5 percent in June -well above economists' forecasts - and U.S. government debt prices fell sharply. U.S. crude oil futures fell more than 4 percent after a U.S. government agency reporteda surprise increase in import levels, causing crude prices to chalk up the biggest two-day loss in percentage terms since January 2007. While the two-day drop in the

 price of oil of almost $15 only brought crude to a three-week low, the fall was enough to help Wall Street indexes rally about 2 percent inlate trading. Equity markets had slipped entirely into bear-market territory earlier in the week. An index of top European shares also closed higher, a day after hitting

a three-year closing low. Stronger-than-expected quarterly results by Wells Fargo, one of the biggest U.S. banks, helped turn a sour moodon Wall Street that has seen banking shares slide to decade lows as the sector looks for still more capital after record infusions. 

11

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 12/76

BizConDDI 2008 SS

 Fadi

Investor Con High- Mortgage Lenders

Fed action on Fannie Mae boosted investor con

Maurna Desmond, Forbes writer, 7-14-08, “Investors Still Shy Of Fannie & Freddie”,

http://www.forbes.com/home/2008/07/14/fannie-freddie-gse-markets-econ-cx_md_0714markets11.htmlFannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ) surged Monday morning, butthen cooled after news that the Federal Government announced a three-pronged plan on Sunday to ensure that the twogovernment-backed lenders, which own or guarantee roughly $5.3 trillion or half of all outstanding U.S. mortgage debt, areable to continue operating. The government's action turns an implicit government guarantor into an explicit one, and boostedinvestor confidence, at least initially. Freddie was down 1.4%, or 11 cents, to $7.64 and Fannie added 2.8%, or 29 cents, to$10.54 by noon in New York.

12

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 13/76

BizConDDI 2008 SS

 Fadi

Investor Con Stable

Investor confidence stable – strong debt sales prove

The Guardian, (Reuters), 7-14-08, “US pledge fails to lift cloud over Fannie, Freddie”,

http://www.guardian.co.uk/business/feedarticle/7651704The Treasury Department is seeking Congressional approval for a temporary increase in the credit line it provided for Fannieand Freddie. Its size is to be determined by Paulson, who told the Fed not to lend to Fannie and Freddie until they exhaust their Treasury credit lines. Debt buyers seemed confident in the mortgage agencies. Monday's $3 billion debt sale from Freddie drewstronger demand than a similar one on July 7. Fannie announced that it will sell $3 billion worth of debt on Wednesday. WhileMonday's debt auction was routine, it was viewed as a key test of market appetite following last week's stock sell-off. Freddie'streasurer said the sale was "business as usual," and he did not perceive a crisis of investor confidence.

Global investor confidence is rising in the squo.

State Street, “INVESTOR CONFIDENCE INDEX RISES FROM 72.3 TO 81.0 IN MAY ”,http://pr.statestreet.com/us/en/20080520_1.html, May 20th, 2008 Global Investor Confidence rose by 8.7 points to 81.0 from a revised April level of 72.3 . North American investors were the key

drivers of this, as their risk appetite increased by 8.0 points from 77.0 to 85.0. In other regions, the confidence levels sawnegligible changes from the previous month, with European investor confidence falling by 0.5 points to 76.3 and Asian investor confidence rose by 0.2 to 86.4.

13

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 14/76

BizConDDI 2008 SS

 Fadi

Invester Con Brink

Investor confidence is on the brink – rescue of financial institutions shored up

confidence, but any erosion cascades globally

WSJ (Wall Street Journal), 7-15-08, “The Multifront War Over Investor Confidence”,

http://online.wsj.com/article/SB121610307854153963.html?mod=googlenews_wsjThat seemed to help, at least temporarily, since investors yesterday bought $3 billion in short-term debt in a Freddie auctionthat drew more bids than usual and thus allowed the company to offer lower yields and keep down its borrowing costs, as TheWall Street Journal notes. This confidence stems from the powerful promise Treasury Secretary Henry Paulson essentiallymade to back Fannie and Freddie on Sunday, however much he expressed a preference for keeping their shareholder-ownedstructures. As BusinessWeek's Michael Mandel argues, the two seem to be "on the inevitable road to being bailed out,nationalized, and shrunk," since the placement of "the full faith and credit of the U.S. government behind two private financialcompanies" can't be undone. Still, if Mr. Paulson's weekend moves helped shore up short-term confidence in Fannie andFreddie's ability to keep pumping money into the housing market, they didn't solve long-term worries about their capitalization,the Journal says. The rescue of Fannie and Freddie came "after Wall Street executives and foreign central bankers told

Washington that any further erosion of confidence could have a cascading effect around the world," officials tell the New York Times. And yet, the start-and-stop market cascades tied to the mortgage crisis that began early last year were at it again today.Yesterday's fall in U.S. banking stocks today is translating into hefty losses in Shanghai, Singapore, Hong Kong and Japan, andin London, Frankfurt and Paris, too. The dollar reached a new low against the euro, which was buying more than $1.60, andU.S. stock futures are down ahead of the market open in New York.

14

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 15/76

BizConDDI 2008 SS

 Fadi

Consumer Confidence Stable

Despite fears of recession, consumer confidence remains stagnant a sign for

future potential

Reuters; 7-22-08; http://www.reuters.com/article/marketsNews/idUSN2232489120080722

American consumers' confidence was unchanged for the third week and has been in negative double digits for 50 weeks as high gasoline prices

continue to damage their outlook on the economy, a report showed on Tuesday. The ABC News Consumer Comfort Index held steady at -41 in the week to July 20. Its

all-time low, reached in May, is -51 and its historical average -10. "This week, consumers saw some positive news with a 5 cent per gallon drop inthe price of (gasoline), the biggest weekly decrease since January, bringing the average to $4.06," ABC said in a statement. "Still, the

national average has been over $4 for seven consecutive weeks." The Consumer Comfort Index's components were all unchanged from the previous week. Positiveviews on personal finances were at 52 percent, those on the national economy were at 14 percent, and views on the buying climatewere at 23 percent. Confidence measures are generally viewed as a barometer of consumer spending, which accounts for two-thirds of the U.S. economy. However

economists note that consumers do not always act in accordance with their statements to surveys.

Despite economic slowdown, US consumer confidence is looking up – spending high now

Business World, 5/23/08. “Special Feature: Consumer Loans; Consumer spending on the rise” Lexis

The United States may be experiencing a slump, but local consumer spending is going the opposite direction. With improved consumerconfidence, the low interest rate environment and overseas workers' remittances, consumer spending is definitely goinguphill.Remittances particularly supported the robust consumer confidence in the country as total dollar remittances totaled $14.4 billion last year, up

13.2% year-on-year. It was also higher than the forecast $14.3 billion level.

15

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 16/76

BizConDDI 2008 SS

 Fadi

Link- RPS

Extension of a federal RPS would hurt investors’ potential at maximizingprofits, dissuading local private companies from further investments

Kranenburg, Roger (scientist at the Edison Electrical Institute) ; 01-08;http://findarticles.com/p/articles/mi_qa5392/is_200801/ai_n21302117

Unlike the leading RPS proposals, the PTC is a proven means of actually getting renewable generation built and brought on-line. The current PTC is due to expire on

December 31, 2008. In the past, the short-term, start-and-stop nature of the tax credit has dissuaded utilities, developers, manufacturers,and investors from maximizing the potential of renewable technologies and resources, where they are available. Extending the credit for at

least five years will give the private sector the stability necessary to plan and finance renewable energy projects. The nation's electric utility companies support the

development and greater use of renewable energy sources. Renewables, along with the full range of other climate-friendly technologies--includingnuclear, energy efficiency, clean coal, carbon capture and storage, and plug-in electric hybrids--must be a part of the industry's long-term approach to meeting the country's steadily growing demand for electricity. But renewables must be encouraged where they make

economic sense. For this reason, a federal mandate that forces all states to generate an arbitrary amount of electricity from them,regardless of states' individual resources, is bad for electricity customers and providers alike.

16

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 17/76

BizConDDI 2008 SS

 Fadi

 

Link- Regulations

Empirically proven that regulation has a marked effect on business andconsumer confidence

Financial Advisor; 10-04; http://findarticles.com/p/articles/mi_hb5929/is_200410/ai_n23823719

BUSINESS confidence has fallen, according to a new BCC survey. The British Chamber of Commerce's third quarter economicsurvey suggested that the climate of positive business and economic indicators has changed, with a disturbing loss of confidence in both the manufacturing and service sectors. According to the BCC, the business climate is becoming more difficult, with regulationand taxation having a marked effect.

Continuous economic regulation destroys business confidence

Financial Advisor; 10-04; http://findarticles.com/p/articles/mi_hb5929/is_200410/ai_n23823719

AN IFA has blamed the introduction of financial regulations on recovery problems spreading to financial services, according to a CBIreport. The performance of the financial sector has faltered with business volumes, profitability and confidence falling for the firsttime in 18 months. The survey, prepared in conjunction with PricewaterhouseCoopers, also shows the average costs per transactionrising over the past three months at its fastest rate for nine years. Out of 80 companies, 40 per cent of business said volumes weredown over the past quarter.

Newly proposed federal regulations diminish already sinking business confidence

Business Today; 6-23-08; http://business.watoday.com.au/business/business-confidence-slumps-to-fiveyear-low-20080623-2v7i.html

WA consumers are spending less and business confidence is dropping as higher costs start to bite. Surveys of households and businesses in the state show consumers have cut back on non-essential items in response to higher fuel, food and housing costs. And business confidence in WA has slumped to its lowest level in five years as higher interest rates, wages and the labour shortage hits the bottom line. The triple-whammy has brought a warning that consumers face even more rising costs. The ING Direct survey of consumers, conducted between June

13 and 15, showed that 60 per cent planned to cut back on personal luxuries, 55 per cent would spend less on their credit cards and 37 per cent would drop pay TV. Asthe gas crisis bit deeper, 82 per cent said they would cut back on power, in a week the Government pleaded with households to limit electricity use. About 49 per centof WA households had already made cutbacks. ING Direct executive director Lisa Claes said the cuts could be attributed to the rising cost of living. The company,which offers savings accounts, said half those surveyed had indicated they would save more money, with 26 per cent saying they would save less. Meanwhile theCommonwealth Bank - Chamber of Commerce and Industry quarterly survey of business shows confidence has declined to its lowest level in five years. Profits were ata seven-year low, with about one-third of the 450 businesses surveyed saying their business made less money in the three months to June. Wages, input and non-wagelabour costs were at record high levels, while anticipated capital expenditure also fell to its lowest level in five years. Commonwealth Bank WA corporate financialservices general manager Wayne Zekulich warned the capacity of WA businesses to absorb rising input prices was coming to an end. "With profitability weakening thisquarter, businesses may be forced to pass rising costs on to consumers and concentrate on profitable growth, rather than volume growth," he said. About 43 per cent of 

 businesses intend to raise prices in the next three months. CCI chief economist John Nicolaou said rising costs were also impacting on many businesses expansion plans. Some local government regulations were a concern, with 43 per cent of businesses saying planning laws were the most difficultto comply with. However, the survey found 73 per cent of respondents believed that the WA economy would remain strong or strengthen in the next 12 months. The

survey was carried out before the gas crisis, which is expected to cost businesses more than $1 billion.

17

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 18/76

BizConDDI 2008 SS

 Fadi

Link – Regulations

Regulation causes businesses to fear litigation, shattering confidence

Glenn Hubbard, Dean of the Columbia School of Business, “REDUCING REGULATION AND LITIGATIONWHILE ENHANCING SHAREHOLDER RIGHTS WILL IMPROVE THE COMPETITIVENESS OF U.S.CAPITAL MARKETS”, http://www.capmktsreg.org/pdfs/Summary_11.30interimreport.pdf , 2008

The evidence suggests that balance does need to be restored. A substantial portion of the erosion in U.S. markets global and

internal competitiveness – and the only factors over which U.S. policymakers have control – relates to insufficiently

coordinated, costly and/or excessive market regulation and enforcement, public and private. Regulatory requirements for complying with Section 404 of the Sarbanes-Oxley Act cost companies, on average, $4.36 million in the first year – a stiff pricefor most public companies and a significant burden for small ones, particularly first time market entrants. Nearly open-ended

responsibility of auditors in complying with Section 404 has made an already consolidation-shriveled profession virtually

uninsurable for this work. Insufficiently coordinated state and federal enforcement laws and activities have led to state

authorities driving matters that are more national in scope.  Improper criminalization of entire companies has sometimes

forced them out of business, eliminating thousands of innocent employees’ jobs. Private enforcement in the form of securities law class action suits (which do not exist outside the U.S.) resulted in $150 million of liabilities in 1995. By 2004,this had exploded to $3.5 billion – a figure that does not even include an additional $4.74 billion of penalties assessed by US public enforcement bodies.

Regulation burdens businesses and cripples business confidence

Gary Banks, Chairman Productivity Commission, ‘03 “Reducing the business costs of regulation”,

http://www.pc.gov.au/__data/assets/pdf_file/0017/7802/cs20030320.pdf It is an established fact that the burden of regulation falls more heavily on small businesses; not because they are more heavilyregulated, but because they have the least capacity to cope. Operators or managers of smaller businesses are less likely to havespecialist staff with detailed knowledge of regulations or taxation matters. Regulations are more likely to be dealt with by

 prime decision-makers, distracting them from their core role. The costs of such managerial diversion are very difficult toassess, but are potentially large. The Small Business Deregulation Taskforce found that, among other things: • small businessesoften do not understand their compliance obligations; • unnecessary delays in processing and approvals, and duplication of information requirements, were resulting in lost time; and • inconsistency in administrative interpretation can result inuncertainty about processes and outcomes, which impact adversely on business confidence.

Strict regulations and taxes deter investment and decrease growth and jobs – Canada proves

The Fraser Institute, Canadian Economic Journal, 10/20/99. “Mining Policy: the Good, the Bad and the Ugly,”http://oldfraser.lexi.net/publications/forum/1998/december/mining_policy.html

Most regions in Canada are blessed with a geology that is attractive for mining. Unfortunately, some of those same regions are burdened with cumbersome, restrictive policies that reduce their overall investment attractiveness. If Canada wants to maintain a

healthy mining industry, it cannot afford to be complacent about its policy climate because countries around the world are nowcompeting to attract mining dollars to their jurisdictions. Anti-business policy climates deter investment, reduce economic growth, andcost jobs. As some Canadian jurisdictions have determined, the formula for encouraging investment and prosperity is not complicated.It does not require complex plans to create jobs and manage the economy. Rather, it requires eliminating onerous regulations,simplifying permit processes so they are timely and efficient, lowering taxes, and eliminating uncertainty about expropriation withoutcompensation.

18

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 19/76

BizConDDI 2008 SS

 Fadi

Link – Regulations

Lowered taxes and regulations key to economy – CEOs agree

Chief Executive. 7/10/08. “CEOs Portray a Dismal Forecast for the U.S.,” PR Newswire, Lexis.http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T4174871779&format=GNBFI&sort=BOOLEAN&startDocNo=1&resultsUrlKey=29_T4174871782&cisb=22_T4174871781&treeMax=true&treeWidth=0&csi=8054&docNo=14

MONTVALE, N.J., July 10 /PRNewswire/ -- With the economy overtaking Iraq as one of the main issues this election year, Chief Executive magazine conducted a survey among CEOs between June 13 and June 27 in an effort to gauge CEO sentiment on thedirection of the U.S. economy. CEOs were asked which policy position they think the U.S. should take to increase or maintainAmerican competitiveness as well as questions on which countries will generate the highest number of jobs and where the top paying jobs will be in the future.

An overwhelming majority of American CEOs believe that in order to create the highest paying jobs and maintain the U.S.' economiccompetitiveness, the government needs to reduce taxes and regulation, privatize education and remove restrictions on trade.

Regulation causes businesses to fear litigation, shattering confidenceGlenn Hubbard, Dean of the Columbia School of Business, “REDUCING REGULATION AND LITIGATIONWHILE ENHANCING SHAREHOLDER RIGHTS WILL IMPROVE THE COMPETITIVENESS OF U.S.CAPITAL MARKETS”, http://www.capmktsreg.org/pdfs/Summary_11.30interimreport.pdf , 2008

The evidence suggests that balance does need to be restored. A substantial portion of the erosion in U.S. markets global and

internal competitiveness – and the only factors over which U.S. policymakers have control – relates to insufficiently

coordinated, costly and/or excessive market regulation and enforcement, public and private. Regulatory requirements for complying with Section 404 of the Sarbanes-Oxley Act cost companies, on average, $4.36 million in the first year – a stiff price

for most public companies and a significant burden for small ones, particularly first time market entrants. Nearly open-endedresponsibility of auditors in complying with Section 404 has made an already consolidation-shriveled profession virtually

uninsurable for this work. Insufficiently coordinated state and federal enforcement laws and activities have led to state

authorities driving matters that are more national in scope.  Improper criminalization of entire companies has sometimes

forced them out of business, eliminating thousands of innocent employees’ jobs. Private enforcement in the form of 

securities law class action suits (which do not exist outside the U.S.) resulted in $150 million of liabilities in 1995. By 2004,

this had exploded to $3.5 billion – a figure that does not even include an additional $4.74 billion of penalties assessed by US public enforcement bodies.

Regulation increases uncertainty about the profitability of a firm, deterring investment

Wayne Gray, Dept of Economics, Clark Univ, 1993, “ENVIRONMENTAL REGULATION AND MANUFACTURINGPRODUCTIVITY AT THE PLANT LEVEL” National Bureau of Economic Research, Working Paper Series, No. 4321, p.4.

Regulation may also increase the uncertainty faced by firms, affecting their decisions in a variety of ways. Viscusi (1983) discussesthe role of uncertainty about future regulations (and hence about the future profitability of the firm) in reducing a firm's investment, orat least in postponing the investment until the uncertainty is resolved. Hoerger, Beamer, and Hanson (1983) point out that new product development could be affected by uncertainty about future regulation of new products. Development of new production processes could also be hindered by uncertainty about future regulations, as current regulatory requirements are generally designedwith existing production processes in mind.

