1/10/04 Dumb And Dumber
It’s early Saturday morning. I could insult you and make nice. I could invite you in for coffee and discuss the weather. I could even omit some of the facts, and thereby make the current economic picture look brighter. You and I don’t have that kind of relationship. Forecasting isn’t that tough. It depends on one’s dedication to uncovering the truth. I have an advantage. Thank goodness, I am not running for elected office or any other office. Let’s get started. Yesterday Excel Corp. announced layoffs at its Plainview and Friona beef processing plants that will affect 220 employees. The layoffs are the result of the decline in exports due to the mad cow situation. Excel stated it will lay off 6 to 7% of company employees at its five processing plants: Dodge City, Kansas; Schuyler, Nebraska; Fort Morgan, Colorado; and two in Texas. Each plant employs between 2,200 and 2,500 workers. The layoffs will total 100 to 150 people per plant, Excel stated. Tyson Fresh Meats has lost the market for certain beef allied products, and they have furloughed some workers at their smaller plants. Swift & Co. suspended operations on export lines, and they have targeted 55 positions at their Cactus plant. It should be noted that Excel is the major employer in the area, and Terri Johnson, Friona City Manager, indicates there are not many other jobs the laid-off workers can pick up at this time. Cotton gins are not hiring now.
After the jobs report was released yesterday, U.S. Labor Secretary Elaine Chao remarked that the data was proof that “the president’s economic policies are working.” DUMB! The civilian labor force fell by 309,000 in December to 146.9 million. Over the past year, the participation rate, which measures the number of people who work as a percentage of the overall labor force, has declined by 0.4% to 66%, the lowest in 15 years. If the participation rate were at its pre-recession peak of 67.4%, then the December unemployment figure would have been 7.7%.
Bush spoke Friday to a group of female small-business owners. He stated the drop in the unemployment rate was “a positive sign that the economy is getting better.” DUMBER! In December, about 1.5 million persons were marginally attached (like by the short hairs) to the labor force, about the same as a year earlier. These individuals wanted and were available to work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed, however, because they did not actively search for work in the 4 weeks preceding the employment report. There were 433,00 discouraged workers in December, about the same as in December 2002. Discouraged workers are a subset of the marginally attached, and they are not currently looking for work specifically because they believed no jobs were available to them. The other 1.1 million marginally attached had not searched for work for other reasons such as school or family responsibilities.
The bright spots in the employment report remain the same. Employment continued to rise in temporary help, construction, education, and health care. In the area of temp help, 30,000 jobs were added in December and 166,000 such jobs were added in 2003. A total of 86,000 non-temp jobs have been added in professional and business services in 2003. Since February, 173,000 jobs have been added in construction. A change has taken place in the credit intermediation area. From July 2000 through September 2003, the industry added 251,000 jobs. Over the past three months, employment has fallen by 39,000. When you study these numbers, which are nationwide, you realize that the total non-farm payroll picture has been poor, not just last month, but for a long time. We have discussed the inability to believe the government numbers. Yesterday they revised November and October numbers. A light bulb suddenly came on, and 51,000 jobs disappeared from the employment rolls. The government numbers grossly understate the unemployment problem in the United States. John Challenger, chief executive of Challenger Gray & Christmas, remarked “the fact is we may not see a true job market boom until the next economic cycle around 2008.” Bush stated “I’m optimistic because…I see things happening.” Anthony Chan, chief economist at Banc One Investment Advisors in Columbus, Ohio, stated “ the decline in the unemployment rate is the most misleading aspect of this unemployment report. It’s a sham because of how we got there- the labor force dropped precisely because more people became discouraged.” Wells Fargo chief economist Sung Won Son observed “despite all the hoopla, neither businesses nor potential employees have confidence in the economy. They’re not believing all the stories about a strong and healthy economy given by the economists and the government… the job market is lousy…people who lost jobs in manufacturing, especially some of the older workers, they look at the landscape and say, ‘why should I waste my time?’ And they simply drop out of the labor force.”
On Friday, Ford stated they had eliminated 7,000 hourly, salaried, and contract positions in 2003 in North America. Their CFO stated the company expects to meet its goal of cutting 35,000 jobs worldwide by the end of the year or early 2005. I give them an “A” for downsizing. Bill Ford stated “in North America, in particular, the shift from the cost phase to the product phase is going to be very apparent.” In 2001 they lost $5.5 billion, about $1 billion in 2002, and in 2003 will be profitable. Next year they might earn somewhat less than $2 billion. However, Ford’s COO stated “our forecasting ability is not that good.” Chrysler cut 5,000 jobs last year, for a total of 35,000 since it announced a turnaround plan 3 years ago. GM has cut more than 17,000 white-collar jobs in North America over the last three years. Last year it shed 6,000 hourly workers. In the coming months, Ford plans to close is pickup plants in Edison, New Jersey and Oakville, Ontario, and to eliminate one shift at its sport-utility plant in St. Louis. Those moves will most likely eliminate another 3,000 workers. John Devine, GM’s vice chairman and chief financial officer, stated “the mistake we made in years past is we did it in peaks and valleys on people. You can’t run the business that way, you have to run it as flat as you can. We do it carefully and selectively, but we don’t see massive ups or massive downs” on employment in the auto industry.
Pennsylvania is an important Electoral College state. Their non-farm payrolls declined by 3,600 jobs in December. Since December 2002, the state has lost 11,300 jobs. A total of 30,900 manufacturing positions have been lost in the past 12 months.
“Reefers” are 20-foot to 40-foot refrigerated boxes or containers. They are in tight supply as a result of the mad cow disease situation. About 1,800 containers of U.S. beef are quarantined in Asian ports. Many others have been used to transport food and medical supplies for the war effort in Iraq, and they have been stranded in the Middle East for months. According to the U.S. Department of Agriculture, rates from U.S. to Asian ports rose by 12% for refrigerated shipments and 11% for dry shipments for the first nine months in 2003. A spokesperson for Kraft stated “we’ve seen predictions that refrigerated container transportation costs could increase anywhere from 2 to 7% in 2004 over 2003 across the industry.”
Citing the global shortage of iron-making coke, Weirton Steel Corp. reported yesterday it will temporarily curtail certain operations which will lead to temporary layoffs. Operating reductions will include certain finishing and rolling processes, and could cause the company to temporarily idle one of its two blast furnaces. The coke issue has impacted several other domestic steel producers. U.S. Steel, which is Weirton Steel’s primary coke supplier, was forced last month to reduce coke shipments following a fire at a West Vvirginia coal mine which has not yet resumed operations. Weirton annually uses approximately 1.2 million tons of coke in its iron-making operations. China has added to the tight supply as their steel production has risen from 129 million tons in 2000 to about 265 million tons in 2003. Weirton is the fifth largest U.S. integrated steel company and the second largest producer of tin mill products. They employ 3,300, and filed for bankruptcy protection on May 19,2003.
On behalf of 123,000 Teamster dairy workers in the U.S. and Canada and the 1.4 million Teamster members and their families who consume dairy products, the International Brotherhood of Teamsters’ Dairy Conference Director Fred Gegare yesterday petitioned the U.S. Secretaries of Agriculture and Health & Human Services to immediately ban the distribution of milk associated with the mad cow disease outbreak in the Pacific Northwest. Gegare stated “while immediate steps have been taken to protect consumers from potential dangers associated with beef linked to diseased cows, relatively little has been done to allay fears about dairy products coming from the same cows.”
National Meat Association President Rosemary Mucklow made an offer to the Japanese Trade and Agricultural officials to test all export-bound cows that were born before January 1, 1998. Scott Wallace, CEO of Gardenburger Authentic Foods, stated that “Gardenburger vehemently opposes testing only those cows bound for export. We are very interested in Ms. Mucklow’s explanation as to why she believes Japanese customers deserve better safeguards than American consumers. We strongly urge the industry to test all cows.” A Gallup survey commissioned by CNN and USA Today showed that only 16% of adults were worried about becoming victims of the mad cow disease, while 17% stated they had cut back or stopped eating meat. However, if you combine that 16-17% with the 10% accounted for by exports, then you have a picture with additional layoffs and plant closures, and lower beef prices. I can look elsewhere for bad news in the food industry. We can discuss high levels of dioxins and PCBs in farm-raised salmon, arsenic levels in chicken that control intestinal parasites, or various problems with pork and eggs. The day has just begun. Let’s let the sun come up before we explore cholesterol, heart disease, cancer, and diabetes. At least let me get another cup of coffee.
On October 29, 2003 Bush called on Congress to complete work on the Medicare bill. He promised “if there’s a Medicare reform bill signed by me, corporations have no intention to dump retirees from their existing drug coverage…what we are talking about is trust.” In a January 8, 2004 Wall Street Journal article entitled “U.S. Drug Subsidy Benefits Employers”, the paper noted that the White House added “a quietly-noticed provision” that allows companies to severely reduce their retirees’ drug coverage “without losing out on the new subsidy.” That special tax subsidy would “encourage employers’ to retain prescription-drug coverage” for their retirees and not to cut them off, stated the paper. In other words, Bush will reward companies who cut off coverage for their retirees with a new tax break. Breaking a trust + a job-loss recovery = a one-term president.
Bill Johnson is a reporter with Colorado’s Rocky Mountain News. His column appears on Wednesday, Friday, and Saturday. He is a good guy, fair, and objective. Bill just returned from a assignment in Iraq, and stated “I was very fortunate to have received the assignment.” I will provide a few highlights from his writing: “What I do know with absolute certainty is that U.S. troops cannot soon leave, and likely must be there for a very long time… anyone, whether politician or commentator, who tells you the bulk of U.S. soldiers can be brought home by July, the workaday control of the country handed back to the Iraqis, knows nothing… what we hear and see in the United States bears little resemblance to the reality that is Iraq… Iraq is both dysfunctional and extremely dangerous, a country completely incapable of securing and honestly governing itself… there’s little electricity, no gas, no stability, no security… there is not a penny’s worth of evidence-other than the refinery smokestacks- that any rebuilding money has reached Baghdad… American soldiers know the fix that we’re in… if it is possible to miss anything, having returned from a war, I miss the U.S. troops most. They were the kindest, most selfless and helpful people I have met in some time.”
Friday, January 09, 2004
1/9/04 As The World Turns
I read in the Mars News where Bush has signed a non-disclosure agreement. In announcing his initiative to place humans on Mars, he was unable to relate the incentive deal signed by Levi’s. Mars has promised Levi’s six annual cash payments of $10 million each in lieu of tax credits. This is part of a $300 million incentive package the company would receive to build a plant. Yesterday Levi’s announced the closing of its last two U.S. sewing plants. About 800 employees lost their jobs with the closing. Only two decades ago, Levi’s had 63 U.S. manufacturing plants. In 1996 their workforce had 37,000 employees, and today it has been reduced down to 12,000. Viola Casares, a former employee, stated “for me right now, I feel like I’m in mourning. We used to be like a family. It’s hard to believe that it’s final. Levi Strauss is a 150-year-old company.
