12/27/03 Terrorist Attacks, Earthquakes, Mud Slides, Avalanches, Gas Explosion, Mad Cow, And SARS
The headline did not have room to include the flu epidemic, disappointing holiday revenues for most retailers, the biggest monthly plunge in durable goods orders in 14 months, and the slowest pace of new home sales in 6 months. Overall, it was hardly business as usual.
The U.S. banned Canadian cattle on May 20, and our cattle futures went on to rise 25% until this week’s announcement of mad cow. On Wednesday futures dropped the daily limit of 1.5 cents. The limit was raised on Friday to 3 cents, and again traded down the limit. On Monday the trading limit will be increased to 5 cents. Approximately 34 countries have banned the importation of U.S. beef. As far as profitability is concerned, this has been the best year ever for the cattle industry. Future results will depend on the U.S. consumer’s appetite for beef. As the consumer’s knowledge base improves, his desire to eat beef may decline. We learned what we already knew, and that was the USDA stated the mad cow investigation could take months. Originally, they said it would be a few days. USDA’s chief veterinarian Ron DeHaven stated “potentially many states could be involved.” Let’s take a visit to Texas. According to the U.S. Department of Agriculture, Texas was home to 15.5 million of the nation’s 104 million head of cattle as of July 1. They are spread across about 150,000 cattle operations, part of an industry that contributes $16 billion annually to the Texas economy.
The USDA stated they would increase the number of tests for mad cow next year from 20,600 to 38,000. That doesn’t impress me. That increased testing amounts to roughly one in every 1,000 slaughtered cattle in one year in the U.S. We are the world’s largest exporter of beef and related products. Insufficient testing will cripple the $175 billion-a year U.S. beef industry, including annual beef sales and revenue from related businesses such as processing and packing. It should be noted that Japan tests every animal prior to human consumption. Since September 2001, the Japanese government has discovered nine cases of mad cow disease. You can bet we have more than that. We have larger numbers of cattle.
You think I’m trying to scare you. That’s not true. I am giving you facts not readily made available by the USDA. I will provide some examples. A 2002 survey by the USDA found “unacceptable” central nervous system residue, including spinal cord tissue, in 35% of the meat that ends up in hot dogs, pizza toppings, and hamburger. The Food Safety Inspection Service, a branch of the USDA, stated in the survey that “the presence of spinal cord in meat is not expected and cannot be allowed in products produced through the meat recovery system.” How does this happen? Let me take you inside the slaughterhouse. This is not for young children. The spinal cord is severed with a band saw, and spinal cord fluid is sprayed over the carcass creating contamination. Are you still with me? If the animal’s brain is compressed with a stun gun, brain tissue can travel into the blood stream and the body. This is a source of contamination. It gets better. The Advanced Meat Recovery System strips the last remaining meat from the skeleton, and spinal cord and nervous system tissues find their way into the product, and this is confirmed by the 2002 survey. Unfortunately, there is more. The remains of the spinal cord and other skeletal parts are sent to rendering plants. They are combined with other animal residues to make pet food, feed for pigs and chickens and other products.
Michael Greger is a New York state doctor and nationally known for his watchdog ways on mad cow disease. He understands the extent of the problem when he stated “no one really knows what the final death toll is going to be and how many people are incubating the disease.” Why does he make that statement? The symptoms of the disease take anywhere from 10 to perhaps 40 years to appear in people. Compare Dr. Greger’s observations with those of Rosemary Mucklow, head of the National Meat Association in Oakland, California, who remarked “do mistakes happen? Once in a while they can. Once in a while people look both ways before they cross the road, and they still get run over.” Ms. Mucklow, your organization does not have a tag tracing the life of each cow and only 1% of the cows is tested. I have a feeling you might be hit by a lot of cars, so to speak, yet to appear from around the bend.
When it comes to investing, I have said over and over again that it is your money. The decision is ultimately yours. Your safety and the safety of your family are your decision. I can state that there is less risk eating boneless steaks and boneless roasts than hamburgers, hot dogs, sausages, and various processed toppings for pizzas and tacos. The answer is not to switch to organic beef. The inspection systems are essentially the same, and much sameness exists in the feeding of the animal. The beef-eating scare will be in every neighborhood for years. Many criticized me for writing extensively after the initial outbreak of SARS. Those people truly did not grasp the depth of the problem. The same is the case with mad cow disease. A new case of SARS was just discovered in China. I can’t predict the next case of mad cow disease; however, there will be others. No one can say how many are out there incubating in animals and humans.
Many have asked through this past year why I don’t include photos, video clips, banners, and audio along with my daily musings. I’m not handy. I change toilet paper and light bulbs. I don’t charge admission and I don’t count the number of daily visitors. I welcome your stopping by and hope that I can add something to your daily decision making. My writings should serve as an alternative form of thought. They are based on facts. I have no hidden agenda. Whether you believe what I write is your decision. My words are not for sale. You will not find an end-of-the-year clearance here. This is a government-free zone. It doesn’t get better than that.
I would like to close by congratulating my many good friends and associates from and in India. This has been a year of many accomplishments and successes in a very short period of time. According to a survey published by the News India-Times, the top 92 Indian American-owned companies in the U.S. together generated $2.2 billion in revenue in 2002and employed 18,337 full-time workers. I feel quite confident that those same companies will show improved results for 2003, and that is despite many representing the IT and services sector in addition to manufacturing, distribution, R&D, and other professional services.
Friday, December 26, 2003
12/26/03 A Real Downer
On a previous occasion I mentioned that my father, my grandfather, and my great grandfather were butchers. As a youngster, I worked in the wholesale meat market and was familiar with the workings of animal slaughter operations. I also mentioned the type of folks who “run” this industry. Yesterday was Christmas, and I went easy on the USDA. Today is a different story.
In Europe, testing is done on one-quarter of its beef cattle each year. Japan tests all meat for human consumption. In the U.S. we test only about one in every 2,000 cows. Stephen Sunblof of the FDA’s Center for Veterinary Medicine stated that his agency had known it had compliance problems a few years ago. He remarked “we recognized that 75% compliance was not sufficient.” There are still feed processors that use animal parts as a protein source for feed to animals. In addition, under the current FDA ban, cattle parts can still be used in pet food or in the food for pigs or horses. Feed processors frequently use the same equipment for different foods. As such, James Cullor, a director of Veterinary Medicine Teaching and Research Center at UC Davis, stated such machinery interaction raises the possibility that cow tissue from a batch intended for chickens could end up in cattle food.
On the same day that the diseased Holstein was killed, A Senate-House conference committee killed language in the agriculture appropriations bill that would have prevented the use of downer cows for food. Last week, the 2nd U.S. Circuit Court of Appeals revived a lawsuit that contends that the government’s policy on downer animals does not protect enough against mad cow disease. The suit was filed by Farm Sanctuary, an entity that cares for about 1,000 disabled animals. The court stated Farm Sanctuary “successfully alleged a credible threat of harm from downed cattle.” The Agriculture Department rejected Farm Sanctuary’s initial request in 1998 to ban downer cows from market.
This is not a single Holstein cow problem. As David Ropeik, director of Risk Communication at the Harvard Center for Risk Analysis noted, “potentially other animals at the same age were fed the same feed. There might be other animals carrying the infected material that aren’t symptomatic yet.” The U.S. does not have a national identification system that tracks each head of cattle through its lifetime. Canada has such a system, and it enabled that country to track the history of their diseased cow earlier this year. Even so, it took researchers three weeks to trace the animal’s origin. Former assistant Agriculture Secretary Carol Tucker Foreman, who is now director of food policy for the Consumer Federation of America, stated ‘I know that there is no guarantee that there aren’t other sick animals out there. I know there is no guarantee that the meat from other sick animals hasn’t gotten into the food supply.” We may have a growing computer-literate U.S. population, but it is thought, as David Warren, the chief executive of eMerge Interactive mentioned, that “most of the dairy producers today will have handwritten records on Big Chief tablets or feed bills or vet bills. It’s a very difficult process” to find clues to the animal’s history. USDA chief veterinarian Ron DeHaven stated investigators will “focus on the feeding process of the birth herd. Once we have the birth herd, we’ll want to know what animals have come into that herd and what animals have left that herd and all the feeding practices for that herd.” Agriculture Department officials stated it was likely the cow had been infected while she still lived with her “birth herd.”
John Stauber is the author of “Mad Cow U.S.A.” He stated “here’s the problem, the feed has been grossly violated by feed mills.” X-Cel Feeds Inc. of Tacoma, Washington, for example, admitted in a consent decree in July that it violated FDA regulations designed to prevent the possible spread of mad cow disease. Stauber also mentioned he believes the ban is ineffective because it exempts blood from cattle, which he said could transmit mad-cow type diseases, and he recently warned Veneman, the Agriculture Secretary, that it was “just a matter of time” before the disease was found in the United States. With no sense of urgency, the disease has struck. I doubt very much whether this will be an isolated event. The incubation period is moving to other unknown neighborhoods. Wayne Pacelle, senior vice president of the Humane Society of the United States, remarked “if we allow downed animals to be slaughtered, we are playing Russian roulette with the American food supply.” On the other hand, Professor Cullor inquires “if you ban all downer cows from the food chain, now what are you going to do with them? Are you going to put them in pet food? Bury them in a toxic waste dump? You can’t burn it because there are air-quality rules… that a ban is completely fair to talk about, but offer some solutions, too.”
