10/04/03 What! Me Worry?
Dennis Jett, former U.S. ambassador to Peru and presently dean of the International Center at the University of Florida: “The U.S. is not unique in being threatened by terrorism. And it will not be unique if the response is for the majority to accept the violation of the rights of a few in exchange for the promise of greater security. Some would argue that has already happened.”
President Bush in May 2003: “We found the weapons of mass destruction …and we’ll find more as time goes by.”
Vice President Cheney, recently in a “Meet the Press” interview, described Iraq as “the geographic base of the terrorists who had us under assault now for many years, but most especially on 9-11.”
On Thursday, a study was released, and it was conducted by the Program on International Policy Attitudes based at the University of Maryland and the Menlo Park polling firm of Knowledge Networks. The study indicated that, between January and September, 60% of Americans held at least one of these common mistaken impressions: U.S. forces found WMD in Iraq; there’s clear evidence that Iraqi President Saddam Hussein worked closely with the Sept. 11 terrorists; and people in foreign countries generally either backed the U.S.-led war or were evenly split between supporting and opposing it.
According to Pentagon data, nearly 4,000 U.S. troops have been medically evacuated from Operation Iraqi Freedom for non-combat reasons- with more than one in five of those for psychiatric or neurological problems. Since March 20, 318 soldiers have died in Iraq and another 1,380 soldiers have been wounded in action as of Oct 1.
I will return to yesterday’s paragraph on employment in just a moment. Let’s turn to the underemployed. We must not forget them. Barbara Card Atkinson, a writer and mother of two small children, lives in Arlington, Mass. She writes in the Christian Science Monitor “In our house, Bush’s child-tax rebate checks went to past-due utility bills, groceries, and a full tank of gas. So much for stimulating the economy. My husband and I are two of the almost 1 million “underemployed” in this country- a demure label for a violent lifestyle change. We, with our college degrees and previous incarnations as latte-swilling yuppies, are now attempting- and failing badly- to keep our family of four afloat on an average combined income of substantially less than $1000 a month. Like those others, we’re holding our breath, waiting for the economy to rebound. For us, it’s been more than a year. Our personal trajectory in the high-tech flameout happened to so many others that it’s now clithe: the faltering of a dotcom job, the bankruptcy of a software company. We had great connections, my husband and I, so finding another job wouldn’t be a problem, we thought. We thought wrong. …we’re a legion of misfits, my underemployed brethren and I. We’re workers with superfluous skills in need of jobs when there are no jobs to be had; generally too old and too smart to be making so little; fighting pride and snobbery while wiping counters, flipping burgers, selling shoes…we’re part of the new demographic middle-aged professionals losing our credit, our savings, and our homes. The Foreclosure Generation…I’m spending all my attention, all my energy taking care of things at home. I wonder when George W., chin out, brashly taking on the world, will look back over his shoulder and do the same.”
The same administration that brought you misconceptions and misstatements about the Iraq war also brought you yesterday’s non-farm payroll report. The Bureau of Labor Statistics reported a net increase of 57,000 jobs in September, and this included a gain of 74,000 service sector jobs. It is quite telling that only a little over an hour later the ISM reported that this same service sector in the same month of September had a drop in employment of 1.9%, a significant drop. I mentioned yesterday that over 76,000 job cuts had been announced in September, and that it was statistically impossible for employment to have increased. I wrote yesterday’s report prior to the ISM release. If you wish to invest on misinformation, and I say that politely, then go ahead. It’s your money. We have much worse happening. Our fighting men and women are dying, getting wounded, and being evacuated every day in Iraq. You can walk around every day with a what! Me worry? attitude. It’s a free country- but getting less so also daily.
Blue Bird Corp. is a 76-year old company that makes school buses, commercial buses, and Wanderlodge motor coaches. They are cutting 750 employees from their Fort Valley and LaFayette factories in Georgia. They blamed the layoffs on the sluggish North American economy. Tellabs announced plans to reduce its worldwide workforce by about 370 employees. They also plan to close its development center in Quebec, Canada next year. Eastman Chemical will cut 600 jobs. They have been hurt by pricing pressures and rising material costs.
The competition to attract companies to a community is getting fierce. Soon companies will be getting signing bonuses in addition to incentives. West Des Moines is trying to attract Wells Fargo’s home mortgage and consumer credit expansion to their community. The City Council will vote on a package of incentives worth $32 million. It would include $25 million in new public road construction, $5 million in cash, and $2 million in water line and sewer line extensions. In return, Wells Fargo would construct a 900,000 square foot building with a minimum value of $118 million. This building would generate yearly property taxes of $4 million, and the bank would create or retain at least 3,300 jobs in West Des Moines over the next seven years.
Friday, October 03, 2003
10/03/03 For The Non-Squeamish
My patience has run out. That has happened very rarely in my life. If you’re squeamish, do not proceed with your reading. While David Kay goes through 600,000 ton of artillery shells looking for WMD, the government is weaving a new spin on the unemployment picture. The Labor Department, which labors over the spinning, will announce today an adjustment to the payroll numbers. This information is so accurate that it is available only through a lag and only covers the 12 months through last March. They will provide an officially revised number almost one year later in February 2004. The government wants to include nannies and maids and unpaid family workers. They didn’t mention wet nurses. In sum, the Labor Department will try to tell the American people that the unemployment rolls are overstated by at least 750,000 workers. I suggest we eradicate the Labor Department. Tom Nardone, chief of the Division of Labor Force Statistics, states “if what you are interested in is counting wage and salary jobs, the payroll survey has a clear advantage.” In other words, the attempt to place a new spin on unemployment and the unemployment rate is a failure to communicate reality.
I am pleased to report that Bush will be faced with the veto card. The House and the Senate have voted to oppose the administration’s plans to change the rules on overtime pay that would deny benefits to millions of workers. Just like the Labor Department wants to redefine unemployment, so does the administration wish to redefine eligibility for overtime. Yesterday 21 Republicans joined Democrats in the House to oppose the rule changes. The Fair Labor Standards Act of 1938 created the 40-hour work week by guaranteeing overtime pay, at time and a half, for each hour worked over 40. The law allows for the exemption of administrative, professional, and executive workers. Under the U.S. Labor Department’s proposal, more employees could be reclassified as exempt administrators, professionals, or executives if they meet certain criteria, and particularly if they earn more than $65,000. The administration wants to take overtime pay from millions of American workers. They also wanted to take pay raises from our fighting men and women. That effort was stopped. I truly hope the overtime protection remains in force. At some point, this administration must learn the meaning of loyalty and putting the interests of the people before personal considerations. I’m an optimist. It’s not over until the pudgy lady sings.
Let’s turn to the CIA leak. The role of the president is that of leader, CEO, and commander-in-chief. As CEO of the White House staff, it is his responsibility to quickly get to the core of the leak. He should have ordered everyone on the staff to individually come into his office and, in private, ask whether that person had a participation in the leak. This situation is one of life and death, and not for simply for the operative. It quite conceivably could endanger each individual with whom that operative came into contact. Not taking decisive action is a major disappointment.
Yale Hirsch’s Stock Trader’s Almanac points out that October 9 is historically one of the two worst trading days of the year. Less than 25% of the time do stocks go up on that day.
As part of the JD Edwards acquisition, PeopleSoft planned to cut 750 to 1000 workers. These employees have begun to get laid off. Last month, Springs Industries closed its 1890s-era plants in Fort Mill and Lancaster eliminating 500 jobs, and laid off another 130 employees at its Grace facility in Lancaster County. Yesterday the company said it would close two weaving plants. The one in Fort Lawn employs 140, and the other in Laurel Hill has 180 workers. Interstate Bakeries announced plans to close its bread and roll bakery in Grand Rapids, Michigan and 160 employees will be affected. The company is the nation’s largest baker and distributor of fresh baked bread and sweet goods in the U.S.
Yesterday the Labor Department said filings for state jobless benefits rose by 13,000 in the week ended Sept. 27. The Commerce Department said factory orders dropped 0.8% in August while orders for durable goods declined 1.1%. Chicago Fed President Michael Moskow said yesterday “I have to admit that until we actually book a couple of quarters of solid output growth and see the beginning of an employment rebound, there will be some doubts in my mind whether we are, at last, out of the woods.” Fed Governor Ben Barnanke said yesterday “the most difficult question is when the employment situation will turn around.” Philadelphia Fed chief Anthony Santomero said yesterday “in this particular cycle, I believe the challenge is somewhat more difficult because technological change and globalization are affecting the economy’s long-run capacity for growth and near-term capacity to employ people in ways that are difficult to quantify.”
Overseas investors now hold 36% of our Treasury bonds and notes. With our escalating budget deficit, the Treasury will have a growing need to issue more debt. Most likely, Japan and China will be the largest purchasers of those debt instruments. As such, one can reasonably anticipate overseas investors soon holding more than 40% of these treasuries. The entities that hold the debt gain an increasing influence until they own over 50% of the debt. At that point they control the country. We are a debtor nation, and in danger of losing control of our own destiny. Spending beyond means will create that situation. Those who cast a vote can make a change. Vote out the spenders.
Jon Markman wrote an excellent article in yesterday’s MSN Money entitled “The Devil wears pink: a grim financial fairy tale.” He provided a quote by Jim Williams who stated “the public has turned to speculation in stocks precisely because they do not have hope. They are piling up debt in total denial of their eroding liquidity. Outside they are partying because inside they are glum; they are grasping for straws.” Hope is important. When the public loses confidence in its leadership, societal fabric begins to wear thin and looks threadbare. In the latest CBS/New York Times poll. There was a sharp drop in public confidence in Bush’s ability to handle foreign and economic policy issues.