On Jan. 2, Quanta Computer Inc. in Taiwan, the leading notebook-computer manufacturer in the world, announced that three-quarters of its laptop output were planned to be off its production lines in the Chinese mainland. As a result, the Chinese mainland will replace Taiwan as the world’s largest production base for notebook computers. This location has new science parks, favorable employer policies, cheap labor, reduced costs for customs, and a large number of spare-parts suppliers. Suzhou, a coastal city in JIANGSU PROVINCE IN THE Yangtze River Delta, will account for 25% of the world’s output of notebook computers.
Between Christmas and New Year’s many businesses close or cut back on operations. This phenomenon is reflected in reports from exporters for the period from December 26 through January 1. Net sales of wheat were 67% below the previous week and 78% under the prior 4-week average. The numbers for corn were 45% lower and 54% less, respectively. For soybeans the results were even lower at 70% below and 75% under, respectively. It should be noted that, for all of 2003, beef exports were down 1% from the prior year, and this was before the impact from the mad cow disease.
Yesterday there were a couple of reports released on health care spending. I know a bit about this subject. As such, I thought a few of my thoughts might be in order. The Centers for Medicare and Medicaid Services (CMS) confirmed that spending on prescription medicines continues to account for only about 10 cents of every health dollar spent in the United States and just one-sixth of the increase in health care spending between 2001 and 2002. The share of the health care dollar in the CMS study attributable to brand name drug ingredients is about seven cents, and the three-cent remainder spent is attributable to generic ingredients and the distribution chain for pharmaceuticals. The report indicated that expenditures on medicines still account for nearly the same share of health spending as in 1960. CMS analysts note that, between 2001 and 2002, one-sixth of the health care spending increase reported was attributable to prescription medicines, and over four-fifths of the increase resulted from other health care services. Also noted was that most of the increase in spending on prescription medicines in recent years has been due to the use of more and newer medicines rather than higher prices. All this information does not lessen the fact that health care spending amounted to about $5,440 for every American in 2002. We spend almost 50% more per person than those in Switzerland, the second biggest health care spender per capita.
It’s that time when holiday bills begin to reach millions of Americans. They are often accompanied by IRS tax forms for 2003. As David Wyss, chief economist with Standard & Poor’s remarked, “we’ve never had so many who owed so much.” Credit card delinquencies hit a milestone of 4.09% in November, the American Bankers Association reported this week. It was hard to believe that the fastest growing class of indebted consumers are those 65 and older. Jordan Goodman, author of Everyone’s Money Book on Credit, remarked “more and more middle-income and former higher-income-busted dot-commers, airplane pilots, programmers whose jobs have gone to India-have a lifestyle they can’t maintain any more.” Robert Manning, a professor at Rochester Institute of Technology and author of Credit Card Nation, stated “it used to be that most Americans would save 10% of income for a rainy day. But that Depression-era generation has been followed by baby boomers who rely on credit in emergencies.” This growing burden of debt will slow the economy. The average Wal-Mart customer lives paycheck-to-paycheck. If you don’t believe that, please visit one of their stores on January 14th. You might mistake the empty aisles for a bowling alley.
Our money supply growth has been steadily decreasing for several months. Yesterday, in the week that ended December 29, the Federal Reserve reported that M-2 fell about $11 billion. On the other hand, China’s money supply has been increasing at a 20% annual rate. Inflation in China is accelerating. As a result, China will reduce the growth of its money supply to a level of about 13%. We must keep in mind that primarily China and Japan have been financing our deficits through the purchase of U.S. treasuries. Printing currency to buy our treasuries is a non-sustainable policy. Japan has an 8% budget deficit to finance and a growing mountain of Japanese government debt. China has its hands full with problem loans at its banks. The Federal Reserve does not worry about inflation. China exports low-priced goods and Wal-Mart delivers value to its customers. The Fed keeps our interest rates at depressed levels, and this encourages Americans and businesses to take the dollars and invest them at higher rates of interest, such as, the New Zealand dollar. In the end, inflation is exported to other countries, such as China, and the latter exports deflation to the U.S. That is how the world turns.
In a cost-cutting move, Bush has decided against awarding separate campaign medals for service in Iraq and Afghanistan in favor of a single decoration covering service in the global war on terrorism. Critics state the single campaign medal is being utilized to buttress the contention that the war in Iraq was undertaken as part of the worldwide battle against al-Qaida and other Islamic extremists. One defense source stated that ‘politics aside, separate campaign ribbons seem to make sense.” Retired Army Col. John Antal remarked “the decision not to issue separate medals seems to be the work of people who do not appreciate the importance of the values that help form a strong military culture.”
Just as Wal-Mart is a good indicator of the American consumer, H&R Block is a good indicator of the American taxpayer. That company has stated that they will process less taxpayer returns this year than last year. The reason given is the economy and its impact on rising unemployment. The government job report might provide a different spin on employment; however, in the end, it’s a question of whether someone is working full-time, part-time, at what rate of pay, or unemployed entirely. When the extended unemployment benefits program ended on December, all those folks receiving those benefits were then dropped from the unemployment rolls.
Before the beginning of the holiday shopping season, I did my own survey of seasonal hiring by retailers. I mentioned that muted hiring indicated to me muted projected results for the upcoming holidays. The Labor Department announced that retail employment declined 38,000 after November’s 28,000 decrease. This decrease was more than offset by a 45,000 increase in professional and business services, and this rise includes temporary workers. Education and health services employment rose by 21,000. In sum, U.S. December payrolls rose by 1,000, and not the projected 130,000 to 150,000 increase. I want to close with a couple of observations. On December 21 the extended unemployment benefit program ended, and those folks receiving those benefits were dropped from the unemployment rolls. You can bet U.S. December payrolls declined. Secondly, the Labor Department stated the unemployment rate dropped to 5.7% from 5.9%. This proves my point. The rate dropped because the employment population as a whole declined. This is very negative. Thirdly, the average weekly hours worked for all employees fell to 33.7 hours in December from 33.9 in the prior month. How do you make ends meet working only 33.7 hours a week? Average weekly earnings fell to $522.35 from $524.43 in November. The motto for the Bush years should be “most every worker is left behind.”
I read in the Mars News where Bush has signed a non-disclosure agreement. In announcing his initiative to place humans on Mars, he was unable to relate the incentive deal signed by Levi’s. Mars has promised Levi’s six annual cash payments of $10 million each in lieu of tax credits. This is part of a $300 million incentive package the company would receive to build a plant. Yesterday Levi’s announced the closing of its last two U.S. sewing plants. About 800 employees lost their jobs with the closing. Only two decades ago, Levi’s had 63 U.S. manufacturing plants. In 1996 their workforce had 37,000 employees, and today it has been reduced down to 12,000. Viola Casares, a former employee, stated “for me right now, I feel like I’m in mourning. We used to be like a family. It’s hard to believe that it’s final. Levi Strauss is a 150-year-old company.
On Jan. 2, Quanta Computer Inc. in Taiwan, the leading notebook-computer manufacturer in the world, announced that three-quarters of its laptop output were planned to be off its production lines in the Chinese mainland. As a result, the Chinese mainland will replace Taiwan as the world’s largest production base for notebook computers. This location has new science parks, favorable employer policies, cheap labor, reduced costs for customs, and a large number of spare-parts suppliers. Suzhou, a coastal city in JIANGSU PROVINCE IN THE Yangtze River Delta, will account for 25% of the world’s output of notebook computers.
Between Christmas and New Year’s many businesses close or cut back on operations. This phenomenon is reflected in reports from exporters for the period from December 26 through January 1. Net sales of wheat were 67% below the previous week and 78% under the prior 4-week average. The numbers for corn were 45% lower and 54% less, respectively. For soybeans the results were even lower at 70% below and 75% under, respectively. It should be noted that, for all of 2003, beef exports were down 1% from the prior year, and this was before the impact from the mad cow disease.
Yesterday there were a couple of reports released on health care spending. I know a bit about this subject. As such, I thought a few of my thoughts might be in order. The Centers for Medicare and Medicaid Services (CMS) confirmed that spending on prescription medicines continues to account for only about 10 cents of every health dollar spent in the United States and just one-sixth of the increase in health care spending between 2001 and 2002. The share of the health care dollar in the CMS study attributable to brand name drug ingredients is about seven cents, and the three-cent remainder spent is attributable to generic ingredients and the distribution chain for pharmaceuticals. The report indicated that expenditures on medicines still account for nearly the same share of health spending as in 1960. CMS analysts note that, between 2001 and 2002, one-sixth of the health care spending increase reported was attributable to prescription medicines, and over four-fifths of the increase resulted from other health care services. Also noted was that most of the increase in spending on prescription medicines in recent years has been due to the use of more and newer medicines rather than higher prices. All this information does not lessen the fact that health care spending amounted to about $5,440 for every American in 2002. We spend almost 50% more per person than those in Switzerland, the second biggest health care spender per capita.
It’s that time when holiday bills begin to reach millions of Americans. They are often accompanied by IRS tax forms for 2003. As David Wyss, chief economist with Standard & Poor’s remarked, “we’ve never had so many who owed so much.” Credit card delinquencies hit a milestone of 4.09% in November, the American Bankers Association reported this week. It was hard to believe that the fastest growing class of indebted consumers are those 65 and older. Jordan Goodman, author of Everyone’s Money Book on Credit, remarked “more and more middle-income and former higher-income-busted dot-commers, airplane pilots, programmers whose jobs have gone to India-have a lifestyle they can’t maintain any more.” Robert Manning, a professor at Rochester Institute of Technology and author of Credit Card Nation, stated “it used to be that most Americans would save 10% of income for a rainy day. But that Depression-era generation has been followed by baby boomers who rely on credit in emergencies.” This growing burden of debt will slow the economy. The average Wal-Mart customer lives paycheck-to-paycheck. If you don’t believe that, please visit one of their stores on January 14th. You might mistake the empty aisles for a bowling alley.
Our money supply growth has been steadily decreasing for several months. Yesterday, in the week that ended December 29, the Federal Reserve reported that M-2 fell about $11 billion. On the other hand, China’s money supply has been increasing at a 20% annual rate. Inflation in China is accelerating. As a result, China will reduce the growth of its money supply to a level of about 13%. We must keep in mind that primarily China and Japan have been financing our deficits through the purchase of U.S. treasuries. Printing currency to buy our treasuries is a non-sustainable policy. Japan has an 8% budget deficit to finance and a growing mountain of Japanese government debt. China has its hands full with problem loans at its banks. The Federal Reserve does not worry about inflation. China exports low-priced goods and Wal-Mart delivers value to its customers. The Fed keeps our interest rates at depressed levels, and this encourages Americans and businesses to take the dollars and invest them at higher rates of interest, such as, the New Zealand dollar. In the end, inflation is exported to other countries, such as China, and the latter exports deflation to the U.S. That is how the world turns.
In a cost-cutting move, Bush has decided against awarding separate campaign medals for service in Iraq and Afghanistan in favor of a single decoration covering service in the global war on terrorism. Critics state the single campaign medal is being utilized to buttress the contention that the war in Iraq was undertaken as part of the worldwide battle against al-Qaida and other Islamic extremists. One defense source stated that ‘politics aside, separate campaign ribbons seem to make sense.” Retired Army Col. John Antal remarked “the decision not to issue separate medals seems to be the work of people who do not appreciate the importance of the values that help form a strong military culture.”