Japan has stated that it will look to Australia and New Zealand as alternative beef suppliers to the United States. It will take time for our beef industry to regain the world’s trust. Significant testing and tracking procedures must be implemented. Cooperation will be required. Beef consumption will decline in the U.S. Many businesses will be hurt. Some will become downers. There isn’t a season for the mad cow disease. This isn’t the flu. There is a plus side. Prevention does not require a vaccine. There is a hidden downside. Dispensing irresponsible talk on the subject of mad cow can create an outbreak of hoof and mouth disease.
On a previous occasion I mentioned that my father, my grandfather, and my great grandfather were butchers. As a youngster, I worked in the wholesale meat market and was familiar with the workings of animal slaughter operations. I also mentioned the type of folks who “run” this industry. Yesterday was Christmas, and I went easy on the USDA. Today is a different story.
In Europe, testing is done on one-quarter of its beef cattle each year. Japan tests all meat for human consumption. In the U.S. we test only about one in every 2,000 cows. Stephen Sunblof of the FDA’s Center for Veterinary Medicine stated that his agency had known it had compliance problems a few years ago. He remarked “we recognized that 75% compliance was not sufficient.” There are still feed processors that use animal parts as a protein source for feed to animals. In addition, under the current FDA ban, cattle parts can still be used in pet food or in the food for pigs or horses. Feed processors frequently use the same equipment for different foods. As such, James Cullor, a director of Veterinary Medicine Teaching and Research Center at UC Davis, stated such machinery interaction raises the possibility that cow tissue from a batch intended for chickens could end up in cattle food.
On the same day that the diseased Holstein was killed, A Senate-House conference committee killed language in the agriculture appropriations bill that would have prevented the use of downer cows for food. Last week, the 2nd U.S. Circuit Court of Appeals revived a lawsuit that contends that the government’s policy on downer animals does not protect enough against mad cow disease. The suit was filed by Farm Sanctuary, an entity that cares for about 1,000 disabled animals. The court stated Farm Sanctuary “successfully alleged a credible threat of harm from downed cattle.” The Agriculture Department rejected Farm Sanctuary’s initial request in 1998 to ban downer cows from market.
This is not a single Holstein cow problem. As David Ropeik, director of Risk Communication at the Harvard Center for Risk Analysis noted, “potentially other animals at the same age were fed the same feed. There might be other animals carrying the infected material that aren’t symptomatic yet.” The U.S. does not have a national identification system that tracks each head of cattle through its lifetime. Canada has such a system, and it enabled that country to track the history of their diseased cow earlier this year. Even so, it took researchers three weeks to trace the animal’s origin. Former assistant Agriculture Secretary Carol Tucker Foreman, who is now director of food policy for the Consumer Federation of America, stated ‘I know that there is no guarantee that there aren’t other sick animals out there. I know there is no guarantee that the meat from other sick animals hasn’t gotten into the food supply.” We may have a growing computer-literate U.S. population, but it is thought, as David Warren, the chief executive of eMerge Interactive mentioned, that “most of the dairy producers today will have handwritten records on Big Chief tablets or feed bills or vet bills. It’s a very difficult process” to find clues to the animal’s history. USDA chief veterinarian Ron DeHaven stated investigators will “focus on the feeding process of the birth herd. Once we have the birth herd, we’ll want to know what animals have come into that herd and what animals have left that herd and all the feeding practices for that herd.” Agriculture Department officials stated it was likely the cow had been infected while she still lived with her “birth herd.”
John Stauber is the author of “Mad Cow U.S.A.” He stated “here’s the problem, the feed has been grossly violated by feed mills.” X-Cel Feeds Inc. of Tacoma, Washington, for example, admitted in a consent decree in July that it violated FDA regulations designed to prevent the possible spread of mad cow disease. Stauber also mentioned he believes the ban is ineffective because it exempts blood from cattle, which he said could transmit mad-cow type diseases, and he recently warned Veneman, the Agriculture Secretary, that it was “just a matter of time” before the disease was found in the United States. With no sense of urgency, the disease has struck. I doubt very much whether this will be an isolated event. The incubation period is moving to other unknown neighborhoods. Wayne Pacelle, senior vice president of the Humane Society of the United States, remarked “if we allow downed animals to be slaughtered, we are playing Russian roulette with the American food supply.” On the other hand, Professor Cullor inquires “if you ban all downer cows from the food chain, now what are you going to do with them? Are you going to put them in pet food? Bury them in a toxic waste dump? You can’t burn it because there are air-quality rules… that a ban is completely fair to talk about, but offer some solutions, too.”
Japan has stated that it will look to Australia and New Zealand as alternative beef suppliers to the United States. It will take time for our beef industry to regain the world’s trust. Significant testing and tracking procedures must be implemented. Cooperation will be required. Beef consumption will decline in the U.S. Many businesses will be hurt. Some will become downers. There isn’t a season for the mad cow disease. This isn’t the flu. There is a plus side. Prevention does not require a vaccine. There is a hidden downside. Dispensing irresponsible talk on the subject of mad cow can create an outbreak of hoof and mouth disease.
Thursday, December 25, 2003
12/25/03 A Happy And Safe Holiday Season
Our troops are stationed around the globe. They place our well-being before their own. Without them, our daily freedom would be on the endangered list. As it is, perils exist, and we must counter them with rekindled diligence and force when necessary. Hopefully, every day can be merry and bright, and not just on December 25th.
There are precautionary measures we can take that may ensure an improvement in our way of life. The mad cow headlines can lead to positive action. If we take the time to acquire greater knowledge, the pathway to the truth should be more accessible. A 1997 Agriculture Department study found that a majority of meat producers were making meat products with unacceptable materials in it. Laws prohibit animal intestines as well as eye and brain tissue from being placed in our food supply. Nevertheless, according to statistics by the Global Resource Action Center for the Environment’s Factory Farm Project, about 300 companies were found to be out of compliance with the nation’s laws for prevention of mad cow disease.
The USDA states they have tested about 20,000 cows for mad cow disease in 2002 and 2003. This represents only a small percentage of the millions of cows in U.S. herds. More importantly, despite requests to see the testing information under the Freedom of Information Act, the USDA has ignored the request made back on July 10, 2003, and, as recently as December 17, stated the agency is still searching for the documentation of its mad cow testing results from 2002 and 2003. Further troubling is the fact that, the recent Washington cow found to have contracted the disease, was a so-called downer cow, one unable to stand on its own. Some industry watchers claim the United States sees about 200,000 of these downers per year, or about ten times as many as are tested for the disease. Lester Friedlander, a former USDA veterinarian, stated “the government doesn’t have records to substantiate their testing so how do they know whether this is an isolated case.” Michael Schwochert, a retired USDA veterinarian in Fort Morgan, Colorado, stated “it scares the hell out of me what it’s going to do to the cattle industry. This could be catastrophic.” He related that he had been informed of an incident that took place six months ago at a slaughtering plant in Ft. Morgan. A cow displaying symptoms of mad cow disease was spotted by employees prior to the USDA officials inspecting the animal. He stated “it went back out on a special truck and they called the guys in the office and said they don’t know anything about this.”
A report from the General Accounting Office issued last year found some ranchers in the United States still violate the fed ban and do feed cow tissue to cattle. The GAO concluded in February 2002 that “while mad cow disease has not been found in the United States, federal actions do not sufficiently ensure that all mad cow-infected animals or products are kept out or that if mad cow were found, it would be detected promptly and not spread to other cattle through animal feed or enter the human food supply.” About 35 million head are slaughtered per year, and maybe a fraction of one percent are tested for mad cow disease. Agriculture Secretary Anne M. Veneman stated on CBS’ The Early Show “and I would, without hesitation, say that no one should be afraid to eat beef.” Ms. Veneman, you don’t have the facts to support that statement, and that statement, is, in my view, reckless and irresponsible. You won’t even turn over your test results. You don’t even know whether the meat from the infected animal was consumed. We know Vern’s Moses Lake Meats recalled about 10,410 pounds of raw beef that might have been exposed to tissues containing mad cow disease. We know that Interstate Meats of Oregon, a ground beef supplier, notified Albertson’s and several other Northwest retailers that certain product provided by Interstate meat is subject to a voluntary recall. Albertson’s is asking any customers in Washington, Oregon, and Northern Idaho stores to return pre-packaged ground beef purchased between December 16, and December 25, 2003.
We also know that the USDA suspended applications for certain livestock insurance policies. The agency stated the mad cow case “will have a significant effect on the price of cattle for the foreseeable future.” Chris Hurt, a professor of agricultural economics at Purdue University, stated “this will get tied up in diplomacy, politics, and trade policy. U.S. cattle producers can expect to lose as much as $3 billion should exports be halted for six months, and that period is the best we can hope for.” U.S. consumers and beef-importing nations have come to believe that our cows are carefully tested and the beef well inspected. As our learning curve improves, the outlook for the beef industry may take a turn for the worst.
