10/30/03 “It Ain’t Fair. It Ain’t Right.”
Since getting elected, President Bush will make his 13th visit to Ohio today. I wonder whether he will be discussing medical care for our wounded soldiers. Yesterday, he discussed a Medicare bill that would omit co-pay for home health care. Cpl. Waymond Boyd has served the military for 15 years, and was recently in Iraq with the National Guard. He said “I joined to serve my country. It doesn’t make sense to go over there and risk your life and come back to this. It ain’t fair and it ain’t right. I used to be patriotic.” Boyd’s knee and wrist injuries were severe enough that he was evacuated and sent to Fort Knox. It took him about two months to get a cast for his wrist. He walks with a cane. More than 400 sick and injured soldiers are stuck at Fort Knox waiting weeks and sometimes months for medical treatment. The conditions at Fort Stewart were not an isolated situation. I will repeat what I previously stated. A commander-in-chief should care for his soldiers and should not let them endure inadequate medical treatment. To consider any financial aid for Iraq before proper assistance is provided to those serving our country is unspeakable. Our own come first.
It was reported in the Washington Times that, on June 25, the FBI’s regional office in Denver had sent a memo to state and local law enforcement agencies warning them of a plot to start forest fires in the western United States using timed incendiary devices. The fires in southern California have produced 20 deaths, charred about 700,000 acres, and destroyed 2600 homes. With increased smoke and ash producing hundreds of natural chemicals as well as numerous gases, airborne particulate levels have become highly unhealthy, and, in some cases, dangerous for breathing.
Peaking of Fort Knox, as the new colorful $20 bills circulate around the country, more consumers are finding that the bills do not work on ATM machines found in self-service check-out counters at many grocery stores. Customers can pay a store cashier with the new bills. Sprint also can’t accept the new bill at payment machines in their 600 stores nationwide. This is another example of inadequate government planning. They can’t blame this on terrorism.
California’s Controller, Steve Westley, urged Arnold to push for spending cuts. Westley anticipates that the state will have at least an $8 billion budget shortfall, and remarked “do not rely on putting our problems off to the future by extended borrowing.” Talking about California, the East Bay section of the San Francisco Bay Area had a severe venture capital slump in the third quarter, the weakest quarter since the beginning of 1997, and 39% below the financing levels of the third quarter of 2002. Steve Bengston, managing director of emerging company services with PricewaterhouseCoopers, stated “the good news is we are at or near the bottom. The bad news is the market will not head up any time soon.”
The EU slashed its growth forecasts for 2003 to “a mere 0.4%” and stated that next year growth should return to average growth of 1.8%. They warned “the need for firms to focus on cost reductions…together with the prospects for a mild recovery” as drags on job creation. The unemployment rate in the euro-zone approximates 9%. Yesterday brought more bad news for our own loss of jobs. EDS, the number two computer services company, said it will cut 2,500 more jobs. They had originally announced layoffs for 2,700 employees. General Cable announced they would be closing a 131,000 square foot manufacturing plant in Taunton, Mass due to what its CEO calls the “unprecedented decline in North American industrial activity.” The plant employed 77 workers. In addition, the company is conducting feasibility studies of facilities in South Hadley, Mass. and Marion, Ind. to determine whether to continue operations at the plants or transfer or outsource the production. Do not be concerned. The GDP growth rate for the third quarter will be announced and it will be a buoyant 6% or so, and everything will be fine and dandy.
The Urban Land Institute had its fall meeting in San Francisco. The leading concern is the jobless recovery. Without more jobs, offices will remain empty and rents will not increase. Said one participant worried about outsourcing, “it was one thing to move a back office to Sioux Falls in the nineties. It is quite another to move an accounting operation to Banglahor…it’s hard to have much near-term conviction.”
Yesterday’s geomagnetic storm did a number on Japan. The storm shut down two experimental communications satellites. They could be permanently damaged. The brunt of the storm is known as a coronal mass ejection. I have to get me one of those!
In his 1/29/03 State of the Union address, Bush said “Medicare is the binding commitment of a caring society.” Then, in a 6/6/03 speech, Bush stated “we must protect seniors from high medical costs that can rob them of their savings.” There are several studies that show the proposed Medicare plan will, in fact, increase costs for seniors, such as, eliminating co-payments for home health care. A July 2003 stdy by the U.S. Action Education Fund shows that drug prices could be negotiated at 40% savings below retail if Medicare were able to offer a prescription drug benefit directly. The proposed plan will increase the level of deductible costs.
The Iraq Survey Group is comprised of 1,400 people working under David Kay. Having not found the WMD, there are thoughts to shift some of these “intelligence personnel” to the battle against insurgent forces with their attacks on our troops.
Wednesday, October 29, 2003
10/29/03 The World Is Not The Rose Garden
For 48 minutes yesterday President Bush gave a news conference out in the Rose Garden. It was a chilly fall morning but he made us feel so much better as he declared “the world is more peaceful and more free under my leadership and America is more secure.” He announced the United States will change tactics and stiffen defenses. It’s too late for the 116 U.S. troops killed in hostile action since Washington declared major combat operations over on May 1. That number exceeds the 115 U.S. combat deaths during the U.S.-led war. Would the president consider this a trick question? How is the world more peaceful if there are on average 26 daily attacks on our troops in Iraq and about 1,675 of our troops wounded since May 1? Attacks have been on the rise since early September. That’s a fact. Britain’s special representative in Iraq, Sir Jeremy Greenstock, predicted the violence would continue and stated “it is going to go on through the winter, probably.”
A little before noon EST today our planet will be buffeted (not Warren) by a major geomagnetic storm, one that has the potential to disrupt satellites, communications, and power. It will be a significant geomagnetic storm. “The flare as measured by X-ray flux is the largest we’ve ever seen,” said John Kohl, a solar astrophysicist at the Harvard-Smithsonian Center for Astrophysics. One of Kohl’s associates, Leon Golub, remarked “this is the strongest flare we’ve seen in the past 30 years… the Earth is essentially right on the axis of this material.” It has already produced enhanced radiation 100,000 times the background levels at the geostationary satellite orbits. It should be noted that these solar storms do not threaten the health or welfare of humans on Earth; however, they do have the potential of producing elongated noses on those in Congress and in the Administration. I should warn you though. This is a category 5 geomagnetic storm, the top of the scale. It has the potential of creating an unusual flow within the power system but it is not powerful enough to disrupt the BS emanating from Washington.
There have been 16 fatalities resulting from the blazing fires in Southern California. About 2000 homes have been destroyed, and up to 100,000 have endured evacuation. The fires have stormed over about 600,000 acres and 900 square miles, about the size of Rhode Island. At the moment, the fires are fiercest in the bone-dry mountain areas. The firefighters are fatigued. More than 11,000 firefighters are on the lines struggling to contain at least 17 separate fires. More than 50 people have been injured, and that does not include the firefighters. Andrea Tuttle, director of California department of Forestry, stated “ we haven’t seen this intensity of fire and number of residents being affected ever before. This is an extraordinary 100-year event…this is Mother Nature’s natural fire cycle and when you get winds like this it will overwhelm, for awhile, our ability to deal with them.”
According to a report in yesterday’s San Francisco Chronicle, California’s unemployment insurance fund may be bankrupt by January unless benefits are slashed, taxes on businesses are raised, or the state gets a loan from the federal government. The state would have to borrow $1.17 billion to keep benefits flowing to California’s jobless in 2004. It would be unprecedented for California but not nationally. In the most recent past, Texas, New York, Illinois and several smaller states have had to borrow federal funds to keep their unemployment funds solvent. The number of unemployed in California exceeds 1.1 million people.
If the merger of R.J. Reynolds and the tobacco operations of BAT in the United States does take place, then one of the world’s largest cigarette factories will close. The Brown and Williamson factory in Macon, Georgia has 2,100 employees. The average hourly worker makes $26 an hour, and the typical before-tax annual pay is $50,000 to $70,000. It is estimated the Macon plant will close in 18 to 20 months. The plant’s output, about one-half of its cigarettes is shipped to Japan and other countries overseas, accounts for one-tenth of the value of all exports from Georgia. The plant has been in Macon for 27 years.
There was more bad news for Georgia. Coca Cola announced they would be increasing layoffs from the previously announced 1900 to 2800. New York was not spared as JP Morgan Chase announced employee cuts of 1,000. Trapeze Networks of Pleasanton, CA has raised more than $50 million in venture capital funding. The company designs wireless networking equipment for the Wi-FI INDUSTRY. Yesterday Trapeze announced cutting 40 of their 120 employees from the payroll. The company’s vice president of marketing stated “we built for an extremely aggressive ramp-up. We thought we’d see meteoric rise in Wi-Fi demand. Overall, the market is still good. We really just needed to resize the company for what the real growth in the market is.”
Delos Smith, a Conference Board economist, said the expectations index remains low considering the economy likely grew at a 6% rate in the third quarter. He remarked “this economy is on steroids, so it’s going to look very beautiful for the third quarter. But you still have the underlying problem of terrorism, you have the underlying problem of employment. Where will the jobs be.” If the Republicans on the House tax-writing committee have their way, more jobs will be exported. Overcoming Democratic opposition, these Republicans voted yesterday to give multinational corporations tax cuts totaling $128 billion over 10 years. The legislation would make it easier for multinational firms to claim tax deductions for interest and taxes paid to foreign governments. It would also cut the top tax rate for most U.S. businesses from 35% to 32% by 2012. However, small businesses would have their cut phased in depending upon a firm’s taxable income. Writing in a letter signed by 10 other Republicans, Rep. Donald Manzullo, R-ILL, stated the legislation would lower “ the cost of doing business overseas for American companies. This will necessarily encourage American companies to move American jobs offshore to China and other locations.”
According to Nielsen Media Research, advertisers spent an estimated $10 billion in China last year, making it the world’s fifth-largest advertising market. It is widely expected to grow by billions of dollars this year, and in 10 years, China is expected to overtake Japan as the second-largest market. Making ads in China is not cheaper than elsewhere.
For 48 minutes yesterday President Bush gave a news conference out in the Rose Garden. It was a chilly fall morning but he made us feel so much better as he declared “the world is more peaceful and more free under my leadership and America is more secure.” He announced the United States will change tactics and stiffen defenses. It’s too late for the 116 U.S. troops killed in hostile action since Washington declared major combat operations over on May 1. That number exceeds the 115 U.S. combat deaths during the U.S.-led war. Would the president consider this a trick question? How is the world more peaceful if there are on average 26 daily attacks on our troops in Iraq and about 1,675 of our troops wounded since May 1? Attacks have been on the rise since early September. That’s a fact. Britain’s special representative in Iraq, Sir Jeremy Greenstock, predicted the violence would continue and stated “it is going to go on through the winter, probably.”
A little before noon EST today our planet will be buffeted (not Warren) by a major geomagnetic storm, one that has the potential to disrupt satellites, communications, and power. It will be a significant geomagnetic storm. “The flare as measured by X-ray flux is the largest we’ve ever seen,” said John Kohl, a solar astrophysicist at the Harvard-Smithsonian Center for Astrophysics. One of Kohl’s associates, Leon Golub, remarked “this is the strongest flare we’ve seen in the past 30 years… the Earth is essentially right on the axis of this material.” It has already produced enhanced radiation 100,000 times the background levels at the geostationary satellite orbits. It should be noted that these solar storms do not threaten the health or welfare of humans on Earth; however, they do have the potential of producing elongated noses on those in Congress and in the Administration. I should warn you though. This is a category 5 geomagnetic storm, the top of the scale. It has the potential of creating an unusual flow within the power system but it is not powerful enough to disrupt the BS emanating from Washington.
There have been 16 fatalities resulting from the blazing fires in Southern California. About 2000 homes have been destroyed, and up to 100,000 have endured evacuation. The fires have stormed over about 600,000 acres and 900 square miles, about the size of Rhode Island. At the moment, the fires are fiercest in the bone-dry mountain areas. The firefighters are fatigued. More than 11,000 firefighters are on the lines struggling to contain at least 17 separate fires. More than 50 people have been injured, and that does not include the firefighters. Andrea Tuttle, director of California department of Forestry, stated “ we haven’t seen this intensity of fire and number of residents being affected ever before. This is an extraordinary 100-year event…this is Mother Nature’s natural fire cycle and when you get winds like this it will overwhelm, for awhile, our ability to deal with them.”
According to a report in yesterday’s San Francisco Chronicle, California’s unemployment insurance fund may be bankrupt by January unless benefits are slashed, taxes on businesses are raised, or the state gets a loan from the federal government. The state would have to borrow $1.17 billion to keep benefits flowing to California’s jobless in 2004. It would be unprecedented for California but not nationally. In the most recent past, Texas, New York, Illinois and several smaller states have had to borrow federal funds to keep their unemployment funds solvent. The number of unemployed in California exceeds 1.1 million people.
If the merger of R.J. Reynolds and the tobacco operations of BAT in the United States does take place, then one of the world’s largest cigarette factories will close. The Brown and Williamson factory in Macon, Georgia has 2,100 employees. The average hourly worker makes $26 an hour, and the typical before-tax annual pay is $50,000 to $70,000. It is estimated the Macon plant will close in 18 to 20 months. The plant’s output, about one-half of its cigarettes is shipped to Japan and other countries overseas, accounts for one-tenth of the value of all exports from Georgia. The plant has been in Macon for 27 years.
There was more bad news for Georgia. Coca Cola announced they would be increasing layoffs from the previously announced 1900 to 2800. New York was not spared as JP Morgan Chase announced employee cuts of 1,000. Trapeze Networks of Pleasanton, CA has raised more than $50 million in venture capital funding. The company designs wireless networking equipment for the Wi-FI INDUSTRY. Yesterday Trapeze announced cutting 40 of their 120 employees from the payroll. The company’s vice president of marketing stated “we built for an extremely aggressive ramp-up. We thought we’d see meteoric rise in Wi-Fi demand. Overall, the market is still good. We really just needed to resize the company for what the real growth in the market is.”
Delos Smith, a Conference Board economist, said the expectations index remains low considering the economy likely grew at a 6% rate in the third quarter. He remarked “this economy is on steroids, so it’s going to look very beautiful for the third quarter. But you still have the underlying problem of terrorism, you have the underlying problem of employment. Where will the jobs be.” If the Republicans on the House tax-writing committee have their way, more jobs will be exported. Overcoming Democratic opposition, these Republicans voted yesterday to give multinational corporations tax cuts totaling $128 billion over 10 years. The legislation would make it easier for multinational firms to claim tax deductions for interest and taxes paid to foreign governments. It would also cut the top tax rate for most U.S. businesses from 35% to 32% by 2012. However, small businesses would have their cut phased in depending upon a firm’s taxable income. Writing in a letter signed by 10 other Republicans, Rep. Donald Manzullo, R-ILL, stated the legislation would lower “ the cost of doing business overseas for American companies. This will necessarily encourage American companies to move American jobs offshore to China and other locations.”
According to Nielsen Media Research, advertisers spent an estimated $10 billion in China last year, making it the world’s fifth-largest advertising market. It is widely expected to grow by billions of dollars this year, and in 10 years, China is expected to overtake Japan as the second-largest market. Making ads in China is not cheaper than elsewhere.
Tuesday, October 28, 2003
10/28/03 Staying The Course
Sometimes it gets pretty scary staying the course. Sometimes it means staying inside your living quarters and placing wet towels around the doors and windows to the outside world. The soot and grime find a way through the cracks. You can see the bright flames on the hills not far from where you are. The highways are closed. The local roads are bumper to bumper. Transmission lines are damaged. People are urged to stay indoors. Schools are closed. The airports cancel flights. Some panic and attempt to drive through the flames. It’s tough to breathe. At least fifteen are known dead. At least 1,500 homes have been destroyed, and another 30,000+ homes are threatened with raging flames. Already 500,000 acres have been consumed from the border of Mexico to the northeast suburbs of LA. Supposedly, cooler and less windy weather is on the way. That forecast could raise the hopes of the overworked fire personnel and the endangered residents, and one of those is my son.
There are times when one decides against staying the course. Warren Buffett made that decision over the past year and a half. For the first time in his seventy-plus years, he made significant purchases in foreign currencies. He remarked that “our trade deficit has greatly worsened, to the point that our country’s ‘net worth,’ so to speak, is now being transferred abroad at an alarming rate.”
In the past two days Cadbury and Sony have announced they will cut thousands of employees over the next few years. Sony will cut 7,000 just in Japan. These two companies could reduce their employment by almost 30,000 people.
The state of Illinois claims that importing cheaper prescription drugs from Canada could save their residents up to $90 million a year without compromising safety. The Illinois report said there is an additional guarantee of safety because Canadian pharmacies fill prescriptions in amounts supplied by the manufacturer in sealed containers only. They do not open manufacturer supplied containers, count, and repackage to fill the prescription as done in the United States.
It is not unusual for an individual to work for a company because of the insurance benefits and not just for the pay. Many of those companies employee 1,000 or more, and many of those companies are cutting those same benefits. In the 1960s, more than 80% of U.S. workers had health insurance through their employers. With sharply rising premiums, that number is down to 62%. A recent study by the Institute for Labor and Economy at UC Berkeley found that 700,000 uninsured people who were eligible for the state Medicaid program were in families with a wage earner employed by a company of more than 1,000 employees.
How many citizens ask what will $500 million budget deficits and $500 million trade deficits mean to my family? Richard Kogan, a fellow at the Center for Budget and Policy Priorities, explains that “these historically large deficits mean a generation is going to have to pay taxes at higher rates, if we are going to support a decent retirement and healthcare system.” Do not be fooled by the tax cuts and child credit extended to our citizens over the past three years. Tax cuts along with record deficits create catastrophic economic and social derailments. The payments for mismanagement take place over many years. There are rational ways to stay the course and then there are poorly planned strategies. Alan Greenspan was smart enough to realize there was a bubble forming in 1996. He also has warned the Congress of the current out-of-control spending policies. Buffett sees the handwriting on the wall. Do you? When you vote, ask whether that person you want elected gets it.
The McDonald Financial Group Affluent Consumer Index is based on a national survey of randomly selected individuals with investable assets of $500,000 or more, or personal annual incomes of $150,000 or more. Some 60% of respondents classify themselves as business leaders and senior executives, and of them, 73% said they plan to hold their holiday spending steady compared with 2002, while only 13% said they would spend more. The affluent is paying down debt. Only 30% of the respondents actually plan to increase their investments in the next three months and 27% intend to reduce them.
R.J. Reynolds and British American Tobacco will combine the assets and operations of their respective U.S. tobacco businesses into a new publicly traded holding company. RJR shareholders will own 58% and BAT holders 42%. The transaction will be tax-free, and is expected to close in mid-2004. The combination will consolidate the second and third largest U.S. tobacco companies, and generate over 30% of the cigarette sales in the United States.
Sometimes it gets pretty scary staying the course. Sometimes it means staying inside your living quarters and placing wet towels around the doors and windows to the outside world. The soot and grime find a way through the cracks. You can see the bright flames on the hills not far from where you are. The highways are closed. The local roads are bumper to bumper. Transmission lines are damaged. People are urged to stay indoors. Schools are closed. The airports cancel flights. Some panic and attempt to drive through the flames. It’s tough to breathe. At least fifteen are known dead. At least 1,500 homes have been destroyed, and another 30,000+ homes are threatened with raging flames. Already 500,000 acres have been consumed from the border of Mexico to the northeast suburbs of LA. Supposedly, cooler and less windy weather is on the way. That forecast could raise the hopes of the overworked fire personnel and the endangered residents, and one of those is my son.