Just as Wal-Mart is a good indicator of the American consumer, H&R Block is a good indicator of the American taxpayer. That company has stated that they will process less taxpayer returns this year than last year. The reason given is the economy and its impact on rising unemployment. The government job report might provide a different spin on employment; however, in the end, it’s a question of whether someone is working full-time, part-time, at what rate of pay, or unemployed entirely. When the extended unemployment benefits program ended on December, all those folks receiving those benefits were then dropped from the unemployment rolls.
Before the beginning of the holiday shopping season, I did my own survey of seasonal hiring by retailers. I mentioned that muted hiring indicated to me muted projected results for the upcoming holidays. The Labor Department announced that retail employment declined 38,000 after November’s 28,000 decrease. This decrease was more than offset by a 45,000 increase in professional and business services, and this rise includes temporary workers. Education and health services employment rose by 21,000. In sum, U.S. December payrolls rose by 1,000, and not the projected 130,000 to 150,000 increase. I want to close with a couple of observations. On December 21 the extended unemployment benefit program ended, and those folks receiving those benefits were dropped from the unemployment rolls. You can bet U.S. December payrolls declined. Secondly, the Labor Department stated the unemployment rate dropped to 5.7% from 5.9%. This proves my point. The rate dropped because the employment population as a whole declined. This is very negative. Thirdly, the average weekly hours worked for all employees fell to 33.7 hours in December from 33.9 in the prior month. How do you make ends meet working only 33.7 hours a week? Average weekly earnings fell to $522.35 from $524.43 in November. The motto for the Bush years should be “most every worker is left behind.”
Thursday, January 08, 2004
1/8/04 The Truth Does Not Plea Bargain
I am taking off the gloves. If you read further, there will be blood. Today is the day for no prisoners.
We begin in Richmond, California, Contra Costa County’s second largest city. They have only $125,00 of available cash flow. Officials are attempting to avert defaulting on a major bond payment and bouncing checks come April. This is for real. Acting City Manager Jay Corey stated “if we don’t take different steps, checks are going to start bouncing. The state is broke. That’s the reality.” He went on to remark that the situation is “the perfect storm. It’s a combination of things: big seas, big storms, big wind, and human error.” Richmond could be facing a third, deep round of service cuts and staff layoffs in the short term. Expenditures of more than $1,000 must be approved by a cash-flow committee. Corey stated “this dwarfs Proposition 13. Then the state could bail us out. This isn’t getting as much press, but it dwarfs Proposition 13.” I didn’t hear Arnold describe the dire problems in Richmond. They are not disappearing.
Yesterday Steven Kandarian announced he is leaving his position as head of the Pension Benefit Guaranty Corp. In a letter to Labor Secretary Chao he wrote “we have learned these past two years that current pension funding rules are inadequate to secure sound funding in pension plans at the greatest risk of termination…if we do not take action soon, these consequences will repeat themselves, or worse, U.S. taxpayers may find themselves called upon to bail out the pension insurance system." The PBGC insures retirement plans for 44 million current workers and retirees. There are over 30,000 of these plans in the United States. Last year the government estimated the shortfall in these plans to be $350 billion. As of August, 2003, the PBGC’s single-employer insurance program had a deficit of $8.8 billion.
On January 6, the SBA stopped approving 7(a) business loans because demand was exceeding the amount of money available to support the government-guaranteed loans. It should be noted that small businesses are the largest generator for added employment in the United States. The suspension of the SBA’s flagship loan program followed an earlier announcement of plans to reduce the maximum size of the loans from $2 million to $750,000. The 7 (a) loan program is available to small businesses who otherwise would not be able to obtain financing on favorable terms. The SBA offers the program through private lenders and guarantees 50% to 85% of the loan amount, depending on the type and size of the loan. An SBA spokesman said the $750,000 cap will likely remain in effect until September 30. In reality, the Congress has only approved a loan amount of $3.3 billion through January 31, and by January 2, the SBA had already used up $3.2 billion of this authority. They are essentially out of funds for the remainder of this month. It would not be surprising for the SBA to impose a lower cap on loans from February through the end of September.
Today’s Financial Times reported that the White House ‘distorted’ the Iraq threat and “systematically misrepresented” the threat from Iraq’s WMD in the run-up to the war. In addition, the paper stated that 400 weapons hunters have been withdrawn from Iraq. People pay for this news. We reported this information for free some time ago. Not to be forgotten, since the beginning of the Iraq war, 332 of our troops have been killed in combat.
There were many mixed reactions to Bush’s immigration plan. The Federal Government Accounting Office estimates at least 50% of Florida’s agricultural workers are there illegally. I wonder if they took a poll. The Florida growers association estimates that, of their 90,000 workers, 70 to 80% are undocumented. I wonder whether they took a poll. I figure 101% are there illegally. Of course, the problem extends to maids, dishwashers, Congressional personnel (just joking. Their ethics are often described as illegal), and others. Theresa Brown, director of immigration policy for the U.S. Chamber of Commerce, observed “our immigration system is broken, it needs fixing and the president is obviously acknowledging that…you have a system that provides pretty much zero legal immigration avenues for people who are maybe not the highest skilled or highest educated, but are essential to our economy.” It is also essential to uphold the law. One does not declare legal what has always been illegal, and hurt Americans who already have a problem finding a job. As Rep. Tom Tancredo stated, “the president makes two very bad mistakes in this proposal. No. 1, he rewards people for having broken the law. That’s bad policy. No.2, he believes it will not hurt him politically.” Additionally, Tancredo mentioned failure to create secure borders first is the “fatal flaw” in Bush’s proposals.
For the five-week period ending January 2, 2004, Wal-Mart’s U.S. same-store sales rose 4.3%. A closer look reveals that a few factors saved the season for this company. Sam’s Club last year experienced a decline of 2.8% in same-store sales. This year the number was a plus 6.1%, a positive swing of almost 9%. The second big factor was the revenue generated from gift cards. Thirdly, the flu season made a big difference in pharmaceutical sales. Fourth, there was an additional shopping day this holiday season. Lastly, the strike in Southern California at large grocery chains, such as, Safeway, had a very positive impact on Sam’s Club results. In sum, the only factor that can be counted on to repeat for next Christmas would be the gift cards. The other items are conservatively deemed non-recurring. I would not depend on the consumer spending at current levels next year. Even Wal-Mart had difficulty bringing customers through their doors. I agree with Pamela Klaffke, author of Spree: a Cultural History of Shopping, when she observes “the days of the mall as the center of the teen universe will soon be over…nowadays the mall doesn’t have the same significance.” Additionally, the added convenience of online shopping makes for fierce competition to mall shopping. Even Wal-Mart has begun to experience the importance of their Internet site as an added inducement to its customers.
Reserve Bank of India Governor Y.V. Reddy stated yesterday that the overall growth for the year 2003-2004 was likely to be “higher and around seven percent with a continued upward bias.” This would be India’s largest full-year expansion in six years. Planning Commission Deputy Chairman K.C. Pant observed yesterday that India could become the world’s largest economy by 2020. He stated the 10th Five Year Plan (2002-2007) aimed to make India the fastest growing economy in the world by the end of this period. The Indian government stated yesterday it would create a 15 days’ strategic crude oil reserve as an “emergency response mechanism” to short-term disruptions. India imports around 69% of its crude requirements and 67% of this comes from the Middle East.
Carly Fiorina, HP CEO: “There is no job that is America’s God-given right anymore.”
Craig Barrett, Intel CEO: The United States “now has to compete for every job going forward. That has not been on the table before. It has been assumed we had a lock on white-collar jobs and high-tech jobs. That is no longer the case.”
A December Commerce Department report predicted that “many U.S. companies that are not already offshoring are planning to do so in the near future.”
IBM announced yesterday that it’s cutting another 300 software jobs.
A waitress hospitalized in Guangzhou, China was declared that country’s second suspected SARS case of the season today.
The European Commission announced yesterday that European business confidence in December dropped for the first time in five months. Some production plans are being scaled back. Confidence among French consumers remains at a six-year low.
Exports of our domestically produced aircraft dropped to the number two spot in U.S. exports. For full-year 2003 Boeing only delivered 281 planes, and of that number, 4 were intra-company deliveries and 17 were operating lease transactions.
I am taking off the gloves. If you read further, there will be blood. Today is the day for no prisoners.
We begin in Richmond, California, Contra Costa County’s second largest city. They have only $125,00 of available cash flow. Officials are attempting to avert defaulting on a major bond payment and bouncing checks come April. This is for real. Acting City Manager Jay Corey stated “if we don’t take different steps, checks are going to start bouncing. The state is broke. That’s the reality.” He went on to remark that the situation is “the perfect storm. It’s a combination of things: big seas, big storms, big wind, and human error.” Richmond could be facing a third, deep round of service cuts and staff layoffs in the short term. Expenditures of more than $1,000 must be approved by a cash-flow committee. Corey stated “this dwarfs Proposition 13. Then the state could bail us out. This isn’t getting as much press, but it dwarfs Proposition 13.” I didn’t hear Arnold describe the dire problems in Richmond. They are not disappearing.
Yesterday Steven Kandarian announced he is leaving his position as head of the Pension Benefit Guaranty Corp. In a letter to Labor Secretary Chao he wrote “we have learned these past two years that current pension funding rules are inadequate to secure sound funding in pension plans at the greatest risk of termination…if we do not take action soon, these consequences will repeat themselves, or worse, U.S. taxpayers may find themselves called upon to bail out the pension insurance system." The PBGC insures retirement plans for 44 million current workers and retirees. There are over 30,000 of these plans in the United States. Last year the government estimated the shortfall in these plans to be $350 billion. As of August, 2003, the PBGC’s single-employer insurance program had a deficit of $8.8 billion.
On January 6, the SBA stopped approving 7(a) business loans because demand was exceeding the amount of money available to support the government-guaranteed loans. It should be noted that small businesses are the largest generator for added employment in the United States. The suspension of the SBA’s flagship loan program followed an earlier announcement of plans to reduce the maximum size of the loans from $2 million to $750,000. The 7 (a) loan program is available to small businesses who otherwise would not be able to obtain financing on favorable terms. The SBA offers the program through private lenders and guarantees 50% to 85% of the loan amount, depending on the type and size of the loan. An SBA spokesman said the $750,000 cap will likely remain in effect until September 30. In reality, the Congress has only approved a loan amount of $3.3 billion through January 31, and by January 2, the SBA had already used up $3.2 billion of this authority. They are essentially out of funds for the remainder of this month. It would not be surprising for the SBA to impose a lower cap on loans from February through the end of September.
Today’s Financial Times reported that the White House ‘distorted’ the Iraq threat and “systematically misrepresented” the threat from Iraq’s WMD in the run-up to the war. In addition, the paper stated that 400 weapons hunters have been withdrawn from Iraq. People pay for this news. We reported this information for free some time ago. Not to be forgotten, since the beginning of the Iraq war, 332 of our troops have been killed in combat.