19

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 20/76

BizConDDI 2008 SS

 Fadi

Link – Regulations

Environmental regulations cause companies to lose jobs, investment and output

Michael Greenstone, Dept Economics – MIT, 2002 [“The Impacts of Environmental Regulations on Industrial Activity: Evidencefrom the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures,” Journal of Political Economy, vol. 110, no. 6]http://www.journals.uchicago.edu/doi/abs/10.1086/342808

This paper provides new evidence that environmental regulations re- strict industrial activity. I find that in the first 15 years after theCAAAs became law (1972–87), nonattainment counties (relative to attainment ones) lost approximately 590,000 jobs, $37 billion incapital stock, and $75 billion (1987 dollars) of output in polluting industries. Although these estimates are not derived from arandomized experiment and therefore cannot meet a strict definition of causality, they provide robust evidence that these regulationsdeter the growth of polluters. In the first place, the findings are derived from the most comprehensive data available on clean air regulations and manufacturing activity. Second, the preferred statistical model for plant-level growth controls for all permanent plantcharacteristics, unrestricted industry shocks, and un- restricted county shocks. Third, the effects are robust across a variety of specifications. Finally, the regulation effects are evident across three different measures of manufacturing activity and a wide range of pol- luting industries. The federal standards for ozone and particulates were tightened re- cently, causing a substantial increase in thenumber of nonattainment counties.39 The balance of evidence from this paper suggests that the new nonattainment counties willexperience reductions in employment, investment, and shipments in polluting industries. To gain a clearer understanding of whether it is worthwhile to incur the costs associated with these reductions, it is crucial to understand the regulations’ effec- tiveness atcleaning the air and the benefits of cleaner air. Recent re- search finds that these policies are effective at reducing concentrations of air pollution and that cleaner air, particularly reductions in TSPs, provides substantial monetary benefits to homeowners and reducedin- fant mortality rates (Smith and Huang 1995; Henderson 1996; Chay and Greenstone 2000, 2002a, 2002b). Regardless of whether these pol- icies pass or fail a cost-benefit test, this paper’s findings undermine the contention that environmental regulations arecostless or even benefi- cial for the regulated.

Government regulation causes investors to wait to invest – uncertain about the future of the laws and the company

Alain Verbeke, Director of MBA Studies - Solvay Business School, University of Brussels, 4 Dec 1998. [“Corporate strategies andenvironmental regulations: an organizing framework,” Strategic Management Journal, Volume 19 Issue 4, Pages 363 – 375]

In our view, many firms at present fear a quadrant 1 scenario. They do not invest in developing green capabilities because of the highuncertainty regarding leveraging effects associated with these investments. In many cases it is, for example, unclear ( a ) howgovernment regulation, both in terms of command and control regulations and market-based instruments will evolve over time, ( b )to what extent the impact of ‘green consumerism’ will increase in terms of affecting purchasing decisions of buyers, ( c ) what theindustry standards and benchmarks will be in the area of environmental protection. This is consist- ent with Jaffe’s analysis, whichdemonstrated the benefit of waiting to make irreversible invest- ments in clean technologies until better technol- ogies becomeavailable ( Jaffe et al, 1995 ).

20

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 21/76

BizConDDI 2008 SS

 Fadi

Link – Regulations

Regulation undermines investmentConsumers' Research Magazine, August 1996, p.L/N. (BLUEOC1600)Who Pays for All This? In general, the cost of regulating is initially expressed as a cost of doing business. Okay, but who pays thistariff? We all do, in one way or another. Consider a standard situation in which a law requires certain practices to be followed in hiringor procedures to be used to assure product quality. The former will raise costs by forcing employers to expand their job search and fillout forms to prove compliance; the latter will raise costs by requiring changes in the production process. Sometimes, firms can passthese costs to consumers, making them pay more; sometimes firms can't pass them along at all, so they will have lower profits, whichmeans that owners or shareholders foot the bill. But, often, employers pass these costs down the line with lower wages and salaries.Other times, when costs cannot be directly passed off to employees, employers will respond by either hiring fewer people or laying offthose already employed. Either way, higher business costs from regulation will result in lower wages and/or higher unemployment.Excessive regulation also discourages investment in domestic business: Why plop a factory down on regulated soil when unregulatedopportunities beckon abroad? Moreover, the threat of regulatory changes creates uncertainty, which scares investors, who then demandhigher returns, and tends to make planning horizons more short term. Further, regulation stymies innovation. This has been especially

true in the drug and medical-device industry. Long approval periods shorten the effective patent time for the results of expensiveresearch and development and thus diminish returns on discoveries without lowering risk. A larger gap between risk and return rendersmany research and development projects too unprofitable to under take. And last, all of the above make it harder for domestic firms tocompete in international markets in which many foreign-based firms do not have to contend with the effects of excessive regulation.

Regulations drain the economyDavid Schoenbrod, Professor, New York Law School, JOURNAL OF SMALL & EMERGING BUSINESS LAW, 2001, p. 108(WFU197)The weight of EPA's unnecessarily heavy hand falls primarily on us and our joy rather than on corporate fat cats and their purses.Although the direct costs of EPA's requirements fall in the first instance on existing firms, those who pay the price in the end are primarily ordinary people. For example, auto buyers, not auto manufacturers, pay most of the cost of emissions controls on new cars.More generally, ordinary people pay for most of the direct costs of environmental pollution control by way of higher prices for goods,higher taxes, and less pay. To the extent that the direct costs of pollution control are reflected in the bottom lines of corporations, most

of us are adversely affected anyway because so many of us now own shares of corporate stock, directly or through various pension plans.

Regulation discourages entrepreneurshipJames L. Huffman, Dean and Professor of Law, Northwestern School of Law of Lewis and Clark College; JOURNAL OF SMALL &EMERGING BUSINESS LAW, Summer 2000, pp. 314-5 (WFU201)Disparities in income and wealth are probably affected as well. One important opportunity for low income individuals to improve theirlot is through entrepreneurship and innovation. By definition, these entrepreneurs are capital poor, so they cannot afford even smalldelays in advancing from idea to product or service. If entrepreneurship is discouraged by regulation, lower income individuals are lefto either hourly employment in the businesses of others or the largess of the state. Neither of these options holds the promise for significant advancement or personal satisfaction that a successful business venture can provide.

Regulations reduce productivity

Frank Cross, Professor of Business Regulation, University of Texas, ECOLOGY LAW QUARTERLY, 1995, pp. 757-8 (WFU202)Environmental rules may impair productivity in several discrete ways. By requiring capital investment, environmental regulations usecapital that might otherwise have been used for productivity enhancement. Environmental and occupational health and safety rulesmay require manpower for monitoring thus reducing the workforce available for other more productive activities. Required changes inoperation may also reduce productivity. New plants tend to be more productive than older plants; however, environmental requirements

discourage the development of new plants because environmental requirements are consistently stricter for new sources. In addition, "(r)iskier, longer terminvestment may be discouraged by uncertainties about the stringency. timing and applicability of many regulations and by regulatoryrequirements for studies and permits that can introduce considerable delays between investment and income."

21

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 22/76

BizConDDI 2008 SS

 Fadi

Link – Regulations

Legal brawls magnify costs of government mandatesPietro Nivola, senior fellow in the Brookings Governmental Studies Program, Winter 1996, Brookings Review, p.20 (BLUEOC1603)

For Sheer contentiousness, however, the process of social regulation in the United States seems hard to top. It is not unusual for decisions, buffeted by legal contestation, to remain in limbo for years. Regulated interests spend lavishly on lawyers and lobbyists.Their machinations are met by the counter-suits and counter-lobbying of organized advocacy groups, frequently armed with statutory private rights of action that few, if any, other governments would countenance. Caught in the middle of the legal brawls, not a fewdazed entrepreneurs wait indefinitely for the next shoe to drop before making desirable investments.

Businesses fear environmental policy – regulations raise the price of their products

Patrick Bernhagen, Department of Politics and International Relations - University of Aberdeen, 8/15/05. “Business Political Power:Economic Voting, Information Asymmetry, and Environmental Policy in 19 OECD Countries,”http://convention2.allacademic.com/getfile.php?file=apsa05_proceeding/2005-10-06/40383/apsa05_proceeding_40383.pdf 

For the purpose of empirically assessing the sources of business political influence, I focus on the area of environmental regulation.Aiming to reduce negative externalities flowing from the actions of citizens and businesses, environmental regulation virtually alwayshas cost implications for business (Golub 1998, 1). At the macroeconomic level, environmental policy is blamed for reducingindustrial productivity (Christiansen and Haveman 1981). Increasing sensitivity to global economic compe- tition and budgetaryconstraints makes governments wary of any form of regulation which might threaten economic growth, foreign investment, exportmarkets, and em- ployment creation. Regulations requiring firms to reduce emissions, increase recy- cling, pay more for energy, or switch to more expensive fuels and input materials all raise the final price of their products, with the result that “green” states losemarkets to “dirty” states that lack similar environmental standards (Golub 1998, 4). This ar- gument is frequently hammered home by business. Criticizing the British govern- ment’s target of a twenty-percent reduction of greenhouse gas emissions by 2010, for example, the director-general of the Confederation of British Industry (CBI), Digby Jones, recently complained, “if our action is notmatched by similar efforts from the rest of the world, we will undermine the competitiveness of British companies for no realenvironmental gain.” 2 Indeed, the CBI accepts that, to some degree, it has op- posed every one of approximately 250 EUenvironmental directives passed. over the past twenty years. 3 To the extent that governments share this perception of the

environment-competitiveness nexus, they are induced to engage in a ‘race to the bot- tom’ or ‘ecological dumping’ (Golub 1998, 4).

Businesses fear environmental policy – regulations raise the price of their products

Patrick Bernhagen, Department of Politics and International Relations - University of Aberdeen, 8/15/05. “Business Political Power:

Economic Voting, Information Asymmetry, and Environmental Policy in 19 OECD Countries,”http://convention2.allacademic.com/getfile.php?file=apsa05_proceeding/2005-10-06/40383/apsa05_proceeding_40383.pdf 

For the purpose of empirically assessing the sources of business political influence, I focus on the area of environmental regulation. Aiming to reduce negativeexternalities flowing from the actions of citizens and businesses, environmental regulation virtually always has cost implications for business (Golub 1998, 1). At the

macroeconomic level, environmental policy is blamed for reducing industrial productivity (Christiansen and Haveman 1981). Increasingsensitivity to global economic compe- tition and budgetary constraints makes governments wary of any form of regulation whichmight threaten economic growth, foreign investment, export markets, and em- ployment creation. Regulations requiring firms to

reduce emissions, increase recy- cling, pay more for energy, or switch to more expensive fuels and input materials all raise the final price of their products, with the result that “green” states lose markets to “dirty” states that lack similar environmental standards (Golub 1998, 4). This ar- gument

is frequently hammered home by business. Criticizing the British govern- ment’s target of a twenty-percent reduction of greenhouse gas emissions by 2010, for example, the director-general of the Confederation of British Industry (CBI), Digby Jones, recently complained, “if our action is not matched by similar efforts from therest of the world, we will undermine the competitiveness of British companies for no real environmental gain.” 2 Indeed, the CBI accepts that, to some degree, it hasop- posed every one of approximately 250 EU environmental directives passed. over the past twenty years. 3 To the extent that governments share this perception of theenvironment-competitiveness nexus, they are induced to engage in a ‘race to the bot- tom’ or ‘ecological dumping’ (Golub 1998, 4).

22

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 23/76

BizConDDI 2008 SS

 Fadi

Links- Mandates

Indirect costs of government mandates add large expensesRichard Stewart, Prof. of Law, NYU, 1993, The Yale Law Journal, p.2083 (BLUEOC1604)

The dysfuntions of the relatively centralized, legalistic regulatory system in the U.S. have become more pronounced in thisambitious second stage of regulation, which moves requirements further up industry's cost curves. Compliance outlays under the U.S. regulatory system have increased rapidly and are projected to continue to grow at an accelerating pace. 218 Pollutioncontrol outlays alone exceed $120 billion annually and are expected to rise to $185 billion by the end of the decade. 219 Theindirect costs of regulation in the U.S. may add a further 50% to such figures. 220 Perhaps even more important are the indirecteffects of the regulatory constraints, delays, and uncertainties, and the large and often unpredictable liability awards thatdistinguish the U.S. system. 221

23

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 24/76

BizConDDI 2008 SS

 Fadi

Links- Emission Reductions

Studies on the Kyoto Protocol show that ANY method of reducing emissions would indiscriminatelyannihilate key sectors of the economyRaymond Keating, Chief Economist of the Small Business Survival Committee, June 4, 1998,http://republicans.smbiz.house.gov/hearings/105th/1998/980604/keating.aspOn behalf of the Small Business Survival Committee (SBSC) and its more than 40,000 members across the nation, I appreciate the opportunity to offer thefollowing comments regarding the potential impact of the Kyoto Protocol, or "Global Warming Treaty," agreed to this past December by the Clinton Administrationin Kyoto, Japan. SBSC is an advocacy and information organization that supports policies which promote the survival and growth of the entrepreneurial sector of our economy. As I will more fully explain in a moment, SBSC opposes the Global Warming Treaty for several reasons, but primarily due to the crushing

costs that would be imposed on businesses of all sizes and in practically all industries, as well as on consumers and the economy in general. As most

studies of the Global Warming Treaty indicate -- whether performed by private industry or by the Clinton Administration itself -- this treaty will be an

indiscriminate killer of businesses and jobs. And this will be the case no matter what the means utilized to reduce so-called "greenhouse gas emissions" --

primarily CO2 -- that is, whether through higher taxes, increased regulations, an emissions "cap and trade" system, or some combination of these options.

Like other Americans, we also have other concerns about this treaty, such as national security implications, the fact that it is based on, to be generous, debatablescience, the exclusion of "developing" nations, the foreign aid and transfer of wealth implications among nations, as well as the often secretive and at timesmisleading methods used by the Clinton Administration in seeking to advance its global climate policies.

CO2 is the fuel of the global economy – reductions in emissions would devastate the economyLewis, Senior Fellow at the Competitive Enterprise Institute, and Bourne et. al, Director of the Energy and Environment Task Force, 2004

(Marlo and Sandy, http://www.cei.org/gencon/025,03801.cfm, Jan 9)A study in the November 1, 2002 issue of Science magazine examined possible technology options that might be used in coming decades to stabilize atmosphericCO2 concentrations.13 Such options include wind and solar energy, nuclear fission and fusion, biomass fuels, efficiency improvements, carbon sequestration, andhydrogen fuel cells. The report found that, "All these approaches currently have severe deficiencies that limit their ability to stabilize global climate." It specificallydisagreed with the Intergovernmental Panel on Climate Change's assessment that, "known technological options could achieve a broad range of atmospheric CO2stabilization levels, such as 550 ppm, 450 ppm or below over the next 100 years." As the study noted, world energy demand could triple by 2050. Yet, "Energysources that can produce 100 to 300 percent of present world power consumption without greenhouse emissions do not exist operationally or as pilot plants." The bottom line: "CO2 is a combustion product vital to how civilization is powered; it cannot be regulated away." Given current and foreseeable technologicalcapabilities, any serious attempt to stabilize CO2 levels via regulation would be economically devastating and, thus, politically unsustainable.

24

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 25/76

BizConDDI 2008 SS

 Fadi

Link- Emissions Reductions

Any meaningful reduction in carbon emissions would cause a protracted U.S. economic depression

Raymond Keating, Chief Economist of the Small Business Survival Committee, June 4, 1998,http://republicans.smbiz.house.gov/hearings/105th/1998/980604/keating.aspThe author shows that altering the carbon/energy ratio or the development of new technologies will not come close to being enough to reduce carbon emissions.Indeed, continued economic growth and capital stock renewal will ensure that carbon levels continue rising. The author notes only two avenues that will allow the U.S. to meet its Kyoto Protocol goals: "A decline in GDP of about 4 percent per year would reduce the demand for energy and thereby carbon emissionssufficient to achieve the Kyoto target. Alternatively, an increase in the price of energy of about 12 percent per year for a ten year period also would achieve theKyoto target. " He concludes: "Either of these changes would impose unacceptable costs on the American economy." To say the least. According to theseestimates, in effect, an extended U.S. economic depression would be necessary in order to meet Kyoto Protocol goals. * A DRI-McGraw Hill study by Dr.Lawrence Horowitz found the following: * a $100 per ton carbon tax could lower emission levels close to 1990 levels by 2010 and would cost the economy

$203 billion annually in lost output; * $200 per ton carbon tax would be required to reduce emissions below 1990 levels, and would cost the economy $350

billion in lost products and services; * annual job losses from 1995 to 2010 under a $100 per ton carbon tax would hit 520,000, and would leap to 1.1

million annually under a $200 per ton carbon tax; * gasoline prices could jump by as much as 60 cents per gallon, and electricity costs could increase by 50 percent, and home heating oil by 50-100 percent. * Resources Data International Inc. (RDI) was retained last year by Peabody Holding Company Inc., reportedlythe world's largest private coal producer, to study the economic impact of a new global warming treaty. RDI estimated that a $100 per ton carbon tax imposed

in order to reduce CO2 emissions to 1990 levels would: * limit the annual growth rate in the supply of electricity between 1995 and 2015 to0.83% from a

projected 1.45%; * place up to $1.314 trillion, or 14% of GDP, at risk in 2010 and up to $16.823 trillion cumulatively from 2005 to 2015. RDI estimates

that any kind of CO2 trading program would mimic the effects of a carbon tax, with the federal government collecting at least $133 billion annually. 

The U.S. economy is dependent on fossil fuels – taking away carbon is like taking a guitar away from

HendrixSebastian Oberthur, Senior fellow at Ecologic, and Hermann Ott, head of the climate policy division at the Wuppertal Institute, 1999 (The Kyoto

 Protocol: International Climate Change Policy for the 21 st  Century, p. 19)

Outweighing these positive forces is the country's pattern of economic and societal development, which has relied heavily on the availabilityof low-price energy, making the US one of the most energy intensive economies in the OECD. As Steve Rayner put it, "the history of USenergy demand and the existing resources infrastructure and institutions make the US economy as dependent upon fossil fuel as aheroin addict is on the needle".25 Because of the very high energy intensity associated with American technology and lifestyles, low-costs means of saving

energy and reducing GHG emissions are in fact abundant.21 Nevertheless, the perception (furthered by some for obvious political reasons) that  reducing C02emissions would be exorbitantly costly has been comparatively widespread in the US.