Lieutenant General Ricardo Sanchez, commander of ground forces in Iraq, stated “the enemy has evolved. It is a bit more lethal, little bit more complex, little bit more sophisticated and in some cases a little bit more tenacious. As long as we are here the coalition need to be prepared to take casualties. We should not be surprised if one of these days we wake up to find there’s a major firefight or a major terrorist attack.” At least someone tells the truth. Maybe Lieutenant General Sanchez should inform the Commander-in -Chief that the major fighting did not necessarily end on May 1.
CIA advisor David Kay: “Despite evidence of Saddam’s continued ambition to acquire nuclear weapons, to date we have not uncovered evidence that Iraq undertook significant post-1998 steps to actually build nuclear weapons or produce fissile material.”
Earlier this year I mentioned that the WTO had authorized the E.U. to impose as much as $4 billion in tariffs against U.S. farm goods, jewelry, and other products, and the E.U. specifically said they would strongly consider imposing those tariffs unless the Congress voted to repeal export-tax credit breaks. Boeing and Caterpillar, for example, have received hundreds of millions of tax breaks over the years. Yesterday the Senate Finance Committee approved a bill to phase out the credit over three years. The WTO has already waited three years to have this repealed. A total of $4 billion in sanctions are threatened to be imposed by the E.U. if changes are not made by year- end.
Lastly, I would like to touch on a subject I have mentioned over and over again- the lack of credibility in government reporting unemployment numbers. I have over and over again caught errors in simple math and pointed them out. Today we have another one. The government stated September payrolls rose by 57,000 and remarked that Services in government agencies, banks, and retailers added 74,000 jobs. The fact is there were over 76,000 reported company layoffs in September. I mentioned that this week. Those numbers are documented. The best that could have taken place was no job losses and no job gains, and that I do not believe. The revisions will come out down the road. A few points to remember. In September the labor force participation rate fell to 66.1%, the lowest since December 1991. Average weekly hours worked for all employees held at 33.7 hours in September but incomes decreased. Workers’ average hourly earnings declined 0.1%.
My patience has run out. That has happened very rarely in my life. If you’re squeamish, do not proceed with your reading. While David Kay goes through 600,000 ton of artillery shells looking for WMD, the government is weaving a new spin on the unemployment picture. The Labor Department, which labors over the spinning, will announce today an adjustment to the payroll numbers. This information is so accurate that it is available only through a lag and only covers the 12 months through last March. They will provide an officially revised number almost one year later in February 2004. The government wants to include nannies and maids and unpaid family workers. They didn’t mention wet nurses. In sum, the Labor Department will try to tell the American people that the unemployment rolls are overstated by at least 750,000 workers. I suggest we eradicate the Labor Department. Tom Nardone, chief of the Division of Labor Force Statistics, states “if what you are interested in is counting wage and salary jobs, the payroll survey has a clear advantage.” In other words, the attempt to place a new spin on unemployment and the unemployment rate is a failure to communicate reality.
I am pleased to report that Bush will be faced with the veto card. The House and the Senate have voted to oppose the administration’s plans to change the rules on overtime pay that would deny benefits to millions of workers. Just like the Labor Department wants to redefine unemployment, so does the administration wish to redefine eligibility for overtime. Yesterday 21 Republicans joined Democrats in the House to oppose the rule changes. The Fair Labor Standards Act of 1938 created the 40-hour work week by guaranteeing overtime pay, at time and a half, for each hour worked over 40. The law allows for the exemption of administrative, professional, and executive workers. Under the U.S. Labor Department’s proposal, more employees could be reclassified as exempt administrators, professionals, or executives if they meet certain criteria, and particularly if they earn more than $65,000. The administration wants to take overtime pay from millions of American workers. They also wanted to take pay raises from our fighting men and women. That effort was stopped. I truly hope the overtime protection remains in force. At some point, this administration must learn the meaning of loyalty and putting the interests of the people before personal considerations. I’m an optimist. It’s not over until the pudgy lady sings.
Let’s turn to the CIA leak. The role of the president is that of leader, CEO, and commander-in-chief. As CEO of the White House staff, it is his responsibility to quickly get to the core of the leak. He should have ordered everyone on the staff to individually come into his office and, in private, ask whether that person had a participation in the leak. This situation is one of life and death, and not for simply for the operative. It quite conceivably could endanger each individual with whom that operative came into contact. Not taking decisive action is a major disappointment.
Yale Hirsch’s Stock Trader’s Almanac points out that October 9 is historically one of the two worst trading days of the year. Less than 25% of the time do stocks go up on that day.
As part of the JD Edwards acquisition, PeopleSoft planned to cut 750 to 1000 workers. These employees have begun to get laid off. Last month, Springs Industries closed its 1890s-era plants in Fort Mill and Lancaster eliminating 500 jobs, and laid off another 130 employees at its Grace facility in Lancaster County. Yesterday the company said it would close two weaving plants. The one in Fort Lawn employs 140, and the other in Laurel Hill has 180 workers. Interstate Bakeries announced plans to close its bread and roll bakery in Grand Rapids, Michigan and 160 employees will be affected. The company is the nation’s largest baker and distributor of fresh baked bread and sweet goods in the U.S.
Yesterday the Labor Department said filings for state jobless benefits rose by 13,000 in the week ended Sept. 27. The Commerce Department said factory orders dropped 0.8% in August while orders for durable goods declined 1.1%. Chicago Fed President Michael Moskow said yesterday “I have to admit that until we actually book a couple of quarters of solid output growth and see the beginning of an employment rebound, there will be some doubts in my mind whether we are, at last, out of the woods.” Fed Governor Ben Barnanke said yesterday “the most difficult question is when the employment situation will turn around.” Philadelphia Fed chief Anthony Santomero said yesterday “in this particular cycle, I believe the challenge is somewhat more difficult because technological change and globalization are affecting the economy’s long-run capacity for growth and near-term capacity to employ people in ways that are difficult to quantify.”
Overseas investors now hold 36% of our Treasury bonds and notes. With our escalating budget deficit, the Treasury will have a growing need to issue more debt. Most likely, Japan and China will be the largest purchasers of those debt instruments. As such, one can reasonably anticipate overseas investors soon holding more than 40% of these treasuries. The entities that hold the debt gain an increasing influence until they own over 50% of the debt. At that point they control the country. We are a debtor nation, and in danger of losing control of our own destiny. Spending beyond means will create that situation. Those who cast a vote can make a change. Vote out the spenders.
Jon Markman wrote an excellent article in yesterday’s MSN Money entitled “The Devil wears pink: a grim financial fairy tale.” He provided a quote by Jim Williams who stated “the public has turned to speculation in stocks precisely because they do not have hope. They are piling up debt in total denial of their eroding liquidity. Outside they are partying because inside they are glum; they are grasping for straws.” Hope is important. When the public loses confidence in its leadership, societal fabric begins to wear thin and looks threadbare. In the latest CBS/New York Times poll. There was a sharp drop in public confidence in Bush’s ability to handle foreign and economic policy issues.
Lieutenant General Ricardo Sanchez, commander of ground forces in Iraq, stated “the enemy has evolved. It is a bit more lethal, little bit more complex, little bit more sophisticated and in some cases a little bit more tenacious. As long as we are here the coalition need to be prepared to take casualties. We should not be surprised if one of these days we wake up to find there’s a major firefight or a major terrorist attack.” At least someone tells the truth. Maybe Lieutenant General Sanchez should inform the Commander-in -Chief that the major fighting did not necessarily end on May 1.
CIA advisor David Kay: “Despite evidence of Saddam’s continued ambition to acquire nuclear weapons, to date we have not uncovered evidence that Iraq undertook significant post-1998 steps to actually build nuclear weapons or produce fissile material.”
Earlier this year I mentioned that the WTO had authorized the E.U. to impose as much as $4 billion in tariffs against U.S. farm goods, jewelry, and other products, and the E.U. specifically said they would strongly consider imposing those tariffs unless the Congress voted to repeal export-tax credit breaks. Boeing and Caterpillar, for example, have received hundreds of millions of tax breaks over the years. Yesterday the Senate Finance Committee approved a bill to phase out the credit over three years. The WTO has already waited three years to have this repealed. A total of $4 billion in sanctions are threatened to be imposed by the E.U. if changes are not made by year- end.
Lastly, I would like to touch on a subject I have mentioned over and over again- the lack of credibility in government reporting unemployment numbers. I have over and over again caught errors in simple math and pointed them out. Today we have another one. The government stated September payrolls rose by 57,000 and remarked that Services in government agencies, banks, and retailers added 74,000 jobs. The fact is there were over 76,000 reported company layoffs in September. I mentioned that this week. Those numbers are documented. The best that could have taken place was no job losses and no job gains, and that I do not believe. The revisions will come out down the road. A few points to remember. In September the labor force participation rate fell to 66.1%, the lowest since December 1991. Average weekly hours worked for all employees held at 33.7 hours in September but incomes decreased. Workers’ average hourly earnings declined 0.1%.