There were many mixed reactions to Bush’s immigration plan. The Federal Government Accounting Office estimates at least 50% of Florida’s agricultural workers are there illegally. I wonder if they took a poll. The Florida growers association estimates that, of their 90,000 workers, 70 to 80% are undocumented. I wonder whether they took a poll. I figure 101% are there illegally. Of course, the problem extends to maids, dishwashers, Congressional personnel (just joking. Their ethics are often described as illegal), and others. Theresa Brown, director of immigration policy for the U.S. Chamber of Commerce, observed “our immigration system is broken, it needs fixing and the president is obviously acknowledging that…you have a system that provides pretty much zero legal immigration avenues for people who are maybe not the highest skilled or highest educated, but are essential to our economy.” It is also essential to uphold the law. One does not declare legal what has always been illegal, and hurt Americans who already have a problem finding a job. As Rep. Tom Tancredo stated, “the president makes two very bad mistakes in this proposal. No. 1, he rewards people for having broken the law. That’s bad policy. No.2, he believes it will not hurt him politically.” Additionally, Tancredo mentioned failure to create secure borders first is the “fatal flaw” in Bush’s proposals.
For the five-week period ending January 2, 2004, Wal-Mart’s U.S. same-store sales rose 4.3%. A closer look reveals that a few factors saved the season for this company. Sam’s Club last year experienced a decline of 2.8% in same-store sales. This year the number was a plus 6.1%, a positive swing of almost 9%. The second big factor was the revenue generated from gift cards. Thirdly, the flu season made a big difference in pharmaceutical sales. Fourth, there was an additional shopping day this holiday season. Lastly, the strike in Southern California at large grocery chains, such as, Safeway, had a very positive impact on Sam’s Club results. In sum, the only factor that can be counted on to repeat for next Christmas would be the gift cards. The other items are conservatively deemed non-recurring. I would not depend on the consumer spending at current levels next year. Even Wal-Mart had difficulty bringing customers through their doors. I agree with Pamela Klaffke, author of Spree: a Cultural History of Shopping, when she observes “the days of the mall as the center of the teen universe will soon be over…nowadays the mall doesn’t have the same significance.” Additionally, the added convenience of online shopping makes for fierce competition to mall shopping. Even Wal-Mart has begun to experience the importance of their Internet site as an added inducement to its customers.
Reserve Bank of India Governor Y.V. Reddy stated yesterday that the overall growth for the year 2003-2004 was likely to be “higher and around seven percent with a continued upward bias.” This would be India’s largest full-year expansion in six years. Planning Commission Deputy Chairman K.C. Pant observed yesterday that India could become the world’s largest economy by 2020. He stated the 10th Five Year Plan (2002-2007) aimed to make India the fastest growing economy in the world by the end of this period. The Indian government stated yesterday it would create a 15 days’ strategic crude oil reserve as an “emergency response mechanism” to short-term disruptions. India imports around 69% of its crude requirements and 67% of this comes from the Middle East.
Carly Fiorina, HP CEO: “There is no job that is America’s God-given right anymore.”
Craig Barrett, Intel CEO: The United States “now has to compete for every job going forward. That has not been on the table before. It has been assumed we had a lock on white-collar jobs and high-tech jobs. That is no longer the case.”
A December Commerce Department report predicted that “many U.S. companies that are not already offshoring are planning to do so in the near future.”
IBM announced yesterday that it’s cutting another 300 software jobs.
A waitress hospitalized in Guangzhou, China was declared that country’s second suspected SARS case of the season today.
The European Commission announced yesterday that European business confidence in December dropped for the first time in five months. Some production plans are being scaled back. Confidence among French consumers remains at a six-year low.
Exports of our domestically produced aircraft dropped to the number two spot in U.S. exports. For full-year 2003 Boeing only delivered 281 planes, and of that number, 4 were intra-company deliveries and 17 were operating lease transactions.
Wednesday, January 07, 2004
1/7/04 Conscience Counts
Japan’s Agriculture Minister Yoshiyuki Kamei told a new conference yesterday that “the U.S. safeguards are not up to the level of those in Japan.” He related that he wanted the United States to conduct the same level of testing as Japan’s, namely, testing each animal for mad cow disease prior to its entry into the human food chain. Hence, Japan will continue its ban on the importation of U.S. beef. There was additional bad news for the beef industry. Of course, it didn’t make the headlines. Yet. Some school officials have taken beef off their lunch menus. Jefferson County School District is the largest in Colorado. Until they can confirm the meat they are serving is safe for the children, some beef and beef byproducts will be dropped. A food contractor in Aspen also stopped serving beef indefinitely to elementary and middle school students over fears of the mad cow disease. Anne Owsley is the owner of The Lunchroom Co. in Aspen. She stated “I know the government says beef is safe, but I don’t believe the government has much credibility right now…it’s my hunch, but it’s also my prerogative. I serve by my own conscience.” Her company provides lunch for about 750 students a day. Ms. Owsley’s actions didn’t sit too well with Fred Lombardi, executive director of the Colorado Beef Council. He stated “when the secretary of agriculture says beef is safe, when the president continues to eat beef, and when American consumers eat beef, I think this is a strong overreaction.” Fred, your words and $1.25 will get you a ride on the local bus. School children are not the only group in the news. Mad cow disease may have the greatest impact on Hispanics. They eat tacos with brain and small intestines, menudo with spinal cord bits, and, during holiday times, barbacoa made with cow’s heads. A spokesperson for Selma, California-based Harris Ranch mentioned “California’s Hispanic community is a heavier consumer of beef products than the general population.”
Hispanics may have a beef with Bush. The White House maintains there are an estimated 8 to 10 million undocumented immigrants in the United States, perhaps half from Mexico. Bush will unveil to Congress today his “temporary worker program.” This is aimed as smoothing relations with Mexico as well as wooing Latino voters. The centerpiece of the program is to permit foreign workers to apply for legal status for a three-year period if they have a U.S. job. If approved by Congress, they could possibly work for an additional three-year period. Cecilia Munoz, vice president for policy at the National council of La Raza, stated “they’re proposing to invite people to be guest workers without providing any meaningful opportunity to remain in the United States to become legal permanent residents. It appears to be all about rewarding employers who have been hiring undocumented immigrants while offering almost nothing to the workers themselves.” She said that, under current immigration law, foreigners who have violated U.S. laws, including entering the country illegally, can be banned from re-entry for three years to life. A government official stated “we want to bring those workers already out of the shadows and into the above ground economy…we really don’t know how many people are here illegally and how many of those are working.” That makes sense. For example, seasonal and migratory agricultural workers are not counted in unemployment statistics. As for the families of the worker receiving a temporary visa, Bush believes “dependents can be present, as long as the worker demonstrates they can be supported.” Those temporary workers must receive the same minimum wage as U.S. workers have. It should be noted that Gore beat Bush 66% to 32% among the Hispanic electorate in the 2000 election.
The Heartland will not look kindly on the Bush immigration plan. Ira Mehlman, spokesman for the Coalition for the Future American Worker (CFAW), stated “ the combination of exporting jobs to cheaper labor markets around the world and importing millions of low wage workers through unprecedented levels of legal and illegal immigration is destroying the middle class in America. And it’s no longer just blue-collar workers, like the meatpackers, who are being squeezed. Technology jobs are as endangered as jobs in manufacturing.” The CFAW is running ads in Iowa because mass immigration is an emerging issue throughout the Midwest. Mehlman remarked “the estimated influx of 14 million immigrants during this decade is an issue that is critical to the nation and to this region in particular. The people who want to lead this country have an obligation to explain to the American public why they believe that amnesty for millions of illegal aliens and new large-scale guest worker programs are good for America.” An Iowa immigration fact sheet has been developed. It denotes immigration’s impact on the state’s workforce, its impact on affordable housing, its impact on health care, its impact on education, and its impact on law enforcement costs, The most recent Des Moines Register poll shows 91% of Iowans state they are willing to accept tighter restrictions on immigration., 58% oppose a policy of encouraging immigration, and 54% disapprove of a state policy that would encourage immigration to Iowa.
Challenger Gray and Christmas noted that, in December, publicly announced layoffs totaled 93,200, and this was comparable to the number in December 2002. Not much has changed this year. Earthlink is cutting another 1300 jobs, or 40% of its workforce. U.S. Airways is eliminating 200 flight attendant positions. Flint River Textiles, a 95-year-old Albany, Georgia company, is closing its doors and putting its 230 employees out of work. The company produced fabrics for home furnishings. President Philip McArdle stated “honestly, it was inevitable. We’re up against prices there is no way in God’s name we can compete with.” Tomorrow the Labor Department will release rosy employment figures. Should they have a conscience, they might consider revealing the entire picture. If they choose to cherry pick, then I feel confident others can provide a more complete analysis. The latter may not make the headlines, but the truth will be forthcoming.
According to the most recent figures from the Federal Reserve, consumer debt hit a record $1.98 trillion in October 2003. Consumer debt has more than doubled in the past 10 years. The Fed figures include debt from credit cards and car loans but no mortgages. Without including mortgages, the debt amounts to $18,700 per U.S. household. Greenspan remarked this debt is “not a significant cause for concern.” That’s easy for him to say. He is a government employee. How many government employees were cut from the payrolls in 2003?
U.S. factory orders fell 1.4% in November, the first decline in three months, and the largest drop since April. Orders were still 6% above year earlier levels. Of course, November 2002 wasn’t exactly a robust period. The U.S. December ISM Service Industry Index also dropped. On the other hand, crude is at $34 per barrel, natural gas at $7 per BTU, and heating oil at just under 98 cents per gallon. Consumers are experiencing rising energy costs. They will further pinch available funds in the pockets of Americans. Wall Street talks about a flight to safety in times of crisis. Normally they refer to U.S. government bonds. The discussion today might center around gold at $423 per ounce, silver at $6.32 per ounce, the British pound at an 11-year high of $1.82, the yen at 106, or the euro at 1.28. On the other hand, Mars could be safe. It might require further investigation. It may open up a new market for our exports. Hopefully, the currency on Mars won’t have a fixed peg to our dollar.
Japan’s Agriculture Minister Yoshiyuki Kamei told a new conference yesterday that “the U.S. safeguards are not up to the level of those in Japan.” He related that he wanted the United States to conduct the same level of testing as Japan’s, namely, testing each animal for mad cow disease prior to its entry into the human food chain. Hence, Japan will continue its ban on the importation of U.S. beef. There was additional bad news for the beef industry. Of course, it didn’t make the headlines. Yet. Some school officials have taken beef off their lunch menus. Jefferson County School District is the largest in Colorado. Until they can confirm the meat they are serving is safe for the children, some beef and beef byproducts will be dropped. A food contractor in Aspen also stopped serving beef indefinitely to elementary and middle school students over fears of the mad cow disease. Anne Owsley is the owner of The Lunchroom Co. in Aspen. She stated “I know the government says beef is safe, but I don’t believe the government has much credibility right now…it’s my hunch, but it’s also my prerogative. I serve by my own conscience.” Her company provides lunch for about 750 students a day. Ms. Owsley’s actions didn’t sit too well with Fred Lombardi, executive director of the Colorado Beef Council. He stated “when the secretary of agriculture says beef is safe, when the president continues to eat beef, and when American consumers eat beef, I think this is a strong overreaction.” Fred, your words and $1.25 will get you a ride on the local bus. School children are not the only group in the news. Mad cow disease may have the greatest impact on Hispanics. They eat tacos with brain and small intestines, menudo with spinal cord bits, and, during holiday times, barbacoa made with cow’s heads. A spokesperson for Selma, California-based Harris Ranch mentioned “California’s Hispanic community is a heavier consumer of beef products than the general population.”