There are times when one decides against staying the course. Warren Buffett made that decision over the past year and a half. For the first time in his seventy-plus years, he made significant purchases in foreign currencies. He remarked that “our trade deficit has greatly worsened, to the point that our country’s ‘net worth,’ so to speak, is now being transferred abroad at an alarming rate.”
In the past two days Cadbury and Sony have announced they will cut thousands of employees over the next few years. Sony will cut 7,000 just in Japan. These two companies could reduce their employment by almost 30,000 people.
The state of Illinois claims that importing cheaper prescription drugs from Canada could save their residents up to $90 million a year without compromising safety. The Illinois report said there is an additional guarantee of safety because Canadian pharmacies fill prescriptions in amounts supplied by the manufacturer in sealed containers only. They do not open manufacturer supplied containers, count, and repackage to fill the prescription as done in the United States.
It is not unusual for an individual to work for a company because of the insurance benefits and not just for the pay. Many of those companies employee 1,000 or more, and many of those companies are cutting those same benefits. In the 1960s, more than 80% of U.S. workers had health insurance through their employers. With sharply rising premiums, that number is down to 62%. A recent study by the Institute for Labor and Economy at UC Berkeley found that 700,000 uninsured people who were eligible for the state Medicaid program were in families with a wage earner employed by a company of more than 1,000 employees.
How many citizens ask what will $500 million budget deficits and $500 million trade deficits mean to my family? Richard Kogan, a fellow at the Center for Budget and Policy Priorities, explains that “these historically large deficits mean a generation is going to have to pay taxes at higher rates, if we are going to support a decent retirement and healthcare system.” Do not be fooled by the tax cuts and child credit extended to our citizens over the past three years. Tax cuts along with record deficits create catastrophic economic and social derailments. The payments for mismanagement take place over many years. There are rational ways to stay the course and then there are poorly planned strategies. Alan Greenspan was smart enough to realize there was a bubble forming in 1996. He also has warned the Congress of the current out-of-control spending policies. Buffett sees the handwriting on the wall. Do you? When you vote, ask whether that person you want elected gets it.
The McDonald Financial Group Affluent Consumer Index is based on a national survey of randomly selected individuals with investable assets of $500,000 or more, or personal annual incomes of $150,000 or more. Some 60% of respondents classify themselves as business leaders and senior executives, and of them, 73% said they plan to hold their holiday spending steady compared with 2002, while only 13% said they would spend more. The affluent is paying down debt. Only 30% of the respondents actually plan to increase their investments in the next three months and 27% intend to reduce them.
R.J. Reynolds and British American Tobacco will combine the assets and operations of their respective U.S. tobacco businesses into a new publicly traded holding company. RJR shareholders will own 58% and BAT holders 42%. The transaction will be tax-free, and is expected to close in mid-2004. The combination will consolidate the second and third largest U.S. tobacco companies, and generate over 30% of the cigarette sales in the United States.
Monday, October 27, 2003
10/27/03 Can Your Job Be Digitized?
The Institute for International Economics is a Washington, DC think tank. Gary C. Hufbauer is a senior fellow and international economist at the Institute. He has made an excellent point by stating “if your job can be digitized, it can be moved.” In other words, millions of service jobs could be moved outside the United States and remain there. Normally, one immediately mentions IT jobs but included could be life sciences, legal work, finance, business services, etc. John Napier is a 53-year old electrical engineer who was laid off by EMC Corp. in mid-2001. He raises a crucial point that “the people who get forced out of old jobs that go overseas are not the ones who get the new jobs.” If millions follow Napier to the unemployment rolls over the coming years, what new white-collar “mind”jobs will be created in the United States? There aren’t enough service jobs on the horizon to make this an economy of the under-employed.
We started the week off with two major merger announcements. For years, it was rumored that FleetBoston Financial was a takeover candidate. The Boston Globe reported that Bank of America would pay $45 a share in stock and cash for the seventh-biggest U.S. bank by assets. Bank of America is the third-largest U.S. bank. In addition, Anthem, Inc., the fifth-largest U.S. health insurer, announced plans to buy one of its competitors, WellPoint Health Networks, for more than $12 billion in cash and stock. Both companies are two of the biggest providers of Blue Cross and Blue Shield plans.
Prior to the Iraq war, Tony Blair told the British Parliament that Iraq was trying to procure high-strength aluminum tubes with the potential to be used in nuclear centrifuges. Colin Powell cited these tubes in his address to the United Nations in February, and said the tubes were used to enrich uranium. On Sunday senior officials with the Iraq Survey Group concluded that the high-strength aluminum tubes were “innocuous,” and that Iraqi nuclear scientists undertook no significant work after 1991, and that many facilities described before the war as suspicious were benign. In sum, the WMD claim was dismissed.
Today three American soldiers were killed and four wounded in two separate attacks in Iraq. Since Bush announced the end of major combat in Iraq on May 1, 112 U.S. soldiers have been killed in hostile action.
In a new Newsweek poll, it is reported that 58% of Americans say the U.S. is spending too much on operations in postwar Iraq. Forty nine percent of Americans say they don’t think the Bush administration has a well-thought-out plan to establish security and a stable government in Iraq while 39% say it does. 46% would like to see Bush re-elected and 47% would not. John McCain for the first time compares the situation in Iraq to Vietnam, where he survived six years of wartime imprisonment. McCain told Newsweek “this is the first time that I have seen a parallel to Vietnam in terms of information that the administration is putting out versus the actual situation on the ground. I’m not saying the situation is as bad as Vietnam. But we have a problem in the Sunni Triangle and we should face up to it and tell the American people about it.”
The worst firestorm in 33 years or since the Vietnam War is raging from Valley Center to Mexico. The fires have swept through 200 square miles and over 300,000 acres in Southern California. Tens of thousands have been evacuated, 850 homes have been destroyed, and at least 14 are known dead from the blazes. Schools are closed for today, and Monday Night Football has been moved from San Diego to Tempe, Arizona. A state of emergency has been declared in San Diego, San Bernardino, Los Angeles, and Ventura counties. The heat, wind, and low humidity have help to create relentless flames. With the Santa Ana winds gusting up to 70 mph, it is virtually impossible to contain the fires. National Weather Service meteorologist Robert Balfour said “ we’ll have a 24 to 36 hour window where winds will die down, but the vegetation is so dry and the terrain so steep that the fire will probably take off and go into the mountains then.”
The Institute for International Economics is a Washington, DC think tank. Gary C. Hufbauer is a senior fellow and international economist at the Institute. He has made an excellent point by stating “if your job can be digitized, it can be moved.” In other words, millions of service jobs could be moved outside the United States and remain there. Normally, one immediately mentions IT jobs but included could be life sciences, legal work, finance, business services, etc. John Napier is a 53-year old electrical engineer who was laid off by EMC Corp. in mid-2001. He raises a crucial point that “the people who get forced out of old jobs that go overseas are not the ones who get the new jobs.” If millions follow Napier to the unemployment rolls over the coming years, what new white-collar “mind”jobs will be created in the United States? There aren’t enough service jobs on the horizon to make this an economy of the under-employed.
We started the week off with two major merger announcements. For years, it was rumored that FleetBoston Financial was a takeover candidate. The Boston Globe reported that Bank of America would pay $45 a share in stock and cash for the seventh-biggest U.S. bank by assets. Bank of America is the third-largest U.S. bank. In addition, Anthem, Inc., the fifth-largest U.S. health insurer, announced plans to buy one of its competitors, WellPoint Health Networks, for more than $12 billion in cash and stock. Both companies are two of the biggest providers of Blue Cross and Blue Shield plans.
Prior to the Iraq war, Tony Blair told the British Parliament that Iraq was trying to procure high-strength aluminum tubes with the potential to be used in nuclear centrifuges. Colin Powell cited these tubes in his address to the United Nations in February, and said the tubes were used to enrich uranium. On Sunday senior officials with the Iraq Survey Group concluded that the high-strength aluminum tubes were “innocuous,” and that Iraqi nuclear scientists undertook no significant work after 1991, and that many facilities described before the war as suspicious were benign. In sum, the WMD claim was dismissed.
Today three American soldiers were killed and four wounded in two separate attacks in Iraq. Since Bush announced the end of major combat in Iraq on May 1, 112 U.S. soldiers have been killed in hostile action.
In a new Newsweek poll, it is reported that 58% of Americans say the U.S. is spending too much on operations in postwar Iraq. Forty nine percent of Americans say they don’t think the Bush administration has a well-thought-out plan to establish security and a stable government in Iraq while 39% say it does. 46% would like to see Bush re-elected and 47% would not. John McCain for the first time compares the situation in Iraq to Vietnam, where he survived six years of wartime imprisonment. McCain told Newsweek “this is the first time that I have seen a parallel to Vietnam in terms of information that the administration is putting out versus the actual situation on the ground. I’m not saying the situation is as bad as Vietnam. But we have a problem in the Sunni Triangle and we should face up to it and tell the American people about it.”
The worst firestorm in 33 years or since the Vietnam War is raging from Valley Center to Mexico. The fires have swept through 200 square miles and over 300,000 acres in Southern California. Tens of thousands have been evacuated, 850 homes have been destroyed, and at least 14 are known dead from the blazes. Schools are closed for today, and Monday Night Football has been moved from San Diego to Tempe, Arizona. A state of emergency has been declared in San Diego, San Bernardino, Los Angeles, and Ventura counties. The heat, wind, and low humidity have help to create relentless flames. With the Santa Ana winds gusting up to 70 mph, it is virtually impossible to contain the fires. National Weather Service meteorologist Robert Balfour said “ we’ll have a 24 to 36 hour window where winds will die down, but the vegetation is so dry and the terrain so steep that the fire will probably take off and go into the mountains then.”
Sunday, October 26, 2003
10/26/03 Getting The Job Done
The Al Rasheed Hotel is in Baghdad. It was attacked on September 27 with small rockets that caused only minimal damage. At 6:10AM this morning a barrage of rockets hit the hotel. One U.S. soldier was killed and 15 people were wounded. Deputy Defense Secretary Wolfowitz reportedly was staying at the hotel. He has been on a three-day Iraq tour. Putting on his preemption face, Wolfowitz spoke after the attack, and stated “we are taking this fight to the enemy. We are getting the job done.” Lt. Brian Dowd, a 1st Armored Division reconnaissance officer at the scene, had a more rational analysis of the situation and remarked “there is no guarantee we can protect against this kind of thing unless we have soldiers on every block.” The holy fasting month of Ramadan begins in Iraq on Monday.
Yesterday, Senator Patrick Leahy of Vermont gave the Democrats’ weekly radio address. He complained that more than 600 members of the Guard and the Reserve are now in “medical limbo” at Ft. Stewart, Georgia, “living in substandard barracks, without adequate medical care.” I discussed this not so long ago. Leahy said Bush wants $87 billion to rebuild Iraq and keep U.S. troops there but opposes a Senate-passed measure to guarantee health care coverage to all members of the Guard and Reserve. I have discussed this too.
Illinois is a very important election state due to the size of its electoral votes. In a very recent Chicago Tribune/WGN-TV poll, only 38% of Illinois voters want to see Bush re-elected. On TV, for the most part, you hear about approval ratings. The question really is do you want a specific person elected and/or re-elected. That determines the outcome.
This weekend there is a meeting of the Group of 20 nations in Mexico. This group includes the G-7 nations, emerging market nations such as Mexico and Argentina, the EU, the World Bank, and the IMF. Currencies, tariffs, and international trade will be some of the main topics.
Alan Abelson:”We fervently hope Mr. Snow is right about the booming job market. We think not, and we’d be willing to stake our reputation on it, if we could only scare one up.”
Alan Abelson: “The economy in the third quarter was on steroids dished out by Uncle Sam…our sense is that most of the tax cuts have been spent and the vast explosion of mortgage refinancing is over.”
Warren Buffett on the stock market: “We’re not finding anything…we have more cash than ideas. The question is whether that will prevail for an unduly long time…but, occasionally, successful investing requires inactivity.”
In recent weeks I have mentioned that there have been growing layoffs in the textile area and that some companies have closed plants and/or gone out of business. There are three basic problems. The price of cotton has risen almost 40% in 2003 to a 5-year high. The industry has had to absorb those added costs because they have been unable to pass along the cotton price increases. In addition, has been able to offer competitive products at cheaper prices because of their lower cost of labor. China is the world’s largest cotton producer and its largest consumer of cotton. The cotton crop in China has been hurt by poor weather. According to the American Textile Manufacturers Institute, China controls 53% of the U.S. market for apparel products removed from quota control, and by year-end that number will two-thirds, and by the end of 2004 will rise to 75%. In 1998 there were over 600,000 textile jobs in the United States. Today, this number has dropped below 400,000 and continues to decline.
There is one more point I would like to cover, and that is the multiplier effect of employment or unemployment, as the case may be. Boeing, for example, has over the most recent past cut 50,000 from its employment rolls. That is only part of the story. A local think tank has shown that every Boeing job creates 1.8 other indirect jobs in the service economy. Therefore, a loss of 50,000 Boeing jobs means the loss of another 90,000 service jobs. Boeing is not unique. A similar problem occurs in textiles and other industries.
The Al Rasheed Hotel is in Baghdad. It was attacked on September 27 with small rockets that caused only minimal damage. At 6:10AM this morning a barrage of rockets hit the hotel. One U.S. soldier was killed and 15 people were wounded. Deputy Defense Secretary Wolfowitz reportedly was staying at the hotel. He has been on a three-day Iraq tour. Putting on his preemption face, Wolfowitz spoke after the attack, and stated “we are taking this fight to the enemy. We are getting the job done.” Lt. Brian Dowd, a 1st Armored Division reconnaissance officer at the scene, had a more rational analysis of the situation and remarked “there is no guarantee we can protect against this kind of thing unless we have soldiers on every block.” The holy fasting month of Ramadan begins in Iraq on Monday.
Yesterday, Senator Patrick Leahy of Vermont gave the Democrats’ weekly radio address. He complained that more than 600 members of the Guard and the Reserve are now in “medical limbo” at Ft. Stewart, Georgia, “living in substandard barracks, without adequate medical care.” I discussed this not so long ago. Leahy said Bush wants $87 billion to rebuild Iraq and keep U.S. troops there but opposes a Senate-passed measure to guarantee health care coverage to all members of the Guard and Reserve. I have discussed this too.
Illinois is a very important election state due to the size of its electoral votes. In a very recent Chicago Tribune/WGN-TV poll, only 38% of Illinois voters want to see Bush re-elected. On TV, for the most part, you hear about approval ratings. The question really is do you want a specific person elected and/or re-elected. That determines the outcome.
This weekend there is a meeting of the Group of 20 nations in Mexico. This group includes the G-7 nations, emerging market nations such as Mexico and Argentina, the EU, the World Bank, and the IMF. Currencies, tariffs, and international trade will be some of the main topics.
Alan Abelson:”We fervently hope Mr. Snow is right about the booming job market. We think not, and we’d be willing to stake our reputation on it, if we could only scare one up.”
Alan Abelson: “The economy in the third quarter was on steroids dished out by Uncle Sam…our sense is that most of the tax cuts have been spent and the vast explosion of mortgage refinancing is over.”
Warren Buffett on the stock market: “We’re not finding anything…we have more cash than ideas. The question is whether that will prevail for an unduly long time…but, occasionally, successful investing requires inactivity.”
In recent weeks I have mentioned that there have been growing layoffs in the textile area and that some companies have closed plants and/or gone out of business. There are three basic problems. The price of cotton has risen almost 40% in 2003 to a 5-year high. The industry has had to absorb those added costs because they have been unable to pass along the cotton price increases. In addition, has been able to offer competitive products at cheaper prices because of their lower cost of labor. China is the world’s largest cotton producer and its largest consumer of cotton. The cotton crop in China has been hurt by poor weather. According to the American Textile Manufacturers Institute, China controls 53% of the U.S. market for apparel products removed from quota control, and by year-end that number will two-thirds, and by the end of 2004 will rise to 75%. In 1998 there were over 600,000 textile jobs in the United States. Today, this number has dropped below 400,000 and continues to decline.
There is one more point I would like to cover, and that is the multiplier effect of employment or unemployment, as the case may be. Boeing, for example, has over the most recent past cut 50,000 from its employment rolls. That is only part of the story. A local think tank has shown that every Boeing job creates 1.8 other indirect jobs in the service economy. Therefore, a loss of 50,000 Boeing jobs means the loss of another 90,000 service jobs. Boeing is not unique. A similar problem occurs in textiles and other industries.
Saturday, October 25, 2003
10/25/03 Seeing And Deciding
Hermes is an asteroid. For real. It was first observed in 1937. Since that time, it had circled the sun 31 times. However, Hermes was not seen again until October 15, 2003. As Mel Allen would have said, “how about that!” In actuality, Hermes was found to comprise two objects, and they orbit one another. Pretty cool. However, never before have the orbiting objects been of the same size. This is a first. Their spin is such that they present the same face to one another on a constant basis. Way cool. Researchers have found that Hermes comes within 378,000 miles of Earth, about 1.6 times the distance from Earth to the moon. The last such approach was in 1942! Astronomers never noticed. So I ask three questions. Do you have to see to believe? Could what you see hide the identical object and make it invisible? On what basis would you make a decision?
There is an art to decision-making. The more decisions you make the greater the chance of making a wrong decision. That’s simple. That’s why so few people make money day trading. I am certain everyone credits oneself with attempting to make good decisions. I know I do. I try to limit my investing decisions. As such, I sit on my hands a great deal. Since I weigh over 200 pounds, that’s a lot of weight on my hands. So, when a decision is made, it had better be a good one. Otherwise, my hands have paid a stiff price for nothing. Last year I did make a good decision. I placed my liquid funds in the New Zealand dollar. That didn’t make me anti-American. It was good business. This week the New Zealand dollar reached its highest level versus our dollar in six years, and is up 16% in 2003 versus the dollar. That’s not chump change. Our Federal Reserve has pegged its short-term rate at a 45-year low of 1%. The comparable rate in New Zealand is 5%. The GDP in New Zealand has risen for 10 consecutive years. Their exports are growing, and they account for 30% of their economy. In sum, I made one decision. I switched my dollars over to New Zealand dollars, and they have remained there. In hindsight, it was a no-brainer; however, it took me some time to arrive at that decision.
Did you know that Australia is the third-biggest gold producer? I didn’t. With gold at $389, Australia’s gold mining companies must be coining it. In addition, yesterday Australia and China signed a free-trade agreement. Over the past six years, Australia’s trade with China has trebled on an annual basis, and now approximates $16 billion a year. Its currency also hit a six-year high versus the dollar this week.