The FDA indicated yesterday that a recall may need to take place in pet food. The main threat among pets is cats because “they are susceptible to BSE.” said Dr. Lester Crawford, FDA’s deputy commissioner. Some pet food could have contained material from the infected cow. He remarked that there is no way of knowing how much pet food would have to be recalled. He stated that, even if a small batch of infected pet food was mixed with a ton of other food, “the ton would have to be destroyed.” Michael Hansen of Consumers Union noted “they will have to recall pet food and other feed products. In addition, all those rendering plants (the infected cow material passed through) will be contaminated.”
I have taken this opportunity to discuss the mad cow situation not to frighten you, but rather to expose the real playing field. It would be wise not to depend on the assurances of Ms. Veneman. Hopefully, we can take a page from the way the CDC handled the outbreak of SARS. Their actions were transparent and well-documented. The information provided was accurate and responsible. Whether Ms. Veneman serves beef to her family at the Christmas table is not the point. There are 15 countries around the globe that have placed a ban and/or partial ban on the exports of our cattle and cow products. Other nations will probably be added to the list. Our testing procedures will probably be found lacking. How we react shall go a long way towards determining the future of the cattle industry in the United States. Adjusted for inflation, Americans spend less on beef today than they spent in 1980.
Once again. I would like to wish all my friends and my readers a very MERRY CHRISTMAS. Please enjoy this time of togetherness and joy, and remember others love you.
Our troops are stationed around the globe. They place our well-being before their own. Without them, our daily freedom would be on the endangered list. As it is, perils exist, and we must counter them with rekindled diligence and force when necessary. Hopefully, every day can be merry and bright, and not just on December 25th.
There are precautionary measures we can take that may ensure an improvement in our way of life. The mad cow headlines can lead to positive action. If we take the time to acquire greater knowledge, the pathway to the truth should be more accessible. A 1997 Agriculture Department study found that a majority of meat producers were making meat products with unacceptable materials in it. Laws prohibit animal intestines as well as eye and brain tissue from being placed in our food supply. Nevertheless, according to statistics by the Global Resource Action Center for the Environment’s Factory Farm Project, about 300 companies were found to be out of compliance with the nation’s laws for prevention of mad cow disease.
The USDA states they have tested about 20,000 cows for mad cow disease in 2002 and 2003. This represents only a small percentage of the millions of cows in U.S. herds. More importantly, despite requests to see the testing information under the Freedom of Information Act, the USDA has ignored the request made back on July 10, 2003, and, as recently as December 17, stated the agency is still searching for the documentation of its mad cow testing results from 2002 and 2003. Further troubling is the fact that, the recent Washington cow found to have contracted the disease, was a so-called downer cow, one unable to stand on its own. Some industry watchers claim the United States sees about 200,000 of these downers per year, or about ten times as many as are tested for the disease. Lester Friedlander, a former USDA veterinarian, stated “the government doesn’t have records to substantiate their testing so how do they know whether this is an isolated case.” Michael Schwochert, a retired USDA veterinarian in Fort Morgan, Colorado, stated “it scares the hell out of me what it’s going to do to the cattle industry. This could be catastrophic.” He related that he had been informed of an incident that took place six months ago at a slaughtering plant in Ft. Morgan. A cow displaying symptoms of mad cow disease was spotted by employees prior to the USDA officials inspecting the animal. He stated “it went back out on a special truck and they called the guys in the office and said they don’t know anything about this.”
A report from the General Accounting Office issued last year found some ranchers in the United States still violate the fed ban and do feed cow tissue to cattle. The GAO concluded in February 2002 that “while mad cow disease has not been found in the United States, federal actions do not sufficiently ensure that all mad cow-infected animals or products are kept out or that if mad cow were found, it would be detected promptly and not spread to other cattle through animal feed or enter the human food supply.” About 35 million head are slaughtered per year, and maybe a fraction of one percent are tested for mad cow disease. Agriculture Secretary Anne M. Veneman stated on CBS’ The Early Show “and I would, without hesitation, say that no one should be afraid to eat beef.” Ms. Veneman, you don’t have the facts to support that statement, and that statement, is, in my view, reckless and irresponsible. You won’t even turn over your test results. You don’t even know whether the meat from the infected animal was consumed. We know Vern’s Moses Lake Meats recalled about 10,410 pounds of raw beef that might have been exposed to tissues containing mad cow disease. We know that Interstate Meats of Oregon, a ground beef supplier, notified Albertson’s and several other Northwest retailers that certain product provided by Interstate meat is subject to a voluntary recall. Albertson’s is asking any customers in Washington, Oregon, and Northern Idaho stores to return pre-packaged ground beef purchased between December 16, and December 25, 2003.
We also know that the USDA suspended applications for certain livestock insurance policies. The agency stated the mad cow case “will have a significant effect on the price of cattle for the foreseeable future.” Chris Hurt, a professor of agricultural economics at Purdue University, stated “this will get tied up in diplomacy, politics, and trade policy. U.S. cattle producers can expect to lose as much as $3 billion should exports be halted for six months, and that period is the best we can hope for.” U.S. consumers and beef-importing nations have come to believe that our cows are carefully tested and the beef well inspected. As our learning curve improves, the outlook for the beef industry may take a turn for the worst.
The FDA indicated yesterday that a recall may need to take place in pet food. The main threat among pets is cats because “they are susceptible to BSE.” said Dr. Lester Crawford, FDA’s deputy commissioner. Some pet food could have contained material from the infected cow. He remarked that there is no way of knowing how much pet food would have to be recalled. He stated that, even if a small batch of infected pet food was mixed with a ton of other food, “the ton would have to be destroyed.” Michael Hansen of Consumers Union noted “they will have to recall pet food and other feed products. In addition, all those rendering plants (the infected cow material passed through) will be contaminated.”
I have taken this opportunity to discuss the mad cow situation not to frighten you, but rather to expose the real playing field. It would be wise not to depend on the assurances of Ms. Veneman. Hopefully, we can take a page from the way the CDC handled the outbreak of SARS. Their actions were transparent and well-documented. The information provided was accurate and responsible. Whether Ms. Veneman serves beef to her family at the Christmas table is not the point. There are 15 countries around the globe that have placed a ban and/or partial ban on the exports of our cattle and cow products. Other nations will probably be added to the list. Our testing procedures will probably be found lacking. How we react shall go a long way towards determining the future of the cattle industry in the United States. Adjusted for inflation, Americans spend less on beef today than they spent in 1980.
Once again. I would like to wish all my friends and my readers a very MERRY CHRISTMAS. Please enjoy this time of togetherness and joy, and remember others love you.
Wednesday, December 24, 2003
12/24/03 Mad About You
Forbes Magazine readers voted off-shoring the most significant business trend of 2003. As such, their Face of the Year was Kiran Karnik, a gentleman I have mentioned several times in the last few months. Karnik is the president of Nasscom, the National Association of Software and Service Companies. Karnik told Forbes that his goal was to more than double India’s share of the global software production to six percent. The magazine has noted that “tech currently accounts for some three percent of India’s GDP, or $16.5 billion, up from just $1.7 billion nine years ago. The big driver? Exports of software and services to the U.S.” Karnik remarked that “outsourcing was triggered by the intention to cut costs, but now it’s not just driven by cost factors. We are helping U.S. companies tap into talent that is scarce in the United States.”
Bovine Spongiform Encephalopathy (BSE) or Mad Cow disease is an animal disease that is not contagious as a result of ordinary cattle-to-cattle contact. BSE is caused by proteins called prions found in neurological tissues, such as, brains, spinal cords, and eye tissue and not in beef cuts, such as, steaks, roasts, and ground beef. With respect to the first detection of Mad Cow near Yakima in Washington, it is believed the diseased tissue did not enter the food supply. However, Japan and South Korea stated they will ban imports of U.S. beef. Japan is the biggest customer for U.S. beef, buying $1.4 billion worth so far this year, according to the National Cattlemen’s Beef Association. South Korea imported $372 million of U.S. beef in the first 10 months of 2003. In May the U.S. banned imports of Canadian cattle after a case of Mad Cow was discovered in Alberta. The ban is still in effect. More than 20 other countries joined the ban. The beef industry contributes $20 billion to the Canadian economy while our industry totals about $175 billion.
Talking about Japan, their cabinet proposed a $657 budget for fiscal year 2004. They have record debt, a projected primary deficit of $152 billion, and swelling social security and debt-servicing costs. That sounds quite familiar. France doesn’t paint a very rosy picture either. They have experienced only 0.2% growth this year, and in November, French consumers cut spending on manufactured goods by 2.8%, the largest decline in seven years. Their consumer confidence is nearing a six-year low, and unemployment is approaching 10%. A partner at Deloitte Touche Tomatsu stated “more than a quarter of the population is personally affected by the recession and there’s been a more significant drop in their planned Christmas purchases.” That sounds familiar as well. In November U.S. consumer spending rose less than expected, and the personal consumption expenditures price index declined for the first time in seven months. Some economists believe we have reached price stability. I disagree. I believe we are munching on deflation. I’ll give you an example.