25

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 26/76

BizConDDI 2008 SS

 Fadi

Link- Emissions Reduction

Reducing CO2 in the squo would lead to a massive debt that wouldn’t be

repaid until 2100, leaving potential for a century long depression

Business Week; 12-07; http://www.businessweek.com/bwdaily/dnflash/content/dec2007/db2007123_373996.htm

But what are those costs? If you listen to opponents of action against climate change , the American economy will be brought to its knees by suchefforts. The Chamber of Commerce, for instance, says the bill would cost 3.4 million Americans their jobs; the nation's gross domestic product, now about $13 trillion, would drop to $12 trillion; and American consumers would pay as much as $6 trillion more becauseof higher prices for gas, heating oil, and many other goods. Other economic projections put the total price tag for preventingdangerous climate change at up to $20 trillion.Yet a new analysis from McKinsey & Co . not only pegs the price tag for making substantial cuts at just a few

 billion dollars, it also shows that at least 40% of the reductions bring actual savings to the economy, not costs. Long-Term Forecasts Are Less Reliable Why the big

difference? First consider the numbers used by the opponents. Typically, they come from large-scale mathematical models of the economy. These models look atthe economy from the top down. They try to calculate the effects of changes such as rising energy costs or financial penalties for carbon emissions. These models are widely used to predict short-term changes in the economy. But longer-term forecasts are lessaccurate because of their increasing reliance on the initial assumptions. For example, the final result varies dramatically depending on the

assumptions about the pace of innovation. If the model assumes that development of new forms of renewable energy will continue at the same rate as before carbonemission limits were enacted (when the financial incentives for development were lower), then cutting carbon emissions will be costly. But if you assume that an addedfinancial incentive, such as a price on carbon emissions, will increase the pace of innovation and the development of new technologies, then meeting the limits will becheaper. And if the model discounts the future benefits of avoiding the dangers of warming in terms of their present value, it will also predict higher overall costs.Different Conclusions Are Possible Yet even with these inherent limitations, many of the models suggest that the ultimate cost of slowing global warming is reasonable.

Stanford University climatologist Stephen Schneider, for instance, has analyzed one of the most prominent models, from Yale's William Nordhaus. According to Nordhaus' results, stabilizing the climate would be "unimaginably expensive—$20 trillion," Schneider says. But the $20 trillion hit tothe economy isn't immediate. Instead, that's the calculated cost in the year 2100, Schneider says, not now. What does that really mean? Schneider 

ran the numbers, assuming the economy grows at about 2% per year. The seemingly huge $20 trillion price tag works out to "a one-year delay in being 500% richer," he

says. In other words, paying the price to reduce climate change would mean Americans would have to wait until 2101 to be as rich asthey otherwise would have been in 2100. To Schneider, that's a minuscule price to pay for saving the planet from the dangers of global warming. "Are you out

of your mind? Who wouldn't take that?" he says.

26

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 27/76

BizConDDI 2008 SS

 Fadi

Links- Regulations Cause Blackouts

Environmental regulations risk supply shortages and severe power outagesJames M. Inhofe, R-OK and Chairman of the Senate Environment and Public Works Committee, May 12, 2004 (FDCH, “Hearing on Oiand Gas Environmental Regulations” p. online)In hopes to appear responsive to constituents, some members of Congress have suggested that we drastically alter the situation with respect to boutique fuels, or gasoline blends produced to meet a particular need of a particular geographic area. Price volatility is a very real problem when there is a supply disruption.

 Neighboring areas don't make the special blend so they are unable to meet the supply shortfall. However, given the experience of the proposed sulfur regulationroll back, sweeping changes to our fuel policies without careful consideration and study can have detrimental price impacts for consumers. That's why I worked toconclude carefully crafted study in H.R. 6, the House-Senate Conference report of the energy bill, to consider environmental and economic impacts of new fuels

 policy. In this constrained market, we must consider the environmental and the economic more stringent -- environmental regulations means that refiners mustmake environmental upgrades rather than increase capacity to meet consumer demand. The third chart is before you, but it's self-explanatory, but you don't justhave to take my word for it. The Energy Information Agency concluded that tighter product specification will result in increasing likelihood of outrageousoutages, diminishing yields in prime fuels. 

Regulatory uncertainty discourages investment and causes power shortagesDoug Ose, Republican representative from California, April 8, 2003, http://bulk.resource.org/gpo.gov/hearings/108h/87231.txtWe need to keep in mind that it takes years to propose, site, and build a power plant.Up and down the State, power plant construction is being delayed and companies

are scrapping plans to build more generation. Energy companies cite political and regulatory uncertainty as the principal obstacle to newenergy supply. Wall Street refuses to invest in such an unstable environment. Yet, experts predict that California will experience shortagesagain in a few short years. It is, therefore, essential that we get on with the reform process in order to encourage investments in energygeneration and transmission. A stable marketplace, with clear, rational rules, is the only way to supply the lowest cost, most environmentally

clean energy that Californians deserve. We simply cannot afford to wait any longer.

27

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 28/76

BizConDDI 2008 SS

 Fadi

Link – Kills Investment

Taxes and regulations tank business confidence, decreasing investment

ICAEW (Institute of Chartered Accountants in England & Wales), 5-9-08, “Business confidence still fragile says ICAEW/Orange

UK survey”, http://www.icaew.com/index.cfm?route=135719The latest ICAEW- Orange UK Business Confidence Monitor shows that while forecasts for GDP and profit growth have increasedthis quarter, almost half of the finance professionals surveyed are worried about the growing burdens of tax and regulation, leadingthem to invest less in the economy and so endanger long term prospects for economic growth. Despite rising profit forecasts for thefourth quarter in a row (6.3 per cent), firms in the UK predict that they will increase their capital investment budgets at a lower ratethan they did over the past year, from 3.0 per cent last year, down to 2.2 per cent over the coming 12 months. This suggests that businesses are not as confident about investing capital in the UK. Eric Anstee, Chief Executive of the ICAEW, said: “While the BCMshows the economy is moving in the right direction, the longer term economic outlook looks fragile. A lack of business investmentcould play an important role in weakening economic growth further down the road, especially if world economic imbalances start tounravel. I would urge the Government to revisit its taxation and regulatory regimes to renew confidence among businesses of all sizeswhich, despite higher profit growth expectations and rising confidence, remain nervous of further investment.”

Regulation decreases business investment and investor confidence and killscompetitiveness

Susan Lee writing for Consumers’ Research Magazine, Aug. 1996, “How Government Menaces Our Economic Health”, vol. 79

no. 8, pp. 16-17Who Pays for All This? In general, the cost of regulating is initially expressed as a cost of doing business. Okay, but who pays thistariff? We all do, in one way or another. Consider a standard situation in which a law requires certain practices to be followed inhiring or procedures to be used to assure product quality. The former will raise costs by forcing employers to expand their jobsearch and fill out forms to prove comp1ianc the latter will raise costs by requiring changes in the production process. Sometimes,firms can pass these costs to consumers, making them pay more; sometimes, firms can’t pass them along at all, so they will havelower profits, which means that owners or shareholders foot the bill. But, often, employers pass these costs down the line withlower wages and salaries. Other times, when costs cannot be directly passed off to employees, employers will respond by either 

hiring fewer people or laying off those already employed. Either way, higher business costs from regulation will result in lower wages and/or higher unemployment.Excessive regulation also discourages investment in domestic business: Why plop a factory down on regulated soil whenunregulated opportunities beckon abroad? Moreover, the threat of regulatory changes creates uncertainty, which scares investors,who then demand higher returns, and tends to make planning horizons more short term.Further, regulation stymies innovation. This has been especially true in the drug ind medical- device industry. Long approval periods shorten the effective patent time for the results of expensive research and development and thus diminish returns ondiscoveries without lowering risk. A larger gap between risk and return renders many research and development projects toounprofitable to undertake. And last, all of the above make it harder for domestic firms to compete in international markets in whichmany foreign-based firms do not have to contend with the effects of excessive regulation.

Regulation hinders investment and growth

Tobias Madden, Regional Economist FedGazette, Fed Reserve Bank of Minneapolis, Jan. ‘08 “Mixed bag for 2008”,

http://www.minneapolisfed.org/pubs/fedgaz/08-01/poll.cfmThe biggest challenges facing businesses are securing workers and complying with government regulation. “We have been in suchan incredibly tight labor market,” a Montana manufacturer said. Over half of all respondents expect a challenging time findingworkers. Leaders from the agricultural and retail sectors have the hardest time securing workers. About three-quarters of theDakota respondents expect finding workers as a challenge or a serious challenge, compared with only 23 percent of therespondents from the U.P. About half of all respondents see government regulation as a challenge. The respondents from thefinance, insurance and real estate sector expect the toughest government regulation. “Regulation by state and national governmentwill hamper investment and growth seriously,” said a financial services respondent from the U.P.

28

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 29/76

BizConDDI 2008 SS

 Fadi

Link- Kills Investment

Increased economic regulation negatively impacts investment and overall

economic growth

Alesina, Alberto (Harvard Professor); ’02; http://escholarship.bc.edu/cgi/viewcontent.cgi?article=1082&context=econ_papers

In the past decade the rate of GDP growth has been remarkably different amongst OECD countries. One of the most striking and often cited comparison is the one between the US with a 4.3 percent average GDP growth in the second half of the nineties and large continental European economies (Germany, Italy and France) with 2

 percent average growth. One commonly held explanation of these differences is that a stricter regulation of markets has prevented faster growth in many European countries especially in a period, the nineties, of rapid technological innovation. Is this true? This paper suggests that the answer is “yes”: various measures of product market regulation are negatively related to investment, which is, of course, an important engine of growth.

Implementing regulations destroys consumer and business investment

Alesina, Alberto (Harvard Professor); ’02; http://escholarship.bc.edu/cgi/viewcontent.cgi?article=1082&context=econ_papers

Regulation can affect investment through two additional channels. The first channel is operative when regulation imposes a ceiling onthe rate of return on capital invested in some sectors. If the constraint binds, the choice of factor proportion may be altered in favor of more capital intensive techniques and the amount of capital used increases relative to the one chosen in the absence of constraints.This is the well know argument due originally to Averch and Johnson (1962) and refined, subsequently, by other authors. 11 The basicidea is that by investing in additional capital, firms increase the base to which the (constrained) rate of return is applied, resulting in agreater total remuneration for capital. The consequence is that reduction in the rate of return on capital below the profit maximizinglevel (resulting from the imposition of a binding ceiling) leads to an increase in the capital stock. The lower the allowed rate of returnis, the greater is the capital stock employed by the firm. 12 Removing the binding constraint would, instead, reduce the desired capitalstock and therefore investment.

Regulation hurts growth – limits innovation and diverts attention from keyareas

Freehills, 4-13-06, “Decreasing regulatory burden: An important opportunity for business”,

http://www.freehills.com.au/publications/publications_5768.aspThe taskforce recognised that excessive or inappropriate regulation acts impede economic growth. It limits the scope for innovation, undermines entrepreneurial drive and reduces productivity and competition. The cost of such regulation affects business, government and the community at large. In regard to the effect on business, in addition to the monetary cost, compliancediverts management attention from a company’s core business.

29

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 30/76

BizConDDI 2008 SS

 Fadi

Link - Litigation

Hawkish lawyers make government regulation a unique arena for increased

litigation

Lisa Rickard, Prez U.S. Chamber of Commerce Institute for Legal Reform, 2007, “Trial lawyers storm capitol”,

http://thehill.com/letters/clean-reliable-cost-effective-nuclear-power-none-of-these-2007-10-05.htmlAmerica needs more lawsuits. That’s the message hundreds of plaintiffs’ trial lawyers from across the country have taken toCapitol Hill this week in lobbying Congress to make it easier to bring more lawsuits. It isn’t surprising. The plaintiffs’ bar has been chomping at the bit since last November’s elections. “We are going to get things done,” declared the treasurer of theAssociation of Trial Lawyers of America at the time. (They’ve since changed their name to the “American Association for Justice.”) One thing that you can say for the plaintiffs’ trial lawyers association: They haven’t disappointed their members.They’ve been working hard. No bill has been too big or too small not to slip in a liability-expanding provision. Passing the farm bill? Invalidate arbitration agreements in meat-packer and producer contracts, so that more business disputes become lawsuits. Or, better yet, why don’t we outlaw arbitration in all contracts so that the only realistic way to resolve disputes is with a lawsuit?Reauthorizing Food and Drug Administration funding? Perfect opportunity to take away the federal government’s uniform

consumer protection powers and allow for 50 different sets of food and drug laws — and while they’re at it, open the door tothousands of state lawsuits for years to come. Or how about a bill funding the war on terror? Why don’t we allow each state toenact its own set of security laws and regulations? The more sets of confusing government regulations, the more the likelihood

of lawsuits. At every turn, the plaintiffs’ trial lawyers are looking to cash in on Capitol Hill. They’ve bragged to their membershipthat their political donations helped to elect this Congress. Now they want a return favor, asking for plaintiffs’ trial lawyer earmarks that give them the ability to bring more lawsuits.

Costs of litigation kills competitiveness and domestic investmentRobert A. Kagan, senior associate at the Carnegie Endowment for International Peace, and Lee Axelrad, senior research

associate with the UC Berkeley Center for the Study of Law & Society ’97, “Adversarial Legalism: International Perspective” in

“Comparative Disadvantages? Social Regulations and the Global Economy” Ed. Pietro S. Nivola. Published by Brookings InstitutePress, pp. 187

The impact of higher liability and legal costs can be more pronounced for particular industries. Here the key question iswhether the higher costs fall on inputs or on product design. Ignore the exact magnitudes, just worry about getting the signsright. Input costs might be higher for certain U.S. industries because of various regulations or liability-related costs. Andregardless of whether the higher costs are offset by social benefits, they hurt U.S. exports abroad, while also making it easier for foreigners to sell their goods in America (though foreign-owned businesses in the United States presumably do not get thisadvantage unless they are screwdriver plants, which purchase all their basic inputs abroad).

Economic costs of litigation outweigh any possible benefit to environmentalprotection

Robert A. Kagan, senior associate at the Carnegie Endowment for International Peace, and Lee Axelrad, senior research

associate with the UC Berkeley Center for the Study of Law & Society ’97, “Adversarial Legalism: International Perspective” in

“Comparative Disadvantages? Social Regulations and the Global Economy” Ed. Pietro S. Nivola. Published by Brookings InstitutePress, pp. 163

It seems reasonably clear that U.S. adversarial legalism generates higher costs than do some alternative modes of governance.Yet there is little evidence in the policy areas covered by our research that the higher expenditures imposed by the system yield better environmental protection, more safety, and so on than the results that prevail in other sophisticated democracies In other words, our comparative interviews with corporate officials suggest that a significant share of the costs of U.S. adversariallegalism is not fully offset by its benefits. We proceed by identifying several categories of such costs, then by reviewing thecomparative literature on the subject and reporting conclusions from our interviews with multinational enterprises. At the endwe return to the question of whether adversarial legalism confers adequate compensatory benefits.

30

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 31/76

BizConDDI 2008 SS

 Fadi

Link - Litigation

Litigation kills investor confidence – trials damage the image of companies

David Cid, President of Salus International, '3. Interviewed by Wanja Eric Naef  http://www.iwar.org.uk/infocon /espionage-cid.htm

The first line of defence is really protection. Once you have to go to the United States Attorney's Office and say someone stole this information from us the damage has

already been done. So the EEA provides a disincentive for someone to do that, but it really does not help the company per se . The criminal courts are the kindsof places where you are not made whole, you simply punish the person who did something bad. On the civil side there is the possibility of 

recovering damages and you may recoup monetarily, but again the process of litigation takes forever, it is embarrassing to the company and it cancause loss of faith of stockholders and other investors. So, there is really nothing good about having a serious information compromise. The EEA is an

important facet of our society's response to this sort of thing, but it is really not a solution and it is really not the best option available to a company. Once you needto go to criminal trial you have already been seriously damaged.

Environmental litigation hurts business equity – deters investment

Paul Lanoie, Development Director, HEC Montreal. 1/1/94. “The market response to environmental incidents in Canada: a theoreticaland empirical analysis.” Southern Economic Journal. Vol. 60, No. 3

There is a growing concern that regulations that promote safety (e.g., automobile safety and product safety) may have little impact on the level of risk associated withthe utilization of such products |21; 29~. A similar concern has been recently raised with respect to regulations that promote safety in the workplace |12~. A reason often

advocated to explain this phenomenon is the lack of adequate enforcement mechanisms. In particular, it is often argued that fines imposed on agents notcomplying with these regulations are not severe enough to have a deterrence effect |30~. With respect to the enforcement of the Ontario

Environmental Protection Act (R.S.O. 1980, c. 141), Saxe writes that "the majority of fines were too low to act as effective deterrents" |23, 104~. However, someauthors have challenged this view in showing that the market provides additional monetary incentives for firms to comply with the regulations by punishing non-

complying firms through lower stock market prices. For example, some analyses have shown that public announcements of lawsuits againstAmerican firms not complying with workplace safety |8~, product safety |31~ and environmental regulations |19~ have caused significant dropsof the equity value of these firms. In this last study, it was found that the announcement of lawsuits against firms violating the AmericanResource Conservation and Recovery Act (RCRA 1976) had a significant negative impact on their equity value on the day of theannouncement, while announcements of suit settlements (e.g., fines) had no effect. In most studies, authors argue that the reductions in stock prices have some

deterrence effect on firms.

Litigation kills investor and consumer confidence

Anthony Q. Fletcher, A.B. Columbia U, ‘95 “Curing Crib Death: Emerging Growth Companies, Nuisance Suits, And

Congressional Proposals for Securities Litigation Reform”, Harvard Journal on Legislation32 Harv. J. on Legis.Third, litigation raises the potential of irreparable harm to a company’s reputation. In fact, consumer attitudes may be so adverselyaffected upon the initiation of a class action shareholder suit that some consumers may begin to view a particular product and its entireindustry negatively.47 Since most consumer purchases involve potential repeat customers, a class action suit may significantly stifle future revenues.48

Litigation has the potential to damage a company’s reputation, and consequently may deter both consumer and investor interest.