Hispanics may have a beef with Bush. The White House maintains there are an estimated 8 to 10 million undocumented immigrants in the United States, perhaps half from Mexico. Bush will unveil to Congress today his “temporary worker program.” This is aimed as smoothing relations with Mexico as well as wooing Latino voters. The centerpiece of the program is to permit foreign workers to apply for legal status for a three-year period if they have a U.S. job. If approved by Congress, they could possibly work for an additional three-year period. Cecilia Munoz, vice president for policy at the National council of La Raza, stated “they’re proposing to invite people to be guest workers without providing any meaningful opportunity to remain in the United States to become legal permanent residents. It appears to be all about rewarding employers who have been hiring undocumented immigrants while offering almost nothing to the workers themselves.” She said that, under current immigration law, foreigners who have violated U.S. laws, including entering the country illegally, can be banned from re-entry for three years to life. A government official stated “we want to bring those workers already out of the shadows and into the above ground economy…we really don’t know how many people are here illegally and how many of those are working.” That makes sense. For example, seasonal and migratory agricultural workers are not counted in unemployment statistics. As for the families of the worker receiving a temporary visa, Bush believes “dependents can be present, as long as the worker demonstrates they can be supported.” Those temporary workers must receive the same minimum wage as U.S. workers have. It should be noted that Gore beat Bush 66% to 32% among the Hispanic electorate in the 2000 election.
The Heartland will not look kindly on the Bush immigration plan. Ira Mehlman, spokesman for the Coalition for the Future American Worker (CFAW), stated “ the combination of exporting jobs to cheaper labor markets around the world and importing millions of low wage workers through unprecedented levels of legal and illegal immigration is destroying the middle class in America. And it’s no longer just blue-collar workers, like the meatpackers, who are being squeezed. Technology jobs are as endangered as jobs in manufacturing.” The CFAW is running ads in Iowa because mass immigration is an emerging issue throughout the Midwest. Mehlman remarked “the estimated influx of 14 million immigrants during this decade is an issue that is critical to the nation and to this region in particular. The people who want to lead this country have an obligation to explain to the American public why they believe that amnesty for millions of illegal aliens and new large-scale guest worker programs are good for America.” An Iowa immigration fact sheet has been developed. It denotes immigration’s impact on the state’s workforce, its impact on affordable housing, its impact on health care, its impact on education, and its impact on law enforcement costs, The most recent Des Moines Register poll shows 91% of Iowans state they are willing to accept tighter restrictions on immigration., 58% oppose a policy of encouraging immigration, and 54% disapprove of a state policy that would encourage immigration to Iowa.
Challenger Gray and Christmas noted that, in December, publicly announced layoffs totaled 93,200, and this was comparable to the number in December 2002. Not much has changed this year. Earthlink is cutting another 1300 jobs, or 40% of its workforce. U.S. Airways is eliminating 200 flight attendant positions. Flint River Textiles, a 95-year-old Albany, Georgia company, is closing its doors and putting its 230 employees out of work. The company produced fabrics for home furnishings. President Philip McArdle stated “honestly, it was inevitable. We’re up against prices there is no way in God’s name we can compete with.” Tomorrow the Labor Department will release rosy employment figures. Should they have a conscience, they might consider revealing the entire picture. If they choose to cherry pick, then I feel confident others can provide a more complete analysis. The latter may not make the headlines, but the truth will be forthcoming.
According to the most recent figures from the Federal Reserve, consumer debt hit a record $1.98 trillion in October 2003. Consumer debt has more than doubled in the past 10 years. The Fed figures include debt from credit cards and car loans but no mortgages. Without including mortgages, the debt amounts to $18,700 per U.S. household. Greenspan remarked this debt is “not a significant cause for concern.” That’s easy for him to say. He is a government employee. How many government employees were cut from the payrolls in 2003?
U.S. factory orders fell 1.4% in November, the first decline in three months, and the largest drop since April. Orders were still 6% above year earlier levels. Of course, November 2002 wasn’t exactly a robust period. The U.S. December ISM Service Industry Index also dropped. On the other hand, crude is at $34 per barrel, natural gas at $7 per BTU, and heating oil at just under 98 cents per gallon. Consumers are experiencing rising energy costs. They will further pinch available funds in the pockets of Americans. Wall Street talks about a flight to safety in times of crisis. Normally they refer to U.S. government bonds. The discussion today might center around gold at $423 per ounce, silver at $6.32 per ounce, the British pound at an 11-year high of $1.82, the yen at 106, or the euro at 1.28. On the other hand, Mars could be safe. It might require further investigation. It may open up a new market for our exports. Hopefully, the currency on Mars won’t have a fixed peg to our dollar.
Tuesday, January 06, 2004
1/6/04 The Story Of Christmas
On Thursday, retailers will announce their sales for the month of December. I don’t know the specifics on each individual performance, but I do know the story of this year’s holiday sales. Last evening Starbucks provided their company-operated same-store sales for the month of December. They rose a whopping 11%, and it was the highest December growth since 1992. Starbucks Chairman Howard Schultz stated “a large part of the momentum of the holiday season was driven off the card, which bodes well for the rest of the year.” Howard was referring to the company’s store-value purchase card and its related Duetto Visa card. The gift card phenomenon is not a one-trick pony. It will be around next holiday season, and, to a lesser extent, throughout the year. The other half of the Christmas story was online spending, which rose 35% over 2002. As noted by an eSpending Report from Goldman Sachs, Harris Interactive, and Nielsen/NetRatings, spending on apparel and clothing rose 40%, for toys and video games the rise was 33%, and spending on video and DVD jumped 46%. Online spending will become a growing part of the retail landscape throughout the year, and especially during the gift giving times. The eSpending report revealed 63% of online shoppers were satisfied with their overall shopping experience, a five-point increase from 2002. Only 7% were dissatisfied. Online shoppers reported that they spent more of their total shopping budget online this season. These positive trends bode well for the future growth of online shopping. This is not a one-trick pony. I am purposely ignoring upscale spending at Gucci, Coach,, Saks, and others because those revenues are not a large enough percentage of overall holiday sales and there is no historical data to confirm the future consistency of this current strong performance. It could very well be a one-trick pony.
It came to my attention that Microsoft’s next-gen SQL server will debut in India. The company is working towards the beta-one release of its ‘futuristic’ SQL server product. Christened ‘Yukon’, the product is designed to help enterprises address data challenges related to application availability, security, and reliability. Microsoft’s marketing manager, Tarun Malik, stated “in India about nine of our partners are already working with us to drive applications on Yukon. By the end of January we will be releasing the public beta for the product. However the final release of this product would be sometime in October 2004. This product will take data warehousing and business intelligence to a new level and will have huge capacity to drive data…we are sure that the product will drive the market to new heights.” Business intelligence for the mid-tier market is being heavily addressed by Microsoft. Its new version of SQL server was developed at its headquarters in Redmond.
I would like to re-visit the matter of overtime pay. I will continue to mention it until all readers get angry enough to scream through the halls of the White House and the Congress. If you’re too shy, I’ll do it for you. This time around I won’t be so gentle. The Labor Department under orders from George Bush is about to screw millions of American workers. A final rule, revising the 1938 Fair Labor Standards Act, is expected to be issued in March. Any worker impacted by this rule who votes for Bush has no self-worth and deserves to be screwed. The act defines the types of jobs that qualify workers for time-and-a-half if they work more than 40 hours. The Labor Department, in an effort to stab workers in the back, summarized their suggestions on how employers can avoid paying overtime to those newly eligible low-income workers. This is your family-friendly administration at work. It has been illegal to cut workers’ pay to avoid overtime under a 1945 Supreme Court ruling and a more recent 1986 memo by the Labor Department under President Reagan. Tammy McCutchen, the architect of the administration’s plan and the Labor Department’s Wage and Hour Division administrator, stated “we had a lot of lawyers look at this rule. We would not have put that in there if we thought it was illegal. Unless you have a contract, there is no legal rule…prohibiting an employer from either raising your salary or cutting your salary. We do not anticipate employers will cut pay.” Basically, she is stating that workers impacted do not have a contract with their employer, and if changes were made week to week to avoid overtime, they would be illegal. A one-time change, she remarked, is not illegal. I can’t tell you how many millions of workers will be screwed out of overtime pay. I just know it will be in the millions. Chalk it up to the need for companies to cut costs and generate higher worker productivity. We don’t need to spend billions looking for WMD in Iraq and other foreign places. Voters look no further than Washington DC. When an administration does not view “payroll adjustment” as a pay cut, then voters need to send the Santini Movers over to the halls of the White House and Congress.
While I’m on the subject of dead carcasses, a livestock carcass that passes USDA inspection at the slaughterhouse is not necessarily tested for disease. It can be visually examined, and then it can enter the food supply. The carcass is considered edible waste, and then it is processed into lard, tallow, gelatin, and other ingredients used in candy, canned ham, sour cream, frosting, lozenges, soups, “glandulars”and gel-caps for some pharmaceuticals and vitamins. For example, stated Stephen Sundlof, the FDA does not inspect the ingredients that go into making gelatin. He remarked “we’re still trying to look into what all comes out of that rendering stream.” This is not like exploring the moon. I fell so much better after Sundlof stated “I can assure you, if there is a problem, we’re looking into it.” Sundlof might begin by looking in the mirror.
I often wonder what the word “orderly” means to people who work in Washington DC. The dollar fell to a record low of 1.2762 against the euro. It’s dropped 13% since the beginning of November. In 2003 Japan spent almost $200 billion attempting to bolster the dollar from falling too rapidly against the yen, and the dollar has still fallen to about 106 versus the yen. What’s orderly and what’s the price to produce orderly? Our deficits are getting very expensive to fund for Japan and China. It’s only a matter of time until those countries cry for the help of American voters. The weak dollar policy of the Bush administration is weakening the economies in Japan, the euro countries, and others around the globe. Don’t be lulled to sleep by the past year’s rise in the stock market. Very limited politically directed foreign investment capital has entered the equity market in the past 12 months. These countries have been too busy purchasing U.S. treasury securities with their surplus payment accounts. Meanwhile, the standard of living for almost all Americans will continue to erode, and our dependence on foreign capital inflows will continue to escalate. This is a recipe not designed by our forefathers. Before it is too late, change must take place.