Every week I write about unemployment. I would like to discuss another aspect to hiring and then firing. One of the growing reasons for the reluctance to hire is the increased unemployment tax rates. (I am not ignoring rising costs for benefits.) Let’s look at the state of Washington. Employers in that state will see their taxes rise by about 12% on average in 2004. The state’s unemployment trust fund shrank 34% between September 2002 and September 2003, triggering a law that increases the rate to protect the trust fund in bad times. The state paid $1.62 billion in unemployment benefits to jobless workers between June 2002 and June 2003, a period when the state’s unemployment rate has remained among the highest in the nation. On average, businesses with employees who earn more than $30,200 will see their taxes per employee increase from $741 in 2003 to $863 in 2004, a 14% increase. The unemployment insurance trust fund was at $1 billion as of September 30, 2003, about $216 million less than the balance necessary to keep the 2003 tax rate.
John Challenger: “There’s no business that can constantly be growing. There are always cycles.” Bowling Green Spinning Co. has been a family owned operation in textiles dating to 1902. Citing the rising cost of cotton and competition from low-cost imports, they are closing by year-end and laying off 160 workers. AK Steel is a Middletown, Ohio manufacturer of flat-rolled carbon, stainless, and electrical steel. They announced a big loss and are cutting 475 employees or 20% of the workforce. They cited continuing high prices for raw materials and energy, lower production volumes, a less favorable product mix, and rising pension and retiree health care benefit expenses. Their CEO said “the rules have changed and so must we.”
On Friday two U.S. soldiers were killed in Iraq and four more wounded. The deaths bring to 108 the number of American soldiers killed by hostile fire since Bush declared an end to major combat May 1.
President Bush: “If you are a CEO in corporate America, you’re responsible for telling the truth to your shareholders and your employees.” I agree with that. President Bush is the CEO of this nation, and he is responsible for telling the truth to the citizens of the United States.
Hermes is an asteroid. For real. It was first observed in 1937. Since that time, it had circled the sun 31 times. However, Hermes was not seen again until October 15, 2003. As Mel Allen would have said, “how about that!” In actuality, Hermes was found to comprise two objects, and they orbit one another. Pretty cool. However, never before have the orbiting objects been of the same size. This is a first. Their spin is such that they present the same face to one another on a constant basis. Way cool. Researchers have found that Hermes comes within 378,000 miles of Earth, about 1.6 times the distance from Earth to the moon. The last such approach was in 1942! Astronomers never noticed. So I ask three questions. Do you have to see to believe? Could what you see hide the identical object and make it invisible? On what basis would you make a decision?
There is an art to decision-making. The more decisions you make the greater the chance of making a wrong decision. That’s simple. That’s why so few people make money day trading. I am certain everyone credits oneself with attempting to make good decisions. I know I do. I try to limit my investing decisions. As such, I sit on my hands a great deal. Since I weigh over 200 pounds, that’s a lot of weight on my hands. So, when a decision is made, it had better be a good one. Otherwise, my hands have paid a stiff price for nothing. Last year I did make a good decision. I placed my liquid funds in the New Zealand dollar. That didn’t make me anti-American. It was good business. This week the New Zealand dollar reached its highest level versus our dollar in six years, and is up 16% in 2003 versus the dollar. That’s not chump change. Our Federal Reserve has pegged its short-term rate at a 45-year low of 1%. The comparable rate in New Zealand is 5%. The GDP in New Zealand has risen for 10 consecutive years. Their exports are growing, and they account for 30% of their economy. In sum, I made one decision. I switched my dollars over to New Zealand dollars, and they have remained there. In hindsight, it was a no-brainer; however, it took me some time to arrive at that decision.
Did you know that Australia is the third-biggest gold producer? I didn’t. With gold at $389, Australia’s gold mining companies must be coining it. In addition, yesterday Australia and China signed a free-trade agreement. Over the past six years, Australia’s trade with China has trebled on an annual basis, and now approximates $16 billion a year. Its currency also hit a six-year high versus the dollar this week.
Every week I write about unemployment. I would like to discuss another aspect to hiring and then firing. One of the growing reasons for the reluctance to hire is the increased unemployment tax rates. (I am not ignoring rising costs for benefits.) Let’s look at the state of Washington. Employers in that state will see their taxes rise by about 12% on average in 2004. The state’s unemployment trust fund shrank 34% between September 2002 and September 2003, triggering a law that increases the rate to protect the trust fund in bad times. The state paid $1.62 billion in unemployment benefits to jobless workers between June 2002 and June 2003, a period when the state’s unemployment rate has remained among the highest in the nation. On average, businesses with employees who earn more than $30,200 will see their taxes per employee increase from $741 in 2003 to $863 in 2004, a 14% increase. The unemployment insurance trust fund was at $1 billion as of September 30, 2003, about $216 million less than the balance necessary to keep the 2003 tax rate.
John Challenger: “There’s no business that can constantly be growing. There are always cycles.” Bowling Green Spinning Co. has been a family owned operation in textiles dating to 1902. Citing the rising cost of cotton and competition from low-cost imports, they are closing by year-end and laying off 160 workers. AK Steel is a Middletown, Ohio manufacturer of flat-rolled carbon, stainless, and electrical steel. They announced a big loss and are cutting 475 employees or 20% of the workforce. They cited continuing high prices for raw materials and energy, lower production volumes, a less favorable product mix, and rising pension and retiree health care benefit expenses. Their CEO said “the rules have changed and so must we.”
On Friday two U.S. soldiers were killed in Iraq and four more wounded. The deaths bring to 108 the number of American soldiers killed by hostile fire since Bush declared an end to major combat May 1.
President Bush: “If you are a CEO in corporate America, you’re responsible for telling the truth to your shareholders and your employees.” I agree with that. President Bush is the CEO of this nation, and he is responsible for telling the truth to the citizens of the United States.
Friday, October 24, 2003
10/24/03 Not A Crisis. Only A Concern
How could a stockholder be concerned when a company has $52 billion in cash? How can you be concerned when sales and earnings exceed expectations and forecasts for the fiscal year are raised? I should have such a crisis of confidence! The only area on Wall Street that is priced to perfection would be the salary for the analysts. That’s for another morning. Today is simplifying the Microsoft information. It’s really doesn’t take much. Their PC and server business exceeded expectations; however, and some say it is a big however, Microsoft had expected unearned revenue or long-term licensing revenue to business customers to decline by about $250 million in the latest quarter. The actual decline was $768 million. Microsoft’s CFO said “in hindsight, our forecast for the September quarter was a little too optimistic. Corporate IT spending, especially in the enterprise segment, was not quite what we had forecast. I wouldn’t say we have a crisis. I would say we missed the forecast, so you should have a concern, but we feel pretty good about what the next three quarters look like relative to the market and relative to competition.” While analysts focus on the unexpected larger drop in unearned revenue, I am a bit more concerned on the revenue from Microsoft’s Windows operating system that was flat and the 1% growth in revenue from its Office line of software. The latter two areas are the company’s cash cows.
It’s Friday. It’s layoff day at Boeing. Another 860 leave the company payroll today, and they will also distribute 60-day layoff warning notices to 115 more workers today. You can expect additional layoffs in the future. Marshal Larsen is CEO of Goodrich, the company that supplies landing gear for all Boeing models except the 100-seat 717. Yesterday Larsen said “landing gear is long lead time, and we expect further drop in Boeing next year.” In other words, you can expect Boeing to state they will not meet their goal of building 280 jets in 2004. Consequently, there will be more layoffs at Boeing.
When will the taxpayers in this country stop rewarding mediocrity (and I am being generous)? Do you get a raise every year? The U.S. Senate yesterday voted themselves a pay raise for the fifth year in a row to about $158,000 in 2004. Last month the House of Representatives voted to accept a 2.2% pay increase. Over the last 5 years, members of Congress will have received a raise of $21,000. It should be noted that federal employees received an even greater raise of 4.1%. Medicare recipients received a cost of living adjustment of about 2%. When it comes to Congress, do you think you are getting value for your tax dollars?
Talking about taxes, next week Houstonians will be receiving tax bills, and the increase will be 9% higher than in 2002. They can thank soaring home valuations. The owner of a $132,000 home, the community average, will pay $2,928 in property taxes for 2003. That’s nearly double the tax bill in 1997.
Today a U.S. soldier was killed in northern Iraq and 13 troops were wounded in a mortar attack. The death brings to 106 the number of American soldiers killed by hostile fire since Bush declared an end to major combat operations May 1. Since the war began in March, approximately 2,000 soldiers have been wounded in Iraq, many quite severely. Of that amount, about 1,600 were wounded in hostile fire. These numbers come through U.S. Central Command and the Pentagon.
It’s been some time since I discussed the West Nile virus. According to the latest data from the CDC, at least 155 people in the United States have died from West Nile and more than 7,000 others have been infected this year, and this represents the worst outbreak since the virus first surfaced in this country in 1999.
I could never figure why Nestle’s wanted to become majority owner of Dreyer’s Ice Cream. It’s not exactly Ben and Jerry’s. Yesterday Nestle’s said they would close the Union City plant and eliminate 221 jobs. Dreyer’s had been making ice cream there since 1928. Nestle’s said that Dreyer’s has too many plants in the state of California.
The Administration is attempting to have Congress approve $87 billion for the Iraq reconstruction. Should the taxpayers be informed that Iraq already has a debt load of about $120 billion, and would be over $160 billion when including compensation claims for Hussein’s invasion of Kuwait? It’s one thing to support the troops, and quite another to know other monies are dropping into a deep black hole. I thought the U.S. was the most indebted country per capita. Not true. Iraq is.
The Snowman: “I would stake my reputation on employment growth happening before Christmas.” That statement could present a problem. Richmond Federal Reserve Bank President Albert Broaddus Jr. said “many firms can meet sizable increases in demand without hiring new workers.”
A recent report from the USDA indicates that more than 80% of U.S. soybean fields are planted with genetically modified seeds, and the latter account for nearly 75% of cotton and 40% of corn grown in the U.S. A Food Policy Institute study reveals more than 80% of processed foods contain some genetically modified crops.
How could a stockholder be concerned when a company has $52 billion in cash? How can you be concerned when sales and earnings exceed expectations and forecasts for the fiscal year are raised? I should have such a crisis of confidence! The only area on Wall Street that is priced to perfection would be the salary for the analysts. That’s for another morning. Today is simplifying the Microsoft information. It’s really doesn’t take much. Their PC and server business exceeded expectations; however, and some say it is a big however, Microsoft had expected unearned revenue or long-term licensing revenue to business customers to decline by about $250 million in the latest quarter. The actual decline was $768 million. Microsoft’s CFO said “in hindsight, our forecast for the September quarter was a little too optimistic. Corporate IT spending, especially in the enterprise segment, was not quite what we had forecast. I wouldn’t say we have a crisis. I would say we missed the forecast, so you should have a concern, but we feel pretty good about what the next three quarters look like relative to the market and relative to competition.” While analysts focus on the unexpected larger drop in unearned revenue, I am a bit more concerned on the revenue from Microsoft’s Windows operating system that was flat and the 1% growth in revenue from its Office line of software. The latter two areas are the company’s cash cows.
It’s Friday. It’s layoff day at Boeing. Another 860 leave the company payroll today, and they will also distribute 60-day layoff warning notices to 115 more workers today. You can expect additional layoffs in the future. Marshal Larsen is CEO of Goodrich, the company that supplies landing gear for all Boeing models except the 100-seat 717. Yesterday Larsen said “landing gear is long lead time, and we expect further drop in Boeing next year.” In other words, you can expect Boeing to state they will not meet their goal of building 280 jets in 2004. Consequently, there will be more layoffs at Boeing.
When will the taxpayers in this country stop rewarding mediocrity (and I am being generous)? Do you get a raise every year? The U.S. Senate yesterday voted themselves a pay raise for the fifth year in a row to about $158,000 in 2004. Last month the House of Representatives voted to accept a 2.2% pay increase. Over the last 5 years, members of Congress will have received a raise of $21,000. It should be noted that federal employees received an even greater raise of 4.1%. Medicare recipients received a cost of living adjustment of about 2%. When it comes to Congress, do you think you are getting value for your tax dollars?
Talking about taxes, next week Houstonians will be receiving tax bills, and the increase will be 9% higher than in 2002. They can thank soaring home valuations. The owner of a $132,000 home, the community average, will pay $2,928 in property taxes for 2003. That’s nearly double the tax bill in 1997.
Today a U.S. soldier was killed in northern Iraq and 13 troops were wounded in a mortar attack. The death brings to 106 the number of American soldiers killed by hostile fire since Bush declared an end to major combat operations May 1. Since the war began in March, approximately 2,000 soldiers have been wounded in Iraq, many quite severely. Of that amount, about 1,600 were wounded in hostile fire. These numbers come through U.S. Central Command and the Pentagon.
It’s been some time since I discussed the West Nile virus. According to the latest data from the CDC, at least 155 people in the United States have died from West Nile and more than 7,000 others have been infected this year, and this represents the worst outbreak since the virus first surfaced in this country in 1999.
I could never figure why Nestle’s wanted to become majority owner of Dreyer’s Ice Cream. It’s not exactly Ben and Jerry’s. Yesterday Nestle’s said they would close the Union City plant and eliminate 221 jobs. Dreyer’s had been making ice cream there since 1928. Nestle’s said that Dreyer’s has too many plants in the state of California.
The Administration is attempting to have Congress approve $87 billion for the Iraq reconstruction. Should the taxpayers be informed that Iraq already has a debt load of about $120 billion, and would be over $160 billion when including compensation claims for Hussein’s invasion of Kuwait? It’s one thing to support the troops, and quite another to know other monies are dropping into a deep black hole. I thought the U.S. was the most indebted country per capita. Not true. Iraq is.
The Snowman: “I would stake my reputation on employment growth happening before Christmas.” That statement could present a problem. Richmond Federal Reserve Bank President Albert Broaddus Jr. said “many firms can meet sizable increases in demand without hiring new workers.”
A recent report from the USDA indicates that more than 80% of U.S. soybean fields are planted with genetically modified seeds, and the latter account for nearly 75% of cotton and 40% of corn grown in the U.S. A Food Policy Institute study reveals more than 80% of processed foods contain some genetically modified crops.
Thursday, October 23, 2003
10/23/03 Another Economic Pothole
According to the Mortgage Bankers Association, the value of mortgages will fall from $3.3 trillion in 2003 to $1.6 trillion in 2004. Naturally, such a significant drop does not make headlines. Often, information gets released through other means. Washington Mutual is a highly successful lending institution; however, their mortgage area has created a profit drain in recent quarters. Today, the bank is cutting 4000 jobs in its nationwide home-loan operations. A total of 22,000 employees work in this area. It was only in August that Washington Mutual had announced a job cut of 1500 people. I have a feeling that many other mortgage lenders will be axing employees. It would not surprise me to see the cuts exceed 100,000 in coming months.
Yesterday was also not a very good day for the unemployment rolls. Merck, the second-biggest U.S. drugmaker, announced plans to cut about 4,400 jobs or 7% of the company’s workforce. In addition, GE, in its power systems division, plans to cut 1,000 jobs. This division has been having profitability problems. Surprisingly, nurses did not avoid the layoffs. Grays Harbor Community Hospital operates two hospitals in Aberdeen, Washington. The hospital’s skilled nursing facility has been losing more than $100,000 per month. As such, 60-day layoff notices were given to 80 on staff, and most of the affected employees are nurses.
Chinese President Hu Jintao said keeping the yuan exchange rate stable “serves China’s economic performance and conforms to the requirements of economic development in the Asia-Pacific region and the whole world.”
Donald Rumsfeld: “It is pretty clear that the coalition can win in Afghanistan and Iraq in one way or another, but it will be a long, hard, slog.”
Lt.Gen. Ricardo Sanchez said the average of 20 to 25 attacks daily in Iraq had increased over the last three weeks “to a peak of 35 attacks a day.” After the Gulf War, Dick Cheney, then the U.S. Defense Secretary, said “once you’ve got Baghdad, it is not clear what you would do with it. It’s not clear what kind of government you would put in. How much credibility is that government going to have if it’s set up by the U.S. military?” A year later, General Colin Powell, the Chairman of the Joint Chiefs of Staff, said occupying Baghdad would have come at an “unpardonable expense in terms of money, lives lost, and ruined regional relationships.”
Yesterday the British pound rose to its highest level in almost five years versus the U.S. dollar. Currently, the Bank of England’s key rate is at a 48-year low of 3.5%. However, four of the nine Monetary Policy Committee members voted to raise rates while the majority voted to maintain the current level. It appears that their rates might increase in a few months.
Michael Belkin: “The contrast between bullish equity-market psychology and deteriorating private-sector credit conditions is bizarre. The point of a bear-market rally is to make everyone bullish again just before the market does its next swan dive.”
Robert Prechter: “After this bear market is finally over, almost no one will remember the Pollyanna psychology that existed in the summer of 2000, the spring of 2002, or the fall of 2003. The S&P and the Nasdaq will look like one big slide with a few rallies along the way, and historians will probably not even imagine that investors could have been stark raving bullish during any one of them.”
By now, everyone is asking where is the good news. It’s on the way. It’s pumpkin time. We are going to use the technique I explained from two days ago in our sausage and spinach dish. Today we will use only one pound of the sweet Italian sausage without the fennel. We will brown on both sides simmering in the water and pricking the sausage after it has been turned. Now it’s cooked. Please set it aside. In a separate, large non-stick skillet that has been heated on medium high, place one teaspoon of olive oil, 5 cloves of chopped garlic and 1 large sweet onion that has been diced. Saute for at least five minutes. Do not burn the garlic. The onions need to be tender. Add a cup of dry white wine. It should be a wine you would drink and not garbage that’s been sitting open for one year. After about four minutes the wine should have been reduced by about one-half. Add to the pan one cup of drained canned pumpkin and one cup of chicken stock and a pinch of red pepper flakes. Stir. When the sauce begins to bubble, turn the heat to low and add ½ cup of heavy whipping cream (do you want it to taste good or not?) and ¼ teaspoon of cinnamon (it shouldn’t be from a can that has been open for 10 years) and ½ teaspoon of fresh ground nutmeg (if not fresh, don’t shoot yourself) and two pinches of sea salt and three full round grinds of pepper. Return the sausage (now cut into bite size chunks)to the skillet. While the sauce is simmering for ten minutes, we will cook a pound of penne. If it’s fresh penne, it will cook in about three minutes. If it’s in a box, the directions will be provided. The idea is to cook the penne al dente. Before draining the pasta, take a a large spoonful of the pasta water and put it in the sauce and stir. Then drain the pasta, return the penne to the pasta pot, pour the sauce over the penne, stir and cook for one minute only at a low flame. Serve with grated pecorino cheese.
According to the Mortgage Bankers Association, the value of mortgages will fall from $3.3 trillion in 2003 to $1.6 trillion in 2004. Naturally, such a significant drop does not make headlines. Often, information gets released through other means. Washington Mutual is a highly successful lending institution; however, their mortgage area has created a profit drain in recent quarters. Today, the bank is cutting 4000 jobs in its nationwide home-loan operations. A total of 22,000 employees work in this area. It was only in August that Washington Mutual had announced a job cut of 1500 people. I have a feeling that many other mortgage lenders will be axing employees. It would not surprise me to see the cuts exceed 100,000 in coming months.