Thursday, October 02, 2003
10/02/03 Auto Immune-less System
Dieter Zetsche heads up Chrysler. Yesterday he gave a speech at the Chief Executives Club of Boston. He likened the highly competitive global automotive industry to a “jungle.” If that’s so, then the CEOs of the big two and the big fourth are swinging from the trees without a clue as to the path leading to firm ground. Of course, losers blame it on others. Zetsche remarked “this jungle is an extremely fierce and competitive place. The U.S. market is under attack from all sides and in every segment.” Maybe he should bring out play-do and have everyone make nice. So what is Chrysler to do? Zetsche has the solution. “Global competition, an over saturated market and heavy incentive spending put tremendous pressure on margins,” he stated. “If the market is reducing your top line, you’ve got to work harder to recover that money from your cost base.” As such, the plan is to give incentives up to $5,000 and to cut 5,000 workers. It’s the 5,000 solution. Meanwhile, Chrysler’s sales of new cars and trucks dropped 15% last month. It was their worst September in more than a decade and more than double the drop in August when Toyota passed Chrysler in monthly sales. Only the Jeep Grand Cherokee with its $3,000 rebate had a sales increase. Yesterday Chrysler stock rose 82 cents. There is no way this company is going to break even in 2003. Some predict Chrysler will lose $1 billion in 2004. I know one thing. In my opinion, this company is in big trouble, and the stock does not reflect it. Meanwhile, September sales for GM were up 13% and Ford’s were flat. Yesterday GM raised the level on its incentive program to $4,500 as well as providing interest-free loans for up to five years for purchases of most 2003 and 2004 model-year passenger cars.
According to the Defense Department, a total of 314 American service members have died since the Iraq war started on March 20. Of that number, 90 have died since May 1 when Bush said the major combat operations were over. How does Bush sleep at night?
AT&T eliminated 10,000 positions in 2001, 10,000 in 2002, and 5,000 in 2003. Their CFO said plans for 2004 have not been finalized but they may be more or less than 5,000, he stated. Ashland Inc. had previously announced job cuts of 200. Yesterday they announced eliminating another 500 positions. Their CEO stated “reducing our costs is a pivotal part of our strategy to produce top-quartile results relative to our peers.” A subsidiary of Charlotte-based Ruddick Corp. will close its thread-yarn spinning plant in Maiden, NC and cut 125 jobs. The company cited a declining customer base, increased apparel imports from Asia, and weak business conditions. Assurant Group, a risk management company based in Miami and Atlanta, will lay off 300 employees, and this will include managerial positions. The cuts are in their credit insurance and debt protection businesses.
Challenger, Gray, and Christmas said reported planned layoffs at U.S. firms amounted to 76,506 in September, and down slightly from August’s 79.925. Norbert Ore heads a committee that compiles the survey for the Institute of Supply Management. He stated “there is nothing here that offers signs of encouragement. The rate of decline seems to be slowing…but I don’t see much change in the mployment picture in the next six to 12 months.”
North Korea said it had reprocessed nuclear rods “in the direction increasing its nuclear deterrent force.” These rods had been sealed under a 1994 agreement with the U.S. Last year North Korea had withdrawn from the Non-Proliferation Treaty and started up its Yongbyon plant. No one has verification as to whether the rods have indeed been processed as North Korea had previously expelled the U.N. inspectors. It’s quite apparent that most countries have no interest in joining forces with the Bush Administration. Hopefully, we have learned from the fiasco in Iraq. We cannot spread our troops too thin, and we cannot, at the same time, endanger our populace. That means creating a coalition, and China, in this case, needs to be the major player. We must remember never to negotiate with thugs. They are cancers to their own people and to the world.
Dieter Zetsche heads up Chrysler. Yesterday he gave a speech at the Chief Executives Club of Boston. He likened the highly competitive global automotive industry to a “jungle.” If that’s so, then the CEOs of the big two and the big fourth are swinging from the trees without a clue as to the path leading to firm ground. Of course, losers blame it on others. Zetsche remarked “this jungle is an extremely fierce and competitive place. The U.S. market is under attack from all sides and in every segment.” Maybe he should bring out play-do and have everyone make nice. So what is Chrysler to do? Zetsche has the solution. “Global competition, an over saturated market and heavy incentive spending put tremendous pressure on margins,” he stated. “If the market is reducing your top line, you’ve got to work harder to recover that money from your cost base.” As such, the plan is to give incentives up to $5,000 and to cut 5,000 workers. It’s the 5,000 solution. Meanwhile, Chrysler’s sales of new cars and trucks dropped 15% last month. It was their worst September in more than a decade and more than double the drop in August when Toyota passed Chrysler in monthly sales. Only the Jeep Grand Cherokee with its $3,000 rebate had a sales increase. Yesterday Chrysler stock rose 82 cents. There is no way this company is going to break even in 2003. Some predict Chrysler will lose $1 billion in 2004. I know one thing. In my opinion, this company is in big trouble, and the stock does not reflect it. Meanwhile, September sales for GM were up 13% and Ford’s were flat. Yesterday GM raised the level on its incentive program to $4,500 as well as providing interest-free loans for up to five years for purchases of most 2003 and 2004 model-year passenger cars.
According to the Defense Department, a total of 314 American service members have died since the Iraq war started on March 20. Of that number, 90 have died since May 1 when Bush said the major combat operations were over. How does Bush sleep at night?
AT&T eliminated 10,000 positions in 2001, 10,000 in 2002, and 5,000 in 2003. Their CFO said plans for 2004 have not been finalized but they may be more or less than 5,000, he stated. Ashland Inc. had previously announced job cuts of 200. Yesterday they announced eliminating another 500 positions. Their CEO stated “reducing our costs is a pivotal part of our strategy to produce top-quartile results relative to our peers.” A subsidiary of Charlotte-based Ruddick Corp. will close its thread-yarn spinning plant in Maiden, NC and cut 125 jobs. The company cited a declining customer base, increased apparel imports from Asia, and weak business conditions. Assurant Group, a risk management company based in Miami and Atlanta, will lay off 300 employees, and this will include managerial positions. The cuts are in their credit insurance and debt protection businesses.
Challenger, Gray, and Christmas said reported planned layoffs at U.S. firms amounted to 76,506 in September, and down slightly from August’s 79.925. Norbert Ore heads a committee that compiles the survey for the Institute of Supply Management. He stated “there is nothing here that offers signs of encouragement. The rate of decline seems to be slowing…but I don’t see much change in the mployment picture in the next six to 12 months.”
North Korea said it had reprocessed nuclear rods “in the direction increasing its nuclear deterrent force.” These rods had been sealed under a 1994 agreement with the U.S. Last year North Korea had withdrawn from the Non-Proliferation Treaty and started up its Yongbyon plant. No one has verification as to whether the rods have indeed been processed as North Korea had previously expelled the U.N. inspectors. It’s quite apparent that most countries have no interest in joining forces with the Bush Administration. Hopefully, we have learned from the fiasco in Iraq. We cannot spread our troops too thin, and we cannot, at the same time, endanger our populace. That means creating a coalition, and China, in this case, needs to be the major player. We must remember never to negotiate with thugs. They are cancers to their own people and to the world.
Wednesday, October 01, 2003
10/1/03 Involuntary Separation
Yesterday Ford began eliminating about 5,000 world wide positions. Executive Vice President Jim Padilla stated “these decisions have been borne out of our need to respond to an increasingly competitive automotive industry that continues to grapple with the challenges of production over capacity and spiraling incentive costs.” In my view, Edmunds.com gave a more complete analysis stating “despite the increased incentives spending by the domestic manufacturers, their market share declined by an historic 57.6%. In August, Ford’s incentives spending went up by 2.8% to $3,472 per unit while its market share dropped 0.6% to 17.5%.” GM and Chrysler had similar experiences. Ford is cutting more than 3,000 nonunion jobs in North America and offering buyouts to 1,700 German workers. In addition, there is the so-called involuntary separation of about 50 full-time salaried workers. Many salaried workers will receive limited overtime, and new hires will be restricted to critical positions. Padilla went on to state that, “in many instances, full-time salaried employees will stepping in to assume work previously handled by contract help.”
Chrysler announced yesterday that they would be asking several thousand employees to take early retirement. The company will provide more information in the next few days.
Last week Verizon warned it would not meet forecasts for the remainder of the year. Yesterday Verizon offered a voluntary severance package to all of its 74,000 nonunion management employees.
Louisiana Pacific, a major lumber mill company, has been based in Portland, Oregon for 31 years. Most employees have wanted to remain in Portland for the quality of life there. Management decided to move the headquarters to Nashville for cost cutting reasons. There will be 175 jobs cut in Portland.
Jacuzzi Brands is considering closing its manufacturing plant in Salem, Ohio, and this would impact 253 employees. The plant opened 95 years ago. The company said the preliminary conclusion is “that continued manufacture of cast iron products in Salem is not a viable alternative.”
This month WalMart will open a distribution center in north China in Tianjin. To this point, their distribution center in Shenzhen has fueled the supply chain in their existing 31 stores in China. Over the past 7 years, WalMart has worked with the Chinese government to set up a holding company to consolidate joint venture distribution and finance. Globally, WalMart will be increasing its total selling space by 8% next year.
The drug industry spends more than $26 billion annually in the U.S. on R&D. At the same time, since 1996, there has been a steady decline in drugs whose active ingredients have never before been approved in the U.S.
Last week U.S. chain store sales fell for the third consecutive week. A spokesperson for Bank of Tokyo-Mitsubishi and UBS stated there was “some fundamental softening in consumer demand.” WalMart, on the other hand, appears to be taking business from the department stores.
Yesterday, yields on U.S. treasury bonds declined to their lowest level in two months. Some folks in the bond pits believe the Bank of Japan is an on-going and active buyer of our treasuries. Even with the recent gains, the 10-year government bond was down 2% in value for the 3rd quarter.
Pentagon officials report that Air National Guard and Air Force Reserve units contribute 100% of weather reconnaissance, 64% of tactical airlift, 57% of combat search and rescue, and 55% of aerial refueling and strategic tankers. Since the 1991 Persian Gulf War, the full-time military has been cut by 29% to 1.4 million service members. Despite Rumsfeld’s statements, we appear to be short on regular soldiers to get the job done all around the globe. The Congressional Budget Office estimates that adding two new Army divisions would cost up to $19.4 billion in one-time costs, would add another $9.5 billion to $10.1 billion to the annual defense budget, and would take from 3 to 5 years to field with new troops.