31

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 32/76

BizConDDI 2008 SS

 Fadi

Link - Litigation

Pollution management causes huge shareholder losses – companies held accountable for all cleanup costs and become moresusceptible to future lawsuits

Michael Muoghalu, Director of MBA Program, Pittsburgh State University. 10/90. “Hazardous Waste Lawsuits, Stockholder Returns, and Deterrence,” Southern

Economic Journal, Vol. 57 Issue 2, p357

Table II presents the return information for the Pollution Management, Others, and Petrochemical industry subsamples. Pollution  Management firms suffer the largest shareholder losses, 6.249 percent (z = -6.716). The large losses are not surprising for a number of reasons. First, under the Superfund Act, PollutionManagement firms can be held liable for all cleanup costs at dump sites they control, even if they generate none of the waste products.Second, a lawsuit at one location may increase the probability of additional lawsuits by increasing regulatory and public awareness of the firm’s practices. Third, the increased awareness of the firm’s practices may cause client firms, fearing a joint liability, to seek other disposal options. Another possible factor in explaining the abnormal returns is the small size (in terms of assets, market values, and cash flows) of Pollution

Management firms relative to other firms in the study.

Litigation kills investor confidence

David Cid, President of Salus International, '03 (http://www.iwar.org.uk/infocon /espionage-cid.htm

The first line of defence is really protection. Once you have to go to the United States Attorney's Office and say someone stole thisinformation from us the damage has already been done. So the EEA provides a disincentive for someone to do that, but it reallydoes not help the company per se. The criminal courts are the kinds of places where you are not made whole, you simply punishthe person who did something bad. On the civil side there is the possibility of recovering damages and you may recoup monetarily but again the process of litigation takes forever, it is embarrassing to the company and it can cause loss of faith of stockholders andother investors. So, there is really nothing good about having a serious information compromise. The EEA is an important facet of our society's response to this sort of thing, but it is really not a solution and it is really not the best option available to a company.Once you need to go to criminal trial you have already been seriously damaged.

Litigation causes a negative market reaction – automobile liability proves

DANIEL TINKELMAN, Assoc. Prof – Accounting, Pace University, Et al, 2007. “Using the Event Study Methodology to Measurethe Social Costs of Litigation - A Re Examination Using Cases from the Automobile Industry.” Review of Law & Economics, Vol. 3Issue 2, p1-42. (co-authored by: SURESH GOVINDARAJ, associate prof - Accounting, Business Ethics & Information Systems, StateUniversity of New Jersey and PICHENG LEE, associate prof – Accounting, Pace University)

In a comprehensive study extending prior research, Prince and Rubin (2002) use the event study methodology, and find negativemarket reaction to a sample of 15 initial filings of product liability litigation and 29 other litigation events against U.S. automakers between 1973 and 1995. They conclude that the event study methodology is a useful way to measure the costs of litigation. Incontrast, after examination of a new sample of 144 initial filing events and 465 other litigation events for six major automobile firmsfrom 1985 to 2000, and after re-examining Prince and Rubin’s data, we find that the market reaction to all but the most extreme and

infrequent events is generally not significant. We suggest that the event study methodology may not generally be useful to study thesocial costs of litigation, but may be useful for unexpected abnormal litigation events where the potential liabilities (includingreputation and other losses triggered by litigation) may far exceed the legal liability reserves set up by firms. We find mixed resultsfor the market impact of litigation against a competitor. When a product liability lawsuit is first filed against a U.S. firm, the marketvalues of the Japanese firms significantly decline. When a Japanese firm is sued for product liability, the U.S. firms register asignificant increase in market value. However, these spillover results have to be interpreted with caution because of small samplesizes and possible confounding events.

32

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 33/76

BizConDDI 2008 SS

 Fadi

Link- Permits

Increased carbon taxes destroy business confidence, SQUO still relies on fossil

fuels

Whyte, Garth (staff writer Financial Post); 7-7-08; http://www.financialpost.com/small_business/story.html?id=636655

This is just one example of the inefficiencies costing our businesses money and preventing them from being more environmentallyresponsible. CFIB members are regularly surveyed on environmental issues. Regardless of what plan Canada eventually adopts, businesses now face what amounts to a carbon tax, in the form of high prices. CFIB's most recent Business Barometer shows businessconfidence declining for the third quarter in a row. Eighty-two percent of respondents report rising energy costs as the factor that hasworsened their business performance. That's up from 71% in the previous quarter. It's time for governments to take action.

Carbon rationing hurts consumers – will be excluded from permit feeding frenzy

Brian Mannix, associate administrator of the Environmental Protection Agency’s Office of Policy, Economics, and Innovation,

10/9/03. “A Mountain of Money,” http://www.alec.org/am/pdf/energy/mountain-of-money.pdf 

Once rationing is imposed and the price of energy goes up, there will be many more claimants getting in line. Can the governmentrefuse to give C-rations to schools? To hospitals? To the armed forces? To local police departments? To mass transit? Tomanufacturers facing foreign competition? The average consumer will have no place in this contest, except as a victim. The politicsof carbon rationing cannot be understood by looking just at theories of climate change or at the serious economic losses that rationingwould cause. Rationing will extract tens to hundreds of billions of dollars of revenue per yearfrom consumers, and the fate of thatrevenue is what will drive political decisions. Advocates of rationing argue that we should start a program with modest goals. Butonce a feeding frenzy for C-rations begins, modesty, and restraint will be very scarce indeed.

33

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 34/76

BizConDDI 2008 SS

 Fadi

Links: Cap and Trade

Emissions caps slow economic growthCoon, Senior Policy Analyst in the Thomas A. Roe Institute for Economic Policy Studies, 2004(Charli E., “As Reliable as theGroundhog: Kyoto’s Proponents Are Back,” 7/18,http://www.heritage.org/Research/EnergyandEnvironment/wm530.cfm?renderforprint=1Likewise, Charles River Associates (CRA), an economics, finance, and business consulting firm, analyzed the proposal (PDF link) and found that imposing an

emissions cap equal to 2000-level emissions in perpetuity would increase the cost of residential electricity by over 19 percent and raise gasoline prices 14

percent by 2020. In addition, natural gas and electricity prices for industry would increase by 32 percent and 43 percent, respectively, by 2020. The CRA study

also shows that the purchasing power of the typical household (2.6 members and an income of $49,000) would erode by over $600 in 2010 and by $1,000 in

2020. More disturbingly, however, CRA notes that the cost burdens associated with this proposal would fall most heavily on the poor and elderly. CRA data

show that the poorest 20 percent of households would have to bear energy cost increases 64 percent larger than the highest income households. The elderly

would have to bear cost increases 15 percent higher than those under age 65. Additionally, CRA projects that higher energy prices would cost 39,000 jobs by

2010 and 190,000 jobs by 2020. Finally, CRA projects that all industries would suffer losses in production . For example, coal production, electricity

generation, and oil refining would decline by 57 percent, 7.9 percent, and 8.8 percent, respectively, by 2020. Non-energy sectors that are dependent on energy,

chemicals, and steel would be the hardest hit. CRA estimates that, collectively, production from energy-intensive industries would decline $70 to $160 billion

by 2020.

Emissions caps slow economic growthCoon, Senior Policy Analyst in the Thomas A. Roe Institute for Economic Policy Studies, 2004 (Charli E., “As Reliable as theGroundhog: Kyoto’s Proponents Are Back,” 7/18http://www.heritage.org/Research/EnergyandEnvironment/wm530.cfm?renderforprint=1 Senators John McCain (R-AZ) and Joseph Lieberman (D-CT) may try to attach an amended version of last year’s ClimateStewardship Act of 2003 (S. 139) to the class-action lawsuit bill that is being debated in the Senate this week or to another legislativevehicle. Studies show that this energy-suppressing proposal, whether in its original version or in its amended form, would have anadverse impact on the nation’s economy. It would increase the cost of energy for consumers, impact job creation, and slow the nation’seconomic growth. For these reasons alone, Congress should continue to reject attempts to impose caps on greenhouse gas emissions.

Binding emission caps will cripple a critical sector of US economy and exports and causing massive job

outsourcing

Stone chairman, president and CEO of Stone Container Co. ’98 – Roger “A Call for Common Sense” Global Climate Change, A senior Level

Debate at the Intersection of Economics, Strategy, Technology, Science, Politics, and International Negotiation p. 141As we all know, the first UN Framework Convention on Climate Change issued a call on the developed nations to voluntarily reduce greenhouse gases to

1990 levels by the year 2000. As I understand it, the current U.S. position now calls for mandated emissions reduction targets and timetables; we heard that today.This would be accomplished primarily, I think, by setting a cap on energy consumption and may also lead to new taxes on both energy and carbon emissions

as well as impose excessive energy efficiency standards and perhaps severely re strict the way we manage our nation’s working forests. Massive changes

such as these could permanently cripple our pulp and paper industry. A carbon tax could increase our direct costs by as much as 150 percent over the nexteighteen years and raise manufacturing costs by up to 14 percent. And if credit is not given to the use of biomass fuels, manufacturing costs could rise as much as

30 percent. Indirect costs would probably be higher than that 30 percent number. I don’t think it takes a scientist or a Kellogg School graduate to understand theimpact of a 30 percent hike in manufacturing costs. Paper mills could permanently close, thousands of jobs would probably be lost, and our position as the

world’s leading paper producer would surely deteriorate, if not vanish.As an industry, paper’s payroll is about $26 billion a year, and we ex port goods worth more than $11.5 billion. In fact, our exports represent more than 2 percent of all U.S. exports. From our perspective it would be just plain silly to jeopardize all of this based on a theory founded on poor or inexact science or someone’scomplex social or environmental agenda, using the false issue of climate change. What’s worse is that the jobs lost in the United States—and I think this is

referred to as some thing that has to be negotiated—will move to the developing nations that are aggressively expanding their pulp and paper capacity,nations such as Malaysia, Thailand, Indonesia, and Brazil. These countries are not a part of the climate change equation as I understand it. And this means

that, at the moment, they are not required to reduce their CO emissions, nor do they subscribe to the practice of sustainable forestry. They are free to cut

their virgin tropical or rain forests at unsustainable levels. So what would the net effect of all this be? Well, the way we see it is that it will lead to an

increase in CO emissions on a worldwide basis and a loss of forests rich in biodiversity. Clearly this is not a level playing field, and we see no

environmental benefit in this scenario. In my opinion the loss of thousands of jobs to overseas countries that follow no environmental standard, frankly, is

absurd.

34

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 35/76

BizConDDI 2008 SS

 Fadi

Links: Cap and Trade

Binding emissions reductions would devastate six U.S. industries critical to the global economy: paper,iron and steel manufacturing, petroleum refining, aluminum, chemical and cement manufacturing

Mulchay executive vice president and CEO of Northern Indiana Public Service Company ’98 – Patrick “The Importance of 

Flexibility Implemented Through Voluntary Commitments to Reduce Greenhouse Gas Emissions” Global Climate Change, A senior Level Debate at the Intersection of Economics, Strategy, Technology, Science, Politics, and International Negotiation p. 87-8

A U.S. Department of Energy study analyzed the potential economic impacts of increased energy prices on energy-intensiveindustries, assuming that new greenhouse gas control policies will constrain only industrialized countries and that anyemissions control mechanism—from new energy taxes to emissions standards and tradable emissions permits—will drive upenergy costs to some degree. According to the study, rising energy prices driven by new climate commitments could have acrushing effect on six U.S. industries: paper and allied products, iron and steel manufacturing, petroleum refining, aluminum production, chemical

manufacturing, and cement manufacturing. Increased energy costs from emissions mandates could devastate the U.S. steel industry (which has already investedheavily in energy efficiency and pollution control technologies), without bringing a significant de crease in worldwide energy-related emissions from

steelmaking. Production will simply be shifted to developing countries and may possibly lead to higher levels of overall pollution due to lower standards inthose countries. This issue highlights the necessity for the thoughtful application of binding agreements for all nations—developing and developed. Energycosts account for approximately one-third of the cost of making steel. Almost half of the electricity NIPSCO generates is de livered to the steel industry.Steelmaking facilities in northern Indiana have invested substantially in the past decade to improve their efficiency, both in production and in energy use.Primary Energy, a subsidiary of NIPSCO Industries, is developing cogeneration projects with several of our steelmaking customers. These projects willcontribute significantly to NIPSCO’s greenhouse gas reductions. In 1998 three Primary Energy cogeneration projects will go on-line at Inland, U.S. Steel, and

 National Steel, displacing nearly one million metric tons of NIPSCO’s carbon dioxide emissions. Sensible decision making on the greenhouse gasissue should involve a careful balancing of costs and benefits. However, this is complicated by the global effects of greenhousegas concentrations in the atmosphere, the long-term consequences and short-term costs associated with the issue, and the globaleconomy and tension between developed and developing nations.

Cap-and-trade deters investment – investors fear unstable prices

LA Times, 5/28/07. “Time to tax carbon,” http://www.latimes.com/news/opinion/la-ed-carbontax28may28,0,2888366.story?coll=la-

opinion-leftrail

Cap-and-trade would also have a nasty effect on consumers’ power bills. Say there’s a very hot summer week in California. Utilitieswould have to shovel more coal to produce more juice, causing their emissions to rise sharply. To offset the carbon, they would haveto buy more credits, and the heavy demand would cause credit prices to skyrocket. The utilities would then pass those costs on to theircustomers, meaning that power bills might vary sharply from one month to the next.That kind of price volatility, which has been endemic to both the American and European cap-and-trade systems, doesn’t just hurtconsumers. It actually discourages innovation, because in times when power demand is low, power costs are low, and there is littleincentive to come up with cleaner technologies. Entrepreneurs and venture capitalists prefer stable prices so they can calculatewhether they can make enough money by building a solar-powered mousetrap to make up for the cost of producing it.

35

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 36/76

BizConDDI 2008 SS

 Fadi

Regulations Kill FDI

Environmental regulations stifle foreign investment – statistical evidence

Yuquing Xing, professor of economics at Graduate School of International Relations, International University of Japan, 4/18/01, “DoLax Environmental Regulations Attract Foreign Investment?” Environmental and Resource Economics, ,http://www.springerlink.com/index/3JUUUG48YY29QHMU.pdf 

The statistical evidence suggests that there exists a significant negative linear relationship between FDI of the US chemical and metalindustries and the strin- gency of environmental regulation in a foreign host country. In general, lax environmental policy tends toattract more capital inflow from the US for pollu- tion intensive industries. Viewed differently, tough environmental regulationswould tend to impede or discourage FDI from these industries. Since chemicals and primary metals are probably the most polluting oall industries, this result may have implications for the relationship between environmental regulations and capital movements for other polluting industries. Also, this finding provides indirect support to the “pollution haven” hypothesis, which postulates thatdevel- oping countries may utilize lenient environmental regulations as a strategy to compete for the investment of polluting industry

from developed countries. This result is strengthened by our inability to find a similar effect for other sectors for which pollution isless of a problem – electrical and non-electrical machinery, transportation equipment and food products.

Foreign investment has empirically decreased because of strict regulations and taxes

Department of the Treasury, 5/10/07. “An Open Economy is Vital to United States Prosperity,”http://www.ustreas.gov/press/releases/hp395.htm

At $1.9 trillion, the total stock of FDI in the United States in 2005 was equivalent to 15% of U.S. GDP. Foreign investment in theU.S. is the ultimate vote of confidence in our economy. It signals a long-term belief in the strength of our markets and the skill of our workforce.

*In the last few years, the United States has not received as high a share of total worldwide FDI as it did before 2000. This trend

could be due to the growth of opportunities in emerging markets, burdensome U.S. legal, regulatory and corporate tax regimes, or themisperception that the United States is no longer open to foreign direct investments.

36

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 37/76

BizConDDI 2008 SS

 Fadi

AT: Election Kills Bizcon

The 2004 Election proves that elections don’t determine business confidence

CNN Money; ’04; http://money.cnn.com/2004/10/26/news/economy/abc_money/index.htm

The ABC News/Money magazine Consumer Comfort Index stands at -11 on its scale of +100 to -100, right where it's been the last twoweeks, and a bare two points off its average of -9 since 1985. Components within the index have shifted slightly, however. Thirty-nine percent of those surveyed now say the economy's in good shape, up five points in the last three weeks; but the percentage of peoplewho now say their own finances are solid, 53 percent, is the lowest since mid-June.

37

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 38/76

BizConDDI 2008 SS

 Fadi

Bizcon Spillover- Domestic

Fall out in one sector means that decline will spillover domestically alsoaffecting consumer confidence, housing market decline proves

International Herald Tribune; ’07; http://www.iht.com/articles/2007/10/26/business/wbmarket27.php

When home builders' stocks plunged in 2006, Wall Street was confident that the problems would not spill over into the larger economy. Exhibit A? Department storestocks rose steadily despite the housing woes. Not this time around. Housing stocks have fallen again - and this time department store stocks have marched down with

them. Since April, when investors voiced optimism that the housing slide had been contained, shares of the country's biggest departmentstore chains have fallen by about 30 percent. With the sagging prices, investors are predicting that consumers will severely cut back onspending this holiday season. The gloom is spread evenly across the industry: Shares of J.C. Penney are down by 33 percent, Macy's by 28 percent,

Kohl's by 29 percent and Sears by 29 percent. Robert Barbera, the chief economist of ITG, said that "the conventional wisdom of a year ago was that we would have a

soft landing in housing." But today, he said, "the stock market message is a hard landing for housing, with clear damage to consumer discretionary spending." In interviews, retail executives conceded that the slumping housing market is taking its toll. "We are in the window-covering business

and you don't cover windows in houses you don't build," said Myron Ullman, chief executive of J.C. Penney. But they remain at least somewhat upbeat, complaining

that investors are lumping them together when they should not. "I believe in the fourth quarter people will continue to buy," said Terry Lundgren, chief executive of Macy's. Over at Saks, the view is that the housing credit crunch is somebody else's problem. "The underlying strength in the luxury market is there," said StephenSadove, the chief executive. "That consumer is driven more by confidence in the stock market than in the housing market." Investors appear less certain that Saks willsuffer. Its shares are off just 9 percent since April 20. Still, other higher-priced department stores, which have been largely immune to housing market troubles over the

 past several years, have seen their stocks plunge this year. Nordstrom is down by almost a third. Economic slowdowns traditionally hurt stores catering to a less affluentcustomer base, such as Wal-Mart and Target. But, in a reversal, those discount chains have not done as poorly as department stores. "The problems have crept up theconsumer food chain," said Bill Dreher, an analyst at Deutsche Bank Securities. So what is different about the housing market slump of 2007? The accompanying chartsshow that in 2006, when housing troubles first became apparent, shares in home builders plunged, but department store shares held their value. The charts show the 26-week change in prices of Standard & Poor's 500 home-building index and its department store index. In 2006, when the home-building stocks plunged, the rest of the

market, including department stores, kept rising, and the home builders recovered in late 2006. But this year, with the credit crunch taking hold during thesummer, housing stocks have fallen again, and so have department store stocks. The overall stock market has held up fairly well. TheS&P 500 set a record high this month, and since has lost only a small part of its value. That performance, however, may reflect better upon the health of America's companies rather than its economy. A rising share of the profits are from foreign operations; domesticearnings remain weak for many companies. Those who think that Americans are likely to reduce their consumption spending point to two related factors.