Yesterday was also not a very good day for the unemployment rolls. Merck, the second-biggest U.S. drugmaker, announced plans to cut about 4,400 jobs or 7% of the company’s workforce. In addition, GE, in its power systems division, plans to cut 1,000 jobs. This division has been having profitability problems. Surprisingly, nurses did not avoid the layoffs. Grays Harbor Community Hospital operates two hospitals in Aberdeen, Washington. The hospital’s skilled nursing facility has been losing more than $100,000 per month. As such, 60-day layoff notices were given to 80 on staff, and most of the affected employees are nurses.
Chinese President Hu Jintao said keeping the yuan exchange rate stable “serves China’s economic performance and conforms to the requirements of economic development in the Asia-Pacific region and the whole world.”
Donald Rumsfeld: “It is pretty clear that the coalition can win in Afghanistan and Iraq in one way or another, but it will be a long, hard, slog.”
Lt.Gen. Ricardo Sanchez said the average of 20 to 25 attacks daily in Iraq had increased over the last three weeks “to a peak of 35 attacks a day.” After the Gulf War, Dick Cheney, then the U.S. Defense Secretary, said “once you’ve got Baghdad, it is not clear what you would do with it. It’s not clear what kind of government you would put in. How much credibility is that government going to have if it’s set up by the U.S. military?” A year later, General Colin Powell, the Chairman of the Joint Chiefs of Staff, said occupying Baghdad would have come at an “unpardonable expense in terms of money, lives lost, and ruined regional relationships.”
Yesterday the British pound rose to its highest level in almost five years versus the U.S. dollar. Currently, the Bank of England’s key rate is at a 48-year low of 3.5%. However, four of the nine Monetary Policy Committee members voted to raise rates while the majority voted to maintain the current level. It appears that their rates might increase in a few months.
Michael Belkin: “The contrast between bullish equity-market psychology and deteriorating private-sector credit conditions is bizarre. The point of a bear-market rally is to make everyone bullish again just before the market does its next swan dive.”
Robert Prechter: “After this bear market is finally over, almost no one will remember the Pollyanna psychology that existed in the summer of 2000, the spring of 2002, or the fall of 2003. The S&P and the Nasdaq will look like one big slide with a few rallies along the way, and historians will probably not even imagine that investors could have been stark raving bullish during any one of them.”
By now, everyone is asking where is the good news. It’s on the way. It’s pumpkin time. We are going to use the technique I explained from two days ago in our sausage and spinach dish. Today we will use only one pound of the sweet Italian sausage without the fennel. We will brown on both sides simmering in the water and pricking the sausage after it has been turned. Now it’s cooked. Please set it aside. In a separate, large non-stick skillet that has been heated on medium high, place one teaspoon of olive oil, 5 cloves of chopped garlic and 1 large sweet onion that has been diced. Saute for at least five minutes. Do not burn the garlic. The onions need to be tender. Add a cup of dry white wine. It should be a wine you would drink and not garbage that’s been sitting open for one year. After about four minutes the wine should have been reduced by about one-half. Add to the pan one cup of drained canned pumpkin and one cup of chicken stock and a pinch of red pepper flakes. Stir. When the sauce begins to bubble, turn the heat to low and add ½ cup of heavy whipping cream (do you want it to taste good or not?) and ¼ teaspoon of cinnamon (it shouldn’t be from a can that has been open for 10 years) and ½ teaspoon of fresh ground nutmeg (if not fresh, don’t shoot yourself) and two pinches of sea salt and three full round grinds of pepper. Return the sausage (now cut into bite size chunks)to the skillet. While the sauce is simmering for ten minutes, we will cook a pound of penne. If it’s fresh penne, it will cook in about three minutes. If it’s in a box, the directions will be provided. The idea is to cook the penne al dente. Before draining the pasta, take a a large spoonful of the pasta water and put it in the sauce and stir. Then drain the pasta, return the penne to the pasta pot, pour the sauce over the penne, stir and cook for one minute only at a low flame. Serve with grated pecorino cheese.
Wednesday, October 22, 2003
10/22/03 Louise K. Hanson
Mrs. Hanson, 90, died Sunday night. She and her late husband, John. K. Hanson, lived most of their lives in Forest City, Iowa, the home of Winnebago Industries, the company they founded in 1958. The Hanson estate retains ownership of 23% of the company’s outstanding shares, and that is after the buyback of 1.45 million shares held by the estate at a price of $44.12, a discount of 15% from Friday’s closing price of $51.91. Yesterday, Winnebago shares closed at an all-time high of $56.23. The repurchase reduced the outstanding shares by 8%. This is one of the more favorable buyback of shares I have ever seen.
John Hussman is the manager of the Hussman Strategic Growth Fund and the Hussman Total Retrun Fund. When measured by the Sharpe ratio, a ratio that gauges return according to the risk taken to achieve the return, his strategic growth fund ranks No. 1 in three-year performance out of more than 5,500 diversified domestic funds. About 50% of his strategic growth fund is hedged in case the market declines. He said “stocks are not cheap here and therefore are likely to deliver below-average long-term returns. When stocks have been as richly valued as they are now, there’s always been some period between four and 17 years later when stocks have reached a durably low valuation. During that time, the returns have been dismal.” He says that, despite the market fall since 2000, the market stands at about 20 times peak earnings.
In the November issue of Business 2.0, there is an article entitled “Why This Tech Bubble Is About To Blow.” These are the words expressed: crazy valuations are back with the Nasdaq 100 trading at 97 times expected 2003 earnings; momentum investing is back; day-traders are back; and buying on margin is back. “You hear a lot of managers saying, ‘Yeah, I know the market is crazy, but I have to buy it,’” says Cliff Asness, who runs $6.5 billion AQR Capital. Asness remarked “we’re in this world where mutual funds compete against benchmarks and hedge funds compete against anything that’s going up.” Talking about the most recent bear market and what has been learned, Asness stated “but if all we learned is to be quicker on the trigger, then we are all in very big trouble.”
According to a report released yesterday by the Commonwealth Fund, workers at large companies made up 25% of the uninsured workforce in 1987. Today, they account for 32% of all uninsured workers.
On Jan. 5, 2004 GM plans to eliminate one of four shifts at their Lansing plant, a move which could affect up to 1,400 hourly UAW workers and 150 salaried employees. The Alero and the Oldsmobile lines will be discontinued in 2004.
Since 2000, California’s worker’s compensation insurance rates have risen 89%. They are expected to rise by 12% in 2004.
Number portability will finally arrive on Nov. 24. Please mark your calendar. After 13 years, the FCC will require carriers to let customers keep their mobile-phone numbers even if they switch service providers. I feel confident that many will be changing providers. Too many have expressed dissatisfaction over the years, but did not want to lose their original number.
Yesterday Intel CEO Craig Barrett spoke before a Gartner tech conference. He ruled out any further expansion in the state of California. He mentioned that 70% of Intel’s markets are outside the United States and that “our investments are following our customers.” He further stated that India, China, and Russia together account for more highly educated knowledge workers than in the entire United States.
In 2002, the Investment Company Institute reported that a net $140.4 billion flowed into bond funds, more than half again as much as in any of the previous 12 years. Meanwhile, almost $28 billion flowed out of stock funds during this time. Two years earlier stock funds experienced record inflows of over $309 billion. Over the past six months, money has once again been flowing into stock funds. It’s unfortunate the inflow didn’t occur one year ago in October. Stock prices were much more favorable on a risk/reward basis at that time. Then again, what do I know from momentum buying? Absolutely nothing.
Mrs. Hanson, 90, died Sunday night. She and her late husband, John. K. Hanson, lived most of their lives in Forest City, Iowa, the home of Winnebago Industries, the company they founded in 1958. The Hanson estate retains ownership of 23% of the company’s outstanding shares, and that is after the buyback of 1.45 million shares held by the estate at a price of $44.12, a discount of 15% from Friday’s closing price of $51.91. Yesterday, Winnebago shares closed at an all-time high of $56.23. The repurchase reduced the outstanding shares by 8%. This is one of the more favorable buyback of shares I have ever seen.
John Hussman is the manager of the Hussman Strategic Growth Fund and the Hussman Total Retrun Fund. When measured by the Sharpe ratio, a ratio that gauges return according to the risk taken to achieve the return, his strategic growth fund ranks No. 1 in three-year performance out of more than 5,500 diversified domestic funds. About 50% of his strategic growth fund is hedged in case the market declines. He said “stocks are not cheap here and therefore are likely to deliver below-average long-term returns. When stocks have been as richly valued as they are now, there’s always been some period between four and 17 years later when stocks have reached a durably low valuation. During that time, the returns have been dismal.” He says that, despite the market fall since 2000, the market stands at about 20 times peak earnings.
In the November issue of Business 2.0, there is an article entitled “Why This Tech Bubble Is About To Blow.” These are the words expressed: crazy valuations are back with the Nasdaq 100 trading at 97 times expected 2003 earnings; momentum investing is back; day-traders are back; and buying on margin is back. “You hear a lot of managers saying, ‘Yeah, I know the market is crazy, but I have to buy it,’” says Cliff Asness, who runs $6.5 billion AQR Capital. Asness remarked “we’re in this world where mutual funds compete against benchmarks and hedge funds compete against anything that’s going up.” Talking about the most recent bear market and what has been learned, Asness stated “but if all we learned is to be quicker on the trigger, then we are all in very big trouble.”
According to a report released yesterday by the Commonwealth Fund, workers at large companies made up 25% of the uninsured workforce in 1987. Today, they account for 32% of all uninsured workers.
On Jan. 5, 2004 GM plans to eliminate one of four shifts at their Lansing plant, a move which could affect up to 1,400 hourly UAW workers and 150 salaried employees. The Alero and the Oldsmobile lines will be discontinued in 2004.
Since 2000, California’s worker’s compensation insurance rates have risen 89%. They are expected to rise by 12% in 2004.
Number portability will finally arrive on Nov. 24. Please mark your calendar. After 13 years, the FCC will require carriers to let customers keep their mobile-phone numbers even if they switch service providers. I feel confident that many will be changing providers. Too many have expressed dissatisfaction over the years, but did not want to lose their original number.
Yesterday Intel CEO Craig Barrett spoke before a Gartner tech conference. He ruled out any further expansion in the state of California. He mentioned that 70% of Intel’s markets are outside the United States and that “our investments are following our customers.” He further stated that India, China, and Russia together account for more highly educated knowledge workers than in the entire United States.
In 2002, the Investment Company Institute reported that a net $140.4 billion flowed into bond funds, more than half again as much as in any of the previous 12 years. Meanwhile, almost $28 billion flowed out of stock funds during this time. Two years earlier stock funds experienced record inflows of over $309 billion. Over the past six months, money has once again been flowing into stock funds. It’s unfortunate the inflow didn’t occur one year ago in October. Stock prices were much more favorable on a risk/reward basis at that time. Then again, what do I know from momentum buying? Absolutely nothing.
Tuesday, October 21, 2003
10/21/03 That Dirty Dog
Barbara Bush granted her first solo interview since her son was elected president. This, to me, is more important than any poll. It reveals that the president’s mother senses re-election troubles for her son, and that the negative sentiment is becoming too loud a noise. She wanted to do something about this, and expressed her opinions Monday on NBC’s “Today” show. There was something important to learn, and it wasn’t her telling her son after a run to get his feet off their table in the bedroom. Barbara Bush said the current president frequently declined to do what she said, and remarked “He still doesn’t take my advice, that dirty dog.” She had stated emphatically in advice to her son not to invade Iraq without a strong coalition and commitments from many other countries. He didn’t that his mother’s advice. According to a Pentagon statement, one U.S. soldier was killed and six others were wounded after being ambushed by small-arms fire and a homemade bomb near Fallujah in central Iraq. The soldier’s death brings to 104 the number of U.S. military members killed in action since Bush declared the major combat of the war over on May 1.
Yesterday Towers Perrin reported that the average pension plan in the U.S. was 77.5% underfunded at the end of 2002 versus 120% overfunded at the end of 1999. Corporate executives are increasingly concerned about pension-plan investment returns. Pension plan contributions as a percentage of cash flows more than doubled in 2002 to 7.3%. Such contributions are one more reason for the lack of pick-up in capital expenditures. Towers Perrin said companies increasingly are allowing pension liabilities to build, hoping that a market recovery will boost portfolio returns. Since March 11, 2003, that has been working. However, Towers Perrin observed “at these levels pension expense and contributions represent a looming cloud over many companies’ future financial results, potentially limiting their ability to invest in the business for future growth.”
Navajo Proverb: “You can’t wake a person who is pretending to be asleep.”
Richmond Federal Reserve President Alfred Broaddus said yesterday that many of the U.S. jobs cut in recent years are gone permanently because of economic changes. He described current conditions as a “job-challenged recovery.” He mentioned that some of the recent economic improvements could be the result of the tax cuts, and he said, “there’s some question, I think, in how long that stimulus is going to be there.” I think he doesn’t have to wait until November comes around. For the first time in six months, September’s index of leading U.S. economic indicators declined. The 0.2% fall was larger than what had been anticipated by economists. That’s not surprising. What might prove important was the index of lagging indicators, which includes the duration of unemployment and the ratio of installment credit to consumer income. That index fell 0.5% in September after having no change in August. That change was abrupt and sharp. One more item in the report went mostly unnoticed. Delivery times shortened in the month of September. This suggests that vendors had an easier time keeping up with orders. Since the inventory to sales ratio is at a record low, I find this very interesting.
Residential Services, Inc., a private, non-profit organization providing residential options for individuals with developmental disabilities, opens the first continuing care retirement community for senior citizens on October 25 in Durham, North Carolina. It is the first such facility in the country devoted to seniors with developmental disabilities and the unique needs of an aging population.
The weather will soon be turning wintery, and that means more time inside. Since I’m not doing cartwheels about any stock in particular, let’s try something a bit different. Cooking and investing have some similarities. In order to have pleasing results it’s necessary to start with good ingredients. They don’t have to be the most expensive. You don’t need to buy a $100 stock to make money, and you don’t need to buy a $100 bottle of balsamic vinegar. You need to shop carefully, and be patient for the price level to represent good value, and for the ingredient in question to get the job done without spoiling the broth, so to speak. Let’s start off with a dish that is guaranteed to make you look good in the kitchen. Just follow along. It’s easy. Please pay attention to the details. You cannot cut corners. We are going to visit Sicily. I figure most of you haven’t been there. This is a simple Sicilian dish. It’s pan-fried sausage with fresh spinach and garlic. The Italian sausage will be sweet; it must have at least 20% fat or the sausage will get hard. The casing must be thin. It should come in a coil with the sausages connected. Do not disconnect the sausages. We will be cooking the sausage the Sicilian way- fritta in l’acqua. It requires lengthier cooking, but wou end up with a plumper sausage and it has a crustier skin. Buy 2 pounds of sweet sausage without fennel. Here we go. In a large and deep frying pan, place the coil of sausages in one-third inch of water. Do not prick the sausages. Bring the water to a boil, and then reduce the heat to low, and cover the pan. The water will simmer for about 15-20 minutes until the water has evaporated. Then prick the sausages with a fork. This will release the fat from the sausages. Continue to cook over the same low heat in the covered pan until the sausage bottoms are brown and crusty. Then turn the sausages and prick them again and cook over the low flame in the covered pan for another ten minutes or so. Stir in one cup of water and this is important. Scrape the browned bits in the pan and mix with the water. Add 8 large cloves of garlic which have been cut into large dices. Sprinkle evenly over the sausages. After 1 ½ pounds of fresh spinach has been carefully washed and rinsed and the moisture drained (this is done prior to the start of the dish), spread the spinach evenly over the sausages. Sprinkle with salt and red pepper flakes. Cover and simmer until the spinach has wilted-about 15 to 20 minutes Transfer and disconnect the sausages to a platter and surround with the spinach and spoon the juices over the top. Please note the salt is not optional but the red pepper flakes are.
Barbara Bush granted her first solo interview since her son was elected president. This, to me, is more important than any poll. It reveals that the president’s mother senses re-election troubles for her son, and that the negative sentiment is becoming too loud a noise. She wanted to do something about this, and expressed her opinions Monday on NBC’s “Today” show. There was something important to learn, and it wasn’t her telling her son after a run to get his feet off their table in the bedroom. Barbara Bush said the current president frequently declined to do what she said, and remarked “He still doesn’t take my advice, that dirty dog.” She had stated emphatically in advice to her son not to invade Iraq without a strong coalition and commitments from many other countries. He didn’t that his mother’s advice. According to a Pentagon statement, one U.S. soldier was killed and six others were wounded after being ambushed by small-arms fire and a homemade bomb near Fallujah in central Iraq. The soldier’s death brings to 104 the number of U.S. military members killed in action since Bush declared the major combat of the war over on May 1.
Yesterday Towers Perrin reported that the average pension plan in the U.S. was 77.5% underfunded at the end of 2002 versus 120% overfunded at the end of 1999. Corporate executives are increasingly concerned about pension-plan investment returns. Pension plan contributions as a percentage of cash flows more than doubled in 2002 to 7.3%. Such contributions are one more reason for the lack of pick-up in capital expenditures. Towers Perrin said companies increasingly are allowing pension liabilities to build, hoping that a market recovery will boost portfolio returns. Since March 11, 2003, that has been working. However, Towers Perrin observed “at these levels pension expense and contributions represent a looming cloud over many companies’ future financial results, potentially limiting their ability to invest in the business for future growth.”
Navajo Proverb: “You can’t wake a person who is pretending to be asleep.”
Richmond Federal Reserve President Alfred Broaddus said yesterday that many of the U.S. jobs cut in recent years are gone permanently because of economic changes. He described current conditions as a “job-challenged recovery.” He mentioned that some of the recent economic improvements could be the result of the tax cuts, and he said, “there’s some question, I think, in how long that stimulus is going to be there.” I think he doesn’t have to wait until November comes around. For the first time in six months, September’s index of leading U.S. economic indicators declined. The 0.2% fall was larger than what had been anticipated by economists. That’s not surprising. What might prove important was the index of lagging indicators, which includes the duration of unemployment and the ratio of installment credit to consumer income. That index fell 0.5% in September after having no change in August. That change was abrupt and sharp. One more item in the report went mostly unnoticed. Delivery times shortened in the month of September. This suggests that vendors had an easier time keeping up with orders. Since the inventory to sales ratio is at a record low, I find this very interesting.
Residential Services, Inc., a private, non-profit organization providing residential options for individuals with developmental disabilities, opens the first continuing care retirement community for senior citizens on October 25 in Durham, North Carolina. It is the first such facility in the country devoted to seniors with developmental disabilities and the unique needs of an aging population.