On Thursday, retailers will announce their sales for the month of December. I don’t know the specifics on each individual performance, but I do know the story of this year’s holiday sales. Last evening Starbucks provided their company-operated same-store sales for the month of December. They rose a whopping 11%, and it was the highest December growth since 1992. Starbucks Chairman Howard Schultz stated “a large part of the momentum of the holiday season was driven off the card, which bodes well for the rest of the year.” Howard was referring to the company’s store-value purchase card and its related Duetto Visa card. The gift card phenomenon is not a one-trick pony. It will be around next holiday season, and, to a lesser extent, throughout the year. The other half of the Christmas story was online spending, which rose 35% over 2002. As noted by an eSpending Report from Goldman Sachs, Harris Interactive, and Nielsen/NetRatings, spending on apparel and clothing rose 40%, for toys and video games the rise was 33%, and spending on video and DVD jumped 46%. Online spending will become a growing part of the retail landscape throughout the year, and especially during the gift giving times. The eSpending report revealed 63% of online shoppers were satisfied with their overall shopping experience, a five-point increase from 2002. Only 7% were dissatisfied. Online shoppers reported that they spent more of their total shopping budget online this season. These positive trends bode well for the future growth of online shopping. This is not a one-trick pony. I am purposely ignoring upscale spending at Gucci, Coach,, Saks, and others because those revenues are not a large enough percentage of overall holiday sales and there is no historical data to confirm the future consistency of this current strong performance. It could very well be a one-trick pony.
It came to my attention that Microsoft’s next-gen SQL server will debut in India. The company is working towards the beta-one release of its ‘futuristic’ SQL server product. Christened ‘Yukon’, the product is designed to help enterprises address data challenges related to application availability, security, and reliability. Microsoft’s marketing manager, Tarun Malik, stated “in India about nine of our partners are already working with us to drive applications on Yukon. By the end of January we will be releasing the public beta for the product. However the final release of this product would be sometime in October 2004. This product will take data warehousing and business intelligence to a new level and will have huge capacity to drive data…we are sure that the product will drive the market to new heights.” Business intelligence for the mid-tier market is being heavily addressed by Microsoft. Its new version of SQL server was developed at its headquarters in Redmond.
I would like to re-visit the matter of overtime pay. I will continue to mention it until all readers get angry enough to scream through the halls of the White House and the Congress. If you’re too shy, I’ll do it for you. This time around I won’t be so gentle. The Labor Department under orders from George Bush is about to screw millions of American workers. A final rule, revising the 1938 Fair Labor Standards Act, is expected to be issued in March. Any worker impacted by this rule who votes for Bush has no self-worth and deserves to be screwed. The act defines the types of jobs that qualify workers for time-and-a-half if they work more than 40 hours. The Labor Department, in an effort to stab workers in the back, summarized their suggestions on how employers can avoid paying overtime to those newly eligible low-income workers. This is your family-friendly administration at work. It has been illegal to cut workers’ pay to avoid overtime under a 1945 Supreme Court ruling and a more recent 1986 memo by the Labor Department under President Reagan. Tammy McCutchen, the architect of the administration’s plan and the Labor Department’s Wage and Hour Division administrator, stated “we had a lot of lawyers look at this rule. We would not have put that in there if we thought it was illegal. Unless you have a contract, there is no legal rule…prohibiting an employer from either raising your salary or cutting your salary. We do not anticipate employers will cut pay.” Basically, she is stating that workers impacted do not have a contract with their employer, and if changes were made week to week to avoid overtime, they would be illegal. A one-time change, she remarked, is not illegal. I can’t tell you how many millions of workers will be screwed out of overtime pay. I just know it will be in the millions. Chalk it up to the need for companies to cut costs and generate higher worker productivity. We don’t need to spend billions looking for WMD in Iraq and other foreign places. Voters look no further than Washington DC. When an administration does not view “payroll adjustment” as a pay cut, then voters need to send the Santini Movers over to the halls of the White House and Congress.
While I’m on the subject of dead carcasses, a livestock carcass that passes USDA inspection at the slaughterhouse is not necessarily tested for disease. It can be visually examined, and then it can enter the food supply. The carcass is considered edible waste, and then it is processed into lard, tallow, gelatin, and other ingredients used in candy, canned ham, sour cream, frosting, lozenges, soups, “glandulars”and gel-caps for some pharmaceuticals and vitamins. For example, stated Stephen Sundlof, the FDA does not inspect the ingredients that go into making gelatin. He remarked “we’re still trying to look into what all comes out of that rendering stream.” This is not like exploring the moon. I fell so much better after Sundlof stated “I can assure you, if there is a problem, we’re looking into it.” Sundlof might begin by looking in the mirror.
I often wonder what the word “orderly” means to people who work in Washington DC. The dollar fell to a record low of 1.2762 against the euro. It’s dropped 13% since the beginning of November. In 2003 Japan spent almost $200 billion attempting to bolster the dollar from falling too rapidly against the yen, and the dollar has still fallen to about 106 versus the yen. What’s orderly and what’s the price to produce orderly? Our deficits are getting very expensive to fund for Japan and China. It’s only a matter of time until those countries cry for the help of American voters. The weak dollar policy of the Bush administration is weakening the economies in Japan, the euro countries, and others around the globe. Don’t be lulled to sleep by the past year’s rise in the stock market. Very limited politically directed foreign investment capital has entered the equity market in the past 12 months. These countries have been too busy purchasing U.S. treasury securities with their surplus payment accounts. Meanwhile, the standard of living for almost all Americans will continue to erode, and our dependence on foreign capital inflows will continue to escalate. This is a recipe not designed by our forefathers. Before it is too late, change must take place.
Monday, January 05, 2004
1/5/03 Staying Power
The Atkins diet was not an overnight success. It took about 30 years for the scientific community to validate its legitimate claims. During this time Atkins pressed forward. Unfortunately, he is not alive today to see the growing success of his vision. Today change takes place a good deal faster. Time is compressed. After all, technology has enabled the clock to move faster. Aren’t we on Internet time?
In the stock market the wait to validate one’s investment ideas can truly be maddening. As I have mentioned, my housing stocks stood still for close to two years. I watched the dotcom companies with no revenue and no earnings shoot upward and upward. Either I was stupid or had staying power or both. I did not waiver. I knew I was riding the right horse. The idea is to find a stock with a premium but not the price. That is easier said than done, and it requires long hours of study. There is a good place to start, and that is within your own mind. Let’s take the mad cow disease situation and run with it. There have been associations in existence promoting humane farming. There have been associations promoting the purchase of meat, seafood, and dairy items produced without non-therapeutic antibiotics. There has been a growing trend towards organics in all food areas. On the other hand, veggie burgers did not gain acceptance. Maybe they require the same staying power exemplified by Atkins.
Mad cow disease will eventually leave the headlines; however, its impact will linger on Main Street. Right now only 1% of our cattle are grass-fed. That will change. The change will be orderly, just like the drop in our dollar. We need not be concerned. Over time, less corn and other grains will go into cattle feed. It will have an impact on various commodity prices. Over time, more Americans will eat less meat on a weekly basis. It will impact demand for cattle, and increase the demand for vegetables, chicken, and turkey. Pet owners will give their cats and dogs less meat in their diets. It will alter the pet food industry. The protection of this nation’s health and its environment will not leave the headlines. Do not blame the mad cow disease for the decline in livestock numbers. In Illinois, for example, there has been a steady decline within the livestock industry. The number of pork producers has been nearly cut in half, while the number of beef cow herds and dairy farms has declined by about one-third in the last five years. In other words, this industry has been on the decline for some time. It will require lots of staying power while improving the efficiency and safety of operations, developing domestic and international markets, and facilitating new production and testing systems.
Yesterday we took a drive to the Hereford/Amarillo area. I thought we could extend our visit and drive 31 miles to Happy, Texas. This is for real. Happy has a population of about 650. I thought you might be interested in visiting a bit with Pat Hickman, president and CEO of First State Bank of Happy. You might be laughing, but Pat knows his business, and probably a good deal better than most analysts and money managers on Wall Street. Talking about the recent decline in cattle prices, Pat stated “we think we’ve seen the adjustments already, and we think the consumers are still strong on beef and we have a lot of confidence. On the agriculture side, we’re a lot more concerned with natural gas prices than we are with mad cow…we know the people in the cattle business today are good cattlemen. They know what they are doing. We have every confidence in the world in them.” Hopefully, Pat is correct. He said small community banks probably have as much as 30 percent to 40 percent or more of their loan volume involved in the cattle industry. Bill Snure, Bank of America senior vice president, observed “just in our bank (in the Amarillo environs), the cattle loans are equal to all commercial loans- industry, oil and gas and all that combined. Our portfolio is not that much different from most of the other banks in town. It’s a huge part of business. We’re hoping our customers weather the storm.” B.A. Donelson is chairman of First State Bank in Stratford, Dumas, and Dalhart. I know I’m in Texas when a guy goes by his initials. You just know he has manure on his boots. Donelson is a straight shooter. He remarked “I’m in the cattle business. Yeah it’s a wreck and it’s scary, but I don’t know of any industry that isn’t subject to something. The cattle industry is no different. It’s tough and we’re all nervous, but if a guy walks in tomorrow and wants to do cattle, we’ll do it. We’ve held a lot of hands these past few days. There’s a lot of apprehension, but I’ve not felt a panic in the ones I’ve talked to.” Heck, B.A., there isn’t any panic because cattle prices are only 20% from the top. They’d be shi—ing in their boots if the prices had come down 60%. Can you imagine those money managers watching their $100 stocks plummet to $5? It wasn’t fun and games between 2000 and October 2002. Fortunately, the fear factor is gone at Broad and Wall. The wall of worry has disappeared. The volatility has evaporated. If someone walks into a Wall Street investment firm and wants to do stocks and bonds, they’ll gladly oblige and do stocks and bonds. It’s the only game in town. I know gold is trading at a 14-year high at $418 per ounce, and silver is about $6 per ounce, platinum at $825, and palladium at $197, but stocks and bonds are the core of investing legends. Some folks pay attention to the euro at 1.27 and the yen below 1.07, but the story really is equities. As Pat Hickman stated about cattlemen, “thank goodness ’03 was a good year. Cattlemen rebuilt a lot of equities they’ve lost in the last few years.” With the Nasdaq up 50% and the Dow and the S&P up 25%, investors also rebuilt a lot of equity lost in the past few years. Lucky there aren’t cows on Wall Street. I don’t believe scientists have discovered mad bull and bear disease.
Not too many investors have heard of Martin Pichinson. His company, Sherwood Partners, is located in Palo Alto and has 60 employees. He liquidates companies. Pichinson stated “I have closed more companies than anyone in the world, so no one knows better about all the things that can go wrong in a business. Sadly, it looks like 2004 is going to be another busy year for me. There’s still another 6,500 to 7,500 companies out there who are among the walking dead.” He figures more than 50,000 people have lost their jobs from the 150 failed startups he has buried since 1999.