First, in recent years the amount of home equity loans rose by as much as $180 billion a year, with much of the money going to consumption. New loans of that variety

are much harder to get now, with banks having tightened credit standards and home values falling in many areas. Second, the wealth effect of seeing that a house hadrisen in value helped to encourage spending, even if the money did not come directly from a mortgage loan. Now there may be a reverse wealth effect, as worries abouthome values lead to a reluctance to spend. If consumers do cut back, it stands to reason that department stores such as Macy's and Nordstrom might lose market share tolower-priced outlets. That may explain the smaller declines in shares of those chains.

38

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 39/76

BizConDDI 2008 SS

 Fadi

Bizcon Spillover- Domestic

Lack of Business confidence in the financial sector spills over into the overall economy,UK proves

Financial Times; 4-24-08; http://us.ft.com/ftgateway/superpage.ft?news_id=fto042420080555180540

The euro fell to a one-week low against the dollar on Thursday after a survey showed German corporate sentiment deteriorated bymore than expected in April, heightening concerns over the health of the eurozone economy. The Ifo German  business climate index fell from 104.80 in March

to 102.40 in April, its weakest level since January 2006 and below forecasts for a reading of 104.3.The survey fuelled fears that the problems emanatingfrom the financial sector were set to spill over into the region's real economy.

39

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 40/76

BizConDDI 2008 SS

 Fadi

Consumer Confidence Spillover- Domestic

Lack of consumer confidence spills over to the credit card sector slowlydraining the economy

The Guardian; 7-23-08; http://www.guardian.co.uk/business/feedarticle/7672808

Caution has set in. The Reuters/University of Michigan survey of consumer confidence in June fell to a 28-year low. And while the preliminary

July reading did edge higher, many consumers believe the country is in an economic recession. Billionaire Warren Buffett has said so several times . AmericanExpress, a bellwether for the consumer economy, posted a surprise 38 percent decline in quarterly profit on Monday and withdrew itstarget for earnings growth. "The credit situation in the U.S. is disappointing," Chief Executive Kenneth Chenault said on Monday. He said even

"very affluent people who have had historically very, very strong spending history with us" are cutting back."American Express is like a surfer riding on the economy:they can control where they go, but only to a limited degree," said Andrew Boord, an analyst at Fenimore Asset Management Inc in Cobleskill, New York, which invests

$2 billion. He noted that Amex cards are also widely held by middle- class customers, "the same folks who bought more houses thanthey should have, or a lot of people who are driving SUVs with a huge gas bill. It's not just the super-wealthy ." HOUSING WOES

TRIGGER BANKRUPTCIES Bank of America and JPMorgan each said the rate of net charge-offs in its card portfolio rose by a double-digit percentage in the secondquarter from the first. Cards also weighed on Citigroup. Increases of 67 percent in credit losses and 37 percent in reserves were among the factors leading to a $2.5

 billion quarterly loss for the bank . "The rate at which delinquent customers advance to write- offs has increased," Chief Financial Officer Gary

Crittenden said last week. "This is especially true in certain geographic areas where the impact of events in the housing market has been greatest." Housing problems are also causing more bankruptcies. Filings have risen from historic lows that followed a 2005 law change pushed by thecard industry and which has made it tougher for people to walk away from their debts. In the January-to-March period, personal bankruptcy filings

nationwide rose 26.5 percent from a year earlier to 236,982, government data show. But in six states hit hard by the housing crisis -- Arizona, California, Florida,Michigan, Nevada and Ohio -- the increase in filings was 45.2 percent. "Folks in the boom and bust markets certainly are having a tougher time," Capital One Chief Executive Richard Fairbank said last week. "We haven't seen any relief of that effect." Arnold said relief will not likely be forthcoming this year for card lenders. Or for 

consumers. "For a lot of consumers, when credit gets tight, they turn more and more to credit cards, even to buy necessities such as foodand gas, the things they need day to day," he said. "If we get some relief at the pump or in food prices, that will help, but so much of that is up in the air right

now." 

40

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 41/76

BizConDDI 2008 SS

 Fadi

Biz Con s/o - Tech

Changes in technology spill over to all sectors and globally – financial integration means news spreads quickly

Thomas Dalsgaard et al, Principal Administrator - Economics Department of the OECD, 2002. “ONGOING CHANGES IN THEBUSINESS CYCLE – EVIDENCE AND CAUSES,” Société Universitaire Européenne de Recherches Financières,http://www.suerf.org/download/studies/study20.pdf 

There may be a number of causes behind increased share price correlations across countries. Financial integration and reduceddivergencies in macroeconomic policies are examples with repercussions throughout the economies. Others relate to globaldevelopments in individual sectors driving correlations. An example could be technological change. In this case, increased cross-country correlations would be driven by the sectors where such common technological change took place. Thus, the news drivingshare price co-movements would tend to be industry-specific and increased aggregate correlation across countries would be the resultof increasingly correlated news in some industries. In the alternative case of economy-wide developments driving share pricecorrelations, the news driving increased correlation should be spread over all industries. Conditional variances of share price returnsmay be considered aproxy indicator of risk, which again is affected by the arrival of new information. Thus, if conditional varianceshave become more highly correlated in some sectors but not in others, this may suggest that the news driving share prices in theformer sectors have had amore global character, possibly as aresult of common technological developments. To shed light on this,time-varying conditional variances of equity returns have been estimated for the G7 countries using aGARCH technique. Bilateralcorrelations of conditional variances have subsequently been calculated for country pairs and the averages taken over all such country pairs. This has been done for two sub-periods since 1973 and for anumber of sectors (Table 3). The results indicate an increasedcorrelation of total market volatility (or risk) driven, in particular, by the ITsector and more generally TMTshares (note that non-cyclical services include the Telecom industry) as well as the financial sector. Given that major technological breakthroughs, productdevelopments and internationalisation have taken place in the TMTand financial sectors (where considerable deregulation andliberalisation has taken place since early and mid 1980s) it is perhaps not surprising that the shocks affecting these industries transmitmore globally. Also, in light of the “new economy”, the results seem to be consistent with the hypothesis that common technologyshocks, spurred by rapid expansion of information and communication technology, may have been the main driving force inconcurrent asset price developments across borders.

41

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 42/76

BizConDDI 2008 SS

 Fadi

Biz Con Spillover – Domestic

Declines in biz and consumer con act as downside risks to the broader

economy – decrease demand

Commonwealth Budget ’02, “Statement 3: Economic Outlook”, http://www.budget.gov.au/2001-02/papers/bp1/html/bs3-

03.htmFrom a domestic perspective, a key uncertainty relates to the possibility that the recent downward trend in business andconsumer sentiment is sustained over coming quarters. While the relationship between business and consumer sentimentmeasures and actual growth outcomes can be loose, if the recent falls in these measures were sustained there may be downsiderisk to the forecasts for business investment and consumption. On the other hand, there is a possibility that the lower dollar andlower interest rates will provide a greater stimulus to economic growth than has been incorporated into the forecasts. There isalso the potential for stronger than forecast investment and consumption in 2001-02 if business and consumer confidence wereto rebound sharply from their current levels. The dwelling sector is expected to rebound strongly in 2001-02, although, there isa greater than normal degree of uncertainty surrounding the timing and extent of this recovery. In particular, while theGovernment's more generous First Home Owners Scheme and the recent reductions in interest rates should provide a

significant boost to activity in the sector, the timing and magnitude of this boost is difficult to assess. The key internationaluncertainty is how the US economy will evolve over the next few quarters. The most likely outcome is that growth will slow inthe first half of 2001 as excess inventories are unwound and excess capacity is pared back, but will pick up quickly once theadjustment is complete. In this case the impact on the rest of the world would be relatively mild and transitory. However, if falls in consumer and business confidence were to translate into weaker demand then the deterioration in confidence wouldlikely become self-reinforcing and the outcome would be a deeper and more prolonged period of weakness than currentlyenvisaged.

Biz con spills over to other sectors

Contractor ‘6, “London IT firms 'the most attractive in Europe'”, http://www.contractoruk.com/news/002968.html

Asked yesterday about the prosperity of London-based IT firms, the Federation of Small Businesses said the confidence in thesector could create a positive overspill. Said FSB spokesman Simon Briault: “Optimism in one small business sector can oftenspill over into other areas, so this is potentially good news for all small businesses.”

42

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 43/76

BizConDDI 2008 SS

 Fadi

Biz Con Spillover - Global

Globalization means U.S. biz con spills over – effects other nations’ growth

F&D (Finance & Development, a quarterly mag of the IMF), 2005, “Economic Spillovers”, September 2005, Volume 42, Number 3

But just how large is the impact of external economic conditions on a country’s growth? And as the world economy becomesmore integrated, has the importance of growth spillovers increased? We undertook three studies to try to answer thesequestions. One study analyzed trade-related growth spillover in over 100 industrial and developing countries. The other twostudies sought to assess the impact of the United States and South Africa on the growth of other countries. Our results showthat economic conditions in trading partners do in fact matter significantly for growth. After controlling for other growthdeterminants, we found that a country’s economic growth is positively influenced by both the growth rate and relative incomelevel of its trading partners. Our findings also suggest that countries benefit relatively more if their trading partners grow faster than they themselves do and are richer. And we found evidence that some countries are indeed engines of global or regionalgrowth: the impact of the United States is significant in many countries around the world, and South Africa matters for economic growth in the rest of Africa. In all three cases, we found the estimated impact of growth spillovers to be relatively

large. It has been larger in recent decades and for open economies, implying that international spillover effects may increase inimportance as globalization continues. What theory tells us Economic conditions abroad—including growth rates and income levels—are thought to

influence a country’s growth through several channels. * The most obvious channel is trade linkages: a rise in trading partners’ growth leads to an increasein their demand for imports, which then contributes directly to an increase in the net exports of the home country. And the positive implications of trade for economic growth are not limited to countries that run surpluses, since countries can benefit from technology transfers and other efficiency gains associatedwith international trade (Coe and Helpman, 1995). * With growing foreign direct and portfolio investment, the spillover effects of trading partners may also

  be transmitted through financial linkages. * Finally, there may be indirect effects, with business and consumer confidence in major countriesinfluencing confidence in other countries.

Growth of world econ tied to U.S. biz con and consumer con

UNECE (United Nations Economic Commission for Europe), ’02, “2002 - United States: leading the global recovery

Western Europe: moderate growth prospects”, http://www.unece.org/press/pr2002/02gen12e.htm"An important risk to the forecast recovery in Europe and other regions of the world economy is its dependence on a sustainedand gradually strengthening expansion of domestic demand in the United States," said Mrs. Schmögnerová. This is expected tostimulate domestic activity in the rest of the world, including Europe, via exports and the spillover effects from increasing business and consumer confidence in the United States.

The internationalization of the market means business confidence spills over globally

Thomas Dalsgaard et al, Principal Administrator - Economics Department of the OECD, 2002. “ONGOING CHANGES IN THEBUSINESS CYCLE – EVIDENCE AND CAUSES,” Société Universitaire Européenne de Recherches Financières,http://www.suerf.org/download/studies/study20.pdf 

A further, much more speculative, channel for greater synchronisation is the internationalisation of enterprises – over and above the effect

it may have on synchronisation of share prices as discussed in Box 4. For example, to the extent enterprises are multinational, the need to retrench because of 

developments in one market may cause cut-backs in activities in other countries, and viceversain case of buoyant conditions.38 It is difficult to get apicture of the potential importance of such effects. However, foreign direct investment flows have expanded strongly in recent years pointing to apotentiallyrising influence of this channel (Figure 22). The transmission of cyclical fluctuations over time may conceivably also be affected by“soft” factors such as confidence. Even if more tangible influences such as linkages viatrade and asset prices may determine theoverall magnitude of international transmission, its timing could well be influenced by confidence. Indeed, over the decade of the

1990sthere has been avery high correlation between indicators of business confidence and share prices in many countries, notably theUnited States. Although causality remains uncertain, this may conceivably have speeded up the impact of share price developments by directly affecting the “animal spirits” of investors.  Nevertheless, despite closer correlation of equity returns over the last two decades, it is not obvious

that cross-country correlations of confidence indicators have increased in any systematic manner. 

43

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 44/76

BizConDDI 2008 SS

 Fadi

AT: Regulations Help Businesses

Even if regulations don’t hurt businesses, firms will overreact – they will ignore any benefits

Patrick Bernhagen, Department of Politics and International Relations - University of Aberdeen, 8/15/05. “Business Political Power:Economic Voting, Information Asymmetry, and Environmental Policy in 19 OECD Countries,”http://convention2.allacademic.com/getfile.php?file=apsa05_proceeding/2005-10-06/40383/apsa05_proceeding_40383.pdf 

The negative link between environmental protection and economic performance is neither clear nor undisputed. While environmental pioneers may suffer short-term economic disadvantages in international competition, early movers in the area of environmental protection will be at an advantage in competition for innovative technologies (J?nicke 1992, 52). At the level of the individual firm,however, no matter what society-wide benefits and even the long-term benefits to the firm there may be, envi- ronmental policies addconsiderable compliance costs to firms. This may lead to cut- backs in research and development efforts, limit the innovative efforts offirms, or even endanger their general profitability. As a result, firms will generally tend to em- phasize the costs of environmental policy, while underestimating the benefits and op- pose environmental policy which they perceive to place them at a competitivedisad- vantage. Exceptions are cases where firms can achieve protectionist benefits through stricter environmental policies. In practice, however, these are rather rare (Murphy 2004)

44

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 45/76

BizConDDI 2008 SS

 Fadi

Flight Bad – Econ/Environment

Industrial flight hurts the economy and can’t solve pollution – businesses will just move to laxer countries

Yuquing Xing, professor of economics at Graduate School of International Relations, International University of Japan, 4/18/01, “DoLax Environmental Regulations Attract Foreign Investment?” Environmental and Resource Economics, ,http://www.springerlink.com/index/3JUUUG48YY29QHMU.pdf 

To correctly interpret our findings, one should keep in mind that the environ- mental variable is only one of the determinants of theFDI. Our empirical study only identifies the impact of environmental regulations on capital outflows and reveals the role of environmental regulations in the decision-making of the FDI of polluting industries. It would not be appropriate to conclude thatenviron- mental regulation alone can decide the direction of FDI flow for a polluting industry. We have no convincing evidence thatthe environmental variable domi- nates other determinants in the process of determining FDI of a polluting industry. However, to theextent that the environmental policy gap between developing and developed countries widens, more capital investment associatedwith polluting industries can be expected to flow to countries with lax environmental regulation. This could result in a significantmigration of polluting industry to “pollution havens”. The flight of polluting industries may cause economic problems such asunemployment in the short run for the country exporting capital, and may also expedite environment degradation of host countries. Inaddition, the migra- tion of polluting industries only changes the geographic location of pollution generation. If the pollution isundepleted and can spill over borders (via rivers, aquifers, precipitation or air movement), the reduction of the pollution at thecountry with strict environmental regulations may be at least partially offset by an increase in pollution in other countries. Thus thefree mobility of capital asso- ciated with polluting industries may undermine noncooperative efforts at pollution control.

45

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 46/76

BizConDDI 2008 SS

 Fadi

AT: No Flight

Skeptics of industrial flight are wrong – their studies focus on goods flow, not capital flow

Yuquing Xing, professor of economics at Graduate School of International Relations, International University of Japan, 4/18/01, “DoLax Environmental Regulations Attract Foreign Investment?” Environmental and Resource Economics, ,http://www.springerlink.com/index/3JUUUG48YY29QHMU.pdf 

An alternative view, without as much theoretical justification, is that environ- mental regulations have no effect on plant location. The basic argument is either that cost effects are so small as to be negligible or that increased environ- mental quality is reflected inreduced employee compensation. Without regulation, employees would have to be paid more to live and work in polluted conditions.Thus in equilibrium, the total costs will be the same. Using the later argument, one would still expect to see particularly pollutingindustries moving to loca- tions endowed with a clean environment (perhaps temporarily) and with weaker environmentalregulations. The empirical literature to date supports the view that environmental regulations do not matter.2While empirical studies of the industrial flight/pollution haven hypotheses have been illuminating, their shortcomings suggest that thequestion has not yet been fully answered. One problem with previous empirical studies is that the endo- genous variable, intended totrack the effects of environmental regulations, is unsatisfactory. For instance, Low and Yeates (1992) use a country’s share of  production in total world trade of pollution-intensive products as a proxy for specialization in polluting goods. This is a coarsemeasure of specialization. Such a variable is determined by a wide variety of factors in addition to the strictness of environmentalregulations. Furthermore, it is capital flow, not goods flow, which should be most affected by differential environmental regulations.Only in the long run will a country’s production mix reflect capital movements induced by differential environmental regulations.

46

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 47/76

BizConDDI 2008 SS

 Fadi

Consumer Con Key to Econ

High consumer confidence indicates strong consumer spending – the key

internal link into the economy

Investopedia, Forbes Media Company, ’08, “Consumer Confidence: A Killer Statistic”,

http://www.investopedia.com/articles/fundamental/103002.aspConsumer spending is the one key to any market economy. On the airwaves, there's never a shortage of data, analysis and cablecommentary regarding consumer behavior. So what are the key fundamental consumption indicators in a good economy? Howabout in a bad economy? The following article will recap the vital economic indicators of overall consumption, outlining whattrends to look for and when to look for them. There is no doubt that consumer spending is the most vital component of anyeconomy. Why? Depending on the economy's sheer breadth, consumer spending can range anywhere from 50-75% of GDP. Inthe U.S. and most highly industrialized nations, this percentage is about 65% of total spending. The first part of measuring totalconsumption is measuring consumer sentiment, which is derived completely from a consumer's standpoint.