The weather will soon be turning wintery, and that means more time inside. Since I’m not doing cartwheels about any stock in particular, let’s try something a bit different. Cooking and investing have some similarities. In order to have pleasing results it’s necessary to start with good ingredients. They don’t have to be the most expensive. You don’t need to buy a $100 stock to make money, and you don’t need to buy a $100 bottle of balsamic vinegar. You need to shop carefully, and be patient for the price level to represent good value, and for the ingredient in question to get the job done without spoiling the broth, so to speak. Let’s start off with a dish that is guaranteed to make you look good in the kitchen. Just follow along. It’s easy. Please pay attention to the details. You cannot cut corners. We are going to visit Sicily. I figure most of you haven’t been there. This is a simple Sicilian dish. It’s pan-fried sausage with fresh spinach and garlic. The Italian sausage will be sweet; it must have at least 20% fat or the sausage will get hard. The casing must be thin. It should come in a coil with the sausages connected. Do not disconnect the sausages. We will be cooking the sausage the Sicilian way- fritta in l’acqua. It requires lengthier cooking, but wou end up with a plumper sausage and it has a crustier skin. Buy 2 pounds of sweet sausage without fennel. Here we go. In a large and deep frying pan, place the coil of sausages in one-third inch of water. Do not prick the sausages. Bring the water to a boil, and then reduce the heat to low, and cover the pan. The water will simmer for about 15-20 minutes until the water has evaporated. Then prick the sausages with a fork. This will release the fat from the sausages. Continue to cook over the same low heat in the covered pan until the sausage bottoms are brown and crusty. Then turn the sausages and prick them again and cook over the low flame in the covered pan for another ten minutes or so. Stir in one cup of water and this is important. Scrape the browned bits in the pan and mix with the water. Add 8 large cloves of garlic which have been cut into large dices. Sprinkle evenly over the sausages. After 1 ½ pounds of fresh spinach has been carefully washed and rinsed and the moisture drained (this is done prior to the start of the dish), spread the spinach evenly over the sausages. Sprinkle with salt and red pepper flakes. Cover and simmer until the spinach has wilted-about 15 to 20 minutes Transfer and disconnect the sausages to a platter and surround with the spinach and spoon the juices over the top. Please note the salt is not optional but the red pepper flakes are.
Monday, October 20, 2003
10/20/03 MicroCHIPS, Inc.
The garage of the Silicon Valley fifty years ago, forty years ago, or possibly even a decade ago is today’s world-wide laboratory. It is the landscape for medical discoveries. The discovery, manufacture, and delivery of pharmaceuticals is changing rapidly. Costs to consumers will be reduced. Revolutionary technology shall be delivered. Let’s take a tour of one of those cutting-edge laboratories.
Have you heard of Dr. John T. Santini, Jr.? He is not make deliveries through Santini Brothers Movers. There is such a company. Bedford, Massachusetts is not exactly known for medical breakthroughs. You will find Dr. Santini there. He is the founder, president, and chief scientific officer of MicroCHIPS. If you think they compete with Intel’s Centrino chip, you would be mistaken. It might prove fruitful for you to remember Dr. Santini and his company. MicroCHIPS has six U.S. patents, 20 pending U.S. applications, and numerous international applications covering their controlled release microchip. This isn’t just any microchip found in a laboratory. This is the real deal. It’s unique, and will, in my view, transform the delivery system of medication. The microfabricated chips contain hundreds of micro-reservoirs. Each reservoir can store and release multiple drugs from a single device. The micro-reservoirs are opened on demand in response to a preprogrammed clock, biosensor feedback, or a wireless signal from a physician or patient. The drug delivery is safe, optimizes drug formulations, and ensures the patient receives the medication in accordance with prescribed drug regimens. The chip is comprised of polymers that are completely absorbed by the body and cleared out of the body. As the polymer cap degrades, an exact amount of drug is released. The release time for each reservoir can be adjusted by changing the composition or thickness of each cap so it deteriorates at a certain rate, releasing drugs at different times without the need for an outside power source to stimulate release. This implantable, degradable delivery system should find many applications. Nature Materials, a scientific journal, will have an article on MicroCHIPS and this new technology for delivering pharmaceutical compounds.
A new study is being released today on women in the workforce in the state of Michigan. It is an eye-opener. Women make up 47% of the Michigan workforce and hold one-third of the managerial and professional positions. Men have 93% of the best-paid executive jobs and more than 90% of the directors’ seats on corporate boards. Seventy five percent of the 100 Michigan index companies have no women among their five highest-paid employees. Thirty three per cent have no women at all among either the top officer group or the board of directors.
Projections indicate that employer-sponsored health plans will cost an average 44% more per employee in 2004 than they did three years in the sate of Washington. This problem is not unique to Washington state. How is this problem solved? Do the businesses absorb the increases? That’s not possible with little or no pricing power for businesses today. Do you pass the increased costs onto the employees? That’s not possible because salary increases on average approximate 3%. Does the business stop subsidizing some coverage entirely? That might create work stoppages. The problem can be resolved but it will require give and take on the part of employers, employees, insurance companies, pharmaceutical companies, doctors, hospitals, and other health providers. There is only one pie. Everyone has to eat from that pie. Pigs will not fare well at the table. They don’t do well on Wall Street either.
The garage of the Silicon Valley fifty years ago, forty years ago, or possibly even a decade ago is today’s world-wide laboratory. It is the landscape for medical discoveries. The discovery, manufacture, and delivery of pharmaceuticals is changing rapidly. Costs to consumers will be reduced. Revolutionary technology shall be delivered. Let’s take a tour of one of those cutting-edge laboratories.
Have you heard of Dr. John T. Santini, Jr.? He is not make deliveries through Santini Brothers Movers. There is such a company. Bedford, Massachusetts is not exactly known for medical breakthroughs. You will find Dr. Santini there. He is the founder, president, and chief scientific officer of MicroCHIPS. If you think they compete with Intel’s Centrino chip, you would be mistaken. It might prove fruitful for you to remember Dr. Santini and his company. MicroCHIPS has six U.S. patents, 20 pending U.S. applications, and numerous international applications covering their controlled release microchip. This isn’t just any microchip found in a laboratory. This is the real deal. It’s unique, and will, in my view, transform the delivery system of medication. The microfabricated chips contain hundreds of micro-reservoirs. Each reservoir can store and release multiple drugs from a single device. The micro-reservoirs are opened on demand in response to a preprogrammed clock, biosensor feedback, or a wireless signal from a physician or patient. The drug delivery is safe, optimizes drug formulations, and ensures the patient receives the medication in accordance with prescribed drug regimens. The chip is comprised of polymers that are completely absorbed by the body and cleared out of the body. As the polymer cap degrades, an exact amount of drug is released. The release time for each reservoir can be adjusted by changing the composition or thickness of each cap so it deteriorates at a certain rate, releasing drugs at different times without the need for an outside power source to stimulate release. This implantable, degradable delivery system should find many applications. Nature Materials, a scientific journal, will have an article on MicroCHIPS and this new technology for delivering pharmaceutical compounds.
A new study is being released today on women in the workforce in the state of Michigan. It is an eye-opener. Women make up 47% of the Michigan workforce and hold one-third of the managerial and professional positions. Men have 93% of the best-paid executive jobs and more than 90% of the directors’ seats on corporate boards. Seventy five percent of the 100 Michigan index companies have no women among their five highest-paid employees. Thirty three per cent have no women at all among either the top officer group or the board of directors.
Projections indicate that employer-sponsored health plans will cost an average 44% more per employee in 2004 than they did three years in the sate of Washington. This problem is not unique to Washington state. How is this problem solved? Do the businesses absorb the increases? That’s not possible with little or no pricing power for businesses today. Do you pass the increased costs onto the employees? That’s not possible because salary increases on average approximate 3%. Does the business stop subsidizing some coverage entirely? That might create work stoppages. The problem can be resolved but it will require give and take on the part of employers, employees, insurance companies, pharmaceutical companies, doctors, hospitals, and other health providers. There is only one pie. Everyone has to eat from that pie. Pigs will not fare well at the table. They don’t do well on Wall Street either.
Sunday, October 19, 2003
10/19/03 Tale Of Two Countries
President Bush stated in his Saturday radio address that “today all 22 universities and 43 technical institutes and colleges are open, as are nearly all primary and secondary schools in the country. Earlier this year we said we would rehabilitate 1,000 schools by the time school started. This month, just days before the first day of class, our coalition and our Iraqi partners have refurbished over 1,500 schools.” This effort has been accomplished on the bodies of hundreds of dead, wounded, and injured soldiers and on the backs of the American taxpayers. Meanwhile, in the U.S., there are 1.7 million Americans invested in prepaid tuition plans that are designed to protect families against spiraling expenses at public colleges. Colorado, Ohio, West Virginia, Kentucky, and Texas have cut off enrollment in this plan. Ohio announced last week it was suspending its program for one year because the state was losing money. Prepaid tuition plans are important for many families. They enable those families to purchase tuition credits, based on current rates, in lump sums or monthly payments. The problem is tuition is rising faster than earnings from the states’ long-term investments covering the tuition plan. Charles Bockway, a spokesman for the West Virginia Prepaid Tuition Plan, stated “typically, when you have had periods of high tuition growth you had periods of high inflation. And during high inflation times you can earn a lot in bonds and the stock market is doing well. Our research shows this has never happened before.” Dallas Martin is the president of the National Association of Student Financial Aid Administrators, and said suspended tuition plans were another signal that the burden of financing colleges is being shifted to families. Martin remarked "it leaves people in a situation where they have to find another mechanism" to pay for college. In sum, Americans pay, in after tax dollars, for Iraq’s education system, and, at the same time, are faced with rising college tuition costs that suspend and/or cancel prepaid tuition plans at the state level. Maybe in next Saturday’s radio address Bush should explain this situation. I’m certain he would state it’s the price of fighting terror. That’s his answer for everything.
Since Bush is reluctant to visit Main Street, let’s take a little Sunday drive across the Bay Bridge to the East Bay in the Bay Area of San Francisco. From 1999 to 2003, the average wages in the East Bay rose almost 4% and costs rose double that rate. State figures show that 300,000 of the 1 million wage earners in the East Bay make less than $15 per hour. They are janitors, retail clerks, food servers, office workers, etc. They live on Main Street where the average rent for a one-bedroom apartment is about $1,050 per month. After taxes, from 52 to 72% of their after-tax monthly income goes to rent or house payments. The results show that an adult raising an infant and a school-age child in the East Bay must earn at least $42,000 a year to meet a basic budget. Over 20% of the Bay Area households don’t earn enough to cover their basic needs, and must depend on food pantries, family assistance, and other subsidies. Maybe in another radio address Bush can discuss the problems of the under-employed that play by the rules but can’t make ends meet.
Rep. Ron Paul of Texas, Republican: “If there is one thing the history of our intervention teaches, it is the best way for a foreign country to become a financial dependent of the United States is to first be attacked by the United States…Conservatives often proclaim that they are opposed to providing American welfare to the rest of the world. I agree. The only way to do that, however, is to stop supporting a policy of military interventionism. You cannot have one without the other…we are heading full-speed toward bankruptcy, yet we continue to spend like there is no tomorrow. There will be a tomorrow, however. The money we are spending today is real. The bill will be paid, whether through raising taxes or printing more money. Either way, the American people will become poorer in pursuit of a policy that cannot and will not work. We cannot re-make the world in our own image.” In my view, Rep. Paul consistently speaks common sense. He is an excellent representative for his district in Texas. Hopefully, some day, his representation will span the nation.
Saturday night two more American soldiers were killed and one was wounded in a guerrilla ambush. It occurred 160 miles north of Baghdad. There was another attack 35 miles west of Baghdad but casualty reports have not been released.
I find it interesting that the inflation numbers are muted. Yet, prices for aluminum, cattle, cotton, and zinc have reached record highs. Looking over history, one could reach the conclusion that this is the first time such a divergence has taken place.
Often, I read comments by others that it is too late to buy, too early to short, the market is ahead of itself, etc. There are observations for every hour of trading. I can’t say what’s right for you. It’s your money. For me, I sell to the sleeping point and back up the truck buying when I see silver dollars going for 50 cent pieces. Unfortunately, the latter does not happen often enough. A good deal of the time is spent sitting on one’s hands. If you cannot sit on your hands, you should not be an investor or a trader. The idea is have fun and make money. If you force it, you’ll lose.
The deficit virus appears to be making the rounds. In England receipts are growing less quickly than forecast while spending is picking up. I now understand why Bush and Blair get along so well. It was predicted in April that England would need to borrow 27 billion pounds. That number has been increased to 36 billion pounds ($61 billion).
President Bush stated in his Saturday radio address that “today all 22 universities and 43 technical institutes and colleges are open, as are nearly all primary and secondary schools in the country. Earlier this year we said we would rehabilitate 1,000 schools by the time school started. This month, just days before the first day of class, our coalition and our Iraqi partners have refurbished over 1,500 schools.” This effort has been accomplished on the bodies of hundreds of dead, wounded, and injured soldiers and on the backs of the American taxpayers. Meanwhile, in the U.S., there are 1.7 million Americans invested in prepaid tuition plans that are designed to protect families against spiraling expenses at public colleges. Colorado, Ohio, West Virginia, Kentucky, and Texas have cut off enrollment in this plan. Ohio announced last week it was suspending its program for one year because the state was losing money. Prepaid tuition plans are important for many families. They enable those families to purchase tuition credits, based on current rates, in lump sums or monthly payments. The problem is tuition is rising faster than earnings from the states’ long-term investments covering the tuition plan. Charles Bockway, a spokesman for the West Virginia Prepaid Tuition Plan, stated “typically, when you have had periods of high tuition growth you had periods of high inflation. And during high inflation times you can earn a lot in bonds and the stock market is doing well. Our research shows this has never happened before.” Dallas Martin is the president of the National Association of Student Financial Aid Administrators, and said suspended tuition plans were another signal that the burden of financing colleges is being shifted to families. Martin remarked "it leaves people in a situation where they have to find another mechanism" to pay for college. In sum, Americans pay, in after tax dollars, for Iraq’s education system, and, at the same time, are faced with rising college tuition costs that suspend and/or cancel prepaid tuition plans at the state level. Maybe in next Saturday’s radio address Bush should explain this situation. I’m certain he would state it’s the price of fighting terror. That’s his answer for everything.
Since Bush is reluctant to visit Main Street, let’s take a little Sunday drive across the Bay Bridge to the East Bay in the Bay Area of San Francisco. From 1999 to 2003, the average wages in the East Bay rose almost 4% and costs rose double that rate. State figures show that 300,000 of the 1 million wage earners in the East Bay make less than $15 per hour. They are janitors, retail clerks, food servers, office workers, etc. They live on Main Street where the average rent for a one-bedroom apartment is about $1,050 per month. After taxes, from 52 to 72% of their after-tax monthly income goes to rent or house payments. The results show that an adult raising an infant and a school-age child in the East Bay must earn at least $42,000 a year to meet a basic budget. Over 20% of the Bay Area households don’t earn enough to cover their basic needs, and must depend on food pantries, family assistance, and other subsidies. Maybe in another radio address Bush can discuss the problems of the under-employed that play by the rules but can’t make ends meet.
Rep. Ron Paul of Texas, Republican: “If there is one thing the history of our intervention teaches, it is the best way for a foreign country to become a financial dependent of the United States is to first be attacked by the United States…Conservatives often proclaim that they are opposed to providing American welfare to the rest of the world. I agree. The only way to do that, however, is to stop supporting a policy of military interventionism. You cannot have one without the other…we are heading full-speed toward bankruptcy, yet we continue to spend like there is no tomorrow. There will be a tomorrow, however. The money we are spending today is real. The bill will be paid, whether through raising taxes or printing more money. Either way, the American people will become poorer in pursuit of a policy that cannot and will not work. We cannot re-make the world in our own image.” In my view, Rep. Paul consistently speaks common sense. He is an excellent representative for his district in Texas. Hopefully, some day, his representation will span the nation.
Saturday night two more American soldiers were killed and one was wounded in a guerrilla ambush. It occurred 160 miles north of Baghdad. There was another attack 35 miles west of Baghdad but casualty reports have not been released.
I find it interesting that the inflation numbers are muted. Yet, prices for aluminum, cattle, cotton, and zinc have reached record highs. Looking over history, one could reach the conclusion that this is the first time such a divergence has taken place.
Often, I read comments by others that it is too late to buy, too early to short, the market is ahead of itself, etc. There are observations for every hour of trading. I can’t say what’s right for you. It’s your money. For me, I sell to the sleeping point and back up the truck buying when I see silver dollars going for 50 cent pieces. Unfortunately, the latter does not happen often enough. A good deal of the time is spent sitting on one’s hands. If you cannot sit on your hands, you should not be an investor or a trader. The idea is have fun and make money. If you force it, you’ll lose.
The deficit virus appears to be making the rounds. In England receipts are growing less quickly than forecast while spending is picking up. I now understand why Bush and Blair get along so well. It was predicted in April that England would need to borrow 27 billion pounds. That number has been increased to 36 billion pounds ($61 billion).
Saturday, October 18, 2003
10/18/03 Corporate Tax Receipts
A happy birthday to my son. He brings me daily joy.
Let’s take a moment to reflect on federal government tax revenues. Last week the CBO reported that corporate tax receipts in the fiscal year that ended on September 30 had fallen by 11% to $132 billion. Three years ago the corporate taxes were $207 billion. I understand business profits are a good deal lower today, but there are loopholes that need to be addressed. Let’s look at Nabors Industries, the nation’s largest operator of oil-well drilling rigs. They operate the company out of Houston. In 2001 they moved their legal address, their tax address to Bermuda where there isn’t any corporate tax. Presently, the U.S. corporate tax rate is 35%. In 2002 Nabors saved $10 million in taxes. I have no problem with that. I do have a problem with Nabors stating that their American subsidiary of 33 ships serving oil drilling platforms in the Gulf of Mexico qualifies it for business under the Jones Act, which since 1916 has required that ships engaged in purely domestic trade be built in American shipyards, owned by American companies, and operated by American crews. A 1996 law allows foreign financing of such ships. The company’s Bermuda parent is lending the money for these ships. By avoiding the payment of U.S. corporate taxes, Nabors is able to underbid competitors. If Congress does not do something about this inequity, competitors to Nabors will also move their tax address to Bermuda, and U.S. corporate tax revenues will drop further.
Several times I have written about the pending $4 billion in trade sanctions. The EU has given Congress until the end of this year to come into compliance. Yesterday the EU mentioned they might phase in those sanctions beginning in March 2004, and would begin with a 5% duty on a list of U.S. goods, and this would increase by 1% per month for a year. In the meantime, there is a Senate bill that would replace the export subsidy with a $60 billion tax cut for manufacturers, and this would lower the tax rate on earnings from domestic manufactured goods to 32% from 35%. There is an additional consideration that would shield corporate overseas income from immediate taxation. Another provision would encourage U.S. companies to return overseas profits to this country, and in return, the corporate income tax for one year would be lowered to 5.25%. The latter is absolutely nuts. There would be a rush to produce in China and hire in India, and then with the added profits from lower costs, bring the profits back to the U.S at the low tax rate. This would be accomplished at the expense of lost jobs in the U.S. and place greater tax expense and fees on the pockets of the American taxpayer. This is not capitalism and free enterprise. This is government -engineered socialism. The average American taxpayer now works almost 5 months out of the year for nothing. That working time goes towards the payment of federal, state, and local taxes and fees. Maybe the government wants your lungs and your cohones too.