Yesterday Ford began eliminating about 5,000 world wide positions. Executive Vice President Jim Padilla stated “these decisions have been borne out of our need to respond to an increasingly competitive automotive industry that continues to grapple with the challenges of production over capacity and spiraling incentive costs.” In my view, Edmunds.com gave a more complete analysis stating “despite the increased incentives spending by the domestic manufacturers, their market share declined by an historic 57.6%. In August, Ford’s incentives spending went up by 2.8% to $3,472 per unit while its market share dropped 0.6% to 17.5%.” GM and Chrysler had similar experiences. Ford is cutting more than 3,000 nonunion jobs in North America and offering buyouts to 1,700 German workers. In addition, there is the so-called involuntary separation of about 50 full-time salaried workers. Many salaried workers will receive limited overtime, and new hires will be restricted to critical positions. Padilla went on to state that, “in many instances, full-time salaried employees will stepping in to assume work previously handled by contract help.”
Chrysler announced yesterday that they would be asking several thousand employees to take early retirement. The company will provide more information in the next few days.
Last week Verizon warned it would not meet forecasts for the remainder of the year. Yesterday Verizon offered a voluntary severance package to all of its 74,000 nonunion management employees.
Louisiana Pacific, a major lumber mill company, has been based in Portland, Oregon for 31 years. Most employees have wanted to remain in Portland for the quality of life there. Management decided to move the headquarters to Nashville for cost cutting reasons. There will be 175 jobs cut in Portland.
Jacuzzi Brands is considering closing its manufacturing plant in Salem, Ohio, and this would impact 253 employees. The plant opened 95 years ago. The company said the preliminary conclusion is “that continued manufacture of cast iron products in Salem is not a viable alternative.”
This month WalMart will open a distribution center in north China in Tianjin. To this point, their distribution center in Shenzhen has fueled the supply chain in their existing 31 stores in China. Over the past 7 years, WalMart has worked with the Chinese government to set up a holding company to consolidate joint venture distribution and finance. Globally, WalMart will be increasing its total selling space by 8% next year.
The drug industry spends more than $26 billion annually in the U.S. on R&D. At the same time, since 1996, there has been a steady decline in drugs whose active ingredients have never before been approved in the U.S.
Last week U.S. chain store sales fell for the third consecutive week. A spokesperson for Bank of Tokyo-Mitsubishi and UBS stated there was “some fundamental softening in consumer demand.” WalMart, on the other hand, appears to be taking business from the department stores.
Yesterday, yields on U.S. treasury bonds declined to their lowest level in two months. Some folks in the bond pits believe the Bank of Japan is an on-going and active buyer of our treasuries. Even with the recent gains, the 10-year government bond was down 2% in value for the 3rd quarter.
Pentagon officials report that Air National Guard and Air Force Reserve units contribute 100% of weather reconnaissance, 64% of tactical airlift, 57% of combat search and rescue, and 55% of aerial refueling and strategic tankers. Since the 1991 Persian Gulf War, the full-time military has been cut by 29% to 1.4 million service members. Despite Rumsfeld’s statements, we appear to be short on regular soldiers to get the job done all around the globe. The Congressional Budget Office estimates that adding two new Army divisions would cost up to $19.4 billion in one-time costs, would add another $9.5 billion to $10.1 billion to the annual defense budget, and would take from 3 to 5 years to field with new troops.
Tuesday, September 30, 2003
9/30/03 Happy Birthday Mom
My Mom would have been 87 today. She died three years ago this month. My world misses her each day.
Yesterday I talked about Bon Macy’s , and mentioned that temporary workers would not be hired for the holiday shopping season. The temporary employment industry is a vital part of our economy. If you want to get an early picture on an economic pick-up, then keep an eye on this sector. By December 2000, staffing employment was less than that of the previous December, the first of 23 consecutive months of negative monthly year-over-year comparisons. It should have been a warning sign to investors. The following needs to be remembered. It will save you money. The fourth quarter has historically been the busiest for staffing companies, as clients seek fill-ins for workers on holiday or vacation leave, bring on extra staff to meet added demand associated with the holiday season, or staff up in a rush to make year-end goals. For the first time since quarterly trends were documented in 1992, fourth quarter temporary staffing employment fell in 2000. As it continued to fall, quarter after quarter, through the first quarter of 2002, more than 739,000 temporary staffing jobs vanished, and this was off 28% from the peak. Temporary staffing employment in the first quarter of 2002 was comparable to that of 1996. For 2002, temporary staffing average daily employment totaled just over 2 million, and this was 5.7% less than in 2001, and the second year in a row of decline. If economists are correct, and the economy does have a sustained recovery, one of the first signs will be a marked increase in temporary employment. Prior to hiring full-time workers, businesses will hire temps to test the business climate, as it were. To date, that has not happened.
According to the Census Bureau, the number of people without health insurance rose to 43.6 million, and it was the second consecutive annual increase. The ranks of the uninsured rose by 2.4 million Americans accompanied by health care costs rising 16% and growing unemployment rolls.
September was the seventh straight month of inflow into stock funds. Somewhat less than $10 billion went into those funds, and that was after over $12 billion in August and almost $11 billion in July. Stock funds have over 4% of their assets in cash. Assets in all funds total about $7 trillion. Our GDP is about $9.5 trillion.
Who wrote this? “We should vigorously promote the spirit of waging hard struggles, carefully make overall plans, operate according to our ability, and gradually and systematically carry out the programs to ensure the invigoration strategy can be implemented successfully.” Alan Geenspan? George Bush? It was the front- page article in China’s People’s Daily, the party newspaper. Northeast China has frequent worker protests and is the site of rundown state businesses. Premier Wen Jiabao is attempting to create private sector jobs and revitalize industry in the northeast. It is hoped that this effort will mitigate the growing divide between rich and poor.
Safeco of Seattle is seeking a buyer for its life and investments business in order to focus on its more property and casualty business. The company said it will eliminate “at least 500 positions” from the operations that won’t be sold. Celeritek will exit the wireless handset power amplifier business and layoff 20% of its workforce.
Employment data for September will be released on Friday. It is anticipated that unemployment will have increased once again. This rise will probably create some further weakness in the dollar.
In August, savings as a percentage of disposable income grew for the second consecutive month. It rose to 3.8% and was the highest level since February. Savings got a boost from Uncle Sam. In late July and early August, the government mailed out 22.8 million tax-credit checks worth a total of $13.7 billion.
Members of the Committee for Economic Development; the Concord Coalition; the Center on Budget and Policy Priorities; and former senior government officials warned of a “growing mismatch between what Americans are scheduled to pay to government and what they expect government to deliver in return.” They project combined deficits between 2004 and 2013 will total $5 trillion if the nation stays on its current path regarding tax and spending policies. “In the end, our children will have to face higher taxes, reduced public services, or both,” the organizations warned. “But if we wait until the crisis is upon us, the solutions will be more draconian.”
My Mom would have been 87 today. She died three years ago this month. My world misses her each day.
Yesterday I talked about Bon Macy’s , and mentioned that temporary workers would not be hired for the holiday shopping season. The temporary employment industry is a vital part of our economy. If you want to get an early picture on an economic pick-up, then keep an eye on this sector. By December 2000, staffing employment was less than that of the previous December, the first of 23 consecutive months of negative monthly year-over-year comparisons. It should have been a warning sign to investors. The following needs to be remembered. It will save you money. The fourth quarter has historically been the busiest for staffing companies, as clients seek fill-ins for workers on holiday or vacation leave, bring on extra staff to meet added demand associated with the holiday season, or staff up in a rush to make year-end goals. For the first time since quarterly trends were documented in 1992, fourth quarter temporary staffing employment fell in 2000. As it continued to fall, quarter after quarter, through the first quarter of 2002, more than 739,000 temporary staffing jobs vanished, and this was off 28% from the peak. Temporary staffing employment in the first quarter of 2002 was comparable to that of 1996. For 2002, temporary staffing average daily employment totaled just over 2 million, and this was 5.7% less than in 2001, and the second year in a row of decline. If economists are correct, and the economy does have a sustained recovery, one of the first signs will be a marked increase in temporary employment. Prior to hiring full-time workers, businesses will hire temps to test the business climate, as it were. To date, that has not happened.
According to the Census Bureau, the number of people without health insurance rose to 43.6 million, and it was the second consecutive annual increase. The ranks of the uninsured rose by 2.4 million Americans accompanied by health care costs rising 16% and growing unemployment rolls.
September was the seventh straight month of inflow into stock funds. Somewhat less than $10 billion went into those funds, and that was after over $12 billion in August and almost $11 billion in July. Stock funds have over 4% of their assets in cash. Assets in all funds total about $7 trillion. Our GDP is about $9.5 trillion.
Who wrote this? “We should vigorously promote the spirit of waging hard struggles, carefully make overall plans, operate according to our ability, and gradually and systematically carry out the programs to ensure the invigoration strategy can be implemented successfully.” Alan Geenspan? George Bush? It was the front- page article in China’s People’s Daily, the party newspaper. Northeast China has frequent worker protests and is the site of rundown state businesses. Premier Wen Jiabao is attempting to create private sector jobs and revitalize industry in the northeast. It is hoped that this effort will mitigate the growing divide between rich and poor.
Safeco of Seattle is seeking a buyer for its life and investments business in order to focus on its more property and casualty business. The company said it will eliminate “at least 500 positions” from the operations that won’t be sold. Celeritek will exit the wireless handset power amplifier business and layoff 20% of its workforce.