Consumer confidence key to econ – drives economic activity

Jim Lee, Professor of Economics at Texas A&M University-Corpus Christi, Oct. ‘02 “What is the role of consumer confidence in the

 business cycle, and how does it affect the economy?”,http://64.233.167.104/search?q=cache:jViVBhE4T_0J:www.tracer2.com/admin/uploadedPublications/181_tlmrexpert0210.pdf+consumer+confidence+key+to+economy&hl=en&ct=clnk&cd=22&gl=us

Consumers play a major role in the economy. This is because consumer spending accounts for two-thirds of U.S. output. Sincehouseholds’ economic outlook affects their spending behavior, their expectations influence the direction of economic activity inthe business cycle. Consumer confidence, or optimism about the overall economy, is commonly referred to as “animal spirits”after a famous economist, John Maynard Keynes. Keynes asserted that the Great Depression of the 1930s was largelyattributable to a collapse of public confidence, which led to dramatic declines in consumer and business spending. Today,consumer confidence receives a great deal of media attention. Rising consumer confidence is widely interpreted as a precursor to higher future household spending. It is therefore a leading indicator of the overall economy. If consumers are more

optimistic about the economy, they will tend to spend more, especially on durable goods and other large purchases. A higher overall demand for goods and services will subsequently lead to higher output and employment.

47

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 48/76

BizConDDI 2008 SS

 Fadi

Biz Con Key to Growth

Business confidence key to sustaining growth via investment

Sue Kirchhoff and Barbara Hegenbaugh, 2004, USA Today, “What's worrying business? Confidence erodes across industries”

http://www.usatoday.com/educate/college/careers/news12.htmBusiness investment and hiring are key to sustained economic growth, as consumer spending growth slows from its heady pace. While corporate profits and spending have ramped up, economists are nervous about one key element -- confidence.Business confidence has eroded since spring, according to several surveys. On Monday, economic consulting firmEconomy.com said its weekly survey of business owners showed declines were widespread, both geographically and acrossindustries. The U.S. index is off 25% from its peak earlier this summer. How business executives see the world is key for theeconomy because it can influence decisions on hiring and investing. Nervousness is likely one reason hiring has been patchythis year, spiking in March but growing less rapidly since then.

Lack of business confidence causes a recession

John Braithwaite, Australian Research Council Federation fellow, 2004, The Annals of The American Academy of Political

and Social Science, March, “Emancipation and Hope,” LexisThe challenge of designing institutions that simultaneously engender emanci- pation and hope is addressed within theassumption of economic institutions that are fundamentally capitalist. This contemporary global context gives more force to thehope nexus because we know capitalism thrives on hope. When business confidence collapses, capitalist economies head for recession. This dependence on hope is of quite general import; business leaders must have hope for the future before they will build new factories; consumers need confidence before they will buy what the factories make; investors need confidence beforethey will buy shares in the company that builds the factory; bankers need confidence to lend money to build the factory;scientists need confidence to innovate with new technologies in the hope that a capitalist will come along and market their invention. Keynes’s ([1936]1981) General Theory of Employment, Interest and Money lamented the theoretical neglect of “animal spirits” of hope (“spontaneous optimism rather than . . . mathematical expectation” (p. 161) in the discipline of economics, a neglect that continues to this day (see also Barbalet 1993).

Bizcon is key to prevent economic collapse resulting from a lack of investmentThomas Boston, Black Enterprise, “Confidence is key: economist cites the importance of business outlook to recovery -The Economy & You”, http://findarticles.com/p/articles/mi_m1365/is_6_33/ai_95845058, Jan 2003

Trying to jump-start the economy by reducing interest rates even further is like pushing on a string. Despite the fact thatthe Federal Reserve has lowered the federal funds rate to 1.75%, its lowest level in 40 years, the Index of Leading Economic

Indicators (the measure used to gauge the future health of the economy) has declined for four consecutive months. Why

is the economy so anemic? One major reason is declining consumer and business confidence. Think of it this way:Suppose you decide to make a major purchase, such as a house or automobile. If the price has been determined, two additionalfactors are likely to figure prominently in your decision to make the purchase. The first factor is the interest rate, which isnothing more than the cost of borrowing money. The second factor is how confident you are about your future earnings.

For example, if you are concerned about job security, you are not likely to make the purchase, no matter how low

interest rates might be. The same logic holds for business owners deciding whether to undertake a new investment .While interest rates are important because they affect the total return on capital invested, if business owners are pessimistic

about future economic activity, even low interest rates will not be attractive enough to make them invest.

48

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 49/76

BizConDDI 2008 SS

 Fadi

Investment Key to Econ

Business investment key to the economy – recent investment-led recession proves

Economic Report of the President, Feb. 2004, http://www.gpoaccess.gov/usbudget/fy05/pdf/2004_erp.pdf 

Business investment in equipment and software surged in the late 1990s. Real investment increased at an average annual rate of roughly 13 percent between the fourth quarter of 1994 and the fourth quarter of 1999, compared with an average annual rate of less than 7 percent over the preceding three decades. The surge in investment was led by purchases of high-tech capital goods —computers, software, and communications equipment—which increased at an average annual rate of 20 percent over the period. Economic theory implies that businesses invest when they believe that there are profits to be made from thatinvestment. In the late 1990s, several developments fed a perception that the expected future return from newly installed capitalwould be considerably greater than the cost of this capital. Rapid advances in technology had lowered the price of high-techcapital goods dramatically throughout the 1990s and especially in the second half of the decade. For example, the quality-adjusted price index for business computers and peripheral equipment fell at an average annual rate of 22 percent between late1994 and late 1999. In addition, rapidly growing demand for business output led firms to believe that newly installed capital

would be used productively, boosting the expected return to investment. Moreover, technological progress and legislation provided incentives for strong investment in high-tech equipment. The development of the World Wide Web enabled new andestablished firms to enter e-commerce, and rapidly increasing household and business access to the Internet provided a large base of 

 potential customers for these firms. The Telecommunications Act of 1996 provided for substantial deregulation of thetelecommunications industry and may have spurred investment in that sector. In addition, concern that some computer systems might

 be inoperable after December 1999 caused a wave of so-called Y2K-related investment. Some analysis indicates that Y2K spendingalone boosted the growth rate of real equipment and software investment by more than 31⁄2 percentage points per year in the latter 

 part of the 1990s. Optimism about the potential gains from new capital, and from high-tech capital in particular, was reflected notonly in investment decisions but also in a sharp rise in stock prices. From late 1994 to late 1999, the Wilshire 5000—a broad index of U.S. stock prices—nearly tripled. The Nasdaq stock price index, which is heavily weighted toward high-tech industries, registered aneven more dramatic ascent, increasing more than fourfold over this period. The increase in stock prices stimulated investment byreducing the cost of equity capital. In addition, the rise in stock prices fueled a consumption boom by boosting the wealth of agrowing number of Americans and more generally signaling better future economic conditions. This consumption boom encouragedfurther business investment. In mid-2000, business equipment investment abruptly slowed. After rising at an annual rate of 15 percent

in the first half of the year, real spending on business equipment and software inched up at about a 1⁄4 percent annual rate in thesecond half. The slowdown in high-tech equipment investment was especially dramatic. For example, real outlays for computers hadskyrocketed at an annual rate of 40 percent in the first half of the year, but grew at less than one-quarter of that pace in the second

half. This stalling of investment preceded the downturn in the overall economy; by contrast, in the typical business cycle,investment has turned down at the same time as overall economic activity (Chart 1-2). The unusual timing of the investmentslowdown in this recession is the reason that the recent business cycle has been widely viewed as an “investment-led”recession. The sharp break in investment occurred in parallel with an apparent reevaluation of future corporate profitability amongfinancial market participants. By the end of 2000, the Wilshire 5000 index of stock prices was down 13 percent from its peak, andanalysts had substantially marked down their forecasts for S&P 500 earnings over the coming year. The movements were even moredramatic in the high-tech sector. The Nasdaq index of stock prices dropped nearly 50 percent from its peak in March 2000 to the endof the year. The prices of technology, telecommunications, and Internet shares fell particularly sharply, along with near-term earningsestimates. The elevated valuations of many such companies also declined markedly. Indeed, the price-earnings ratio (where“earnings” are those expected over the next year) for the technology component of the S&P 500 fell from a peak of more than 50 in

early 2000 to less than 35 by the end of the year. These facts and considerable anecdotal evidence suggest that business managers

and investors sharply revised downward the expected gains from new capital investment during this period. One factor that mayhave contributed to the downward revision is a possible slowing of the pace of technological advance—the rate at which computer 

 prices were declining eased (from more than 20 percent in the late 1990s to about half that in 2000), and the software industryreportedly developed no new so-called “killer applications” that required or spurred purchases of new hardware. In addition, firmsmay have been disappointed by the response of households to e-commerce opportunities and to new communications technologiessuch as broadband. Finally, previous investments had not uniformly translated into higher profitability, perhaps because the true

 potential of new forms of capital could be realized only by changing other aspects of production processes. For example, newcomputer systems designed to lower inventory management costs might have required an expensive reconfiguration of warehouses.

49

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 50/76

BizConDDI 2008 SS

 Fadi

Investment Key to Econ

Investor confidence key to the economy

Phil DeFeo, CEO of Pacific Exchange, 2002. http://www.nysearca.com/content/regulation/weekly/2002/PCX_wb-02-25.pdf 

So the pendulum has swung. Stocks that once traded at sky-high prices are now cautiously valued. Investors have grown weary of significant losses, and are now wary of a marketplace where the information provided cannot be trusted.As long as investors do not trust the financial system, investment performance will lag economic performance. Lacking confidence,they will overweight risk, discount values and potential returns, and shy away from committing new capital to the market. I believethis can and will act as a brake on essential capital formation. I believe will weaken and slow both the economic recovery and long-term growth.

50

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 51/76

BizConDDI 2008 SS

 Fadi

Foreign Investment Internal Link

Foreign investment key to US economy – jobs, R&D, capital account

USINFO, 2/12/07. “Foreign Investment in U.S. Benefits Economy, Bush Advisers Say,” http://www.america.gov/st/washfile-english/2007/February/20070212165404AKllennoCcM0.7061731.html

Washington -- Foreign direct investment in the United States benefits the U.S. economy by stimulating growth, generating jobs for U.S. workers, promoting research and development, and financing the current account deficit, say President Bush’s key economicadvisers.

Recently, foreign direct investment in the United States has stagnated, according to the annual Economic Report of the Presidentreleased February 12. The share of employment credited to foreign investment declined slightly between 2000 and 2004 and the shareof foreign investment in the U.S. capital account has declined since 1999.

The current account deficit is the broadest measure of U.S. transactions with the rest of the world. The U.S. capital account is the flowof money both into the United States and from the United States for investment, grants and loans.

FDI key to US economy – fosters innovation and growth

 Department of the Treasury, 5/10/07. “An Open Economy is Vital to United States Prosperity,”http://www.ustreas.gov/press/releases/hp395.htm

Foreign firms in the U.S. account for 5.7% of U.S. economic output, as well as 10% of all investment in plant and equipment inthe United States.

*Foreign firms in the U.S. re-invested $48.6 billion (45% of their income) back into the U.S. economy in 2004. This investment

furthers innovation and promotes economic growth.*

Foreign firms generate 19% of U.S. exports ($153.9 billion in 2006). This contribution is greater than their overall percentage of U.S. economic output, which means they are doing more than their share to help improve the U.S. trade balance.

*Foreign firms in the U.S. generate a disproportionate share of national R&D spending (13%, totaling $29.9 billion). This spending

strengthens U.S. global competitiveness in pharmaceuticals, high-tech, and other key sectors and produces innovative products thathelp to improve our standard of living.

*The economic benefits generated by inflows of foreign capital help strengthen economic leadership. In the late 1980s and early

1990s, some pointed with alarm to Japanese purchases of U.S. assets, fearing they foreshadowed the Japanese overtaking our economic leadership. Twenty years later, the resulting jobs and economic growth show those fears were misplaced.

Reduced Foreign Investment leads to the collapse of HegScott Champion, analyst with the Centre for Global Negotiations, “Will a US dollar collapse end American Hegmenony?”, Share

International, 6/2003,

http://64.233.167.104/search?q=cache:c7OliQOGgIEJ:shareno.net/dollarcollapse.htm+economic+collapse+and+hegemony&hl=en,BB

Today, many forces are coming together that could lead to a collapse of the US dollar. Among these are its oversupply, lowinterest rates, the need to fight deflation, continuing stock-market declines, and a potential derivatives meltdown [see ShareInternational May 1990] It is highly likely that in the not-too-distant future all of these factors will come into playsimultaneously. In addition, many of the world’s financiers, central bankers, and government officials cannot be pleased

with the economic and foreign policies of the Bush administration. They well know that the continued recycling of capitalinto US assets serves, at least in part, to allow the US to dominate the world. If the people who control the world’s capital

51

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 52/76

BizConDDI 2008 SS

 Fadi

were to decide, for whatever reason, to cease buying Treasury securities and to liquidate those they own, the dollar

would collapse and the US would experience an unprecedented economic shock. Were this to happen, the world would

witness the end of American hegemony.

52

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 53/76

BizConDDI 2008 SS

 Fadi

Foreign Investment Internal Link

Foreign Investment key to avoid economic collapseScott Champion, analyst with the Centre for Global Negotiations, “Will a US dollar collapse end American Hegmenony?”, Share

International, 6/2003,

http://64.233.167.104/search?q=cache:c7OliQOGgIEJ:shareno.net/dollarcollapse.htm+economic+collapse+and+hegemony&hl=en,BB

For many years the US has been the economic engine for the world, standing in as purchaser of last resort for the world’ssupply of goods in times of global economic distress. Now the US itself is in trouble. If the US attempts to fight the rapidlygaining forces of deflation by encouraging a depreciating dollar, it will export deflation to the rest of the world because foreigncurrencies will rise relative to the dollar. This will damage foreign economies and inhibit their ability to buy goods andservices, including those from the US. Since the short-term benefit of a weak dollar to US corporations’ earnings will show upquickly, while the long-term damage to the global economy will become apparent only with the passage of time, it is a fair assumption that the US will take the easy route and worry about the global fallout later. The problem with this approach for theBush administration is that there are great risks to a weak dollar policy. The world economy is awash in dollars, and when there

is too much of something the price or value usually drops, sometimes precipitously. If confidence in the dollar or dollarassets, such as Treasury bonds, declines, the world may, at some point, reconsider its involvement with US assets. The

results of such a reappraisal could be anything from mildly damaging to catastrophic. Seventy-five per cent of the

world’s central-bank assets are held in US dollars (as Treasury bonds). These bankers do not want their primary asset

to suffer a significant decline.

High debt levels leads to anti-american military aggressionThe International Herald Tribune, August 18, 2007, “A debt culture gone awry; America's handicap”, Hamid Varzi, an

economist and banker based in Tehran, Pg. 5, lexis, BBThe U.S. economy, once the envy of the world, is now viewed across the globe with suspicion. America has become

shackled by an immovable mountain of debt that endangers its prosperity and threatens to bring the rest of the world

economy crashing down with it. The ongoing sub-prime mortgage crisis, a result of irresponsible lending policies designedto generate commissions for unscrupulous brokers, presages far deeper problems in a U.S. economy that is beginning to

resemble a giant smoke-and-mirrors Ponzi scheme. And this has not been lost on the rest of the world. This new reality has

had unfortunate side effects that go beyond economics. As a banker working in the heart of the Muslim world, I have beenamazed by the depth and breadth of anti-Americanism, even among U.S. allies, manifested in reactions ranging from

fierce anger to stoic fatalism. Muslims outside the United States interpret America's policies in the Middle East not as aneffort to spread democracy but as a blatant neocolonialist attempt to solve its economic problems by force. Arabs and

Persians alike argue that America's fiscal irresponsibility has forced the nation to seek solutions through military

aggression. 

53

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 54/76

BizConDDI 2008 SS

 Fadi

AT: RegulationsCompetitiveness

All the evidence goes the other way – no empirical evidence that regulations stimulate competitiveness

Robert N. Stavins, Assoc Prof – Public Policy, Harvard, 1994. [“The Challenge of Going Green,” Harvard Business Review, Vol. 72Issue 4, p37-48]

The picture is bleaker still for the tenet that environmental regulation stimulates innovation and competitiveness. Not a singleempirical analysis lends convincing support to this view. Indeed, several studies offer important, if indirect, evidence to the contrary. Natural skepticism regarding this regulatory free lunch should remain unabated.

54

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 55/76

BizConDDI 2008 SS

 Fadi

Bizcon key to Econ

Bizcon is key to prevent economic collapse resulting from a lack of investment

Thomas Boston, Black Enterprise, “Confidence is key: economist cites the importance of business outlook to recovery -The Economy & You”, http://findarticles.com/p/articles/mi_m1365/is_6_33/ai_95845058, Jan 2003

Trying to jump-start the economy by reducing interest rates even further is like pushing on a string. Despite the fact thatthe Federal Reserve has lowered the federal funds rate to 1.75%, its lowest level in 40 years, the Index of Leading Economic

Indicators (the measure used to gauge the future health of the economy) has declined for four consecutive months. Why

is the economy so anemic? One major reason is declining consumer and business confidence. Think of it this way:Suppose you decide to make a major purchase, such as a house or automobile. If the price has been determined, two additionalfactors are likely to figure prominently in your decision to make the purchase. The first factor is the interest rate, which isnothing more than the cost of borrowing money. The second factor is how confident you are about your future earnings.

For example, if you are concerned about job security, you are not likely to make the purchase, no matter how low

interest rates might be. The same logic holds for business owners deciding whether to undertake a new investment .While interest rates are important because they affect the total return on capital invested, if business owners are pessimistic

about future economic activity, even low interest rates will not be attractive enough to make them invest.

Biz con key to the economy – investment and employment

Thomas D. Boston, heads Boston Research Group in Atlanta & member of the Black Enterprise Board of Economists, 1-1-03,

“Confidence is key: economist cites the importance of business outlook to recovery”,Think of it this way: Suppose you decide to make a major purchase, such as a house or automobile. If the price has beendetermined, two additional factors are likely to figure prominently in your decision to make the purchase. The first factor is theinterest rate, which is nothing more than the cost of borrowing money. The second factor is how confident you are about your future earnings. For example, if you are concerned about job security, you are not likely to make the purchase, no matter how lowinterest rates might be. The same logic holds for business owners deciding whether to undertake a new investment. While interestrates are important because they affect the total return on capital invested, if business owners are pessimistic about futureeconomic activity, even low interest rates will not be attractive enough to make them invest. Over the past year, business owners

have been more wary than consumers, so investments have lagged. Fortunately, consumer spending has carried the economyforward--even though consumers are facing record levels of debt. But the situation has changed over the last three months. Thegrowing number of job losses has caused consumers to become cautious. As a result, if the economy is to improve, investmentmust pick up. But low interest rates alone will not get the job done. Rather, the key index to watch is business confidence. TheGazelle Index, a survey of 350 of the nation's fastest growing black-owned businesses as measured by workforce growth rates,took a sharp drop, from 67.7 to 49.5, between the second and third quarters. An index value below 50 indicates that businessowners are more negative than positive about economic conditions. Why is the index value important? When business leaders areconcerned about the economy, they reduce hiring, which contributes to higher unemployment rates.