Let’s take a trip to Detroit. I promise to get you back in time for Christmas. Farmer Jack is a supermarket chain founded 75 years ago, and purchased by the Great Atlantic and Pacific Tea Co. Inc. (A&P) in 1989. The grocer has about 10,000 workers in metro Detroit. They have 106 stores in Michigan and Ohio. The company competes mostly with Kroger and Meijer. Management has been cost-cutting for some months, but it has not been enough to possibly prevent the closing of many stores. To avoid massive store closings and a total pullout from Michigan, Farmer Jack employees agreed to take an immediate 5% wage cut. In addition, workers with more than 18 years of service would receive four paid weeks of vacation, down from five weeks, and personal days would go from eight a year to five. Employees at the top of Farmer Jack’s wage scale earn $13.22 an hour now. Workers would see no changes in health care or pension benefits. The wage concessions cannot be blamed on WalMart because its closet superstore is in Howell. In addition, blame cannot be placed on outsourcing to India. In June, Farmer Jack closed all stores for 37 hours to relaunch itself with lower food prices. The wage concessions help to fund those lower food prices. The executive vice president of the UFCW Local 951 stated “our attitude is it is better to have jobs. We’re just hoping they can turn it around.”
Bush is developing a plan that would allow immigrants to cross the border legally if jobs are waiting for them. Supposedly, the administration also wants to provide a way for some undocumented workers in the United States to move toward legal status. According to government figures, an estimated 8 million undocumented people live in the United States. I guess if they aren’t documented, then they aren’t part of the unemployment rolls. I wonder if they get food stamps. I just read where 339,000 Tennessee families are receiving food stamps, up 17% from a year ago. A spokeswoman for the Tennessee Department of Human Resources stated “it is the economy. Jobs are not being created.” There are 781,000 individuals in the 339,000 households receiving benefits. I am having a problem knowing what to believe. The federal government tells us the economy is roaring forward and jobs are being created. Yet, folks on Main Street indicate something very different. I can relate a lot better to the folks in need. They bleed real blood and don’t spew BS.
I think we have time to make one more detour to Owings Mills, Maryland. We are not visiting the set of Wall Street Week. Actually, this is the corporate home of the Sweetheart Cup Co., a 90-year-old paper cup and plate enterprise. They employ 1,600 workers at its headquarters, and overall, have 7,442 employees across the nation at its 22 plants in North America. About 83% of the employees are hourly workers. Sweetheart recorded sales of $1.3 billion this year and earned $15 million. The company supplies McDonald’s, Burger King, Target, WalMart, and Ben & Jerry’s. At one time the company was known as Maryland Cup. Fort Howard acquired the company in 1983, and the name was changed to Sweetheart Cup in 1989 when Fort Howard sold it. The company will now be acquired by Chicago-based Solo Cup. The closing will occur in the early part of 2004. Solo has 12 U.S. plants. After a complete review, I would anticipate some plants would be closed and layoffs announced. In the meantime, Sweetheart’s workforce faces an uncertain future during this holiday period. Many must feel mad about the merger.
Forbes Magazine readers voted off-shoring the most significant business trend of 2003. As such, their Face of the Year was Kiran Karnik, a gentleman I have mentioned several times in the last few months. Karnik is the president of Nasscom, the National Association of Software and Service Companies. Karnik told Forbes that his goal was to more than double India’s share of the global software production to six percent. The magazine has noted that “tech currently accounts for some three percent of India’s GDP, or $16.5 billion, up from just $1.7 billion nine years ago. The big driver? Exports of software and services to the U.S.” Karnik remarked that “outsourcing was triggered by the intention to cut costs, but now it’s not just driven by cost factors. We are helping U.S. companies tap into talent that is scarce in the United States.”
Bovine Spongiform Encephalopathy (BSE) or Mad Cow disease is an animal disease that is not contagious as a result of ordinary cattle-to-cattle contact. BSE is caused by proteins called prions found in neurological tissues, such as, brains, spinal cords, and eye tissue and not in beef cuts, such as, steaks, roasts, and ground beef. With respect to the first detection of Mad Cow near Yakima in Washington, it is believed the diseased tissue did not enter the food supply. However, Japan and South Korea stated they will ban imports of U.S. beef. Japan is the biggest customer for U.S. beef, buying $1.4 billion worth so far this year, according to the National Cattlemen’s Beef Association. South Korea imported $372 million of U.S. beef in the first 10 months of 2003. In May the U.S. banned imports of Canadian cattle after a case of Mad Cow was discovered in Alberta. The ban is still in effect. More than 20 other countries joined the ban. The beef industry contributes $20 billion to the Canadian economy while our industry totals about $175 billion.
Talking about Japan, their cabinet proposed a $657 budget for fiscal year 2004. They have record debt, a projected primary deficit of $152 billion, and swelling social security and debt-servicing costs. That sounds quite familiar. France doesn’t paint a very rosy picture either. They have experienced only 0.2% growth this year, and in November, French consumers cut spending on manufactured goods by 2.8%, the largest decline in seven years. Their consumer confidence is nearing a six-year low, and unemployment is approaching 10%. A partner at Deloitte Touche Tomatsu stated “more than a quarter of the population is personally affected by the recession and there’s been a more significant drop in their planned Christmas purchases.” That sounds familiar as well. In November U.S. consumer spending rose less than expected, and the personal consumption expenditures price index declined for the first time in seven months. Some economists believe we have reached price stability. I disagree. I believe we are munching on deflation. I’ll give you an example.
Let’s take a trip to Detroit. I promise to get you back in time for Christmas. Farmer Jack is a supermarket chain founded 75 years ago, and purchased by the Great Atlantic and Pacific Tea Co. Inc. (A&P) in 1989. The grocer has about 10,000 workers in metro Detroit. They have 106 stores in Michigan and Ohio. The company competes mostly with Kroger and Meijer. Management has been cost-cutting for some months, but it has not been enough to possibly prevent the closing of many stores. To avoid massive store closings and a total pullout from Michigan, Farmer Jack employees agreed to take an immediate 5% wage cut. In addition, workers with more than 18 years of service would receive four paid weeks of vacation, down from five weeks, and personal days would go from eight a year to five. Employees at the top of Farmer Jack’s wage scale earn $13.22 an hour now. Workers would see no changes in health care or pension benefits. The wage concessions cannot be blamed on WalMart because its closet superstore is in Howell. In addition, blame cannot be placed on outsourcing to India. In June, Farmer Jack closed all stores for 37 hours to relaunch itself with lower food prices. The wage concessions help to fund those lower food prices. The executive vice president of the UFCW Local 951 stated “our attitude is it is better to have jobs. We’re just hoping they can turn it around.”
Bush is developing a plan that would allow immigrants to cross the border legally if jobs are waiting for them. Supposedly, the administration also wants to provide a way for some undocumented workers in the United States to move toward legal status. According to government figures, an estimated 8 million undocumented people live in the United States. I guess if they aren’t documented, then they aren’t part of the unemployment rolls. I wonder if they get food stamps. I just read where 339,000 Tennessee families are receiving food stamps, up 17% from a year ago. A spokeswoman for the Tennessee Department of Human Resources stated “it is the economy. Jobs are not being created.” There are 781,000 individuals in the 339,000 households receiving benefits. I am having a problem knowing what to believe. The federal government tells us the economy is roaring forward and jobs are being created. Yet, folks on Main Street indicate something very different. I can relate a lot better to the folks in need. They bleed real blood and don’t spew BS.
I think we have time to make one more detour to Owings Mills, Maryland. We are not visiting the set of Wall Street Week. Actually, this is the corporate home of the Sweetheart Cup Co., a 90-year-old paper cup and plate enterprise. They employ 1,600 workers at its headquarters, and overall, have 7,442 employees across the nation at its 22 plants in North America. About 83% of the employees are hourly workers. Sweetheart recorded sales of $1.3 billion this year and earned $15 million. The company supplies McDonald’s, Burger King, Target, WalMart, and Ben & Jerry’s. At one time the company was known as Maryland Cup. Fort Howard acquired the company in 1983, and the name was changed to Sweetheart Cup in 1989 when Fort Howard sold it. The company will now be acquired by Chicago-based Solo Cup. The closing will occur in the early part of 2004. Solo has 12 U.S. plants. After a complete review, I would anticipate some plants would be closed and layoffs announced. In the meantime, Sweetheart’s workforce faces an uncertain future during this holiday period. Many must feel mad about the merger.
Tuesday, December 23, 2003
12/23/03 Code Red
It’s like old times. It’s been like this for over 100 years. Some people rent fancy New York City office space in skyscrapers. When you want to do real business, you don’t go to Broad and Wall at the Stock Exchange. That’s nickel and dime stuff. The floor brokers and day traders think that’s the real action. What do they know? Have they ever been to Harlem? Do they know what real red sauce tastes like? Have they ever eaten a real homemade meatball, one as large as a full moon but as light as the air outside? You just know they haven’t. When back home in New York City, I hang out in Harlem, the Bronx, Brooklyn, and on occasion, Little Italy. I know where to find the red sauce. Last night the ten tables at Rao’s in East Harlem were full—like that’s a revelation. Frank Pellegrino and Ronny Straci own the place. Frank’s great-uncle, Charlie Rao, started the Rao’s. I guess that’s where he thought up the name. Ronny was having dinner with Albert Petraolia, chief clerk for the Nassau County Courts. Louis Barone of East Harlem was at the bar. Louis comes from the neighborhood. Also in the restaurant was Albert Circelli of Yonkers. This was not Albert’s night. Louis must have had a bad day. He pulled out a .38-caliber gun and knocked off Albert. Bo Dietl, a former NYPD cop and frequent guest on the Don Imus show, stated “this was not any mob hit. If you want to whack somebody you don’t do it at Rao’s. You take it outside.� This was the real-life Sopranos. The cops related that they don’t have a motive. How would they know? The rumor is Albert made a disparaging remark about the red sauce. You can’t do that, not if you want to live.