On several occasions I have described the Medicare gap. I would like to touch on another gap. As of last Thursday, the start of the New Year, more than 4,000 legal immigrants had their medical benefits drastically slashed under Colorado’s Old Age Pension program. Colorado will stop paying for the hospital stays of these indigent legal residents. It has also slashed reimbursement to doctors from 82% of the Medicaid rate to 50%. The program was cut for those over 60 but younger than 65. Most of these 4,289 legal immigrant residents receive $589-a-month state old-age benefits. This constitutionally authorized plan dates from Depression days and provides $10 million a year for the care of those over 60 but younger than 65, the minimum age for Medicare. Some are not eligible for social security and some are stricken with cancer. The state of Colorado is seriously concerned about the fallout from mad cow on their cattle industry. I would like to think Governor Bill Owens could walk and chew gum at the same time and extend the same worry and care for the less fortunate over 60 and under 65. Care for the fallen should not be ignored.
Pter Drucker: “The biggest problem I see is our total dependence on foreign money to cover our government debt. Never before has a major debtor country owed its debt in its own currency. It is unprecedented in economic history…we have no experience about what will happen here when we owe so much debt in our own currency and we’re forced to devalue the dollar. Sooner or later, we’re going to find out.”
The Atkins diet was not an overnight success. It took about 30 years for the scientific community to validate its legitimate claims. During this time Atkins pressed forward. Unfortunately, he is not alive today to see the growing success of his vision. Today change takes place a good deal faster. Time is compressed. After all, technology has enabled the clock to move faster. Aren’t we on Internet time?
In the stock market the wait to validate one’s investment ideas can truly be maddening. As I have mentioned, my housing stocks stood still for close to two years. I watched the dotcom companies with no revenue and no earnings shoot upward and upward. Either I was stupid or had staying power or both. I did not waiver. I knew I was riding the right horse. The idea is to find a stock with a premium but not the price. That is easier said than done, and it requires long hours of study. There is a good place to start, and that is within your own mind. Let’s take the mad cow disease situation and run with it. There have been associations in existence promoting humane farming. There have been associations promoting the purchase of meat, seafood, and dairy items produced without non-therapeutic antibiotics. There has been a growing trend towards organics in all food areas. On the other hand, veggie burgers did not gain acceptance. Maybe they require the same staying power exemplified by Atkins.
Mad cow disease will eventually leave the headlines; however, its impact will linger on Main Street. Right now only 1% of our cattle are grass-fed. That will change. The change will be orderly, just like the drop in our dollar. We need not be concerned. Over time, less corn and other grains will go into cattle feed. It will have an impact on various commodity prices. Over time, more Americans will eat less meat on a weekly basis. It will impact demand for cattle, and increase the demand for vegetables, chicken, and turkey. Pet owners will give their cats and dogs less meat in their diets. It will alter the pet food industry. The protection of this nation’s health and its environment will not leave the headlines. Do not blame the mad cow disease for the decline in livestock numbers. In Illinois, for example, there has been a steady decline within the livestock industry. The number of pork producers has been nearly cut in half, while the number of beef cow herds and dairy farms has declined by about one-third in the last five years. In other words, this industry has been on the decline for some time. It will require lots of staying power while improving the efficiency and safety of operations, developing domestic and international markets, and facilitating new production and testing systems.
Yesterday we took a drive to the Hereford/Amarillo area. I thought we could extend our visit and drive 31 miles to Happy, Texas. This is for real. Happy has a population of about 650. I thought you might be interested in visiting a bit with Pat Hickman, president and CEO of First State Bank of Happy. You might be laughing, but Pat knows his business, and probably a good deal better than most analysts and money managers on Wall Street. Talking about the recent decline in cattle prices, Pat stated “we think we’ve seen the adjustments already, and we think the consumers are still strong on beef and we have a lot of confidence. On the agriculture side, we’re a lot more concerned with natural gas prices than we are with mad cow…we know the people in the cattle business today are good cattlemen. They know what they are doing. We have every confidence in the world in them.” Hopefully, Pat is correct. He said small community banks probably have as much as 30 percent to 40 percent or more of their loan volume involved in the cattle industry. Bill Snure, Bank of America senior vice president, observed “just in our bank (in the Amarillo environs), the cattle loans are equal to all commercial loans- industry, oil and gas and all that combined. Our portfolio is not that much different from most of the other banks in town. It’s a huge part of business. We’re hoping our customers weather the storm.” B.A. Donelson is chairman of First State Bank in Stratford, Dumas, and Dalhart. I know I’m in Texas when a guy goes by his initials. You just know he has manure on his boots. Donelson is a straight shooter. He remarked “I’m in the cattle business. Yeah it’s a wreck and it’s scary, but I don’t know of any industry that isn’t subject to something. The cattle industry is no different. It’s tough and we’re all nervous, but if a guy walks in tomorrow and wants to do cattle, we’ll do it. We’ve held a lot of hands these past few days. There’s a lot of apprehension, but I’ve not felt a panic in the ones I’ve talked to.” Heck, B.A., there isn’t any panic because cattle prices are only 20% from the top. They’d be shi—ing in their boots if the prices had come down 60%. Can you imagine those money managers watching their $100 stocks plummet to $5? It wasn’t fun and games between 2000 and October 2002. Fortunately, the fear factor is gone at Broad and Wall. The wall of worry has disappeared. The volatility has evaporated. If someone walks into a Wall Street investment firm and wants to do stocks and bonds, they’ll gladly oblige and do stocks and bonds. It’s the only game in town. I know gold is trading at a 14-year high at $418 per ounce, and silver is about $6 per ounce, platinum at $825, and palladium at $197, but stocks and bonds are the core of investing legends. Some folks pay attention to the euro at 1.27 and the yen below 1.07, but the story really is equities. As Pat Hickman stated about cattlemen, “thank goodness ’03 was a good year. Cattlemen rebuilt a lot of equities they’ve lost in the last few years.” With the Nasdaq up 50% and the Dow and the S&P up 25%, investors also rebuilt a lot of equity lost in the past few years. Lucky there aren’t cows on Wall Street. I don’t believe scientists have discovered mad bull and bear disease.
Not too many investors have heard of Martin Pichinson. His company, Sherwood Partners, is located in Palo Alto and has 60 employees. He liquidates companies. Pichinson stated “I have closed more companies than anyone in the world, so no one knows better about all the things that can go wrong in a business. Sadly, it looks like 2004 is going to be another busy year for me. There’s still another 6,500 to 7,500 companies out there who are among the walking dead.” He figures more than 50,000 people have lost their jobs from the 150 failed startups he has buried since 1999.
On several occasions I have described the Medicare gap. I would like to touch on another gap. As of last Thursday, the start of the New Year, more than 4,000 legal immigrants had their medical benefits drastically slashed under Colorado’s Old Age Pension program. Colorado will stop paying for the hospital stays of these indigent legal residents. It has also slashed reimbursement to doctors from 82% of the Medicaid rate to 50%. The program was cut for those over 60 but younger than 65. Most of these 4,289 legal immigrant residents receive $589-a-month state old-age benefits. This constitutionally authorized plan dates from Depression days and provides $10 million a year for the care of those over 60 but younger than 65, the minimum age for Medicare. Some are not eligible for social security and some are stricken with cancer. The state of Colorado is seriously concerned about the fallout from mad cow on their cattle industry. I would like to think Governor Bill Owens could walk and chew gum at the same time and extend the same worry and care for the less fortunate over 60 and under 65. Care for the fallen should not be ignored.
Pter Drucker: “The biggest problem I see is our total dependence on foreign money to cover our government debt. Never before has a major debtor country owed its debt in its own currency. It is unprecedented in economic history…we have no experience about what will happen here when we owe so much debt in our own currency and we’re forced to devalue the dollar. Sooner or later, we’re going to find out.”
Sunday, January 04, 2004
1/4/03 Hot Buttons
During the holiday shopping season WalMart told us that less shoppers were coming through their store doors. This was a very new experience for the company. If WalMart was slowing down, how were others to cope?
General Motors thinks they might have an answer. Today they are introducing their Hot Button marketing program. Beginning tomorrow, consumers will have an opportunity to win one of 54 different GM vehicles simply by visiting their local participating dealership and pushing the OnStar “Hot Button” in a specially designed vehicle. There is no test drive or sales pitch required. The consumer will be told immediately if they are a winner. GM is giving away 1,000 2004 vehicles over the next 56 days. To participate a consumer must be 21 years old, have a valid driver’s license, be a U.S. resident, and visit a participating GM dealership. The company estimates that the chance of winning is about one in 5,500. At this point I do not know how Ford and Chrysler will react to this new marketing initiative. GM devised the interest-free automotive finance program, and others followed with their own offerings. It’s all about bringing the consumer through the door, and that’s becoming a daunting task. According to a study by student-loan provider Nellie Mae, the average student is graduating with college loans of $19,000 and $3,300 in credit-card debt. It’s tougher than ever to get a job coming out of college. There are too many individuals with experience who are out of work. They too need to pay off debts and keep a roof over their heads. They are willing to work for lower wages than what they have been receiving. There are others less fortunate, and about 1.7 million of them filed for personal bankruptcy in 2003. Having sold over 16 million cars in 2003, the auto companies have proven their ability to sell cars, but they are, to a large extent, giveaways. Including incentives of $4,400 per vehicle is not selling. It is moving inventory with barely a profit. GM may have found the answer. Maybe it’s better to give the cars away. It takes less effort, and the customer gets to like you.
GM does not have a monopoly on hot buttons. Bush and his administration are experts on giveaways. Unfortunately, for all Americans, they are giving away our freedom. While Wall Street and the world marvel at the rise in the Dow, S&P, and Nasdaq, total federal revenues are declining and total federal spending is rising. This is a recipe for what I do not want to describe. In the early 1920s there was a decline in total federal revenues for three consecutive years. We had to wait until 2000 through 2003 for this to occur again. However, in this Bush period, it is the first time that total federal spending also increased for three consecutive years. This combination has produced record budget deficits, and they will certainly continue in 2004 and for many years further out. Do not be fooled . When Bush states he is holding domestic discretionary spending increases to 3%, he has not included homeland security, Medicare, Medicaid, or the Defense Department. Bush is not going to hold the discretionary spending to a 3% increase. I have pointed out several times the rise was 5% this year, 6% in 2002, and 15% in 2001. The good news is the trend is down. The bad news is he is bankrupting the nation. Bush’s solution is to make our dollar worth less, and therefore, our products will be cheaper for other countries to purchase. Meanwhile, the purchasing power of Americans is on the decline. That’s not all bad though. Maybe it will make Americans spend less and start to save. Bush will try to buy your vote by extending existing tax credits and providing additional credits in the area of health care insurance and medical savings accounts. Make certain to read the small print in the proposed budget. Someone will pay for increased government deficits, and it will be you and me. The American taxpayer is feeding the spending habit found in the halls of Congress and the White House. They’re spending junkies. We must all spend less and save more. We must provide less revenue at all levels of government. We must take a stand and stop being used via user taxes. Keep track of the daily taxes that confront you. Please record them. The amount adds up each and every day. It will make you puke. That’s a good thing. We all need an awakening.