Employment data for September will be released on Friday. It is anticipated that unemployment will have increased once again. This rise will probably create some further weakness in the dollar.
In August, savings as a percentage of disposable income grew for the second consecutive month. It rose to 3.8% and was the highest level since February. Savings got a boost from Uncle Sam. In late July and early August, the government mailed out 22.8 million tax-credit checks worth a total of $13.7 billion.
Members of the Committee for Economic Development; the Concord Coalition; the Center on Budget and Policy Priorities; and former senior government officials warned of a “growing mismatch between what Americans are scheduled to pay to government and what they expect government to deliver in return.” They project combined deficits between 2004 and 2013 will total $5 trillion if the nation stays on its current path regarding tax and spending policies. “In the end, our children will have to face higher taxes, reduced public services, or both,” the organizations warned. “But if we wait until the crisis is upon us, the solutions will be more draconian.”
Monday, September 29, 2003
9/29/03 Bottom Up Analysis
I’ve decided that we should learn how easy to sleuth it really is. A lot of you think I’m really smart. You give me much too much credit. I just work hard at it, and tweak the information until a clear picture is developed. Last year I came away in September that the holiday shopping season would not be anything terrific. In fact, I realized it would be pretty disappointing. How did this view come into focus? I talked to store clerks and shoppers. I did this at different stores ranging from small specialty stores to outlet stores to discount stores to department stores. So far this season a very important fact has been uncovered. Bon Marche is a pretty upscale department store, and was purchased by Macy’s some time ago. In August the name was changed to Bon Macy’s. The latter is part of Federated Department Stores, one of this nation’s largest department store chains. In late summer management tells the sales people how many extra hours they can expect to work during the holidays, and then the company arranges with part-time workers to fill-in hours as well. Since the stores have extended hours during the holiday shopping season, that’s a rational approach. This year is different. The full-time sales people are not expected to work longer hours. The company will not be hiring extra part-time workers for the holiday season. The store hours will be stretched as usual. This time the workforce will be thinned. I didn’t grasp this notion at first. Then it was explained to me. Simply put, the stores will remain open for about 16 hours. If there are two sales people in a department, then one will handle one eight-hour shift and the other will handle the remaining shift and they shall alternate. There will be less sales people on the floor selling and providing customer service. There won’t be extra hours worked, and there won’t be temporary workers at Bon Macy’s. This will probably result in a less satisfying customer experience, less store traffic, and disappointing sales. Bon Marche now Bon Macy’s did provide holiday gift wrapping for many years. That service was discontinued some years back.
Based on the projected holiday shopping experience at Bon Macy’s, it is easy to visualize that a growing number of people might frequent Target and WalMart rather than a department store. If service will be lessened, then one might as well go to a self-service discount store for more items. You might find this analysis very simplistic, but keeping things simple more often creates clear pictures of the future. To be a successful investor it’s necessary to stay ahead of the curve. See what’s around that bend before the bend comes into view. Anyone can see on the straightaway. In the retail business it is necessary to provide personal service, quality, and value. If a business drops one of those musts, then the business loses its allure. When that happens, stockholders suffer.
Bob Natt is CEO of mbi based in Waltham, Mass. They have issued 310,000 of the flexible-spending debit cards of the 386,000 currently on the market. He predicts his company will have 1 million such cards issued by January. FSAs (flexible spending accounts) are part of corporate employee benefit plans, and the plans permit employees to set aside up to $5,000 from their paycheck into a special account—before taxes are deducted—to reimburse themselves for medical bills that insurance doesn’t cover. Because money in the account spent on medical bills is not taxed, the programs allow middle-income employees to have about 25% of their medical costs onto the U.S. government. The drawbacks are two-fold: employees forfeit whatever they fail to spend before the year ends and employees must front the money prior to filing a reimbursement claim, and the latter can take weeks to process. The employer wins too. The FSAs cut the cost of processing paper claims, the company avoids paying Social Security and Medicare taxes for every dollar that employees divert from their paychecks into flexible spending accounts. The three major players in this field are mbi, SmartFlex of NY, and Evolution Benefits of Avon, Conn. They get a tiny piece of each debit transaction. I predict this business has a growing future.
In Newsweek’s Oct. 6 issue, they report that huge pension liabilities are strangling corporate America, and execs say this new debt is choking off an economic recovery. Companies that offer workers traditional pensions are suddenly facing a $350 billion deficit in those plans. Thus, the magazine states, companies are delaying expansion plans because of the need to fund the pension plans.
I’ve decided that we should learn how easy to sleuth it really is. A lot of you think I’m really smart. You give me much too much credit. I just work hard at it, and tweak the information until a clear picture is developed. Last year I came away in September that the holiday shopping season would not be anything terrific. In fact, I realized it would be pretty disappointing. How did this view come into focus? I talked to store clerks and shoppers. I did this at different stores ranging from small specialty stores to outlet stores to discount stores to department stores. So far this season a very important fact has been uncovered. Bon Marche is a pretty upscale department store, and was purchased by Macy’s some time ago. In August the name was changed to Bon Macy’s. The latter is part of Federated Department Stores, one of this nation’s largest department store chains. In late summer management tells the sales people how many extra hours they can expect to work during the holidays, and then the company arranges with part-time workers to fill-in hours as well. Since the stores have extended hours during the holiday shopping season, that’s a rational approach. This year is different. The full-time sales people are not expected to work longer hours. The company will not be hiring extra part-time workers for the holiday season. The store hours will be stretched as usual. This time the workforce will be thinned. I didn’t grasp this notion at first. Then it was explained to me. Simply put, the stores will remain open for about 16 hours. If there are two sales people in a department, then one will handle one eight-hour shift and the other will handle the remaining shift and they shall alternate. There will be less sales people on the floor selling and providing customer service. There won’t be extra hours worked, and there won’t be temporary workers at Bon Macy’s. This will probably result in a less satisfying customer experience, less store traffic, and disappointing sales. Bon Marche now Bon Macy’s did provide holiday gift wrapping for many years. That service was discontinued some years back.
Based on the projected holiday shopping experience at Bon Macy’s, it is easy to visualize that a growing number of people might frequent Target and WalMart rather than a department store. If service will be lessened, then one might as well go to a self-service discount store for more items. You might find this analysis very simplistic, but keeping things simple more often creates clear pictures of the future. To be a successful investor it’s necessary to stay ahead of the curve. See what’s around that bend before the bend comes into view. Anyone can see on the straightaway. In the retail business it is necessary to provide personal service, quality, and value. If a business drops one of those musts, then the business loses its allure. When that happens, stockholders suffer.
Bob Natt is CEO of mbi based in Waltham, Mass. They have issued 310,000 of the flexible-spending debit cards of the 386,000 currently on the market. He predicts his company will have 1 million such cards issued by January. FSAs (flexible spending accounts) are part of corporate employee benefit plans, and the plans permit employees to set aside up to $5,000 from their paycheck into a special account—before taxes are deducted—to reimburse themselves for medical bills that insurance doesn’t cover. Because money in the account spent on medical bills is not taxed, the programs allow middle-income employees to have about 25% of their medical costs onto the U.S. government. The drawbacks are two-fold: employees forfeit whatever they fail to spend before the year ends and employees must front the money prior to filing a reimbursement claim, and the latter can take weeks to process. The employer wins too. The FSAs cut the cost of processing paper claims, the company avoids paying Social Security and Medicare taxes for every dollar that employees divert from their paychecks into flexible spending accounts. The three major players in this field are mbi, SmartFlex of NY, and Evolution Benefits of Avon, Conn. They get a tiny piece of each debit transaction. I predict this business has a growing future.
In Newsweek’s Oct. 6 issue, they report that huge pension liabilities are strangling corporate America, and execs say this new debt is choking off an economic recovery. Companies that offer workers traditional pensions are suddenly facing a $350 billion deficit in those plans. Thus, the magazine states, companies are delaying expansion plans because of the need to fund the pension plans.
Sunday, September 28, 2003
9/28/03 When The Lights Go Out
It must be a virus. It appears to be spreading around the globe. I’m talking about the loss of power. In this instance it’s electrical power. Italy is Europe’s fourth largest economy. They had an early morning blackout. Initially, the problem was caused by a transmission problem between Switzerland and Italy, and then there was an incident involving one of two high-tension lines between France and Italy. Less than a week ago Copenhagen, the rest of eastern Denmark, and southern Sweden lost power for four hours. About a month before that London had an electricity failure. Two weeks before that there was the biggest blackout in the history of North America. Am I to believe that these happenings are coincidences?
The lights are going out at many San Francisco restaurants, but for a different reason. San Francisco features more restaurants per capita than any city nationwide. San Francisco is heavily dependent on tourism. As recently as May of this year, 24% fewer travelers passed through San Francisco International Airport than in May 2000. Since, 2001, this city has lost 7% of its more than 3,000 restaurants. In the past two years 168 more restaurants closed than opened. Kent O. Sims, a Bay Area economic consultant, remarked “nothing like this has happened here. Restaurants open and close all the time. But we’ve never had an overall drop like this. People are getting slaughtered.” The Golden Gate Restaurant Association stated that, from 2001 to 2002, median table service restaurant income dropped 40%; restaurant advertising fell 70%; and the number of applicants seeking restaurant work rose 50%.”
According to the Bureau of Labor Statistics, more than 4.5 million seniors 65 and older were working in August, up 18% from 3.85 million in 1999. They make up 3% of the workforce, and their numbers are expected to climb. Clare Hushbeck, senior legislative representative and labor economist at AARP, stated “they used to call work the poor man’s pension. Now it is going to be part of many, many people’s retirement income stream. People are being yanked back into reality in a fairly painful way. More and more people are going to have to be working in retirement.”