It’s good that the holiday shopping season is disappointing. Had it been a barn burner, a lot of people could have been killed by the 6.5 earthquake while shopping in downtown Paso Robles? Is there an uptown? As it was, two individuals perished in the quake, which was felt all the way from the Central Coast of California to Rao’s in East Harlem.
U.S. commanders in Iraq have said they hope to reduce the American military presence from 130,000 troops to 100,000 troops by July, when political authority will be handed over to an interim Iraqi government. Unfortunately, things in Iraq are not what the troops and Americans been told. A 16-page White House report states “it is not possible to know at this time either the duration of the military operations or the scope and duration of the deployment of United States armed forces necessary for the full accomplishment of our goals.� Bush has been critical that enough has not been said about the positive accomplishments in Iraq. They are greatly outnumbered by the 202 U.S. soldiers killed by hostile fire since the United States declared major combat over in Iraq on May 1.
ComScore Networks reported that online sales were up 31% to about $1.9 billion for the week ended Friday. That’s a lot more encouraging than the news from WalMart, Target, and Shopko. A spokesperson for the Gallery at South Kalb remarked “we see the traffic, but we don’t see the bags.� WalMart is having trouble seeing the traffic. On the other hand, WalMart sees WalMart.com sales growing at twice the industry rate. Yesterday, Shopko Stores of Green Bay revised its earnings outlook for the fourth quarter and the fiscal year ending January 31,2004. Their present guidance is for the quarter to be in the range of 95 cents to $1.10 per share, down from $1.15 to $1.25 per share. Their president and CEO stated “our December sales expectations have not been met as holiday shopping traffic is lower than anticipated.� That is not the last time you will read these words in the coming two weeks. Shopko will have plenty of company. The combination of lower than expected sales and gross margin compression will create plenty of glum shareholders in the retail sector. I guess the Bush administration will blame the disappointing results on snowstorms, the quake, the orange alert, and the less than expected discounts offered by department stores.
Last night Cheney spoke at a $500-a-plate fund-raising dinner at the Hyatt Hotel in Bellevue, Washington. Maybe it was a combination of the lamb kabobs and stuffed prawns, but I am pretty certain Cheney stated “those who provide safe harbor and sanctuary to terrorists who launch attacks against the United States will be deemed just as guilty as the terrorists themselves. That’s why we went into Afghanistan. That’s why we went into Iraq.� Every day is a learning experience for me. All this time I thought we went into Iraq because their WMD posed an imminent danger to the United States. Now I can get a good night’s sleep.
Yesterday was a big day in China. In the 1949 communist revolution, the state seized private property. For the first time since 1949, China will guarantee property rights for its citizens. It means that businesses can use private property as collateral for loans. The private sector has become a major force in China’s economic growth. However, that same private sector is often the home of over-capacity. There are 123 auto manufacturers in China. The Xinhua News Agency stated that vehicle inventories almost doubled to 240,000 units in the first 10 months this year from the year-earlier period. The next thing you know incentives will be required to sell these vehicles. Maybe GM, F, and Chrysler can provide their expertise in this area.
A Homestar Mortgage survey stated that total mortgage origination will amount to $3.5 trillion in 2003, with two-thirds generated by homeowners refinancing existing mortgages. The forecast for 2004 is a 50% decline in mortgage originations. Another 21% who did not purchase or refinance a home this year intended to do so this year. The survey indicated U.S. homeowners have an average $70,000 in equity. Some industry watchers believe there will be more activity in home-equity loans.
It’s like old times. It’s been like this for over 100 years. Some people rent fancy New York City office space in skyscrapers. When you want to do real business, you don’t go to Broad and Wall at the Stock Exchange. That’s nickel and dime stuff. The floor brokers and day traders think that’s the real action. What do they know? Have they ever been to Harlem? Do they know what real red sauce tastes like? Have they ever eaten a real homemade meatball, one as large as a full moon but as light as the air outside? You just know they haven’t. When back home in New York City, I hang out in Harlem, the Bronx, Brooklyn, and on occasion, Little Italy. I know where to find the red sauce. Last night the ten tables at Rao’s in East Harlem were full—like that’s a revelation. Frank Pellegrino and Ronny Straci own the place. Frank’s great-uncle, Charlie Rao, started the Rao’s. I guess that’s where he thought up the name. Ronny was having dinner with Albert Petraolia, chief clerk for the Nassau County Courts. Louis Barone of East Harlem was at the bar. Louis comes from the neighborhood. Also in the restaurant was Albert Circelli of Yonkers. This was not Albert’s night. Louis must have had a bad day. He pulled out a .38-caliber gun and knocked off Albert. Bo Dietl, a former NYPD cop and frequent guest on the Don Imus show, stated “this was not any mob hit. If you want to whack somebody you don’t do it at Rao’s. You take it outside.� This was the real-life Sopranos. The cops related that they don’t have a motive. How would they know? The rumor is Albert made a disparaging remark about the red sauce. You can’t do that, not if you want to live.
It’s good that the holiday shopping season is disappointing. Had it been a barn burner, a lot of people could have been killed by the 6.5 earthquake while shopping in downtown Paso Robles? Is there an uptown? As it was, two individuals perished in the quake, which was felt all the way from the Central Coast of California to Rao’s in East Harlem.
U.S. commanders in Iraq have said they hope to reduce the American military presence from 130,000 troops to 100,000 troops by July, when political authority will be handed over to an interim Iraqi government. Unfortunately, things in Iraq are not what the troops and Americans been told. A 16-page White House report states “it is not possible to know at this time either the duration of the military operations or the scope and duration of the deployment of United States armed forces necessary for the full accomplishment of our goals.� Bush has been critical that enough has not been said about the positive accomplishments in Iraq. They are greatly outnumbered by the 202 U.S. soldiers killed by hostile fire since the United States declared major combat over in Iraq on May 1.
ComScore Networks reported that online sales were up 31% to about $1.9 billion for the week ended Friday. That’s a lot more encouraging than the news from WalMart, Target, and Shopko. A spokesperson for the Gallery at South Kalb remarked “we see the traffic, but we don’t see the bags.� WalMart is having trouble seeing the traffic. On the other hand, WalMart sees WalMart.com sales growing at twice the industry rate. Yesterday, Shopko Stores of Green Bay revised its earnings outlook for the fourth quarter and the fiscal year ending January 31,2004. Their present guidance is for the quarter to be in the range of 95 cents to $1.10 per share, down from $1.15 to $1.25 per share. Their president and CEO stated “our December sales expectations have not been met as holiday shopping traffic is lower than anticipated.� That is not the last time you will read these words in the coming two weeks. Shopko will have plenty of company. The combination of lower than expected sales and gross margin compression will create plenty of glum shareholders in the retail sector. I guess the Bush administration will blame the disappointing results on snowstorms, the quake, the orange alert, and the less than expected discounts offered by department stores.
Last night Cheney spoke at a $500-a-plate fund-raising dinner at the Hyatt Hotel in Bellevue, Washington. Maybe it was a combination of the lamb kabobs and stuffed prawns, but I am pretty certain Cheney stated “those who provide safe harbor and sanctuary to terrorists who launch attacks against the United States will be deemed just as guilty as the terrorists themselves. That’s why we went into Afghanistan. That’s why we went into Iraq.� Every day is a learning experience for me. All this time I thought we went into Iraq because their WMD posed an imminent danger to the United States. Now I can get a good night’s sleep.
Yesterday was a big day in China. In the 1949 communist revolution, the state seized private property. For the first time since 1949, China will guarantee property rights for its citizens. It means that businesses can use private property as collateral for loans. The private sector has become a major force in China’s economic growth. However, that same private sector is often the home of over-capacity. There are 123 auto manufacturers in China. The Xinhua News Agency stated that vehicle inventories almost doubled to 240,000 units in the first 10 months this year from the year-earlier period. The next thing you know incentives will be required to sell these vehicles. Maybe GM, F, and Chrysler can provide their expertise in this area.
A Homestar Mortgage survey stated that total mortgage origination will amount to $3.5 trillion in 2003, with two-thirds generated by homeowners refinancing existing mortgages. The forecast for 2004 is a 50% decline in mortgage originations. Another 21% who did not purchase or refinance a home this year intended to do so this year. The survey indicated U.S. homeowners have an average $70,000 in equity. Some industry watchers believe there will be more activity in home-equity loans.
Monday, December 22, 2003
12/22/03 One Nation Divisible And In Harm’s Way
This weekend upscale shoppers jammed Louis Vuitton, Neiman Marcus, Coach, and Saks Fifth Avenue, and many stood on long lines at checkout counters. Yesterday extended unemployment benefits ended for hundreds of thousands of Americans. Homeless people and the working poor stood on line Saturday at Glide Memorial Church in San Francisco. It was the annual food giveaway providing chicken or turkey and the fixings for a holiday dinner. For the first time in recent memory they ran out of food. Because of a drop in donations, Glide was only able to purchase 6,000 turkeys and chickens this holiday season, compared with 10,000 last year. At nearby St. Anthony’s Foundation there is a 53-year tradition of never turning anybody away with an empty stomach. They also ran out of chicken, turkey, and ham, and had to switch to hot dogs.