Business investment is the dominant factor – biz con dictates the direction of the economy

Investopedia, Forbes Media Company, ’08, “Consumer Confidence: A Killer Statistic”,

http://www.investopedia.com/articles/fundamental/103002.aspThough not as powerful an indicator as consumer spending, business capital spending can be a killer statistic - since things canget ugly in a hurry when overall business investment precipitously cuts back: the impact on the economy can be felt at an evenfaster pace than as if the cut occurred purely along consumer lines. The rationale is that today's sophisticated and largeinventory-lean corporations often can gauge future demand before policy makers can implement changes, which often takemonths to kick in due to embedded policy lags. Corporate spending is therefore very similar today to the role the stock markethas played in most recoveries: improvements can be foreseen as a leading indicator for things to come. On the flip-side,

55

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 56/76

BizConDDI 2008 SS

 Fadi

cutbacks in corporate capital spending are indeed an ominous indicator. The PMI, or Purchasing Managers Index, is arepresentation of the progress in corporate spending.

56

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 57/76

BizConDDI 2008 SS

 Fadi

Indo-Pak war 

A decline in confidence leads to an Indo-Pak conflict to cover up economic collapse.

Micheal C. Rupert, “Global Economic Collapse Imminent,Pension Fund Disaster”, http://www.rense.com/general26/ftw.htm , July 2002

 

The situation now is much, much worse as more factors combine to suggest that foreign investors and trust in the U.S.

economy might soon be a thing of the past. Your pension is at risk today and your home may be at risk in six months to ayear. One economic analyst has suggested that a nuclear exchange between India and Pakistan might be the perfect

cover for the biggest financial wipe out in human history. I think that an ill-conceived and risky invasion of Iraq might

serve the same purpose. From consumer confidence, to corporate accounting, to the dollar, to gold, to foreign capital

flight, to pension fund wipe outs, to the derivative bubble, to debt, there is not a single economic indicator that is not

flashing red. The warnings are as clear, explicit and well-documented as were the warnings received by the U.S. government

throughout summer 2001 that a terrorist attack against the World Trade Center would take place during the week of Sept. 9using hijacked airliners from United and American airlines. Nothing was done to prevent that and apparently nothing is beingdone now in spite of the fact that $4.2 trillion of your money has been stolen right in front of your eyes.

57

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 58/76

BizConDDI 2008 SS

 Fadi

2AC Biz Con Frontline

T/ A. Incentives increase affected industries’ market control – increasingproductivity and income

Roger G. Noll, professor of economics emeritus at Stanford University and a Senior Fellow at the Stanford Institute for Economic

Policy Research, ’97, “Internationalizing Regulatory Reform” in “Comparative Disadvantages? Social Regulations and the Global

Economy” Ed. Pietro S. Nivola. Published by Brookings Institute Press, pp. 332-333The international consequence of incentive-based environmental regulatory reforms is to reallocate production among nations in amanner that reduces total social costs. These reforms reduce compliance costs for industries that need to control harmful pollutants. Asa result, the relative price of the products of these industries falls, and if their products are traded these industries gain a larger share ofthe world market. In some cases, the principal effect is to substitute domestic production for exports that appeared attractive only because they were produced in a less costly regulatory environment, and in other cases it is to increase exports of the industries thatexperience lower regulatory compliance costs. In all cases, all prices and exchange rates will adjust so that some other industriesexperience some compensating adjustment in net imports, and total trade can either rise or fall. But in all cases, the net effect is an

increase in world productivity and income as production moves to areas where the true social costs are lowest.

B. Increased productivity and business capital increases business investment –key internal link into long-term growth and competitiveness

Christian E. Weller, Fellow at the Center for American Progress and an Associate Professor of Public Policy at the University of 

Massachusetts Boston, and Amanda Logan, Research Associate at the Center, 3-5-08, “Slowing Productivity Growth Requires

Boosting Business Investment”, http://www.americanprogress.org/issues/2008/03/slow_productivity.htmlThe Labor Department reported this morning that worker productivity increased at an annual rate of just 1.9 percent in thefourth quarter of last year, the slowest pace since the first quarter of last year. This also marks the third year in a row that productivity growth fell below the crucial 2 percent-mark. In our report last year, “Ignoring Productivity at Our Peril,” weexamined the likelihood of a general slowdown in productivity and economic growth in the fourth quarter and what that would

mean to U.S. economic competitiveness over the course of 2008. As we pointed out in the report, worker productivity is a keycomponent of economic growth and stability. Over the past seven years, economic growth has largely been driven by consumer spending, which is unsustainable in the long run because of the low personal savings rate, slow income growth, and highhousehold financial debt financing consumption. Despite record profit levels, many companies have chosen to use their moneyin ways other than investing directly in growing their businesses’ overall productivity—and we are seeing the results. More business investment can lead to higher future productivity growth via an enlarged capital base. The rewards of higher  productivity growth come in the form of more money for workers to spend on consumption items. This extra money will provide businesses with an incentive to invest more in their buildings and equipment, thereby laying the foundation for evenhigher productivity in the future.The virtuous cycle of higher investment, rising productivity growth, and growing income helped lift almost all economic boatsin the 1990s. From 1995 to 2000, productivity grew at an annual rate of 2.5 percent, which some researchers have attributed toinvestments in better technology such as hardware and software. Under the right circumstances, this translates into higher living standards in an expanding economy. Boosting business investment to overcome indications of a vicious productivity

cycle taking hold in our economy would have positive effects for the economy both in the short term and the long term. In theimmediate future, faster investment growth could give the economy a much-needed boost as consumer spending has slowed inthe wake of a massive debt run-up and as households concentrate on repaying their record-level debt. Over the long term, faster investment growth could also help lay a stronger foundation for innovation—the key but elusive measure of our nation’soverall competitive advantage in the global economy. But businesses will not invest unless incomes rise faster, which means policymakers need to ensure that workers can see more gains from a growing economy in the form of faster job growth andhigher wage growth. At the same time, policymakers must create additional incentives for companies to invest in newtechnologies appropriate for a creative U.S. economy that remains on the cutting edge of global innovation. Our colleagues atthe Center for American Progress have detailed how the next administration and Congress can begin to chart this new course inour “Progressive Growth” series of papers. It’s time we got started.

58

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 59/76

BizConDDI 2008 SS

 Fadi

2AC Biz Con Frontline

Prefer our turns – litigation has no effect on investor confidence – no abnormalreturns

Michael Muoghalu, Director of MBA Program, Pittsburgh State University. 10/90. “Hazardous Waste Lawsuits, Stockholder Returns,and Deterrence,” Southern Economic Journal, Vol. 57 Issue 2, p357

Table I also reports the abnormal returns around the settlements of hazardous waste lawsuits. No statistically significant abnormal performances occur during the event window. The lack of abnormal returns indicates that the announcement of courtdecisions/settlements provides no new systematic information to investors. To check whether the lack of significant returns was aresult of suits with positive returns canceling those with negative returns, the settlements were individually examined for abnormalreturns. Only 4 firms in the sample of 74 show significant abnormal returns during the two-day event interval (2 positive and 2negative), which is fewer than would be expected randomly at the 90 percent confidence level. Given the lack of statisticallysignificant abnormal returns, no further analysis of lawsuit settlements is conducted.

Squo solves their impacts – biz con fluctuates in the business cycle, it willeventually be restored

The Business Report, “Drop in business confidence part of a cycle”, http://www.fastmoving.co.za/news-archive/sa-economy/drop-in-business-confidence-part-of-a-cycle, July 8th, 2008

The world economic market overall is uncertain at this stage, but all cycles - good and bad - come to an end. "But I

think that the country's macro-economic policies remain strong and despite a number of external global factors - like

the much-publicized subprime mortgage crisis and credit crunch faced by many countries - we should be heading for

less choppy waters as we approach the third and fourth quarters of next year," added Mokoena. "Also, as we headtowards the 2010 soccer World Cup I believe

a more positive business sentiment will start emerging. Consumers andcompanies just need to fine-tune their current business strategies and ensure they are well placed to weather the storm.

Those companies that plan for the business upturn now are the ones that are really going to shine.”

59

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 60/76

BizConDDI 2008 SS

 Fadi

Small business confidence low

Small business confidence is down due to rising prices

Chris Crum, “The Death of the American Dream?”,http://www.smallbusinessnewz.com/topnews/2008/06/30/small-business-confidence-at-all-time-low, , 6/30,

2008 Unfortunately, small business economic confidence is at an all-time low. In fact, confidence indicators were down in every single

category of the survey. "With prices rising, especially gas and food, just about everybody is feeling the squeeze," says, Discover

 business credit card director Ryan Scully. "People are starting to change their habits and cut back. For small business owners

who are seeing profits go down as a result, that means they have less to invest in finding new business ," Scully added

Confidence low now – investors are preparing for low earnings and high oil prices

Glenn Mumford, staff writer - Australian Financial Review 6/24/08. “Testing times for investor confidence,” Australian FinancialReview. Factiva

Equities here and in the United States are in the process of building a major base, but recent market weakness has certainly provided akey test of this belief. The fact that the local market’s forward price-earnings ratio has moved to less than 12 times - with the major  banks and resource companies registering at less than 10 times - suggests investors are pricing in either a new wave of negativeearnings revisions or a sustained bout of inflation-inspired P/E compression. The rising oil price will be significant in all this, andlocal resources companies will be required to support the general market. This week could also see a resolution of iron ore pricingnegotiations for BHP Billiton and Rio Tinto. Do we bounce or do we dive? I’m sticking with the first option, but a lot will depend onthe oil price. Expect a volatile week.

60

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 61/76

BizConDDI 2008 SS

 Fadi

Election Kills Bizcon

The upcoming election has shattered business confidence due to ambiguity regarding the next president’s

economic policies.Peter Ryan, ABC News, “Business confidence plunges on election uncertainty”,

http://www.abc.net/news/stories/2007/11/23/2098730.htm, 2007

The survey of 2,000 businesses, conducted by Telstra's directories arm Sensis, found confidence had fallen 16 points in the

three months to October to 43 per cent. The decline in confidence is the biggest fall in the survey's 14-year history . Theauthor of the Sensis Business Index, economist Christena Singh, said businesses were concerned about the outlook for workplace relations as well as a possible change in leadership. "What we are finding is that small businesses are telling us thattheir confidence has been impacted quite dramatically in the lead up to the election," Ms Singh said. "The main factors

influencing that are a potential change of government, with the key issues small businesses are looking at being

industrial relations and economic management ."We have been picking up strong economic conditions for the past few

years really from small businesses and they are concerned there might be some change there."

61

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 62/76

BizConDDI 2008 SS

 Fadi

BIZ CON CYCLICAL

Although business confidence is decreasing, it fluctuates in a cycle meaning it will eventually be restoredThe Business Report, “Drop in business confidence part of a cycle”, http://www.fastmoving.co.za/news-archive/sa-economy/drop-in-business-confidence-part-of-a-cycle, July 8th, 2008

The world economic market overall is uncertain at this stage, but all cycles - good and bad - come to an end. "But I

think that the country's macro-economic policies remain strong and despite a number of external global factors - like

the much-publicized subprime mortgage crisis and credit crunch faced by many countries - we should be heading for

less choppy waters as we approach the third and fourth quarters of next year," added Mokoena. "Also, as we headtowards the 2010 soccer World Cup I believe a more positive business sentiment will start emerging. Consumers and

companies just need to fine-tune their current business strategies and ensure they are well placed to weather the storm.

Those companies that plan for the business upturn now are the ones that are really going to shine.”

62

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 63/76

BizConDDI 2008 SS

 Fadi

Bizcon declining - flooding

Bizcon declining in the squo – flooding is damaging agricultural sector of the economy

Buisness First, ABC News, “National City: Business confidence declines”,http://www.bizjournals.com/louisville/stories/2008/06/30/daily13.html20, 08

 National City (NYSE: NCC) contacted business managers in Illinois, Indiana, Kentucky, Michigan, Missouri, Ohio and Pennsylvania,and asked them two questions: Business outlook and hiring plans indices are calculated by adding the percentage of total positiveresponses and half of the neutral responses. The composite index is calculated by averaging the outlook and hiring plans indices.R espondents contacted in June said they feared ripple effects of recent Midwestern flooding, including higher food prices.

"Natural disasters seldom prove as damaging to economic growth as their first impressions," National City chief economistRichard DeKaser said in a news release. "The impact of flooding on agriculture, however, is different as crop cycles, which are

measured in years, are not readily recouped. "In Louisville, 55.4 percent of business managers expressed optimism about the

economy, compared with 81.3 percent a year earlier. In Kentucky, 71.6 percent expressed optimism, down from 83.3 percent in

June 2007. In Indiana, 66.9 percent expressed optimism, down from 80.4 percent a year earlier.

63

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 64/76

BizConDDI 2008 SS

 Fadi

Biz Con Low

Banking crisis ensures business confidence remains low – tight credit market

William Rees-Mogg, The Times UK, 7-14-08, “This recession could easily tip into a depression”,

http://www.timesonline.co.uk/tol/comment/columnists/william_rees_mogg/article4326794.eceThe present recession has some characteristics which make me think that it will be a relatively long one. The recession is centred on banking and property. In an ordinary recession, one has to wait for consumers to regain their confidence, which, in turn restores theconfidence of business. Now one has to wait for the bankers as well. At present, banks are too anxious even to lend to each other, letalone to expand consumer credit or business loans.

Buisness confidence is decreasing in the oil industryDayton Business Journal, “Survey: Midwest floods dampen business confidence level”,http://www.bizjournals.com/dayton/stories/2008/06/30/daily1.html?surround=lfn , June 30, 2008

Business confidence levels across the Gulf continued to fall in the second quarter, as inflation, high oil prices and

staffing problems dampened sentiment, the HSBC Gulf Business Confidence Index has revealed.The survey, released onSunday, found that while the general mood of Gulf business people remained buoyant, levels of business confidence had

maintained their downward trend of the past 18 months. Overall, the Business Confidence Index dipped to a mark of 94from the benchmark 100 set in February 2007 when HSBC started the index. The index dropped from 96.8 in the first

quarter of this year.

Buisness confidence low – credit crunch.Dayton Business Journal, “Survey: Midwest floods dampen business confidence level”,http://www.bizjournals.com/dayton/stories/2008/06/30/daily1.html?surround=lfn , June 30, 2008

"In the short term, these events do imply a greater measure of financial restraint on economic growth as credit becomes moreexpensive and difficult to obtain." Already there are signs that it is getting harder to sell bonds linked to credit cards and

car loans, and there are worries that spreads on corporate bonds are tightening. The tightening of credit will hurt

economic growth because in the US consumers have borrowed heavily to fund their consumption. The latest figuresindicate that consumer and business confidence is slumping both in the US and Europe as worries about the effects of the

credit crunch grow.

Business confidence low now – struggling US economy

B&T Weekly, Australian News Magazine, 6/13/08. “Forum paints retail at a crossroads,” Factiva

The current economic landscape is the most significant challenge facing retailers in a generation. The problems are structural and aconsequence of costs growing faster than consumer spending. This is evident in mature retail markets.

The economic malaise is clearly affecting consumer spending and business confidence in the United States and Western Europe muchmore than we have seen to date in Australia.

But while we haven't fallen off the cliff, local retailers can't afford to be complacent. Recent consumer confidence surveys indicatemounting concern, while retail market darlings like Harvey Norman, David Jones and JB Hi Fi are cautious about weakeningconsumer demand.

64

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 65/76

BizConDDI 2008 SS

 Fadi

Biz Con Low

Business confidence on the downturn now – global credit crunch

Reuters, 12/18/07. “Market woes, oil, forex to curb euro zone growth-EU,” Factiva

BRUSSELS, Dec 18 (Reuters) - The global credit crunch, created by uncertainty about the size of losses in the U.S. mortgage market,will curb euro zone economic growth in coming quarters, the European Commission said on Tuesday.Financial market estimates showed losses related to rising default rates in the U.S. mortgage market could reach $250-500 Billioncompared to an earlier range of $50-100 billion, the EU executive said in a quarterly report.Euro zone growth was also at risk from high oil prices and the strong euro, it said, but added that activity would be supported byrobust employment and record-high corporate profitability."Tighter financing conditions, reduced confidence in the aftermath of the financial market turmoil and rising inflation, among other factors, will weigh on growth in the next few quarters," the report said.It said the global credit crunch would affect growth through higher market lending rates, lower consumer and business confidence andreduced consumption in the United States.

Business confidence in the energy sector is low

International Swaps and Derivatives Association

5, “RESTORING CONFIDENCE IN U.S. ENERGY TRADING MARKETS”,http://www.isda.org/press/pdf/isdaenergywhitepaper.pdf, April 2003

 Starting with the Enron Corp. bankruptcy filing on December 2, 2001, the United States gas and power trading business has

sustained one blow after another.  Credit downgrades, accounting scandals, governmental investigations, falling stock prices,

indictments and guilty pleas have been reported in the news for months. The companies involved have included many well-respected energy trading companies. Throughout the energy trading business, few companies with gas and power trading

operations have been spared reputational harm and economic loss. There has been a loss of confidence in the entire business,

which emerged less than a decade ago. Rapid growth, inadequate credit and risk management controls, a poorly designedCalifornia energy market and the Enron bankruptcy all contributed to this loss of confidence.