Walter Cronkite recently compared U.S. Attorney General John Ashcroft to Tomas de Torquemada, the 15t century Dominican friar who became the grand inquisitor of the Spanish Inquisition. The New York Times’ Eric Lichtblau recently wrote how the Bush Administration has been using the Patriot Act beyond investigating terrorism, and has expanded its authority to many criminal investigations devoid of connections to terrorism.
Shipping jobs overseas is known in the Silicon Valley as “offshoring.” Daniel Slack, CFO of Centillium Communications of Fremont, California, made a presentation to investors on September 17. He stated that his company had cut its research and development expenses in the second quarter by 21%, compared with the year-earlier period. Slack said the “key factor” was his company shutting two U.S. plants and opening an office in Bangalore, India. As an illustration, Wipro Technologies is an Indian concern that provides global IT services. Over the last three years, their workforce has grown from 3,000 to 20,000. Vivek Paul, Wipro’s president and CEO, stated that India has a pool of 17 million people with science and engineering degrees.
Even though the price of gasoline has come down in the past 30 days, it is still considerably more expensive than one year ago. By comparison, the experience in Iraq is quite different. True, Iraqis are provided low-octane, government-subsidized fuel called benzene, which is cheaper than water in Iraq and priced at 10 cents per gallon. Halliburton was hired by the Army Corps of Engineers to repair Iraq’s energy infrastructure. According to the Army Corps of Engineers, Halliburton has been paid more than $600 million to date to repair Iraq’s gas distribution network. Yet, Iraq is importing about 750,000 gallons of gasoline a day, according to statements by senior Oil Ministry officials. Today Iraq only produces a little over 1 million barrels of oil per day. Majed Mohammed manages the Mansur station for the Iraqi Oil Ministry and has worked for that entity for 21 years. He related that “the benzene we sell here comes from Turkey, Kuwait, and Saudi Arabia. Before the war it was 100% from Iraq. But now we have problems with sabotage of the pipelines. The refineries are working at far less than capacity. The cost is subsidized by the ministry. It was like that before the war when Saddam was here, and it is the same now. We are obliged to do it because of the needs of the people. If we didn’t, there would be major problems and even more anger at the Americans.” It’s better Iraqis should be paying 10 cents a gallon and Americans in the U.S. $1.65 per gallon with the latter heavily taxed and clearly unsubsidized? I’m not for subsidies but I am for a foreign policy promoting the economic well-being of our citizens first and foremeost.
It must be a virus. It appears to be spreading around the globe. I’m talking about the loss of power. In this instance it’s electrical power. Italy is Europe’s fourth largest economy. They had an early morning blackout. Initially, the problem was caused by a transmission problem between Switzerland and Italy, and then there was an incident involving one of two high-tension lines between France and Italy. Less than a week ago Copenhagen, the rest of eastern Denmark, and southern Sweden lost power for four hours. About a month before that London had an electricity failure. Two weeks before that there was the biggest blackout in the history of North America. Am I to believe that these happenings are coincidences?
The lights are going out at many San Francisco restaurants, but for a different reason. San Francisco features more restaurants per capita than any city nationwide. San Francisco is heavily dependent on tourism. As recently as May of this year, 24% fewer travelers passed through San Francisco International Airport than in May 2000. Since, 2001, this city has lost 7% of its more than 3,000 restaurants. In the past two years 168 more restaurants closed than opened. Kent O. Sims, a Bay Area economic consultant, remarked “nothing like this has happened here. Restaurants open and close all the time. But we’ve never had an overall drop like this. People are getting slaughtered.” The Golden Gate Restaurant Association stated that, from 2001 to 2002, median table service restaurant income dropped 40%; restaurant advertising fell 70%; and the number of applicants seeking restaurant work rose 50%.”
According to the Bureau of Labor Statistics, more than 4.5 million seniors 65 and older were working in August, up 18% from 3.85 million in 1999. They make up 3% of the workforce, and their numbers are expected to climb. Clare Hushbeck, senior legislative representative and labor economist at AARP, stated “they used to call work the poor man’s pension. Now it is going to be part of many, many people’s retirement income stream. People are being yanked back into reality in a fairly painful way. More and more people are going to have to be working in retirement.”
Walter Cronkite recently compared U.S. Attorney General John Ashcroft to Tomas de Torquemada, the 15t century Dominican friar who became the grand inquisitor of the Spanish Inquisition. The New York Times’ Eric Lichtblau recently wrote how the Bush Administration has been using the Patriot Act beyond investigating terrorism, and has expanded its authority to many criminal investigations devoid of connections to terrorism.
Shipping jobs overseas is known in the Silicon Valley as “offshoring.” Daniel Slack, CFO of Centillium Communications of Fremont, California, made a presentation to investors on September 17. He stated that his company had cut its research and development expenses in the second quarter by 21%, compared with the year-earlier period. Slack said the “key factor” was his company shutting two U.S. plants and opening an office in Bangalore, India. As an illustration, Wipro Technologies is an Indian concern that provides global IT services. Over the last three years, their workforce has grown from 3,000 to 20,000. Vivek Paul, Wipro’s president and CEO, stated that India has a pool of 17 million people with science and engineering degrees.
Even though the price of gasoline has come down in the past 30 days, it is still considerably more expensive than one year ago. By comparison, the experience in Iraq is quite different. True, Iraqis are provided low-octane, government-subsidized fuel called benzene, which is cheaper than water in Iraq and priced at 10 cents per gallon. Halliburton was hired by the Army Corps of Engineers to repair Iraq’s energy infrastructure. According to the Army Corps of Engineers, Halliburton has been paid more than $600 million to date to repair Iraq’s gas distribution network. Yet, Iraq is importing about 750,000 gallons of gasoline a day, according to statements by senior Oil Ministry officials. Today Iraq only produces a little over 1 million barrels of oil per day. Majed Mohammed manages the Mansur station for the Iraqi Oil Ministry and has worked for that entity for 21 years. He related that “the benzene we sell here comes from Turkey, Kuwait, and Saudi Arabia. Before the war it was 100% from Iraq. But now we have problems with sabotage of the pipelines. The refineries are working at far less than capacity. The cost is subsidized by the ministry. It was like that before the war when Saddam was here, and it is the same now. We are obliged to do it because of the needs of the people. If we didn’t, there would be major problems and even more anger at the Americans.” It’s better Iraqis should be paying 10 cents a gallon and Americans in the U.S. $1.65 per gallon with the latter heavily taxed and clearly unsubsidized? I’m not for subsidies but I am for a foreign policy promoting the economic well-being of our citizens first and foremeost.
Saturday, September 27, 2003
9/27/03 Big Daddy
DeConna Ice Cream is the maker of the Big Daddy brand. In 2001 a class-action lawsuit was filed in Broward Circuit Court claiming that the company had understated the ice cream’s fat and calorie content. Big Daddy’s label claimed that a 12 ounce serving contained only 2 grams of fat and 100 calories. DeConna conceded the label was wrong. In truth, it contained 7 grams of fat and 300 calories. A settlement has been reached, and covers consumers who purchased the product from 5/195 through 6/17/2001, when the mislabeling became public. More than three million cups of Big Daddy ice cream were sold during this period. Consumers still holding receipts will receive a full refund or coupons for two free cups of ice cream for each cup purchased. About $25,000 of the $1.2 million settlement has been set aside for refunds. How many consumers saved their receipts from 2 to 8 years back? This type of settlement can leave a bad taste in your mouth. Vince DeConna is the owner of the company. He was not exactly apologetic when he remarked “people who purchased the product never said they disliked the product. They were unhappy it did not have the calories it said it had. It had more calories than they thought.” I think DeConna should have been ordered to eat a cup of the ice cream and then regurgitate it on the court house steps.
Yesterday 10,000 National Guard troops were activated for service in Iraq and another 5,000 were placed on alert for likely call-up. Bush has asked other countries to volunteer and form a third multinational division. No country has come forward. Marine Corps. Gen. Peter Pace, vice chairman of the Joint Chiefs of Staff and the nation’s second-ranking officer, said “there are many countries out there talking about contributing troops, and we have every hope that will happen. But hope is not a plan.” On Feb. 27 Rumsfeld stated “it’s not logical to me to think it would take as many troops to keep the peace as it would to win the war.” Anthony Cordesman, a defense expert at the Center for Strategic and International Studies in Washington, stated “they planned to pull the troops out quickly.” He said there was an illogical assumption that U.S. troops would be greeted almost universally as liberators, that political control could be handed over to Iraqis quickly, and that there would be no insurgency. Cordesman said “we never really had a nation-building Plan.”
IBM laid off 1% or 380 employees in marketing in the company’s software divisions. First Virginia cut 940 jobs.
For the third consecutive month U.S. consumer sentiment fell, and the September reading was below the preliminary forecast. The loss of jobs and the on-going conflict in Iraq are weighing heavily on the American public. In addition, the folks on Main Street are not convinced the economic recovery is sustainable. Without hiring, it’s tough to get very optimistic.
A new Harris Poll shows a 46% to 27% plurality is not confident that U.S. policies in Iraq will be successful; 50% to 28% favors the U.S. handing over control of Iraq to the U.N.; 54% to 23% thinks that most people in Iraq see the U.S. troops there more as occupiers than as liberators; and 51% to 47% gives Bush a negative rating on his handling of Iraq over the last several months.
The Census Bureau reported that almost 35 million people lived in poverty in 2002. After accounting for inflation, they said the median household income declined 1.1% in 2002 from the prior year. At the same time, we should always remember that the government announced the recession officially ended in November 2001. These numbers will play a part in the 2004 presidential election. It’s Bush’s economy and its his Iraq war.