If you listen to the spinmeisters, everything in this nation appears bright. A tremendous blow struck many Americans this past August. In that month 400,000 of our citizens applied for first-time jobless benefits; however, the U.S. Department of Labor reported more than 130,000 workers lost jobs in August. These massive layoffs came after about 2.5 million jobs had already been lost over the past three years. Greg Davis, age 54, was one of those who became unemployed. He was a computer programmer at Towers Perrin. He lost his job with no warning. Greg arrived at work at 8:45AM and was laid off and home by 10AM. He received seven weeks severance pay, and received $413 a week in unemployment benefits. He has also worked odd jobs, and recently earned $350 laying bricks for a neighbor’s patio. He reported the $350, and his unemployment check dropped last week to $244. Greg wants to work, and stated “if I have to, I’ll wash cars to support my family (his wife and three children).� For Greg, “the biggest thing is fear, and the feeling that I’ve gone from a middle-class American down to the bottom of the pile…I’ve let my family down. My wife came from a family that never wanted…here we are, in harm’s way.�
Over 50% of store purchases are made with debit and credit cards. Cash registers depend on electricity. At 5:30 PM on Saturday a fire broke out at an unmanned substation in San Francisco. It caused equipment at one of the city’s key distribution centers to shut down, and 120,000 customers had no electricity, including the downtown shopping area packed with customers. Many businesses, such as, Old Navy and Ross, remained closed and without power on Sunday. The good news is they will be open for business today, and last year the Monday before Christmas was the second biggest shopping day of the year.
Over the past several days I have seen many articles stating that shoppers are procrastinating this holiday season, and waiting to make their purchases closer to Christmas to take advantage of added discounts. That may be true of some shoppers. However, there is another part to the story. Unfortunately, not enough writers pay attention to reality. If they were to read the releases from WalMart, they would have learned that many Americans are living paycheck to paycheck, and that more purchases are being made according to need. WalMart’s business picks up after payday. For many, payday comes twice a month. In December, the first paycheck arrived on the 5th, and the second would normally arrive on the 26th; however, that’s the day after Christmas. As such, for most folks the second paycheck will be received on December 24, in time to accomplish some last minute shopping. That would be good news for WalMart where December same-store sales through December 19 continue to track at the low end of the 3 to 5% growth range. Although some progress was made in the last week, traffic is still down but the size of individual purchases has increased.
I do believe that there is no proven connection between Saddam Hussein and the events of 9/11. At the same time, I do believe there is a connection between the capture of Saddam Hussein and yesterday Homeland Security announcing a code orange alert for our nation, the fifth time it has been activated. Administration officials previously had said they were reluctant to take such a step except in the most unusual circumstances. Tom Ridge stated “information indicates that extremists abroad are anticipating near-term attacks that they believe will rival, or exceed, the attacks in New York and at the Pentagon.� One might question whether the capture of Saddam Hussein did indeed make our country a safer place. I believe it increased the danger of our nation being in harm’s way.
On December 20 the World Trade Organization (WTO) rejected the U.S. government’s conclusion that Canadian softwood lumber imports imposed a “threat of injury� to the domestic lumber industry. A spokesperson for American Consumers for Affordable Homes stated “the U.S. cannot produce sufficient lumber to meet its needs for construction. Currently, approximately a third of our lumber must be imported. Protectionist duties harm millions of housing consumers and workers in lumber-dpendent industries who are forced to pay higher costs to protect a small group of lumber producers from open competition with their Canadian counterparts.�
This weekend upscale shoppers jammed Louis Vuitton, Neiman Marcus, Coach, and Saks Fifth Avenue, and many stood on long lines at checkout counters. Yesterday extended unemployment benefits ended for hundreds of thousands of Americans. Homeless people and the working poor stood on line Saturday at Glide Memorial Church in San Francisco. It was the annual food giveaway providing chicken or turkey and the fixings for a holiday dinner. For the first time in recent memory they ran out of food. Because of a drop in donations, Glide was only able to purchase 6,000 turkeys and chickens this holiday season, compared with 10,000 last year. At nearby St. Anthony’s Foundation there is a 53-year tradition of never turning anybody away with an empty stomach. They also ran out of chicken, turkey, and ham, and had to switch to hot dogs.
If you listen to the spinmeisters, everything in this nation appears bright. A tremendous blow struck many Americans this past August. In that month 400,000 of our citizens applied for first-time jobless benefits; however, the U.S. Department of Labor reported more than 130,000 workers lost jobs in August. These massive layoffs came after about 2.5 million jobs had already been lost over the past three years. Greg Davis, age 54, was one of those who became unemployed. He was a computer programmer at Towers Perrin. He lost his job with no warning. Greg arrived at work at 8:45AM and was laid off and home by 10AM. He received seven weeks severance pay, and received $413 a week in unemployment benefits. He has also worked odd jobs, and recently earned $350 laying bricks for a neighbor’s patio. He reported the $350, and his unemployment check dropped last week to $244. Greg wants to work, and stated “if I have to, I’ll wash cars to support my family (his wife and three children).� For Greg, “the biggest thing is fear, and the feeling that I’ve gone from a middle-class American down to the bottom of the pile…I’ve let my family down. My wife came from a family that never wanted…here we are, in harm’s way.�
Over 50% of store purchases are made with debit and credit cards. Cash registers depend on electricity. At 5:30 PM on Saturday a fire broke out at an unmanned substation in San Francisco. It caused equipment at one of the city’s key distribution centers to shut down, and 120,000 customers had no electricity, including the downtown shopping area packed with customers. Many businesses, such as, Old Navy and Ross, remained closed and without power on Sunday. The good news is they will be open for business today, and last year the Monday before Christmas was the second biggest shopping day of the year.
Over the past several days I have seen many articles stating that shoppers are procrastinating this holiday season, and waiting to make their purchases closer to Christmas to take advantage of added discounts. That may be true of some shoppers. However, there is another part to the story. Unfortunately, not enough writers pay attention to reality. If they were to read the releases from WalMart, they would have learned that many Americans are living paycheck to paycheck, and that more purchases are being made according to need. WalMart’s business picks up after payday. For many, payday comes twice a month. In December, the first paycheck arrived on the 5th, and the second would normally arrive on the 26th; however, that’s the day after Christmas. As such, for most folks the second paycheck will be received on December 24, in time to accomplish some last minute shopping. That would be good news for WalMart where December same-store sales through December 19 continue to track at the low end of the 3 to 5% growth range. Although some progress was made in the last week, traffic is still down but the size of individual purchases has increased.
I do believe that there is no proven connection between Saddam Hussein and the events of 9/11. At the same time, I do believe there is a connection between the capture of Saddam Hussein and yesterday Homeland Security announcing a code orange alert for our nation, the fifth time it has been activated. Administration officials previously had said they were reluctant to take such a step except in the most unusual circumstances. Tom Ridge stated “information indicates that extremists abroad are anticipating near-term attacks that they believe will rival, or exceed, the attacks in New York and at the Pentagon.� One might question whether the capture of Saddam Hussein did indeed make our country a safer place. I believe it increased the danger of our nation being in harm’s way.
On December 20 the World Trade Organization (WTO) rejected the U.S. government’s conclusion that Canadian softwood lumber imports imposed a “threat of injury� to the domestic lumber industry. A spokesperson for American Consumers for Affordable Homes stated “the U.S. cannot produce sufficient lumber to meet its needs for construction. Currently, approximately a third of our lumber must be imported. Protectionist duties harm millions of housing consumers and workers in lumber-dpendent industries who are forced to pay higher costs to protect a small group of lumber producers from open competition with their Canadian counterparts.�
12/22/03 One Nation Divisible And In Harm’s Way
This weekend upscale shoppers jammed Louis Vuitton, Neiman Marcus, Coach, and Saks Fifth Avenue, and many stood on long lines at checkout counters. Yesterday extended unemployment benefits ended for hundreds of thousands of Americans. Homeless people and the working poor stood on line Saturday at Glide Memorial Church in San Francisco. It was the annual food giveaway providing chicken or turkey and the fixings for a holiday dinner. For the first time in recent memory they ran out of food. Because of a drop in donations, Glide was only able to purchase 6,000 turkeys and chickens this holiday season, compared with 10,000 last year. At nearby St. Anthony’s Foundation there is a 53-year tradition of never turning anybody away with an empty stomach. They also ran out of chicken, turkey, and ham, and had to switch to hot dogs.