There were memos written warning about a possible 9/11 calamity. There were memos written warning about mad cow disease taking place in this country. There have been warnings about the increased air controller errors taking place. There are too many flights. In 2002 air traffic controllers at O’Hare in Chicago made 3 errors. In 2003 the errors jumped to 13. Craig Burzych, president of the National Air Traffic Controllers Association at O’Hare, stated “I hate to be gloom and doom, but it’s not good for us…it’s scary sometimes. It’s just too busy.” There were 928,000 flights processed at O’Hare in 2003. As such, 13 errors are minimal. Air traffic controllers are doing a good job; however, they are asked to do too much. Burzych remarked “it’s greatly over-scheduled.” While we delay planes from England in hopes of avoiding a terrorist attack, there is a growing danger at some of our airports. The warnings have been made public. We need to respond to this hot button.
Ron Aschermann raises melons and vegetables on his 300-acre farm in Rocky Ford, Colorado. His family has farmed there since 1911. Some of the tastiest melons are grown in this area. He stated “farming is not that great anymore either. These rural communities in almost any state you want to go into, they’re all getting smaller. The best dollar for the asset right now is water.” Billions of gallons of water are shifting hands from the farms into cities. It is taking place in Colorado, in California, and in other western states called home by 450,000 farms. Brent M. Haddad, associate professor of environmental studies at UC Santa Cruz, remarked “the bell tolls when you create water markets, because all this is going to do is shrink the number of farms. What we’re talking about is a means of moving from farms to cities.” Some cities have paid 6 cents a gallon for water coming from the Colorado-Big Thompson Project. From my perspective, that isn’t high. Rather, it’s almost giving the water away. The Imperial Valley in southern California is the largest single user of Colorado River water. In October, in the largest sale of water in this country’s history, they agreed to ship some of their water supply to San Diego for $3.5 billion over 45 years. The Imperial Valley is desert land. This region supplies about 10% of this nation’s crops. I have run a company with a plant in Brawley. Without sufficient water, there can’t be much success in farming. It’s not like they can dig more wells there. Salt is already creeping into the water supply. William Mulholland wrote “whoever brings the water brings the people.” Whoever doesn’t bring the water doesn’t bring the people or the crops. Our nation has survived gasoline shortages. Cars can be driven less. They’ll “drink” less gas. Humans, animals, and crops need water. We can’t survive on dust. This is a hot button. Will our farmers farm water or farmland?
Since we visited Rocky Ford, I thought we might take a drive over to the Hereford/Amarillo, Texas area. Hereford has the largest cattle feedlots in the country. A past business of mine had a plant there. These are really good people. Mad cow has hit them pretty hard. A CNN-Time poll found that 27% stated the discovery of the diseased cow in Washington has left them thinking the nation’s beef supply is unsafe. Combine that with the possibility of our beef export business being left high and dry, and you have a supply/demand problem. Today’s difficulties will not be resolved with a federal law requiring livestock owners by July 2005 to comply with a uniform animal identification system. Right now there are stocker, feeder, and fats available for future supply. The problem is lack of water. As Joe Bell, Amarillo Livestock Auction manager stated, “if it doesn’t start raining, they’re going to have to start bringing them in. If we get rain, most of the producers will try to hang on for awhile.” Some maintain that, at $75 per hundredweight, many cattlemen are sitting on the break-even line. Gill points out that, “as we move into 2004, you’ll start seeing cattle out of the feed yard that will take high $70s and low $80s per hundredweight to break even because they paid higher prices for feeder cattle four to six months ago.” A lot depends on how long it will take to re-open the export market for beef and beef byproducts. Without the export market and with less meat consumed domestically, the value of beef will come down and losses will mount in the industry.
The other day I was watching Bill Clinton and Bob Dole at a fundraiser in Washington DC. Bill Clinton remarked about older people sending younger people to die in war. I thought about the 484 fighting men and women who have died since the beginning of the war in Iraq. Then I thought about the WMD that have not been found after eight months of searching. I remember watching one of our generals on TV stating our intelligence had provided exact knowledge of their whereabouts. For all Americans, this should be a big hot button. For the families of our fallen soldiers, it most certainly is.
During the holiday shopping season WalMart told us that less shoppers were coming through their store doors. This was a very new experience for the company. If WalMart was slowing down, how were others to cope?
General Motors thinks they might have an answer. Today they are introducing their Hot Button marketing program. Beginning tomorrow, consumers will have an opportunity to win one of 54 different GM vehicles simply by visiting their local participating dealership and pushing the OnStar “Hot Button” in a specially designed vehicle. There is no test drive or sales pitch required. The consumer will be told immediately if they are a winner. GM is giving away 1,000 2004 vehicles over the next 56 days. To participate a consumer must be 21 years old, have a valid driver’s license, be a U.S. resident, and visit a participating GM dealership. The company estimates that the chance of winning is about one in 5,500. At this point I do not know how Ford and Chrysler will react to this new marketing initiative. GM devised the interest-free automotive finance program, and others followed with their own offerings. It’s all about bringing the consumer through the door, and that’s becoming a daunting task. According to a study by student-loan provider Nellie Mae, the average student is graduating with college loans of $19,000 and $3,300 in credit-card debt. It’s tougher than ever to get a job coming out of college. There are too many individuals with experience who are out of work. They too need to pay off debts and keep a roof over their heads. They are willing to work for lower wages than what they have been receiving. There are others less fortunate, and about 1.7 million of them filed for personal bankruptcy in 2003. Having sold over 16 million cars in 2003, the auto companies have proven their ability to sell cars, but they are, to a large extent, giveaways. Including incentives of $4,400 per vehicle is not selling. It is moving inventory with barely a profit. GM may have found the answer. Maybe it’s better to give the cars away. It takes less effort, and the customer gets to like you.
GM does not have a monopoly on hot buttons. Bush and his administration are experts on giveaways. Unfortunately, for all Americans, they are giving away our freedom. While Wall Street and the world marvel at the rise in the Dow, S&P, and Nasdaq, total federal revenues are declining and total federal spending is rising. This is a recipe for what I do not want to describe. In the early 1920s there was a decline in total federal revenues for three consecutive years. We had to wait until 2000 through 2003 for this to occur again. However, in this Bush period, it is the first time that total federal spending also increased for three consecutive years. This combination has produced record budget deficits, and they will certainly continue in 2004 and for many years further out. Do not be fooled . When Bush states he is holding domestic discretionary spending increases to 3%, he has not included homeland security, Medicare, Medicaid, or the Defense Department. Bush is not going to hold the discretionary spending to a 3% increase. I have pointed out several times the rise was 5% this year, 6% in 2002, and 15% in 2001. The good news is the trend is down. The bad news is he is bankrupting the nation. Bush’s solution is to make our dollar worth less, and therefore, our products will be cheaper for other countries to purchase. Meanwhile, the purchasing power of Americans is on the decline. That’s not all bad though. Maybe it will make Americans spend less and start to save. Bush will try to buy your vote by extending existing tax credits and providing additional credits in the area of health care insurance and medical savings accounts. Make certain to read the small print in the proposed budget. Someone will pay for increased government deficits, and it will be you and me. The American taxpayer is feeding the spending habit found in the halls of Congress and the White House. They’re spending junkies. We must all spend less and save more. We must provide less revenue at all levels of government. We must take a stand and stop being used via user taxes. Keep track of the daily taxes that confront you. Please record them. The amount adds up each and every day. It will make you puke. That’s a good thing. We all need an awakening.
There were memos written warning about a possible 9/11 calamity. There were memos written warning about mad cow disease taking place in this country. There have been warnings about the increased air controller errors taking place. There are too many flights. In 2002 air traffic controllers at O’Hare in Chicago made 3 errors. In 2003 the errors jumped to 13. Craig Burzych, president of the National Air Traffic Controllers Association at O’Hare, stated “I hate to be gloom and doom, but it’s not good for us…it’s scary sometimes. It’s just too busy.” There were 928,000 flights processed at O’Hare in 2003. As such, 13 errors are minimal. Air traffic controllers are doing a good job; however, they are asked to do too much. Burzych remarked “it’s greatly over-scheduled.” While we delay planes from England in hopes of avoiding a terrorist attack, there is a growing danger at some of our airports. The warnings have been made public. We need to respond to this hot button.
Ron Aschermann raises melons and vegetables on his 300-acre farm in Rocky Ford, Colorado. His family has farmed there since 1911. Some of the tastiest melons are grown in this area. He stated “farming is not that great anymore either. These rural communities in almost any state you want to go into, they’re all getting smaller. The best dollar for the asset right now is water.” Billions of gallons of water are shifting hands from the farms into cities. It is taking place in Colorado, in California, and in other western states called home by 450,000 farms. Brent M. Haddad, associate professor of environmental studies at UC Santa Cruz, remarked “the bell tolls when you create water markets, because all this is going to do is shrink the number of farms. What we’re talking about is a means of moving from farms to cities.” Some cities have paid 6 cents a gallon for water coming from the Colorado-Big Thompson Project. From my perspective, that isn’t high. Rather, it’s almost giving the water away. The Imperial Valley in southern California is the largest single user of Colorado River water. In October, in the largest sale of water in this country’s history, they agreed to ship some of their water supply to San Diego for $3.5 billion over 45 years. The Imperial Valley is desert land. This region supplies about 10% of this nation’s crops. I have run a company with a plant in Brawley. Without sufficient water, there can’t be much success in farming. It’s not like they can dig more wells there. Salt is already creeping into the water supply. William Mulholland wrote “whoever brings the water brings the people.” Whoever doesn’t bring the water doesn’t bring the people or the crops. Our nation has survived gasoline shortages. Cars can be driven less. They’ll “drink” less gas. Humans, animals, and crops need water. We can’t survive on dust. This is a hot button. Will our farmers farm water or farmland?
Since we visited Rocky Ford, I thought we might take a drive over to the Hereford/Amarillo, Texas area. Hereford has the largest cattle feedlots in the country. A past business of mine had a plant there. These are really good people. Mad cow has hit them pretty hard. A CNN-Time poll found that 27% stated the discovery of the diseased cow in Washington has left them thinking the nation’s beef supply is unsafe. Combine that with the possibility of our beef export business being left high and dry, and you have a supply/demand problem. Today’s difficulties will not be resolved with a federal law requiring livestock owners by July 2005 to comply with a uniform animal identification system. Right now there are stocker, feeder, and fats available for future supply. The problem is lack of water. As Joe Bell, Amarillo Livestock Auction manager stated, “if it doesn’t start raining, they’re going to have to start bringing them in. If we get rain, most of the producers will try to hang on for awhile.” Some maintain that, at $75 per hundredweight, many cattlemen are sitting on the break-even line. Gill points out that, “as we move into 2004, you’ll start seeing cattle out of the feed yard that will take high $70s and low $80s per hundredweight to break even because they paid higher prices for feeder cattle four to six months ago.” A lot depends on how long it will take to re-open the export market for beef and beef byproducts. Without the export market and with less meat consumed domestically, the value of beef will come down and losses will mount in the industry.
The other day I was watching Bill Clinton and Bob Dole at a fundraiser in Washington DC. Bill Clinton remarked about older people sending younger people to die in war. I thought about the 484 fighting men and women who have died since the beginning of the war in Iraq. Then I thought about the WMD that have not been found after eight months of searching. I remember watching one of our generals on TV stating our intelligence had provided exact knowledge of their whereabouts. For all Americans, this should be a big hot button. For the families of our fallen soldiers, it most certainly is.
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