On October 9 Bush spoke to National Guard and Reserve troops in Portsmouth, NH. He said those two groups had become part of the backbone of the military. He stated “Citizen-soldiers are serving in every front on the war on terror. And you’re making your sate and your country proud.” They may be the backbone but their medical treatment would not reflect it. One soldier who served in Operation Iraqi Freedom remarked “it is not an Army of One. It is the Army of Two- Army and Reserves. One month ago Bush greeted soldiers at Fort Stewart in Georgia. There are 600 sick or injured members of the Army Reservist and National Guard warehoused there. A document states there aren’t any more appointments available for these soldiers from October 14 through November 11, Veterans Day. We can authorize money for Iraq. Bush can promise U.S. help for the Philippines. But we can’t take care of our sick and wounded soldiers. Sgt. 1st Class Willie Buckles has served in the Army Reserves for 27 years, and that includes Operation Iraqi Freedom and the first Gulf War. He stated “now my whole idea about the U.S. Army has changed. I am treated like a third-class citizen.” A Commander-In-Chief should never let that take place.
Since Bush declared an end to major fighting on May 1, U.S. combat deaths exceeded 100 for the first time. Yesterday marked the 101st combat death since May 1.
House Minority Leader Nancy Pelosi of California announced she would oppose the Iraq loan amendment. She stated “American soldiers are taking virtually all the risks and the American taxpayers are paying virtually all the bills.”
Another senior White House staff member is leaving. On Monday, Jay Lefkowitz will rejoin Kirkland and Ellis as a litigation partner. He is senior policy advisor to President Bush and head of the White House’s Domestic Policy Council. Lefkowitz advised Bush on health, education, transportation and policy, labor and veterans’ affairs, environmental regulations, and international trade. In other words, he has been the consigliore. I guess he felt a 2 ½ year White House stint was enough.
Marathon Ashland Petroleum is a joint venture between Marathon Corp. and Ashland Inc. They are the nation’s sixth-largest oil refiner. On Friday they announced 165 cuts or about 2.5% of their workforce. Gary Heminger, the company’s president, said “MAP must continuously improve its competitive position and long-term profitabilty. We are maximizing every dollar spent to run our business and looking hard at all manageable business elements to determine the most efficient ways to increase MAP’s value.” Mr. Heminger’s words ring through most corporate hallways and boardrooms. Cost cutting is king. MAP is looking at ways to outsource IT, accounting, and HR. Hundreds of other companies are searching for similar outsourcing avenues. More U.S. jobs will be eliminated through outsourcing. This trend is picking up speed. It is not slowing.
There is other employment news. The U.S. Agriculture Department is setting up a new enforcement unit to ensure that biotech companies are properly managing field trials of genetically engineered crops. The unit has a staff of 33 and it will grow to 50, not including a director that needs to be named. What would a government unit be without a director? The USDA released enforcement records that cited 115 infractions between 1990 and 2001 on 7,402 field tests of various biotech crops. A total of 8 violations resulted in fines, ranging from $500 in 2 incidents to one incident of $250,000. Four incidents had fines totaling $43,200. In other words, there was a total of about $300,000 in fines over 11 years, and infractions came to about 1.5% over that period. I wish the government ran so efficiently. I wonder if the biotech industry can create a crop that will stop me from upchucking due to government enforcement
A happy birthday to my son. He brings me daily joy.
Let’s take a moment to reflect on federal government tax revenues. Last week the CBO reported that corporate tax receipts in the fiscal year that ended on September 30 had fallen by 11% to $132 billion. Three years ago the corporate taxes were $207 billion. I understand business profits are a good deal lower today, but there are loopholes that need to be addressed. Let’s look at Nabors Industries, the nation’s largest operator of oil-well drilling rigs. They operate the company out of Houston. In 2001 they moved their legal address, their tax address to Bermuda where there isn’t any corporate tax. Presently, the U.S. corporate tax rate is 35%. In 2002 Nabors saved $10 million in taxes. I have no problem with that. I do have a problem with Nabors stating that their American subsidiary of 33 ships serving oil drilling platforms in the Gulf of Mexico qualifies it for business under the Jones Act, which since 1916 has required that ships engaged in purely domestic trade be built in American shipyards, owned by American companies, and operated by American crews. A 1996 law allows foreign financing of such ships. The company’s Bermuda parent is lending the money for these ships. By avoiding the payment of U.S. corporate taxes, Nabors is able to underbid competitors. If Congress does not do something about this inequity, competitors to Nabors will also move their tax address to Bermuda, and U.S. corporate tax revenues will drop further.
Several times I have written about the pending $4 billion in trade sanctions. The EU has given Congress until the end of this year to come into compliance. Yesterday the EU mentioned they might phase in those sanctions beginning in March 2004, and would begin with a 5% duty on a list of U.S. goods, and this would increase by 1% per month for a year. In the meantime, there is a Senate bill that would replace the export subsidy with a $60 billion tax cut for manufacturers, and this would lower the tax rate on earnings from domestic manufactured goods to 32% from 35%. There is an additional consideration that would shield corporate overseas income from immediate taxation. Another provision would encourage U.S. companies to return overseas profits to this country, and in return, the corporate income tax for one year would be lowered to 5.25%. The latter is absolutely nuts. There would be a rush to produce in China and hire in India, and then with the added profits from lower costs, bring the profits back to the U.S at the low tax rate. This would be accomplished at the expense of lost jobs in the U.S. and place greater tax expense and fees on the pockets of the American taxpayer. This is not capitalism and free enterprise. This is government -engineered socialism. The average American taxpayer now works almost 5 months out of the year for nothing. That working time goes towards the payment of federal, state, and local taxes and fees. Maybe the government wants your lungs and your cohones too.
On October 9 Bush spoke to National Guard and Reserve troops in Portsmouth, NH. He said those two groups had become part of the backbone of the military. He stated “Citizen-soldiers are serving in every front on the war on terror. And you’re making your sate and your country proud.” They may be the backbone but their medical treatment would not reflect it. One soldier who served in Operation Iraqi Freedom remarked “it is not an Army of One. It is the Army of Two- Army and Reserves. One month ago Bush greeted soldiers at Fort Stewart in Georgia. There are 600 sick or injured members of the Army Reservist and National Guard warehoused there. A document states there aren’t any more appointments available for these soldiers from October 14 through November 11, Veterans Day. We can authorize money for Iraq. Bush can promise U.S. help for the Philippines. But we can’t take care of our sick and wounded soldiers. Sgt. 1st Class Willie Buckles has served in the Army Reserves for 27 years, and that includes Operation Iraqi Freedom and the first Gulf War. He stated “now my whole idea about the U.S. Army has changed. I am treated like a third-class citizen.” A Commander-In-Chief should never let that take place.
Since Bush declared an end to major fighting on May 1, U.S. combat deaths exceeded 100 for the first time. Yesterday marked the 101st combat death since May 1.
House Minority Leader Nancy Pelosi of California announced she would oppose the Iraq loan amendment. She stated “American soldiers are taking virtually all the risks and the American taxpayers are paying virtually all the bills.”
Another senior White House staff member is leaving. On Monday, Jay Lefkowitz will rejoin Kirkland and Ellis as a litigation partner. He is senior policy advisor to President Bush and head of the White House’s Domestic Policy Council. Lefkowitz advised Bush on health, education, transportation and policy, labor and veterans’ affairs, environmental regulations, and international trade. In other words, he has been the consigliore. I guess he felt a 2 ½ year White House stint was enough.
Marathon Ashland Petroleum is a joint venture between Marathon Corp. and Ashland Inc. They are the nation’s sixth-largest oil refiner. On Friday they announced 165 cuts or about 2.5% of their workforce. Gary Heminger, the company’s president, said “MAP must continuously improve its competitive position and long-term profitabilty. We are maximizing every dollar spent to run our business and looking hard at all manageable business elements to determine the most efficient ways to increase MAP’s value.” Mr. Heminger’s words ring through most corporate hallways and boardrooms. Cost cutting is king. MAP is looking at ways to outsource IT, accounting, and HR. Hundreds of other companies are searching for similar outsourcing avenues. More U.S. jobs will be eliminated through outsourcing. This trend is picking up speed. It is not slowing.
There is other employment news. The U.S. Agriculture Department is setting up a new enforcement unit to ensure that biotech companies are properly managing field trials of genetically engineered crops. The unit has a staff of 33 and it will grow to 50, not including a director that needs to be named. What would a government unit be without a director? The USDA released enforcement records that cited 115 infractions between 1990 and 2001 on 7,402 field tests of various biotech crops. A total of 8 violations resulted in fines, ranging from $500 in 2 incidents to one incident of $250,000. Four incidents had fines totaling $43,200. In other words, there was a total of about $300,000 in fines over 11 years, and infractions came to about 1.5% over that period. I wish the government ran so efficiently. I wonder if the biotech industry can create a crop that will stop me from upchucking due to government enforcement
Friday, October 17, 2003
10/17/03 The Enemy
There are times my thinking is slow. Since I spend a great deal of time thinking, I expect more of myself. For three years the events of 9/11 have been gnawing at me. Something has been missing. I may be slow but I feel better now. It’s China. They are the real enemy. Three years before 9/11 Colonel Qiao Liang and Colonel Wang Xiangsui wrote a military handbook entitled “Unrestricted Warfare:China’s Master Plan to Destroy America.” You think this is a joke? This is from the book: “Whether it be the intrusions of hackers, a major explosion at the World Trade Center, or a bombing attack by bin Laden, all of these greatly exceed the frequency bandwidths understood by the American military.” Osama bin Laden is mentioned frequently in this book. Adm. Thomas Moorer is the Former Chairman, Joint Chiefs of Staff, and stated “the 9-11 attacks may just be the beginning. Many terrorist nations and groups will try to imitate this operation… and China’s war book “Unrestricted Warfare” will be their text.” Maj. Gen. John K. Singlaub is the Former Chief of Staff, U.S. Forces Korea, and remarked “Unrestricted Warfare is evidence linking China to 9-11. It is also their plan for global operations against America.”
We need to stop investing in China and we need to stop importing from China. Ford, for example, needs to reverse its strategy. China is the world’s fastest-growing major car market. GM has 8% of that market. Ford announced today they would increase their investment in China by $1 to $1.5 billion over the next few years by raising production at its joint venture Chongqing Changan Automobile Co Ltd to 150,000 units from 20,000 units. Last year overall car sales in China passed the one million mark. This year it is expected to double in size.
I am not proposing placing controls on Chinese imports. I am recommending companies voluntarily stop importing from and voluntarily stop investing in that country. China is on an economic roll but it is also an accident waiting to happen. We need to give it a helpful nudge. Let me explain. China has a positive balance of trade with the U.S of about $105 billion. That is for 2003 only. However, China has a trade deficit of about $75 billion yearly with the rest of the world, and most of that is with other Asian nations. Thus, their net trade surplus will only amount to 3% of their GDP. Their capital account was positive by $30 billion in 2001 and $30 billion in 2002, and there is a similar expectation for 2003. The main area of focus must be on their foreign exchange reserves, and these currently amount to $350 billion. Offsetting these pluses, is a major problem in their banking system. The Chinese people, for the most part, cannot take money out of China, and can only hold non-yuan deposits if that money is earned outside China. Consequently, the banking system in China is funded by the high savings rate. The Chinese money supply has risen at a 22% rate this year.; however, this money is being funneled into loans by banks, and non-performing loans have risen significantly in 2003. These loans probably exceed $650 billion. Much of the money has been loaned to real estate developers for industrial development. Much of the development has been for U.S. companies, such as, GM. Under China’s commitments to the WTO, foreign banks must be allowed to enter China by 2004. Consequently, over the next three years, we must take positive action to push that banking system into a collapse. It won’t be difficult. Stop investing there. Stop buying their imports. Their economy will crumble. If that happens, their currency will be significantly overvalued.
In addition to the above- mentioned voluntary actions, our federal government must change its spending habits, and now. On an inflation -adjusted basis, total federal spending has grown 17% during the last three years. Non-defense discretionary spending (ex Social Security, Medicare, and Medicaid) has grown by 23.2% during the last three years. Therefore, our federal spending has risen to more than 20% of GDP. That must change immediately.
Nationwide, the number of local government jobs dropped by 19,000 last month, on a year-over-year basis. It was the first such drop since 1984. Last year, for example, Texas gained 44,000 jobs. Of that amount, 36,000 came from government hiring. During the same time, manufacturing employment in Texas fell by 33,100.
I don’t want you to believe that the U.S is the only country that needs to change its ways. British banking group HSBC said it would slash 4,000 jobs in England and Wales. Call centers in Birmingham, Brentwood, Sheffield, and Swansea would be closed and the jobs would be transferred to centers in China, India, and Malaysia. HSBC had previously announced laying off 1,400 workers in Britain by year-end.
Three American soldiers were killed and seven wounded in Karbala, Iraq. Those deaths mean a total of 197 U.S. soldiers have been killed by bombings, ambushes, and other hostile incidents since the declared end to major combat operations on May 1. It is no wonder that the survey conducted by the Stars and Stripes newspaper indicated that 34% of the troops described their morale as low, and 49% described their unit’s morale as low. Last week Bush said the military spirit was high. He is out of touch with the troops. According to a recent Results for America national opinion poll, 55% of Americans think the United States is either going in the wrong direction or has no direction at all. The poll concludes the majority of Americans believe their current political leaders are either “weak” or “very weak” as “problem solvers.”
Delphi Corp. will cut 5,000 jobs. For the week ended Oct. 4, the number of Americans claiming benefits after filing an initial claim climbed 58,000 to 3.67 million. Workers are having an increasingly difficult time finding new jobs.
Over the last 12 months, the core CPI has risen just 1.2%, the smallest since February 1966.
There are times my thinking is slow. Since I spend a great deal of time thinking, I expect more of myself. For three years the events of 9/11 have been gnawing at me. Something has been missing. I may be slow but I feel better now. It’s China. They are the real enemy. Three years before 9/11 Colonel Qiao Liang and Colonel Wang Xiangsui wrote a military handbook entitled “Unrestricted Warfare:China’s Master Plan to Destroy America.” You think this is a joke? This is from the book: “Whether it be the intrusions of hackers, a major explosion at the World Trade Center, or a bombing attack by bin Laden, all of these greatly exceed the frequency bandwidths understood by the American military.” Osama bin Laden is mentioned frequently in this book. Adm. Thomas Moorer is the Former Chairman, Joint Chiefs of Staff, and stated “the 9-11 attacks may just be the beginning. Many terrorist nations and groups will try to imitate this operation… and China’s war book “Unrestricted Warfare” will be their text.” Maj. Gen. John K. Singlaub is the Former Chief of Staff, U.S. Forces Korea, and remarked “Unrestricted Warfare is evidence linking China to 9-11. It is also their plan for global operations against America.”
We need to stop investing in China and we need to stop importing from China. Ford, for example, needs to reverse its strategy. China is the world’s fastest-growing major car market. GM has 8% of that market. Ford announced today they would increase their investment in China by $1 to $1.5 billion over the next few years by raising production at its joint venture Chongqing Changan Automobile Co Ltd to 150,000 units from 20,000 units. Last year overall car sales in China passed the one million mark. This year it is expected to double in size.
I am not proposing placing controls on Chinese imports. I am recommending companies voluntarily stop importing from and voluntarily stop investing in that country. China is on an economic roll but it is also an accident waiting to happen. We need to give it a helpful nudge. Let me explain. China has a positive balance of trade with the U.S of about $105 billion. That is for 2003 only. However, China has a trade deficit of about $75 billion yearly with the rest of the world, and most of that is with other Asian nations. Thus, their net trade surplus will only amount to 3% of their GDP. Their capital account was positive by $30 billion in 2001 and $30 billion in 2002, and there is a similar expectation for 2003. The main area of focus must be on their foreign exchange reserves, and these currently amount to $350 billion. Offsetting these pluses, is a major problem in their banking system. The Chinese people, for the most part, cannot take money out of China, and can only hold non-yuan deposits if that money is earned outside China. Consequently, the banking system in China is funded by the high savings rate. The Chinese money supply has risen at a 22% rate this year.; however, this money is being funneled into loans by banks, and non-performing loans have risen significantly in 2003. These loans probably exceed $650 billion. Much of the money has been loaned to real estate developers for industrial development. Much of the development has been for U.S. companies, such as, GM. Under China’s commitments to the WTO, foreign banks must be allowed to enter China by 2004. Consequently, over the next three years, we must take positive action to push that banking system into a collapse. It won’t be difficult. Stop investing there. Stop buying their imports. Their economy will crumble. If that happens, their currency will be significantly overvalued.
In addition to the above- mentioned voluntary actions, our federal government must change its spending habits, and now. On an inflation -adjusted basis, total federal spending has grown 17% during the last three years. Non-defense discretionary spending (ex Social Security, Medicare, and Medicaid) has grown by 23.2% during the last three years. Therefore, our federal spending has risen to more than 20% of GDP. That must change immediately.
Nationwide, the number of local government jobs dropped by 19,000 last month, on a year-over-year basis. It was the first such drop since 1984. Last year, for example, Texas gained 44,000 jobs. Of that amount, 36,000 came from government hiring. During the same time, manufacturing employment in Texas fell by 33,100.
I don’t want you to believe that the U.S is the only country that needs to change its ways. British banking group HSBC said it would slash 4,000 jobs in England and Wales. Call centers in Birmingham, Brentwood, Sheffield, and Swansea would be closed and the jobs would be transferred to centers in China, India, and Malaysia. HSBC had previously announced laying off 1,400 workers in Britain by year-end.
Three American soldiers were killed and seven wounded in Karbala, Iraq. Those deaths mean a total of 197 U.S. soldiers have been killed by bombings, ambushes, and other hostile incidents since the declared end to major combat operations on May 1. It is no wonder that the survey conducted by the Stars and Stripes newspaper indicated that 34% of the troops described their morale as low, and 49% described their unit’s morale as low. Last week Bush said the military spirit was high. He is out of touch with the troops. According to a recent Results for America national opinion poll, 55% of Americans think the United States is either going in the wrong direction or has no direction at all. The poll concludes the majority of Americans believe their current political leaders are either “weak” or “very weak” as “problem solvers.”
Delphi Corp. will cut 5,000 jobs. For the week ended Oct. 4, the number of Americans claiming benefits after filing an initial claim climbed 58,000 to 3.67 million. Workers are having an increasingly difficult time finding new jobs.
Over the last 12 months, the core CPI has risen just 1.2%, the smallest since February 1966.
Thursday, October 16, 2003
10/16/03 Out Of Touch
About a dozen years ago, I would have a discussion about then President Bush Sr. and remark that he is out of touch with the people and just doesn’t get it. Unfortunately, I have the same feelings about his son. Mario Terpstra of Johnston, Iowa has never voted for a Democrat. He stated, however, “I don’t think Bush has a clue what the average guy goes through in life.” Dwaine Milliken, also from Johnston, asked “what’s going to happen to Social Security? And health insurance? We have Medicare, but that don’t cover it…It bothers me when troops have families here, have kids, and they’re gone for a year. That’s not right.” Phyllis Jobst has three grown children and works at a Target store in Des Moines. She relates “I see people working two or three jobs just to make ends meet.” Judy Anderson volunteers at a homeless shelter outside of Des Moines. She’s worried about money going towards Iraq rather than social programs in the U.S. June Causey lives in Jacksonville, Florida and worries about rising healthcare costs. Even with Medicare, she is facing a $2,200 hospital bill that she does not know how she will pay.