If you listen to the spinmeisters, everything in this nation appears bright. A tremendous blow struck many Americans this past August. In that month 400,000 of our citizens applied for first-time jobless benefits; however, the U.S. Department of Labor reported more than 130,000 workers lost jobs in August. These massive layoffs came after about 2.5 million jobs had already been lost over the past three years. Greg Davis, age 54, was one of those who became unemployed. He was a computer programmer at Towers Perrin. He lost his job with no warning. Greg arrived at work at 8:45AM and was laid off and home by 10AM. He received seven weeks severance pay, and received $413 a week in unemployment benefits. He has also worked odd jobs, and recently earned $350 laying bricks for a neighbor’s patio. He reported the $350, and his unemployment check dropped last week to $244. Greg wants to work, and stated “if I have to, I’ll wash cars to support my family (his wife and three children).� For Greg, “the biggest thing is fear, and the feeling that I’ve gone from a middle-class American down to the bottom of the pile…I’ve let my family down. My wife came from a family that never wanted…here we are, in harm’s way.�
Over 50% of store purchases are made with debit and credit cards. Cash registers depend on electricity. At 5:30 PM on Saturday a fire broke out at an unmanned substation in San Francisco. It caused equipment at one of the city’s key distribution centers to shut down, and 120,000 customers had no electricity, including the downtown shopping area packed with customers. Many businesses, such as, Old Navy and Ross, remained closed and without power on Sunday. The good news is they will be open for business today, and last year the Monday before Christmas was the second biggest shopping day of the year.
Over the past several days I have seen many articles stating that shoppers are procrastinating this holiday season, and waiting to make their purchases closer to Christmas to take advantage of added discounts. That may be true of some shoppers. However, there is another part to the story. Unfortunately, not enough writers pay attention to reality. If they were to read the releases from WalMart, they would have learned that many Americans are living paycheck to paycheck, and that more purchases are being made according to need. WalMart’s business picks up after payday. For many, payday comes twice a month. In December, the first paycheck arrived on the 5th, and the second would normally arrive on the 26th; however, that’s the day after Christmas. As such, for most folks the second paycheck will be received on December 24, in time to accomplish some last minute shopping. That would be good news for WalMart where December same-store sales through December 19 continue to track at the low end of the 3 to 5% growth range. Although some progress was made in the last week, traffic is still down but the size of individual purchases has increased.
I do believe that there is no proven connection between Saddam Hussein and the events of 9/11. At the same time, I do believe there is a connection between the capture of Saddam Hussein and yesterday Homeland Security announcing a code orange alert for our nation, the fifth time it has been activated. Administration officials previously had said they were reluctant to take such a step except in the most unusual circumstances. Tom Ridge stated “information indicates that extremists abroad are anticipating near-term attacks that they believe will rival, or exceed, the attacks in New York and at the Pentagon.� One might question whether the capture of Saddam Hussein did indeed make our country a safer place. I believe it increased the danger of our nation being in harm’s way.
On December 20 the World Trade Organization (WTO) rejected the U.S. government’s conclusion that Canadian softwood lumber imports imposed a “threat of injury� to the domestic lumber industry. A spokesperson for American Consumers for Affordable Homes stated “the U.S. cannot produce sufficient lumber to meet its needs for construction. Currently, approximately a third of our lumber must be imported. Protectionist duties harm millions of housing consumers and workers in lumber-dpendent industries who are forced to pay higher costs to protect a small group of lumber producers from open competition with their Canadian counterparts.�
This weekend upscale shoppers jammed Louis Vuitton, Neiman Marcus, Coach, and Saks Fifth Avenue, and many stood on long lines at checkout counters. Yesterday extended unemployment benefits ended for hundreds of thousands of Americans. Homeless people and the working poor stood on line Saturday at Glide Memorial Church in San Francisco. It was the annual food giveaway providing chicken or turkey and the fixings for a holiday dinner. For the first time in recent memory they ran out of food. Because of a drop in donations, Glide was only able to purchase 6,000 turkeys and chickens this holiday season, compared with 10,000 last year. At nearby St. Anthony’s Foundation there is a 53-year tradition of never turning anybody away with an empty stomach. They also ran out of chicken, turkey, and ham, and had to switch to hot dogs.
If you listen to the spinmeisters, everything in this nation appears bright. A tremendous blow struck many Americans this past August. In that month 400,000 of our citizens applied for first-time jobless benefits; however, the U.S. Department of Labor reported more than 130,000 workers lost jobs in August. These massive layoffs came after about 2.5 million jobs had already been lost over the past three years. Greg Davis, age 54, was one of those who became unemployed. He was a computer programmer at Towers Perrin. He lost his job with no warning. Greg arrived at work at 8:45AM and was laid off and home by 10AM. He received seven weeks severance pay, and received $413 a week in unemployment benefits. He has also worked odd jobs, and recently earned $350 laying bricks for a neighbor’s patio. He reported the $350, and his unemployment check dropped last week to $244. Greg wants to work, and stated “if I have to, I’ll wash cars to support my family (his wife and three children).� For Greg, “the biggest thing is fear, and the feeling that I’ve gone from a middle-class American down to the bottom of the pile…I’ve let my family down. My wife came from a family that never wanted…here we are, in harm’s way.�
Over 50% of store purchases are made with debit and credit cards. Cash registers depend on electricity. At 5:30 PM on Saturday a fire broke out at an unmanned substation in San Francisco. It caused equipment at one of the city’s key distribution centers to shut down, and 120,000 customers had no electricity, including the downtown shopping area packed with customers. Many businesses, such as, Old Navy and Ross, remained closed and without power on Sunday. The good news is they will be open for business today, and last year the Monday before Christmas was the second biggest shopping day of the year.
Over the past several days I have seen many articles stating that shoppers are procrastinating this holiday season, and waiting to make their purchases closer to Christmas to take advantage of added discounts. That may be true of some shoppers. However, there is another part to the story. Unfortunately, not enough writers pay attention to reality. If they were to read the releases from WalMart, they would have learned that many Americans are living paycheck to paycheck, and that more purchases are being made according to need. WalMart’s business picks up after payday. For many, payday comes twice a month. In December, the first paycheck arrived on the 5th, and the second would normally arrive on the 26th; however, that’s the day after Christmas. As such, for most folks the second paycheck will be received on December 24, in time to accomplish some last minute shopping. That would be good news for WalMart where December same-store sales through December 19 continue to track at the low end of the 3 to 5% growth range. Although some progress was made in the last week, traffic is still down but the size of individual purchases has increased.
I do believe that there is no proven connection between Saddam Hussein and the events of 9/11. At the same time, I do believe there is a connection between the capture of Saddam Hussein and yesterday Homeland Security announcing a code orange alert for our nation, the fifth time it has been activated. Administration officials previously had said they were reluctant to take such a step except in the most unusual circumstances. Tom Ridge stated “information indicates that extremists abroad are anticipating near-term attacks that they believe will rival, or exceed, the attacks in New York and at the Pentagon.� One might question whether the capture of Saddam Hussein did indeed make our country a safer place. I believe it increased the danger of our nation being in harm’s way.
On December 20 the World Trade Organization (WTO) rejected the U.S. government’s conclusion that Canadian softwood lumber imports imposed a “threat of injury� to the domestic lumber industry. A spokesperson for American Consumers for Affordable Homes stated “the U.S. cannot produce sufficient lumber to meet its needs for construction. Currently, approximately a third of our lumber must be imported. Protectionist duties harm millions of housing consumers and workers in lumber-dpendent industries who are forced to pay higher costs to protect a small group of lumber producers from open competition with their Canadian counterparts.�
Sunday, December 21, 2003
12/21/03 Transitional Problems
Cathy E. Minehan, Boston Federal Reserve Bank president and chief executive officer: “Productivity is the only way that economies grow over time. The fact that underlying productivity growth changed from something like 1% in the 1980s to something like 2 ¼ to 2 ½% since 1995 means that we are able to double our standards of living in about half the time. That improves everything for everybody. Real incomes go up, standards of living improve, and economies grow. Yes, increases in productivity during times of slower growth demand mean fewer jobs will be created. But being against productivity is like being against the car because it put some buggy whip manufacturers out of business. You can’t say it’s wrong for an economy to grow because there are transitional difficulties. We are experiencing a transitional problem from slower demand.� Ms. Minehan, if you asked the people on Main Street whether their standard of living has improved since January 2001, you might be greeted with answers unfit for a lady to hear. The simple truth is we have too many goods with too little demand, and exports to our country have all but eliminated the pricing power of businesses. This phenomenon has placed a strain on profit margins and created an on-going focus on cost-cutting, and ultimately, extinguished millions of jobs. The value of our dollar is falling, and so is our standard of living,
Over the past 30 years, U.S. factories have more than doubled their output. Our country continues to be the world’s number one manufacturer as well as the largest exporter. Economists remind us that, in 1910, one out of three U.S. workers was a farmer, and in 2000, that number had been reduced to fewer than one in 33. At the end of WW II, about four in ten workers were employed in manufacturing. Today that number is just over one in ten. The loss of manufacturing jobs is most often blamed on lower-wage earning foreign workers. According to a study of 20 large economies by Alliance Capital, from 1995 to 2002, their production increased more than 30% but employment declined 11%, for a loss of 22 million factory jobs. During this same period, China’s factory employment dropped 15%. As technology advances, and more computer-controlled machines work on their own, the need for workers declines as productivity increases. The machine may require repair and maintenance, but they are not represented by unions, do not require cost of living adjustments and yearly raises and possible bonuses, insurance companies don’t slap them with double-digit cost increases in health care policies, and many employee benefit plans are not required. But we have a transitional problem in the workplace. All this increased efficiency produces high numbers of unemployed, under-employed, and part-time workers. Lower operating costs have not created more jobs—not in the United States and not in China. There is nothing on the horizon to indicate this trend will slow down or reverse itself. It is more than a transitional difficulty, Ms. Minehan.