The state of Massachusetts is the only state still suing Microsoft for antitrust violations. On Thursday Massachusetts became the first state to move their computer systems from the windows operating system to Linux.
This week’s market decline was modest in relationship to the gains recorded since March 11. The Nasdaq lost 6%, and it was its worst weekly performance in almost a year and a half. The Dow lost 3.4%, and it was the worst weekly decline in six months. The S&P 500 dropped 3.8%, and it was the largest weekly decline in eight months. Historically, September has been the worst month on Wall Street. So far, the losses in this September have been modest. Possibly, the most significant change has been the withdrawal of funds from the equity market over the past two weeks.
DeConna Ice Cream is the maker of the Big Daddy brand. In 2001 a class-action lawsuit was filed in Broward Circuit Court claiming that the company had understated the ice cream’s fat and calorie content. Big Daddy’s label claimed that a 12 ounce serving contained only 2 grams of fat and 100 calories. DeConna conceded the label was wrong. In truth, it contained 7 grams of fat and 300 calories. A settlement has been reached, and covers consumers who purchased the product from 5/195 through 6/17/2001, when the mislabeling became public. More than three million cups of Big Daddy ice cream were sold during this period. Consumers still holding receipts will receive a full refund or coupons for two free cups of ice cream for each cup purchased. About $25,000 of the $1.2 million settlement has been set aside for refunds. How many consumers saved their receipts from 2 to 8 years back? This type of settlement can leave a bad taste in your mouth. Vince DeConna is the owner of the company. He was not exactly apologetic when he remarked “people who purchased the product never said they disliked the product. They were unhappy it did not have the calories it said it had. It had more calories than they thought.” I think DeConna should have been ordered to eat a cup of the ice cream and then regurgitate it on the court house steps.
Yesterday 10,000 National Guard troops were activated for service in Iraq and another 5,000 were placed on alert for likely call-up. Bush has asked other countries to volunteer and form a third multinational division. No country has come forward. Marine Corps. Gen. Peter Pace, vice chairman of the Joint Chiefs of Staff and the nation’s second-ranking officer, said “there are many countries out there talking about contributing troops, and we have every hope that will happen. But hope is not a plan.” On Feb. 27 Rumsfeld stated “it’s not logical to me to think it would take as many troops to keep the peace as it would to win the war.” Anthony Cordesman, a defense expert at the Center for Strategic and International Studies in Washington, stated “they planned to pull the troops out quickly.” He said there was an illogical assumption that U.S. troops would be greeted almost universally as liberators, that political control could be handed over to Iraqis quickly, and that there would be no insurgency. Cordesman said “we never really had a nation-building Plan.”
IBM laid off 1% or 380 employees in marketing in the company’s software divisions. First Virginia cut 940 jobs.
For the third consecutive month U.S. consumer sentiment fell, and the September reading was below the preliminary forecast. The loss of jobs and the on-going conflict in Iraq are weighing heavily on the American public. In addition, the folks on Main Street are not convinced the economic recovery is sustainable. Without hiring, it’s tough to get very optimistic.
A new Harris Poll shows a 46% to 27% plurality is not confident that U.S. policies in Iraq will be successful; 50% to 28% favors the U.S. handing over control of Iraq to the U.N.; 54% to 23% thinks that most people in Iraq see the U.S. troops there more as occupiers than as liberators; and 51% to 47% gives Bush a negative rating on his handling of Iraq over the last several months.
The Census Bureau reported that almost 35 million people lived in poverty in 2002. After accounting for inflation, they said the median household income declined 1.1% in 2002 from the prior year. At the same time, we should always remember that the government announced the recession officially ended in November 2001. These numbers will play a part in the 2004 presidential election. It’s Bush’s economy and its his Iraq war.
The state of Massachusetts is the only state still suing Microsoft for antitrust violations. On Thursday Massachusetts became the first state to move their computer systems from the windows operating system to Linux.
This week’s market decline was modest in relationship to the gains recorded since March 11. The Nasdaq lost 6%, and it was its worst weekly performance in almost a year and a half. The Dow lost 3.4%, and it was the worst weekly decline in six months. The S&P 500 dropped 3.8%, and it was the largest weekly decline in eight months. Historically, September has been the worst month on Wall Street. So far, the losses in this September have been modest. Possibly, the most significant change has been the withdrawal of funds from the equity market over the past two weeks.
Friday, September 26, 2003
9/26/03 Happy New Year
According to former U.S. Justice Department Nazi war crimes investigator and current president of the Florida Holocaust Museum, John Loftus, “the Bush family fortune that helped put two members of the family in the White House can be traced directly to the Third Reich.”
The Bureau of Labor Statistics reported yesterday that about 134,000 workers lost their jobs in August up from 128,103 employees who were laid off in August 2002. Yesterday the reading on job losses took a turn for the worse. Levi Strauss announced it would close its remaining North American manufacturing and finishing plants and leave approximately 2,000 employees out of work. Tyson Foods will close a plant in Arkansas and cut 600 workers. Federal Signal plans to aggressively cut costs, and will cut a number of jobs in various businesses. The number of layoffs was not announced. Lastly, as Kodak reinvents itself, the company will eliminate many manufacturing jobs. They will not be needed with the company’s move to digital imaging. Since Kodak sees industry film sales dropping 12% through 2006, I would imagine the job losses could number in the thousands.
Economists still write about a recovery. It’s tough to have a rebound in sustainable economic activity when U.S. durable goods orders drop. They did in August. Inventories of durable goods dropped last month too, and it was the 30th decline in the last 31 months. Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University in Atlanta, stated “CEOs aren’t in a mood to keep investing. If you can’t raise your prices, then you are going to cut costs.” If CEOs don’t want to invest in their businesses, then why should investors invest in those businesses?
A new NBC News/WSJ poll released Wednesday night revealed Bush’s approval rating now stands at 49%. Interestingly, 56% of respondents said they’d opt for repealing the portion of the tax cuts that Congress passed last May that benefits upper-income taxpayers. In addition, 52% disapproved of Bush’s handling of the economy, a figure that surprised me as understated. A key state in the next election may be Pennsylvania, a state Bush lost to Gore by 4 percentage points. It has 21 electoral, the second highest percentage of people over age 65, and since getting elected, Bush has visited Pennsylvania 22 times.
An AARP survey reveals “in this latest study, nearly 70% of workers who have not yet retired report that they plan to work into retirement years or never retire, and almost half indicate that they envision working into their 70s and beyond.” Forty two per cent expect that during their retirement years they will have to “do some kind of work to help pay the bills.” This study is quite different from the findings out of the Conference Board report that states “the leading edge of boomers, now in their mid-50s, are beginning to retire, and not enough people are coming along in the much smaller Generation X, now 25 to 38 years old, to replace them. The unprecedented turnover rates in recent years among younger, mid-career employees will further shrink that pool of qualified replacements at many companies. There is a real question as to how many companies are prepared for the retirement tsunami already underway.”
Economist Henry Kaufman spoke before the Foreign Policy Association of the World Leadership Forum 2003 in New York. He stated that “U.S. economic growth will bump along at a more moderate and irregular pace of 2.5 to 3% growth over the next year. The dimensions of the current recovery are not robust enough to suggest a recovery of cyclical dimensions.”
The Conference Board’s Help-Wanted Advertising Index dipped one point to 37 in August. The Index was 41 a year ago. Their economist remarked “while total job advertising volume is stabilizing, it is at very low levels.”
Deputy Defense Secretary Paul Wolfowitz stated “certainly no one I know believes that we are not going to be in Iraq with significant forces through the end of next year.” Why would we have significant forces there through the end of next year if the primary fighting in Iraq ended on May 1, 2003? I have trouble reconciling those two statements.
Unnamed diplomats said new traces of enriched uranium were found in environmental samples taken during inspections at the Kalaye Electric Company on the southern outskirts of Tehran. A watch company serves as the front for Kalaye Electric. Their motto is ‘it just keeps ticking.’ Earlier this year, inspectors had found traces of uranium at a plant at Natanz. The diplomat stated “this finding may actually raise even more questions about the discovery of enriched uranium.” In an August 26 report, the IAEA said a team of U.N. centrifuge experts concluded Iran must have tested its centrifuges with uranium. Most likely, the testing was done at Kalaye.
A new study released by the Substance Abuse and Mental Health Services Administration (SAMHSA) revealed the following: 22 million Americans suffer from alcohol or drug abuse; 19.5 million used illegal drugs in 2002; 14.6 million use marijuana per month; 2 million are cocaine users; 1.2 million have used Ecstasy or other hallucinogens; 54 million are binge drinkers per month; and 16 million have 5 or more drinks per day.
Robert Higgs: “All sorts of economic, environmental, health and safety, and social regulations continue to spew out of Washington and Brussels, among other places. In addition, however, the U.S. government especially requires eve more uncompensated information collection and reporting by its subjects in order to slake the Surveillance State’s insatiable craving for the most minute details of everyone’s conduct…Simultaneously, the state and local governments, as well as various international bodies, continue to pour out endless streams of their own regulations, all of which entail resource costs and sacrifices of citizens’ liberties.”
According to former U.S. Justice Department Nazi war crimes investigator and current president of the Florida Holocaust Museum, John Loftus, “the Bush family fortune that helped put two members of the family in the White House can be traced directly to the Third Reich.”