Veterans groups have been lobbying campaign to win dual benefits for all retired military personnel who are disabled. Presently, retirees who suffered their disabilities in combat on the battlefield are eligible for full dual benefits. Republicans and Democrats are joining forces to present a package that would extend dual benefits for the first time to some veterans whose disabilities are not combat-related, and this provision would be phased in over a decade, and eventually would cover individuals whose disabilities were rated 50% and higher. Under current law, disabled military retirees lose a dollar in retirement payments for each dollar they receive in disability compensation. This rule impacts 500,000 veterans. Bush has fought the estimated $58 billion in costs over the next decade. At the same time, he proposes spending $87 billion for Iraq’s reconstruction. In my view, a president should first take care of his own people. Our veterans have protected our country. Their well being should come first. If the president doesn’t support this proposed legislation, then he should re-evaluate his ability to be commander-in-chief.
In the September quarter, GM’s auto operations made $34 million versus $368 million in the year ago period; however, GMAC had a profit of $630 million, including $253 million from mortgage operations. GM made more money in the Asia-Pacific region (which includes China) than it did in North America. This is starting to sound like a familiar refrain.
The importation of pharmaceuticals has become a battleground. Humphrey Taylor, chairman of the Harris Poll, remarks “this is a very ugly issue for the pharmaceutical industry. As importation of drugs grow- and it looks set to grow a lot more- drug companies run a big risk of making more enemies as they fight to prevent importation. This would fuel the growing backlash against the industry.” In a Wall Street Journal/Harris Interactive poll, 77% of Americans surveyed said they think it is “unreasonable” for pharmaceutical companies to stop Canadian pharmacies from selling drugs over the Internet to Americans. A bipartisan group in the Congress is trying to include a drug-importation provision in the broad Medicare reform bill currently in committee.
Yesterday Filipino President Gloria Macapagal-Arroyo suggested that it was “critical” for Bush to understand “how closely related the war on terrorism is to the war on poverty.” She stated “there is no denying that poverty provides the breeding grounds for the recruitment of terrorists…if we are to win against terrorism and leftist agitators, President Bush has to win the war against poverty as well. They are inseparable. That is our highest priority.”
A “Coalition of Conscience” is a bipartisan group formed to roll back sections of the Patriot Act that they believe encroaches on civil liberties. Yesterday they introduced the Security and Freedom Ensured (SAFE) Act. It would limit “sneak and peek” search warrants, roving wiretaps, and library computers could not be searched without a court order. Nearly 200 communities have passed resolutions condemning the Patriot Act and refusing to comply with it.
Excluding autos, September’s retail sales rose 0.3%, and it was the weakest performance since May. Auto sales dropped 1.6%, the biggest decline since February. It is expected that sales of durable goods will be down in the quarter ending December 31.
For the 40 million Medicare participants, monthly premiums in 2004 will increase by 13.5% to $66.60. Some Medicare participants also will get a deductible increase in the portion of Medicare that pays for hospital stays, skilled nursing facilities and some home health care. The deductible will rise $36 to $867 next year.
John Antone, general manager for Intel’s Asia-Pacific region, stated yesterday that “we expect China to continue to grow to the point where it’s equal or larger than the U.S. as a consumption market by 2010.” Last year China became Intel’s number two market behind the U.S. According to International Data Corp., China is expected to sell 13 million PCs this year, eclipsing Japan’s 12.7 million units as the world’s number two PC market. By comparison, last year 47 million units were sold in the U.S. market.
Sony Music announced cutting 1500 jobs. Chicago Mayor Richard Daley stated hundreds of city job positions would be eliminated. On the other hand, IBM announced they would add 10,000 jobs next year. They said the new workers hired would be for services, software, and hardware operations in the U.S. and elsewhere. I will be blunt. I don’t believe that hiring number, and for many reasons. As recently as September, I mentioned that IBM had laid off engineers in the IT section of the company. IBM’s CEO Palmisano acknowledges “it is too early to say that a rebound is at hand” yet he is “confident that we will benefit from both a pick up in IT spending and an economic recovery.” The fact is the GDP grew at over 5% in the September quarter but IBM’s revenue gain was less than expected, and most of the gain came from the falling dollar and acquisitions rather than internal growth. The company fired employees to cut costs and improve profits. Even after the payroll cuts, IBM’s gross profit margins declined in the quarter. In my view, the company will continue to outsource, make acquisitions, and have little internal revenue growth. Thus, I doubt the hiring of 10,000 workers. IBM is the world’s biggest computer maker, and yet, they make a growing portion of their money from consulting services. As a matter of fact, computer hardware sales in the September quarter declined 1%.
About a dozen years ago, I would have a discussion about then President Bush Sr. and remark that he is out of touch with the people and just doesn’t get it. Unfortunately, I have the same feelings about his son. Mario Terpstra of Johnston, Iowa has never voted for a Democrat. He stated, however, “I don’t think Bush has a clue what the average guy goes through in life.” Dwaine Milliken, also from Johnston, asked “what’s going to happen to Social Security? And health insurance? We have Medicare, but that don’t cover it…It bothers me when troops have families here, have kids, and they’re gone for a year. That’s not right.” Phyllis Jobst has three grown children and works at a Target store in Des Moines. She relates “I see people working two or three jobs just to make ends meet.” Judy Anderson volunteers at a homeless shelter outside of Des Moines. She’s worried about money going towards Iraq rather than social programs in the U.S. June Causey lives in Jacksonville, Florida and worries about rising healthcare costs. Even with Medicare, she is facing a $2,200 hospital bill that she does not know how she will pay.
Veterans groups have been lobbying campaign to win dual benefits for all retired military personnel who are disabled. Presently, retirees who suffered their disabilities in combat on the battlefield are eligible for full dual benefits. Republicans and Democrats are joining forces to present a package that would extend dual benefits for the first time to some veterans whose disabilities are not combat-related, and this provision would be phased in over a decade, and eventually would cover individuals whose disabilities were rated 50% and higher. Under current law, disabled military retirees lose a dollar in retirement payments for each dollar they receive in disability compensation. This rule impacts 500,000 veterans. Bush has fought the estimated $58 billion in costs over the next decade. At the same time, he proposes spending $87 billion for Iraq’s reconstruction. In my view, a president should first take care of his own people. Our veterans have protected our country. Their well being should come first. If the president doesn’t support this proposed legislation, then he should re-evaluate his ability to be commander-in-chief.
In the September quarter, GM’s auto operations made $34 million versus $368 million in the year ago period; however, GMAC had a profit of $630 million, including $253 million from mortgage operations. GM made more money in the Asia-Pacific region (which includes China) than it did in North America. This is starting to sound like a familiar refrain.
The importation of pharmaceuticals has become a battleground. Humphrey Taylor, chairman of the Harris Poll, remarks “this is a very ugly issue for the pharmaceutical industry. As importation of drugs grow- and it looks set to grow a lot more- drug companies run a big risk of making more enemies as they fight to prevent importation. This would fuel the growing backlash against the industry.” In a Wall Street Journal/Harris Interactive poll, 77% of Americans surveyed said they think it is “unreasonable” for pharmaceutical companies to stop Canadian pharmacies from selling drugs over the Internet to Americans. A bipartisan group in the Congress is trying to include a drug-importation provision in the broad Medicare reform bill currently in committee.
Yesterday Filipino President Gloria Macapagal-Arroyo suggested that it was “critical” for Bush to understand “how closely related the war on terrorism is to the war on poverty.” She stated “there is no denying that poverty provides the breeding grounds for the recruitment of terrorists…if we are to win against terrorism and leftist agitators, President Bush has to win the war against poverty as well. They are inseparable. That is our highest priority.”
A “Coalition of Conscience” is a bipartisan group formed to roll back sections of the Patriot Act that they believe encroaches on civil liberties. Yesterday they introduced the Security and Freedom Ensured (SAFE) Act. It would limit “sneak and peek” search warrants, roving wiretaps, and library computers could not be searched without a court order. Nearly 200 communities have passed resolutions condemning the Patriot Act and refusing to comply with it.
Excluding autos, September’s retail sales rose 0.3%, and it was the weakest performance since May. Auto sales dropped 1.6%, the biggest decline since February. It is expected that sales of durable goods will be down in the quarter ending December 31.
For the 40 million Medicare participants, monthly premiums in 2004 will increase by 13.5% to $66.60. Some Medicare participants also will get a deductible increase in the portion of Medicare that pays for hospital stays, skilled nursing facilities and some home health care. The deductible will rise $36 to $867 next year.
John Antone, general manager for Intel’s Asia-Pacific region, stated yesterday that “we expect China to continue to grow to the point where it’s equal or larger than the U.S. as a consumption market by 2010.” Last year China became Intel’s number two market behind the U.S. According to International Data Corp., China is expected to sell 13 million PCs this year, eclipsing Japan’s 12.7 million units as the world’s number two PC market. By comparison, last year 47 million units were sold in the U.S. market.
Sony Music announced cutting 1500 jobs. Chicago Mayor Richard Daley stated hundreds of city job positions would be eliminated. On the other hand, IBM announced they would add 10,000 jobs next year. They said the new workers hired would be for services, software, and hardware operations in the U.S. and elsewhere. I will be blunt. I don’t believe that hiring number, and for many reasons. As recently as September, I mentioned that IBM had laid off engineers in the IT section of the company. IBM’s CEO Palmisano acknowledges “it is too early to say that a rebound is at hand” yet he is “confident that we will benefit from both a pick up in IT spending and an economic recovery.” The fact is the GDP grew at over 5% in the September quarter but IBM’s revenue gain was less than expected, and most of the gain came from the falling dollar and acquisitions rather than internal growth. The company fired employees to cut costs and improve profits. Even after the payroll cuts, IBM’s gross profit margins declined in the quarter. In my view, the company will continue to outsource, make acquisitions, and have little internal revenue growth. Thus, I doubt the hiring of 10,000 workers. IBM is the world’s biggest computer maker, and yet, they make a growing portion of their money from consulting services. As a matter of fact, computer hardware sales in the September quarter declined 1%.
Wednesday, October 15, 2003
10/15/03 Centrino
In October 2002 I suggested that the risk/reward for shares of Intel at $14 looked worth investigating on the part of investors. My reasoning was their new Centrino chip which would power laptop PCs, and hopefully, power stronger revenue generation. As it turned out, Centrino exceeded expectations; however, my analysis looked right but was only partially correct. I missed the real story where the most pleasing comparative results have taken place in Russia, China, and India. In essence, I was proven correct but should not be given too much credit. I will not make the same mistake twice and overlook the importance of emerging countries as they re-write the technology landscape.
The Bank of America plans to set up a subsidiary in India, and will cut costs by moving more jobs offshore. Elizabeth Wood, a bank spokeswoman, stated “it will help provide faster, high quality, less expensive solutions to our customers.” Does she mean American workers are slower? The move to India is scheduled for April, and it will result in job losses in the bank’s global operations; however, the number and location of those cuts haven’t been determined. You want me to believe that?
The Pension Benefit Guaranty Corp.’s deficit for 2003 rose to $8.8 billion from $3.6 billion registered in 2002, so said its director Steven Kandarian. He remarked it “is the largest in its history and is still growing.” Last week the House passed a bill allowing corporations to put $26 billion less into their retirement plans over the next two years. The vote in favor was 397 to 2. The private pension system covers about 44 million Americans. The PBGC is funded with insurance premiums paid by companies sponsoring pension plans. Kandarian went on to say that “if companies do not fund the pension promises they make, someone else will have to pay—either workers in the form of reduced benefits, other companies in the form of higher PBGC premiums, or taxpayers in the form of a PBGC bailout.” The PBGC estimates the private pension system is underfunded by more than $350 billion.
Illinois’ quarterly collections from corporate taxes fell 14% while individual income tax receipts declined 3%. Inheritance taxes fell 45%, and sales taxes were little changed. Moody’s analyst, Timothy Blake, said “in general, state taxes are lagging the national economy, and the economy isn’t doing that well.” Illinois has not raised taxes to balance the $5 billion budget deficit estimated for the state’s 2004 fiscal year. Instead, fees were raised, such as, on real estate sales. Aren’t fees another name for taxes?
Often, I have discussed the aging of our population as the most important trend in the U,S. Right behind that is the growth of singles as about 26% of our country presently lives alone. In 1940 less than 8% of Americans lived alone. According to the Census Bureau, there are 86 million singles, and half of our households are currently headed by unmarried adults. One-third of home buyers are single, with women buying houses at double the rate of men, according to the National Association of Realtors. Solo consumers probably represent an under-served market. The Bureau of Labor Statistics reports inequities in the workplace as single employees generally make less money than married workers, have a higher unemployment rate, and receive less compensation for benefits. Unmarried employees comprise more than 42% of the nation’s workforce. Singles also make up 35% of voters.
The annual revision for employment data is normally published by the Bureau of Labor Statistics in August. This year the revisions for 2002 will be released around December 10, the latest it has ever been. It will show that the BLS numbers have under-reported unemployment statistics for 2002. I have mentioned this under-reporting time and time again. The amount will be in the six figures. There is no question that a similar under-reporting is taking place in 2003. Naturally, those facts won’t be released until AFTER the next presidential election.
Germany has the largest economy among the countries participating in the euro currency. For the past two years their economy has grown by less than 1%. It should come as no surprise that a downward revision pegs their 2003 economy at a growth rate of 0.75 per cent. That is consistency at work. Next year is projected at between 1.5 and 1.75%. It is safe to say that future revisions will bring down that estimate.
Mike Rhoads, executive vice president of Blue Cross and Blue Shield of Oklahoma, states “our biggest competitor isn’t another insurance company. It’s the uninsured.” In Oklahoma, the percentage of uninsured is 18.3%, according to the Oklahoma State Department of Health, and that’s well above the national average of 14.6%.
In October 2002 I suggested that the risk/reward for shares of Intel at $14 looked worth investigating on the part of investors. My reasoning was their new Centrino chip which would power laptop PCs, and hopefully, power stronger revenue generation. As it turned out, Centrino exceeded expectations; however, my analysis looked right but was only partially correct. I missed the real story where the most pleasing comparative results have taken place in Russia, China, and India. In essence, I was proven correct but should not be given too much credit. I will not make the same mistake twice and overlook the importance of emerging countries as they re-write the technology landscape.
The Bank of America plans to set up a subsidiary in India, and will cut costs by moving more jobs offshore. Elizabeth Wood, a bank spokeswoman, stated “it will help provide faster, high quality, less expensive solutions to our customers.” Does she mean American workers are slower? The move to India is scheduled for April, and it will result in job losses in the bank’s global operations; however, the number and location of those cuts haven’t been determined. You want me to believe that?
The Pension Benefit Guaranty Corp.’s deficit for 2003 rose to $8.8 billion from $3.6 billion registered in 2002, so said its director Steven Kandarian. He remarked it “is the largest in its history and is still growing.” Last week the House passed a bill allowing corporations to put $26 billion less into their retirement plans over the next two years. The vote in favor was 397 to 2. The private pension system covers about 44 million Americans. The PBGC is funded with insurance premiums paid by companies sponsoring pension plans. Kandarian went on to say that “if companies do not fund the pension promises they make, someone else will have to pay—either workers in the form of reduced benefits, other companies in the form of higher PBGC premiums, or taxpayers in the form of a PBGC bailout.” The PBGC estimates the private pension system is underfunded by more than $350 billion.
Illinois’ quarterly collections from corporate taxes fell 14% while individual income tax receipts declined 3%. Inheritance taxes fell 45%, and sales taxes were little changed. Moody’s analyst, Timothy Blake, said “in general, state taxes are lagging the national economy, and the economy isn’t doing that well.” Illinois has not raised taxes to balance the $5 billion budget deficit estimated for the state’s 2004 fiscal year. Instead, fees were raised, such as, on real estate sales. Aren’t fees another name for taxes?
Often, I have discussed the aging of our population as the most important trend in the U,S. Right behind that is the growth of singles as about 26% of our country presently lives alone. In 1940 less than 8% of Americans lived alone. According to the Census Bureau, there are 86 million singles, and half of our households are currently headed by unmarried adults. One-third of home buyers are single, with women buying houses at double the rate of men, according to the National Association of Realtors. Solo consumers probably represent an under-served market. The Bureau of Labor Statistics reports inequities in the workplace as single employees generally make less money than married workers, have a higher unemployment rate, and receive less compensation for benefits. Unmarried employees comprise more than 42% of the nation’s workforce. Singles also make up 35% of voters.
The annual revision for employment data is normally published by the Bureau of Labor Statistics in August. This year the revisions for 2002 will be released around December 10, the latest it has ever been. It will show that the BLS numbers have under-reported unemployment statistics for 2002. I have mentioned this under-reporting time and time again. The amount will be in the six figures. There is no question that a similar under-reporting is taking place in 2003. Naturally, those facts won’t be released until AFTER the next presidential election.
Germany has the largest economy among the countries participating in the euro currency. For the past two years their economy has grown by less than 1%. It should come as no surprise that a downward revision pegs their 2003 economy at a growth rate of 0.75 per cent. That is consistency at work. Next year is projected at between 1.5 and 1.75%. It is safe to say that future revisions will bring down that estimate.
Mike Rhoads, executive vice president of Blue Cross and Blue Shield of Oklahoma, states “our biggest competitor isn’t another insurance company. It’s the uninsured.” In Oklahoma, the percentage of uninsured is 18.3%, according to the Oklahoma State Department of Health, and that’s well above the national average of 14.6%.
Tuesday, October 14, 2003
10/14/03 Three Strikes And Counting
On Saturday, 70,000 clerks walked out at 850 Ralphs owned by Kroger; Vons and Pavilion supermarkets owned by Safeway; and Albertson’s in Southern California. At midnight Monday grocery workers at 44 Kroger stores in West Virginia. Ohio, and Kentucky went on strike. Kroger is West Virginia’s fourth-largest employer, with about 5,100 workers statewide. In Missouri, about 10,000 union members have been on strike at the St. Louis area’s three largest grocery chains since Tuesday. Ninety six stores have been impacted in that region. As previously stated, the supermarkets want the union workers to share in health care costs. Greg Denier, a union spokesperson, stated “increased health premiums reduces low-wage employees to the poverty level…Unless this is addressed on a national level, there is going to be a crisis.” Greg, don’t worry. President Bush is in charge. The fact our country spends more on health care than we do on national defense. The Anderson School of Business at UCLA reported that health care expenses are the fastest growing sector of labor costs and the average annual premium for a family health insurance policy is now over $7,000. Harvey Sobel of Mellon Human Resources and Investor Solutions remarked that “you will see employers and unions in contentious fights for years to come. It’s hard to imagine it relenting.” Who are the winners in a strike? I can only think of WalMart as it gains market share. Besides expertise in logistics, distribution, and IT, WalMart is a nonunion company with lower labor costs as the wages and benefits for its employees run 25% lower than the comparable grocery clerk at Kroger, Safeway, and Albertson’s in Southern California.
Today mechanics for the third-largest public transportation system went on strike , and shut down buses and trains that an estimated 500,000 daily riders count on to get around Los Angeles County. It impacted 1,900 buses as well as light-rail and subway lines. It is the area’s second transit strike in three years. In 2000, the strike lasted for 32 days. The striking point is coping with soaring medical costs. The MTA pays nearly $17 million every year into the mechanics union’s health fund. The reserves in that fund are close to being dry. The MTA has accused the union of mismanaging the fund. The union wants greater contributions into the fund in order to offset rising health care costs.