The transition from the Clinton years to the Bush period has meant the shift from government surpluses to big government deficits. Legislation created the CARFA Commission, the Commission on the Accountability and Review of Federal Agencies, focusing on entitlement programs and their impact on federal spending, deficits, and overall debt problems, discretionary spending policies, and pork programs. The legislation is known as SB 837 and HR 3213. It actually does exist. All taxpayers must remember interest payments on the federal debt are the third-largest budget item, after defense and entitlement programs. Maybe we can transition ourselves from the $2 million Appalachian fruit lab in West Virginia or the $725,000 “Please Touch� museum in Philadelphia.
The non-profit National Security Archive discovered information under the freedom of information act. In 1984 Rummy was then-President Reagan’s special Middle East envoy. In that year he went to Baghdad to personally assure Saddam Hussein that, his use of chemical weapons in the Iran-Iraq war, did not threaten U.S.-Iraqi ties. We transition to this year. Both Hans Blix and former weapons inspector, Dr. Raymond Zilinskas of the Monterrey Institute of International Studies, believe that most of Iraq’s WMD were destroyed in 1991 during the first Gulf War, and, at best, remnants of those weapons will be ultimately discovered. The Bush administration, not elected by the popular vote, chose the route of a preemptive strike because Bush claimed “hard fact that there were weapons of mass destruction, as opposed to the possibility that he could move to acquire those weapons.� In a recent interview with Dianne Sawyer, Bush was reminded of his aforementioned statement. Bush replied “What’s the difference?� The difference is the lost lives of 455 U.S. and 80 European soldiers and thousands of wounded during the conflict, including civilians. The truth is not for sale. It is not negotiable. The truth is not in transition. Congress did not vote to attack Iraq because Iraq and the world would be a better place without Saddam Hussein. Unfortunately for the Bush-Cheney team, the “misspeak� about WMD will re-emerge. It will take its place beside the millions of unemployed, under-employed, and part-time employed. November 2004 will serve as a transition period.
Today there are large fires burning on four pipelines between Tikrit and Beji, and another four fires blazing from pipelines between Beji and Mosul. Rebels fired rocket-propelled grenades that hit storage tanks in southern Baghdad on Saturday. Millions of gallons of gasoline burned, and these events only exacerbated the rationing that the Oil Ministry introduced on Thursday. Life has certainly changed. In the 1970s we experienced gasoline shortages and mile-long lines of cars at gas stations and waits for hours on end. Shortages in Iraq have created mile-long lines of cars at gas stations and waits up to 12 hours. Iraq has the world’s second-largest oil reserves. Tell that to the people waiting on line to get gas. I wonder how many Iraqis are happy that the U.S. occupies their country. Iraq is a country in transition.
Talks broke down Friday between the United Food and Commercial Workers International Union and Safeway, Albertson’s, and Kroger. The union proposed cutting employer funding of worker benefits by between $350 million and $500 million over a three-year contract. Supposedly, the companies are looking for about $1 billion in cuts. The companies did not make a counteroffer. Said the union representative, “they clearly aren’t interested in negotiations. They’re interested in breaking the union and the spirit of the employees.� The strike centers on healthcare costs, pension benefits, and pay for new hires. Unless a bolt of lightning takes place, negotiations will not resume until next year. By that time, the strike will have continued for almost 90 days. This must be music to the ears of WalMart and Costco. Extra grocery revenue certainly is helpful during a disappointing holiday shopping season.
Cathy E. Minehan, Boston Federal Reserve Bank president and chief executive officer: “Productivity is the only way that economies grow over time. The fact that underlying productivity growth changed from something like 1% in the 1980s to something like 2 ¼ to 2 ½% since 1995 means that we are able to double our standards of living in about half the time. That improves everything for everybody. Real incomes go up, standards of living improve, and economies grow. Yes, increases in productivity during times of slower growth demand mean fewer jobs will be created. But being against productivity is like being against the car because it put some buggy whip manufacturers out of business. You can’t say it’s wrong for an economy to grow because there are transitional difficulties. We are experiencing a transitional problem from slower demand.� Ms. Minehan, if you asked the people on Main Street whether their standard of living has improved since January 2001, you might be greeted with answers unfit for a lady to hear. The simple truth is we have too many goods with too little demand, and exports to our country have all but eliminated the pricing power of businesses. This phenomenon has placed a strain on profit margins and created an on-going focus on cost-cutting, and ultimately, extinguished millions of jobs. The value of our dollar is falling, and so is our standard of living,
Over the past 30 years, U.S. factories have more than doubled their output. Our country continues to be the world’s number one manufacturer as well as the largest exporter. Economists remind us that, in 1910, one out of three U.S. workers was a farmer, and in 2000, that number had been reduced to fewer than one in 33. At the end of WW II, about four in ten workers were employed in manufacturing. Today that number is just over one in ten. The loss of manufacturing jobs is most often blamed on lower-wage earning foreign workers. According to a study of 20 large economies by Alliance Capital, from 1995 to 2002, their production increased more than 30% but employment declined 11%, for a loss of 22 million factory jobs. During this same period, China’s factory employment dropped 15%. As technology advances, and more computer-controlled machines work on their own, the need for workers declines as productivity increases. The machine may require repair and maintenance, but they are not represented by unions, do not require cost of living adjustments and yearly raises and possible bonuses, insurance companies don’t slap them with double-digit cost increases in health care policies, and many employee benefit plans are not required. But we have a transitional problem in the workplace. All this increased efficiency produces high numbers of unemployed, under-employed, and part-time workers. Lower operating costs have not created more jobs—not in the United States and not in China. There is nothing on the horizon to indicate this trend will slow down or reverse itself. It is more than a transitional difficulty, Ms. Minehan.
The transition from the Clinton years to the Bush period has meant the shift from government surpluses to big government deficits. Legislation created the CARFA Commission, the Commission on the Accountability and Review of Federal Agencies, focusing on entitlement programs and their impact on federal spending, deficits, and overall debt problems, discretionary spending policies, and pork programs. The legislation is known as SB 837 and HR 3213. It actually does exist. All taxpayers must remember interest payments on the federal debt are the third-largest budget item, after defense and entitlement programs. Maybe we can transition ourselves from the $2 million Appalachian fruit lab in West Virginia or the $725,000 “Please Touch� museum in Philadelphia.
The non-profit National Security Archive discovered information under the freedom of information act. In 1984 Rummy was then-President Reagan’s special Middle East envoy. In that year he went to Baghdad to personally assure Saddam Hussein that, his use of chemical weapons in the Iran-Iraq war, did not threaten U.S.-Iraqi ties. We transition to this year. Both Hans Blix and former weapons inspector, Dr. Raymond Zilinskas of the Monterrey Institute of International Studies, believe that most of Iraq’s WMD were destroyed in 1991 during the first Gulf War, and, at best, remnants of those weapons will be ultimately discovered. The Bush administration, not elected by the popular vote, chose the route of a preemptive strike because Bush claimed “hard fact that there were weapons of mass destruction, as opposed to the possibility that he could move to acquire those weapons.� In a recent interview with Dianne Sawyer, Bush was reminded of his aforementioned statement. Bush replied “What’s the difference?� The difference is the lost lives of 455 U.S. and 80 European soldiers and thousands of wounded during the conflict, including civilians. The truth is not for sale. It is not negotiable. The truth is not in transition. Congress did not vote to attack Iraq because Iraq and the world would be a better place without Saddam Hussein. Unfortunately for the Bush-Cheney team, the “misspeak� about WMD will re-emerge. It will take its place beside the millions of unemployed, under-employed, and part-time employed. November 2004 will serve as a transition period.
Today there are large fires burning on four pipelines between Tikrit and Beji, and another four fires blazing from pipelines between Beji and Mosul. Rebels fired rocket-propelled grenades that hit storage tanks in southern Baghdad on Saturday. Millions of gallons of gasoline burned, and these events only exacerbated the rationing that the Oil Ministry introduced on Thursday. Life has certainly changed. In the 1970s we experienced gasoline shortages and mile-long lines of cars at gas stations and waits for hours on end. Shortages in Iraq have created mile-long lines of cars at gas stations and waits up to 12 hours. Iraq has the world’s second-largest oil reserves. Tell that to the people waiting on line to get gas. I wonder how many Iraqis are happy that the U.S. occupies their country. Iraq is a country in transition.
Talks broke down Friday between the United Food and Commercial Workers International Union and Safeway, Albertson’s, and Kroger. The union proposed cutting employer funding of worker benefits by between $350 million and $500 million over a three-year contract. Supposedly, the companies are looking for about $1 billion in cuts. The companies did not make a counteroffer. Said the union representative, “they clearly aren’t interested in negotiations. They’re interested in breaking the union and the spirit of the employees.� The strike centers on healthcare costs, pension benefits, and pay for new hires. Unless a bolt of lightning takes place, negotiations will not resume until next year. By that time, the strike will have continued for almost 90 days. This must be music to the ears of WalMart and Costco. Extra grocery revenue certainly is helpful during a disappointing holiday shopping season.
Subscribe to:
Posts (Atom)