65

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 66/76

BizConDDI 2008 SS

 Fadi

Consumer Confidence Down

Consumer confidence is shot due to rising food and oil prices

Buisness Wire, “Administaff Announces Results of Business Confidence Surveyhttp://findarticles.com/p/articles/mi_m0EIN/is_2008_May_12/ai_n25408031, May 12th 08

A key measure of consumer confidence dropped in June to the fifth lowest reading ever, as Americans grew more

concerned about their jobs and rising food and fuel prices .The New York-based research group Conference Board saidTuesday that its Consumer Confidence Index dropped to 50.4 from a revised 58.1 in May. The reading was the lowest

since February 1992, when it was 47.3.Economists had expected the index to decline to 56, according toBriefing.com.Lynn Franco, director of the Conference Board, said the report is an indication that the economy is "stuck in

low gear."

Consumer confidence low despite consumer spending

CNN, 6-24-08, “Consumer confidence tumbles to 16-year low”,http://money.cnn.com/2008/06/24/news/economy/consumer_confidence/?postversion=2008062413A key measure of consumer confidence dropped in June to the fifth lowest reading ever, as Americans grew more concerned abouttheir jobs and rising food and fuel prices. The New York-based research group Conference Board said Tuesday that its Consumer Confidence Index dropped to 50.4 from a revised 58.1 in May. The reading was the lowest since February 1992, when it was 47.3.Economists had expected the index to decline to 56, according to Briefing.com. Lynn Franco, director of the Conference Board, saidthe report is an indication that the economy is "stuck in low gear." "Perhaps the silver lining to this otherwise dismal report is thatConsumer Confidence may be nearing a bottom," Franco said in a statement. This year's loss of jobs, the simultaneous decline of stocks and home prices, and the sharp rise in food and fuel prices all combined to leave this month's consumer confidence index atroughly half that of 2007's composite average, according to economist Bernard Baumohl of the Economic Outlook Group. Baumohlsaid consumer spending has held up well in recent weeks, despite "horrible" consumer confidence, but he expects that to change after the effects of the economic stimulus and the annual tax refunds have subsided. "Getting both at this time of year had led to an increasein household spending, but I expect this to be temporary. I'm looking for spending to trail off in the latter part of the summer,"Baumohl said.

66

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 67/76

BizConDDI 2008 SS

 Fadi

Investor Confidence LowInvestor confidence low now – job cuts, high energy and food prices

Washington Post, 7/15/08. “Bush Expresses Confidence in Economy; Bernanke Cites Long List of Problems,”http://www.washingtonpost.com/wp-dyn/content/article/2008/07/15/AR2008071500999.html?hpid=topnews

Wall Street was lower again today, with major U.S. indexes off as much as 1.5 percent in early trading. Asian and European markets both fell overnight.

Bernanke spoke at a time of uncertainty on a number of fronts. Despite a recent series of Fed actions to cut interest rate and keep cashflowing among banks and financial companies, U.S. growth remains sluggish and employers have eliminated jobs for six months in arow. Meanwhile, rising prices for energy, food and a list of commodities has made for an "unusually uncertain" outlook for inflation,Bernanke said.

As a result, "accurately assessing and appropriately balancing the risks to the outlook for growth and inflation is a significantchallenge for monetary policy makers," Bernanke said. "Given the high degree of uncertainty, monetary policy makers will need tocarefully assess incoming information bearing on the outlook for both inflation and growth . . . In light of the increase in upsideinflation risk, we must be particularly alert" to evidence of higher long-term inflation expectations.

67

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 68/76

BizConDDI 2008 SS

 Fadi

Consumer Con Low

Consumer con at all time low

Reuters, 7-15-08, “US consumer confidence unchanged, near record low-ABC”,

http://www.reuters.com/article/economicNews/idUSN1536607520080715American consumers' confidence held steady at a low level in the latest week, more than 30 points below its all-time average, areport showed on Tuesday. The ABC News Consumer Comfort Index held at -41 in the week to July 13, unchanged from the previous week on its -100/+100 scale. Its all-time low, reached in May, is -51 and its historical average -10. In a separate survey,ABC said pessimism about the economy's direction is at a 27-year high of 78 percent.

Investor confidence at an all-time low – housing market proves

BOYD ERMAN, The Globe and Mail's capital markets reporter, 7/12/08. “Good timing: Feds avoid Fannie-style mortgage freefall,”The Globe and Mail, Lexis

That criticism misses a larger point, something that Fannie Mae and Freddie Mac are making painfully clear in the United States: The

housing market depends not just on the confidence and borrowing ability of people interested in trading up from a bungalow to a two-storey with an ensuite Jacuzzi and a great room. It depends on investor confidence and the borrowing ability of the giant government- backed lenders that really fund mortgages. In the United States, that investor confidence is gone and the ability of Freddie and Fannieto borrow may follow. That's an unprecedented threat to the housing market, which is saying something given what the United Stateshas already been through. Freddie and Fannie are federally chartered companies created to help homeowners by purchasing themortgages that banks make, freeing up banks to make even more. With the implicit backing of the U.S. government, Fannie andFreddie could borrow cheaply in the bond market to finance mortgage purchases. Until recently, that is. Investors are shying away and borrowing costs have shot up relative to government bonds. Investors are worried about the highest delinquency rates on mortgages inat least three decades. Many of those mortgages have terms like zero-down and 40-year amortizations. If those terms sound familiar,it's perhaps because Canadian banks had been advertising them lately.

US consumer and business confidence is dismal – free-falling faster than in 2001

The Globe and Mail, Canadian News, 5/31/08. “THREE STATS YOU JUST CAN'T BE WITHOUT ON A SATURDAY: THEWEEK IN ECONOMICS,” Lexis

"In the U.S., consumer confidence is in freefall," he says. Confidence is falling faster now than between 2001 and 2003, when theUnited States was enduring a high-tech meltdown, a mild recession and a major terrorist attack. European confidence peaked a year ago and has plunged since then, especially in Britain. Japan's confidence levels peaked in 2006, but are now at recessionary levels.Confidence in Canada is sliding too.Consumers in these countries account for about 50 per cent of world production, he says. "The prognosis for near-term worldeconomic growth is not encouraging."Business confidence is higher, but is also eroding in Europe, Japan, and particularly in the United States."Confidence is arguably most important when conditions slow," Mr. Hall warns. "Pessimism sells, it spreads rapidly, and can be self-fulfilling. A significant lapse of confidence can even erode parts of the economy that are not drowning in the excesses created by a protracted period of prosperity."

Consumer confidence is at its lowest since 1992 – decreasing growth and home prices

Wall Street Journal, 6/25/08. “CONSUMER CONFIDENCE PLUMMETS,” Lexis

Conference Board reports US consumer confidence fell to 50.4 in June from 58.1 in May, for lowest reading since 1992; second-quarter growth is expected to be around 0.9%; latest evidence of slumping growth and tumbling home prices suggests Americans'

68

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 69/76

BizConDDI 2008 SS

 Fadi

willingness to keep spending is being tested, making economic contraction more likely; Federal Reserve faced with economicweakness is likely to keep interest rate steady at 2%; graphs (L)

69

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 70/76

Consumer Con LowConsumer confidence is at its lowest since 1982 – high fuel and food prices and decreasing incomes

LA Times, 4/26/08. “Consumer confidence hits 26-year low, survey says,” Lexis

U.S. consumer confidence fell for a third straight month in April, hitting its weakest level in 26 years on heightened worries over inflation and the sagging housing market, a survey showed Friday. The Reuters/University of Michigan Surveys of Consumers said its

final index of confidence for April fell deeper into recessionary territory, to 62.6 from 69.5 in March and below economists' medianexpectation of 63.2 in a Reuters poll. The April result is the lowest since March 1982's 62.0, when the "stagflationary" period of lowgrowth and high inflation was still an issue for many Americans. "More consumers reported that their personal financial situation hadworsened than any time since 1982 due to high fuel and food prices as well as shrinking income gains and widespread reports of declines in home values," the survey said. "Never before in the long history of the surveys have so many consumers reported hearingnews of unfavorable economic development as in the April survey." Nearly 9 in 10 consumers thought the economy was now inrecession, Reuters/University of Michigan said. Although a tax rebate will bolster consumer spending, consumers favor "by a widemargin" using the rebate to repay debt and to add to their savings, according to the surveys.

Investor and consumer confidence low now – uncertainties about interest rates

National Post (Canada), 6/25/08. “U.S. traders await Fed decision,” Lexis

Stock markets in the United States fell yesterday, on concerns about the economy after a report showed consumer confidence hit a 16-year low and as a profit warning from United Parcel Service (UPS/NYSE) stoked fears about corporate results.

But trading volume was thin, with investors hesitant to place any big bets as they wait to see whether or not the Federal Reserve keepsinterest rates on hold as expected today.

Consumer confidence is the lowest in 28 years – high petrol and food prices

The Sunday Times, 7/13/08. “Oil and credit woes fuel long summer of discontent,” Lexis

This is the summer of our discontent. Only 14% of Americans are satisfied with the way things are going in the United States, the

lowest figure recorded by Gallup's pollsters since they began asking that question almost 15 years ago. Consumer confidence is at itslowest level in 28 years, according to the respected Reuters/University of Michigan survey. And not many Americans are expectingthings to improve soon. "Consumers' economic outlook is so bleak that the Expectations Index has reached a new all-time low,"reports the Conference Board. In part this pervasive gloom is due to petrol prices that have passed the $4-per-gallon (about 53p a litre)level. In part it is the result of the squeeze soaring food prices are putting on consumers' wallets. 

Consumer confidence falling – high energy prices

The Globe and Mail (Canada), 6/26/08. “Fed seems paralyzed by effect of energy prices on big picture,” Lexis

BCA noted that global expenditures on energy are approaching levels not seen since the early 1980s - and said the last time the "oildrag" on consumers reached these levels, "the world economy veered off into a deep recession."

While the industrialized world's economy is less energy-intensive than it was a generation ago, and global fiscal and monetaryconditions are in much better shape, soaring energy costs are nevertheless a major threat to already fragile consumers (especially inthe U.S.), who are a key driver of global economic activity and who have already been battered by slumping housing and creditmarkets.

As this week's U.S. Conference Board consumer confidence report showed, high energy costs are pushing them off the deep end.Merrill Lynch economist David Rosenberg called the report "arguably the worst" in the 40 years the Conference Board has beentracking consumer moods.

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 71/76

BizConDDI 2008 SSFadi

Consumer Con Low

Consumer con at all time low

Reuters, 7-15-08, “US consumer confidence unchanged, near record low-ABC”,http://www.reuters.com/article/economicNews/idUSN1536607520080715

American consumers' confidence held steady at a low level in the latest week, more than 30 points below its all-time average, areport showed on Tuesday. The ABC News Consumer Comfort Index held at -41 in the week to July 13, unchanged from the previous week on its -100/+100 scale. Its all-time low, reached in May, is -51 and its historical average -10. In a separate survey,ABC said pessimism about the economy's direction is at a 27-year high of 78 percent.

71

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 72/76

BizConDDI 2008 SSFadi

Aff – No Effect on Investment

Environmental regulations have no effect on investment – studies prove

G. Bruce Doern, Professor, School of Public Policy and Administration - Carleton University,

8/2004. “REGULATION AND ENVIRONMENTAL TECHNOLOGIES:KEY ISSUES AND

CHALLENGES,” http://www.huss.ex.ac.uk/politics/research/readingroom/DoernNRTEE.doc

After looking at the U.S. studies, Olewiler concluded in 1994 that they “give little evidence of environmental regulation havingany impact on investment in new plants or on patterns of international trade” (Olewiler, 1994, p. 87). But Olewiler alsoimmediately cautioned that there may well be greater impacts once 1980s and 1990s data was included and examined either atan aggregate level or in particular industrial sectors. When adding very limited Canadian data on Canadian PollutionAbatement Costs (PACs) to the 1994 picture, this study cautioned the reader on the limited nature of the Canadian data and the problems of comparing it to the U.S. Nonetheless, one aspect of the Canadian data on PACs in the late 1980s was that“Canadian PACs for pollution- intensive industries may be as much as three times those for similar U.S. industries” (Olewiler,1994, p. 112). On an overall basis, Olewiler concluded, however, that “the available evidence suggests that international

investment flows have been relatively unresponsive to differences in environmental regulation across countries. A similar storyexists for differential regulations within countries. Other factor input costs are in general much more important, even for  pollution-intensive industries” (Olewiler, 1994, p. 111). Other studies also brought out similar conclusions (Dasgupta, Roy andWheeler, 1995; Jaffe, et.al., 1995; Vogel, 1998).

Litigation has no effect on investor confidence – no abnormal returns

Michael Muoghalu, Director of MBA Program, Pittsburgh State University. 10/90. “Hazardous Waste Lawsuits, Stockholder Returns,and Deterrence,” Southern Economic Journal, Vol. 57 Issue 2, p357

Table I also reports the abnormal returns around the settlements of hazardous waste lawsuits. No statistically significant abnormal performances occur during the event window. The lack of abnormal returns indicates that the announcement of courtdecisions/settlements provides no new systematic information to investors. To check whether the lack of significant returns was aresult of suits with positive returns canceling those with negative returns, the settlements were individually examined for abnormalreturns. Only 4 firms in the sample of 74 show significant abnormal returns during the two-day event interval (2 positive and 2negative), which is fewer than would be expected randomly at the 90 percent confidence level. Given the lack of statisticallysignificant abnormal returns, no further analysis of lawsuit settlements is conducted.

72

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 73/76

BizConDDI 2008 SSFadi

Regulations Increase FDI

Environmental regulations increase foreign investment – China proves

Judith M. Dean, Economist – International Trade Commission, et al, 2/05. “Are Foreign Investors Attracted to Weak EnvironmentalRegulations? Evaluating the Evidence from China,” World Bank Policy Research Working Paper No. 3505. (Mary E. Lovely, HuaWang) http://papers.ssrn.com/sol3/papers.cfm?abstract_id=659122#PaperDownload

Conditional logit analysis indicates that Chinese-sourced equity joint ventures in highly polluting industries are deterred by relativelystringent pollution regulation. This finding is consistent with the behavior described in the pollution haven hypothesis, though itcontradicts the notion that the pollution havens are created by industrial country investors. In contrast, equity joint ventures fromnon-Chinese sources are actually attracted to provinces with more stringent environmental regulations, regardless of pollution-intensity--the opposite of the pollution haven hypothesis. This attraction also holds for Chinese equity investment in low and medium pollution-intenstive industries, though to a lesser extent. Even after accounting for the possibility of a nested decision, environmentalstringency still significantly attracts non-Chinese equity investment, while significantly deterring only Chinese equity investment inhighly pollution-intensive activities. In all specifications, corrections for the degree of state ownership reduce the size of the pollutionlevy effects, but do not alter their effects or significance.

Environmental regulations reduce perception of risk – studies prove

Stanley J. Feldman, Associate Professor of Finance at Bentley College, et al, 1996. “Does Improving a Firm’s EnvironmentalManagement System and Environmental Performance Result in a Higher Stock Price?” Journal of Investing, (co-authored by Peter A.Soyka, and Paul Ameer)

We have just completed a thorough evalu- ation of our ideas using real-world data on more than 300 of the largest public com- panies in the U.S., and have produced results that validate our hypothesis. As suggested by financial theory, we have computedchanges in systematic risk for each firm over two time periods, and related these to a number of financial and environmentalvariables using multiple regression analysis. We constructed our analysis to explain as much of the vari- ability in observedsystematic risk as pos- sible using factors suggested by finance theory and empirical observation. Using this approach, we were ableto isolate and quantify the effects of several environ- mental management and environmental performance measures that have both practical and statistical significance. Our work suggests that environmental improvements such as those we have eval- uated mightlead to a substantial reduction in the perceived risk of a firm, with an accompanying increase in a public compa- ny’s stock priceof perhaps five percent.

73

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 74/76

BizConDDI 2008 SSFadi

Aff – T/ Increases Productivity

Incentives increase affected industries’ market control – increasing

productivity

Roger G. Noll, professor of economics emeritus at Stanford University and a Senior Fellow at the Stanford Institute for Economic

Policy Research, ’97, “Internationalizing Regulatory Reform” in “Comparative Disadvantages? Social Regulations and the Global

Economy” Ed. Pietro S. Nivola. Published by Brookings Institute Press, pp. 332-333The international consequence of incentive-based environmental regulatory reforms is to reallocate production among nations in amanner that reduces total social costs. These reforms reduce compliance costs for industries that need to control harmful pollutants. Asa result, the relative price of the products of these industries falls, and if their products are traded these industries gain a larger share ofthe world market. In some cases, the principal effect is to substitute domestic production for exports that appeared attractive only because they were produced in a less costly regulatory environment, and in other cases it is to increase exports of the industries thatexperience lower regulatory compliance costs. In all cases, all prices and exchange rates will adjust so that some other industriesexperience some compensating adjustment in net imports, and total trade can either rise or fall. But in all cases, the net effect is an

increase in world productivity and income as production moves to areas where the true social costs are lowest.

74

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 75/76

BizConDDI 2008 SSFadi

Energy prices -> inflation

High energy prices are causing rapid inflation.

CNBC, “Energy costs drive up US inflation”, http://www.guardian.co.uk/business/2008/jun/13/inflation.usa, /June13th, 2008 

Core prices, which exclude food and energy, were up 0.2%. Energy prices surged 4.4% during the month, the biggest rise

since November. That was driven by a 5.7% spike in gasoline prices during the month, also the biggest rise since November. Consumer prices rose 4.2% compared with this time last year , the biggest rise since January. Julian Jessop atCapital Economics said: "The latest US inflation data are not bad enough to panic the Fed into an early rate hike (notwhile unemployment is soaring and the financial system is still creaking) but there is little good news here either. "Unless oil

prices drop back sharply soon, headline inflation is likely to remain uncomfortably high at around 4.0-4.5% until the

final months of the year."

75

8/14/2019 148 Ss Bizcon Da

http://slidepdf.com/reader/full/148-ss-bizcon-da 76/76

BizConDDI 2008 SSFadi

Impact Defense

Small Business confidence has been decreasing for months, it’s a try a die for

the affirmative

Prevett, Hannah (staff writer for Growing Business Online); 6-23-08;http://www.growingbusiness.co.uk/06959143452583824115/fsb-government-red-tape-is-crippling-small-businesses.html

In the poll of over 9,000 business owners, nearly 90% said government policy was making already crippling business costs, such asthe escalating price of fuel, even worse. The overall assessment of the government’s performance on small business issues was evenmore damning – 96% of respondents said they were dissatisfied when asked the question “Are you satisfied that the government iscurrently taking the right decisions in the interests of small businesses?”