In 1972 Congress eliminated co-payment for health care under Medicare legislation. The idea was to use home care as an alternative to the greater expense in nursing homes and hospitals. Thirty one years later the House and Senate negotiators are working on Medicare legislation which would impose co-payment on health care. They are considering a co-payment of $40 to $45 for each 60-day period in which a beneficiary receives home care. Medicare typically pays $2,700 to $3,000 for 60 days of home care. The co-payment proposal is being dubbed the “sick tax.” In actuality, great progress has been made in home health care costs. In 1997 it amounted to $17.5 billion, and in 2002 the amount had been reduced to $10 billion. Unfortunately, the man in charge listens to the CBO and that office predicts that annual spending for home care will triple in the coming decade to $32.9 billion in 2013. A proposal will be discussed to exempt low-income beneficiaries from the new co-payment. For the great majority, co-payment will become a reality in the new Medicare legislation. It is poor decision-making. There is a great cost benefit in home care over nursing homes and hospitals. The man in charge must have difficulty in reading comparative cost analysis. That may not be a popular course at Yale.
There is good news and bad news in telecommunications. The bad news is the phone companies are in trouble. The good news is on the consumer side. Have you heard of Niklas Zennstromm and Janus Friis? Have you heard of Skype? Only a million people know about it. That’s because it’s only been available for a month. I will give you a hint. It works best over broadband connections, and yes, as Pew Research Center says, it can reach only 16% of Americans at home. You need a headset. It’s a free download. It has a big advantage because the software and audio connections do not pass through central servers but rather through a peer-to-peer infrastructure. This winter Skype will make it possible for users to call people on regular telephones and not just through their computers. I believe Skype has real potential in the marketplace and for consumers. This service should transform the land-line telephone business. The consumer will benefit; however, the telephone companies will be in trouble and so will their workers.
Convergys Corp. opened two call centers in the Philippines and announced plans to open a third in 2004. Combined, the three centers will employ 3,100 workers, and will provide general support and technical help-desk services to Convergys clients. The investment in the Philippines is part of an effort to make the company’s global operations generate at least 30% of total revenue.
Yesterday’s attack in Tikrit brought to 96 the number of U.S. soldiers killed in Iraq since President Bush declared major combat operations over on May 1. Yes, President Bush is in charge.
WalMart is on target to generate 3 to 5 percent same-store sales growth in October; however, the company has not raised its quarterly earnings forecast, in part because of heavier-than-expected markdowns that trimmed profits. Some economists are cautious about the retail outlook. Richard DeKaser, chief economist for National City Corp. in Cleveland, remarked “we had explosive growth in consumer spending, and I don’t expect that to continue. Many of the goods they want to buy were bought this summer.”
On Saturday, 70,000 clerks walked out at 850 Ralphs owned by Kroger; Vons and Pavilion supermarkets owned by Safeway; and Albertson’s in Southern California. At midnight Monday grocery workers at 44 Kroger stores in West Virginia. Ohio, and Kentucky went on strike. Kroger is West Virginia’s fourth-largest employer, with about 5,100 workers statewide. In Missouri, about 10,000 union members have been on strike at the St. Louis area’s three largest grocery chains since Tuesday. Ninety six stores have been impacted in that region. As previously stated, the supermarkets want the union workers to share in health care costs. Greg Denier, a union spokesperson, stated “increased health premiums reduces low-wage employees to the poverty level…Unless this is addressed on a national level, there is going to be a crisis.” Greg, don’t worry. President Bush is in charge. The fact our country spends more on health care than we do on national defense. The Anderson School of Business at UCLA reported that health care expenses are the fastest growing sector of labor costs and the average annual premium for a family health insurance policy is now over $7,000. Harvey Sobel of Mellon Human Resources and Investor Solutions remarked that “you will see employers and unions in contentious fights for years to come. It’s hard to imagine it relenting.” Who are the winners in a strike? I can only think of WalMart as it gains market share. Besides expertise in logistics, distribution, and IT, WalMart is a nonunion company with lower labor costs as the wages and benefits for its employees run 25% lower than the comparable grocery clerk at Kroger, Safeway, and Albertson’s in Southern California.
Today mechanics for the third-largest public transportation system went on strike , and shut down buses and trains that an estimated 500,000 daily riders count on to get around Los Angeles County. It impacted 1,900 buses as well as light-rail and subway lines. It is the area’s second transit strike in three years. In 2000, the strike lasted for 32 days. The striking point is coping with soaring medical costs. The MTA pays nearly $17 million every year into the mechanics union’s health fund. The reserves in that fund are close to being dry. The MTA has accused the union of mismanaging the fund. The union wants greater contributions into the fund in order to offset rising health care costs.
In 1972 Congress eliminated co-payment for health care under Medicare legislation. The idea was to use home care as an alternative to the greater expense in nursing homes and hospitals. Thirty one years later the House and Senate negotiators are working on Medicare legislation which would impose co-payment on health care. They are considering a co-payment of $40 to $45 for each 60-day period in which a beneficiary receives home care. Medicare typically pays $2,700 to $3,000 for 60 days of home care. The co-payment proposal is being dubbed the “sick tax.” In actuality, great progress has been made in home health care costs. In 1997 it amounted to $17.5 billion, and in 2002 the amount had been reduced to $10 billion. Unfortunately, the man in charge listens to the CBO and that office predicts that annual spending for home care will triple in the coming decade to $32.9 billion in 2013. A proposal will be discussed to exempt low-income beneficiaries from the new co-payment. For the great majority, co-payment will become a reality in the new Medicare legislation. It is poor decision-making. There is a great cost benefit in home care over nursing homes and hospitals. The man in charge must have difficulty in reading comparative cost analysis. That may not be a popular course at Yale.
There is good news and bad news in telecommunications. The bad news is the phone companies are in trouble. The good news is on the consumer side. Have you heard of Niklas Zennstromm and Janus Friis? Have you heard of Skype? Only a million people know about it. That’s because it’s only been available for a month. I will give you a hint. It works best over broadband connections, and yes, as Pew Research Center says, it can reach only 16% of Americans at home. You need a headset. It’s a free download. It has a big advantage because the software and audio connections do not pass through central servers but rather through a peer-to-peer infrastructure. This winter Skype will make it possible for users to call people on regular telephones and not just through their computers. I believe Skype has real potential in the marketplace and for consumers. This service should transform the land-line telephone business. The consumer will benefit; however, the telephone companies will be in trouble and so will their workers.
Convergys Corp. opened two call centers in the Philippines and announced plans to open a third in 2004. Combined, the three centers will employ 3,100 workers, and will provide general support and technical help-desk services to Convergys clients. The investment in the Philippines is part of an effort to make the company’s global operations generate at least 30% of total revenue.
Yesterday’s attack in Tikrit brought to 96 the number of U.S. soldiers killed in Iraq since President Bush declared major combat operations over on May 1. Yes, President Bush is in charge.
WalMart is on target to generate 3 to 5 percent same-store sales growth in October; however, the company has not raised its quarterly earnings forecast, in part because of heavier-than-expected markdowns that trimmed profits. Some economists are cautious about the retail outlook. Richard DeKaser, chief economist for National City Corp. in Cleveland, remarked “we had explosive growth in consumer spending, and I don’t expect that to continue. Many of the goods they want to buy were bought this summer.”
Monday, October 13, 2003
10/13/03 Mighty Beanz
Many of my readers have children and grandchildren. Many will go shopping today. I thought it appropriate to recommend a value-oriented purchase, and one that has the capability of increasing in value as a collectible. Children are nuts for the Beanz. They sell for $5.99 a six-pack. They are small capsules with a bearing that make them shake and bob after being set down. Kids collect and trade them. A collection of Mighty Beanz is sought after by children. The North American distributor, Spin Master, expects to have holiday sales of $60 million this year and is projecting Mighty Beanz sales at $160 to $200 million next year. That’s revenue growth. It’s more than I can say for companies in the Nasdaq 100 and the S&P 500. Your downside risk is $5.99, and you will bring a smile to your child’s face. I only wish I owned the distributorship. Then again, I’d be listening to customer complaints about running out of Mighty Beanz on the shelves. I don’t have the patience for that.
The Commerce Department estimates, while online sales represented less than 2% of retail purchases last year, such sales grew at a rate of 26%.
Senator Richard Lugar, R-Indiana, is the chairman of the Senate Foreign Relations Committee. Yesterday on Meet The Press, he predicted American forces might have to be in Iraq in some capacity for eight years or more. In addition, he stated Iraq’s recovery would cost at least $50 billion more than the $87 billion that Bush has requested and is pending in Congress.
WalMart has 1.4 million employees, and close to half will leave in 2003. Employee turnover is one of the biggest problems facing WalMart. The average wage for a sales associate is $8.23 an hour. In addition to the low wage, health coverage is a massive problem. WalMart does not provide coverage to retirees. The company offers strong catastrophic coverage and some low-priced plans, but charges deductibles up to $1,000. I am not singling WalMart out. They just happen to be the largest employer in the private sector.
The matter of healthcare coverage in the workplace will be an important subject in the next presidential election. Over the past year, almost every labor dispute has focused on health benefits. Some workers postpone retirement in order to get better coverage for prescription drugs. How does one control employer costs and not hurt the employee? With the new auto pact, companies held the line on health benefits and, in return, the workers receive no wage increases for two years. Health premiums for businesses have risen at a double-digit clip for four straight years, and a similar rise is expected in 2004. Unfortunately, revenues have not grown at a similar rate and are not projected to do so in 2004.
There are 95 million Americans invested in mutual funds. Do they really know what those funds own? Do they really know anything about the individuals who manage those funds? Do they know what’s been charged to manage those funds? What do they know? Not very much is probably the answer. If your mutual fund experience is not satisfying, blame yourself. It’s time the public took some responsibility for the ineptness of the money managers. Vote with your money. Either the managers can hack it or give them their walking papers. Don’t settle for mediocrity. It’s too hard to earn the after-tax dollars, and too hard to save those dollars.
Many of my readers have children and grandchildren. Many will go shopping today. I thought it appropriate to recommend a value-oriented purchase, and one that has the capability of increasing in value as a collectible. Children are nuts for the Beanz. They sell for $5.99 a six-pack. They are small capsules with a bearing that make them shake and bob after being set down. Kids collect and trade them. A collection of Mighty Beanz is sought after by children. The North American distributor, Spin Master, expects to have holiday sales of $60 million this year and is projecting Mighty Beanz sales at $160 to $200 million next year. That’s revenue growth. It’s more than I can say for companies in the Nasdaq 100 and the S&P 500. Your downside risk is $5.99, and you will bring a smile to your child’s face. I only wish I owned the distributorship. Then again, I’d be listening to customer complaints about running out of Mighty Beanz on the shelves. I don’t have the patience for that.
The Commerce Department estimates, while online sales represented less than 2% of retail purchases last year, such sales grew at a rate of 26%.
Senator Richard Lugar, R-Indiana, is the chairman of the Senate Foreign Relations Committee. Yesterday on Meet The Press, he predicted American forces might have to be in Iraq in some capacity for eight years or more. In addition, he stated Iraq’s recovery would cost at least $50 billion more than the $87 billion that Bush has requested and is pending in Congress.
WalMart has 1.4 million employees, and close to half will leave in 2003. Employee turnover is one of the biggest problems facing WalMart. The average wage for a sales associate is $8.23 an hour. In addition to the low wage, health coverage is a massive problem. WalMart does not provide coverage to retirees. The company offers strong catastrophic coverage and some low-priced plans, but charges deductibles up to $1,000. I am not singling WalMart out. They just happen to be the largest employer in the private sector.
The matter of healthcare coverage in the workplace will be an important subject in the next presidential election. Over the past year, almost every labor dispute has focused on health benefits. Some workers postpone retirement in order to get better coverage for prescription drugs. How does one control employer costs and not hurt the employee? With the new auto pact, companies held the line on health benefits and, in return, the workers receive no wage increases for two years. Health premiums for businesses have risen at a double-digit clip for four straight years, and a similar rise is expected in 2004. Unfortunately, revenues have not grown at a similar rate and are not projected to do so in 2004.
There are 95 million Americans invested in mutual funds. Do they really know what those funds own? Do they really know anything about the individuals who manage those funds? Do they know what’s been charged to manage those funds? What do they know? Not very much is probably the answer. If your mutual fund experience is not satisfying, blame yourself. It’s time the public took some responsibility for the ineptness of the money managers. Vote with your money. Either the managers can hack it or give them their walking papers. Don’t settle for mediocrity. It’s too hard to earn the after-tax dollars, and too hard to save those dollars.
Sunday, October 12, 2003
10/12/03 Bullies Are Easy Prey
Yesterday I wrote about Russia and OPEC. Today the bully is crying. OPEC PresidentAl-Attiyah warned that crude oil prices might collapse next year. In Tokyo he stated “without help, mainly from Russia, we expect oil markets to face a lot of difficulties in the future. Non-OPEC should understand that 1999 is only four years ago. We have to learn from the past.” In 1998-1999 crude oil prices dropped to $10 a barrel. Al-Attiyah further remarked “we don’t just cut because we love to cut, we’re not psychopaths. We don’t want to kill barrels. This is related to markets. We’re forced to cut.” Bullies are easy prey. They are dead on arrival. Russia is producing about 9 million barrels a month, and that country is the world’s second largest oil exporter after Saudi Arabia. Yusufov, Russia’s oil minister, said it best when he related “our colleagues from OPEC consider $28 a barrel normal. We think it’s not. It’s too high. Low oil prices are bad for producers, but exceedingly high prices are bad for consumers in the U.S. and Europe.” OPEC thinks there is only one oil price and self-interest takes the front seat while importing nations pay their set price for supplies. Russia will undercut OPEC’s pricing and poison their arrogance. Another bully will be put to rest. I know of a mausoleum that’s for sale for $250,000 in Oakland, California.
George Bush Sr.’s memoirs are entitled “A World Transformed.” He explains why didn’t go after Saddam Hussein at the end of the Gulf War: “Trying to eliminate Saddam…would have incurred incalculable human and political costs. Apprehending him was probably impossible…We would have been forced to occupy Baghdad and, in effect, rule Iraq…there was no viable ‘exit strategy’ we could see, violating another of our principles. Furthermore, we had been self-consciously trying to set a pattern for handling aggression in the post-Cold War world. Going in an occupying Iraq, thus unilaterally exceeding the United Nations’ mandate, would have destroyed the precedent of international response to aggression that we hoped to establish. Had we gone the invasion route, the United States could conceivably still be occupying power in a bitterly hostile land.”
Some time ago I wrote about the growing demand for soy milk. Today I will take a look at another growing market for soybeans, and one that is coming to your neighborhood. Soy complex combined with vitamin E can help diminish the appearance of wrinkles and age spots, and is being combined in moisturizer creams. In other words, you might find these ingredients in creams promoted to prevent premature aging. Most of the large cosmetic companies have, or will have, soy-based lines of products.
IMF Deputy Director Shigemitsu Sugisaki told the World Form East Asia in Singapore “it’s hard to tell where the appropriate exchange rate is” for the Chinese yuan…”it’s difficult to find a persuasive case that the renminbi (yuan) is substantially undervalued.”
Another subject I have touched on is the tax deduction for vehicles that weigh 6,000 pounds or more. Originally they were intended for farmers and other small businesses that needed large vehicles, and not for the ‘Hummer crowd.’ At the beginning of 2003 the amount of the deduction was $25,000 but it was raised this past summer to $100,000 as part of the economic stimulus package. The Senate Finance Committee voted this month to cut the amount small businesses can deduct for buying an SUV weighing 6,000 ponds or more from $100,000 back to $25,000. Some lawmakers want the entire tax deduxtion repealed.
In the Newsweek poll taken Thursday and Friday, 50% of voters don’t want to see him re-elected to a second term while 44% support his re-election.
Yesterday I wrote about Russia and OPEC. Today the bully is crying. OPEC PresidentAl-Attiyah warned that crude oil prices might collapse next year. In Tokyo he stated “without help, mainly from Russia, we expect oil markets to face a lot of difficulties in the future. Non-OPEC should understand that 1999 is only four years ago. We have to learn from the past.” In 1998-1999 crude oil prices dropped to $10 a barrel. Al-Attiyah further remarked “we don’t just cut because we love to cut, we’re not psychopaths. We don’t want to kill barrels. This is related to markets. We’re forced to cut.” Bullies are easy prey. They are dead on arrival. Russia is producing about 9 million barrels a month, and that country is the world’s second largest oil exporter after Saudi Arabia. Yusufov, Russia’s oil minister, said it best when he related “our colleagues from OPEC consider $28 a barrel normal. We think it’s not. It’s too high. Low oil prices are bad for producers, but exceedingly high prices are bad for consumers in the U.S. and Europe.” OPEC thinks there is only one oil price and self-interest takes the front seat while importing nations pay their set price for supplies. Russia will undercut OPEC’s pricing and poison their arrogance. Another bully will be put to rest. I know of a mausoleum that’s for sale for $250,000 in Oakland, California.
George Bush Sr.’s memoirs are entitled “A World Transformed.” He explains why didn’t go after Saddam Hussein at the end of the Gulf War: “Trying to eliminate Saddam…would have incurred incalculable human and political costs. Apprehending him was probably impossible…We would have been forced to occupy Baghdad and, in effect, rule Iraq…there was no viable ‘exit strategy’ we could see, violating another of our principles. Furthermore, we had been self-consciously trying to set a pattern for handling aggression in the post-Cold War world. Going in an occupying Iraq, thus unilaterally exceeding the United Nations’ mandate, would have destroyed the precedent of international response to aggression that we hoped to establish. Had we gone the invasion route, the United States could conceivably still be occupying power in a bitterly hostile land.”
Some time ago I wrote about the growing demand for soy milk. Today I will take a look at another growing market for soybeans, and one that is coming to your neighborhood. Soy complex combined with vitamin E can help diminish the appearance of wrinkles and age spots, and is being combined in moisturizer creams. In other words, you might find these ingredients in creams promoted to prevent premature aging. Most of the large cosmetic companies have, or will have, soy-based lines of products.
IMF Deputy Director Shigemitsu Sugisaki told the World Form East Asia in Singapore “it’s hard to tell where the appropriate exchange rate is” for the Chinese yuan…”it’s difficult to find a persuasive case that the renminbi (yuan) is substantially undervalued.”
Another subject I have touched on is the tax deduction for vehicles that weigh 6,000 pounds or more. Originally they were intended for farmers and other small businesses that needed large vehicles, and not for the ‘Hummer crowd.’ At the beginning of 2003 the amount of the deduction was $25,000 but it was raised this past summer to $100,000 as part of the economic stimulus package. The Senate Finance Committee voted this month to cut the amount small businesses can deduct for buying an SUV weighing 6,000 ponds or more from $100,000 back to $25,000. Some lawmakers want the entire tax deduxtion repealed.
In the Newsweek poll taken Thursday and Friday, 50% of voters don’t want to see him re-elected to a second term while 44% support his re-election.
Subscribe to:
Posts (Atom)