The Bureau of Labor Statistics reported yesterday that about 134,000 workers lost their jobs in August up from 128,103 employees who were laid off in August 2002. Yesterday the reading on job losses took a turn for the worse. Levi Strauss announced it would close its remaining North American manufacturing and finishing plants and leave approximately 2,000 employees out of work. Tyson Foods will close a plant in Arkansas and cut 600 workers. Federal Signal plans to aggressively cut costs, and will cut a number of jobs in various businesses. The number of layoffs was not announced. Lastly, as Kodak reinvents itself, the company will eliminate many manufacturing jobs. They will not be needed with the company’s move to digital imaging. Since Kodak sees industry film sales dropping 12% through 2006, I would imagine the job losses could number in the thousands.
Economists still write about a recovery. It’s tough to have a rebound in sustainable economic activity when U.S. durable goods orders drop. They did in August. Inventories of durable goods dropped last month too, and it was the 30th decline in the last 31 months. Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University in Atlanta, stated “CEOs aren’t in a mood to keep investing. If you can’t raise your prices, then you are going to cut costs.” If CEOs don’t want to invest in their businesses, then why should investors invest in those businesses?
A new NBC News/WSJ poll released Wednesday night revealed Bush’s approval rating now stands at 49%. Interestingly, 56% of respondents said they’d opt for repealing the portion of the tax cuts that Congress passed last May that benefits upper-income taxpayers. In addition, 52% disapproved of Bush’s handling of the economy, a figure that surprised me as understated. A key state in the next election may be Pennsylvania, a state Bush lost to Gore by 4 percentage points. It has 21 electoral, the second highest percentage of people over age 65, and since getting elected, Bush has visited Pennsylvania 22 times.
An AARP survey reveals “in this latest study, nearly 70% of workers who have not yet retired report that they plan to work into retirement years or never retire, and almost half indicate that they envision working into their 70s and beyond.” Forty two per cent expect that during their retirement years they will have to “do some kind of work to help pay the bills.” This study is quite different from the findings out of the Conference Board report that states “the leading edge of boomers, now in their mid-50s, are beginning to retire, and not enough people are coming along in the much smaller Generation X, now 25 to 38 years old, to replace them. The unprecedented turnover rates in recent years among younger, mid-career employees will further shrink that pool of qualified replacements at many companies. There is a real question as to how many companies are prepared for the retirement tsunami already underway.”
Economist Henry Kaufman spoke before the Foreign Policy Association of the World Leadership Forum 2003 in New York. He stated that “U.S. economic growth will bump along at a more moderate and irregular pace of 2.5 to 3% growth over the next year. The dimensions of the current recovery are not robust enough to suggest a recovery of cyclical dimensions.”
The Conference Board’s Help-Wanted Advertising Index dipped one point to 37 in August. The Index was 41 a year ago. Their economist remarked “while total job advertising volume is stabilizing, it is at very low levels.”
Deputy Defense Secretary Paul Wolfowitz stated “certainly no one I know believes that we are not going to be in Iraq with significant forces through the end of next year.” Why would we have significant forces there through the end of next year if the primary fighting in Iraq ended on May 1, 2003? I have trouble reconciling those two statements.
Unnamed diplomats said new traces of enriched uranium were found in environmental samples taken during inspections at the Kalaye Electric Company on the southern outskirts of Tehran. A watch company serves as the front for Kalaye Electric. Their motto is ‘it just keeps ticking.’ Earlier this year, inspectors had found traces of uranium at a plant at Natanz. The diplomat stated “this finding may actually raise even more questions about the discovery of enriched uranium.” In an August 26 report, the IAEA said a team of U.N. centrifuge experts concluded Iran must have tested its centrifuges with uranium. Most likely, the testing was done at Kalaye.
A new study released by the Substance Abuse and Mental Health Services Administration (SAMHSA) revealed the following: 22 million Americans suffer from alcohol or drug abuse; 19.5 million used illegal drugs in 2002; 14.6 million use marijuana per month; 2 million are cocaine users; 1.2 million have used Ecstasy or other hallucinogens; 54 million are binge drinkers per month; and 16 million have 5 or more drinks per day.
Robert Higgs: “All sorts of economic, environmental, health and safety, and social regulations continue to spew out of Washington and Brussels, among other places. In addition, however, the U.S. government especially requires eve more uncompensated information collection and reporting by its subjects in order to slake the Surveillance State’s insatiable craving for the most minute details of everyone’s conduct…Simultaneously, the state and local governments, as well as various international bodies, continue to pour out endless streams of their own regulations, all of which entail resource costs and sacrifices of citizens’ liberties.”
Thursday, September 25, 2003
9/25/03 It’s A Kodak Moment
For those depending on the Kodak dividend it is a defining moment. It was only a matter of time. The company announced this morning that it will cut its semi-annual dividend by 65 cents or 72% to 25 cents per share. This was a necessary action. The company’s net cash flow was not supporting the higher dividend pay out. It is a good lesson to remember. Please do not focus on dividend yield alone. Please analyze whether the company paying the dividend can afford that dividend. In several cases the answer will be no. Eastman Kodak stock has been going down for years, and so has their business. A stockholder in this company should have cut his/her losses short by selling quite some time ago. Do not get emotional about a stock holding. It’s only a piece of paper. You’re not married to the stock.
Mirant is a company in bankruptcy. They continue to lose money, and had a layoff in 2002. In order to stem the red ink, they will shortly announce another cutback in employment. They have 6,700 workers worldwide.
Yesterday OPEC announced a cutback in their daily output by 3.5% or 900,000 barrels. It’s not a big deal because it returns their output target to what it was until April, when Iraq’s production was removed from the oil market due to the war. It’s another example of knowing the facts and not getting emotional. It’s business as usual, and also the cost of doing business at the pump.
Yesterday saw another example of negative pricing power. Nintendo cut the U.S. retail price of its GameCube system by 33% to $100 in order to increase holiday sales and to undercut Microsoft’s Xbox and Sony’s competing products. GameCube is now at least $50 cheaper than other gaming consoles.
The Pentagon announced they may need to call up thousands more Guard and Reserve troops over the next two months for duty in Iraq unless other nations send more soldiers to the region. It won’t make for a very happy holiday for our troops and their families.
San Ramon is a city located in Contra Costa County, California. The city will join more than 170 others around the country that have registered their opposition to provisions of the U.S. Patriot Act. Mentioned was a quote attributed to Hermann Goering, a commander in the Third Reich: “Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the pacifists for lack of patriotism, and exposing the country to greater danger.”
A widely watched survey was released yesterday by UCLA’s Anderson School which forecast growth at a modest 2.5% on average through the middle of 2004, and stated that consumers do not have much room left to spark stronger growth. They said tight budgets will keep a lid on spending at the state and local level and be a drag on the economy. They anticipate the unemployment rate rising to 6.4% and to remain above 6% through 2005. They peg inflation at 2.1% in this quarter and to drop to 1.5% at the end of the year.
For those depending on the Kodak dividend it is a defining moment. It was only a matter of time. The company announced this morning that it will cut its semi-annual dividend by 65 cents or 72% to 25 cents per share. This was a necessary action. The company’s net cash flow was not supporting the higher dividend pay out. It is a good lesson to remember. Please do not focus on dividend yield alone. Please analyze whether the company paying the dividend can afford that dividend. In several cases the answer will be no. Eastman Kodak stock has been going down for years, and so has their business. A stockholder in this company should have cut his/her losses short by selling quite some time ago. Do not get emotional about a stock holding. It’s only a piece of paper. You’re not married to the stock.
Mirant is a company in bankruptcy. They continue to lose money, and had a layoff in 2002. In order to stem the red ink, they will shortly announce another cutback in employment. They have 6,700 workers worldwide.
Yesterday OPEC announced a cutback in their daily output by 3.5% or 900,000 barrels. It’s not a big deal because it returns their output target to what it was until April, when Iraq’s production was removed from the oil market due to the war. It’s another example of knowing the facts and not getting emotional. It’s business as usual, and also the cost of doing business at the pump.
Yesterday saw another example of negative pricing power. Nintendo cut the U.S. retail price of its GameCube system by 33% to $100 in order to increase holiday sales and to undercut Microsoft’s Xbox and Sony’s competing products. GameCube is now at least $50 cheaper than other gaming consoles.
The Pentagon announced they may need to call up thousands more Guard and Reserve troops over the next two months for duty in Iraq unless other nations send more soldiers to the region. It won’t make for a very happy holiday for our troops and their families.
San Ramon is a city located in Contra Costa County, California. The city will join more than 170 others around the country that have registered their opposition to provisions of the U.S. Patriot Act. Mentioned was a quote attributed to Hermann Goering, a commander in the Third Reich: “Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the pacifists for lack of patriotism, and exposing the country to greater danger.”
A widely watched survey was released yesterday by UCLA’s Anderson School which forecast growth at a modest 2.5% on average through the middle of 2004, and stated that consumers do not have much room left to spark stronger growth. They said tight budgets will keep a lid on spending at the state and local level and be a drag on the economy. They anticipate the unemployment rate rising to 6.4% and to remain above 6% through 2005. They peg inflation at 2.1% in this quarter and to drop to 1.5% at the end of the year.
Wednesday, September 24, 2003
9/24/03 Dark Matter Does Matter
Each day I receive emails with remarks about my on-going discussion of the job loss recovery. Yesterday, one said it was boring and another stated no one is entitled to a job. I will receive more email on this subject. Yesterday was a poor day for unemployment. On 8/28/03 Goodyear announced that it will eliminate 500 salaried and non-bargaining unit positions at its North American Tire manufacturing locations. Now Goodyear stated they are considering closing an Alabama tire plant and laying off as many as 2400 workers at other plants in 10 states. I’m not finished. TIAA-CREF has about 3 million customers and $286 billion in assets under management. They’ve been in business for 85 years, and never had a layoff-until yesterday when they announced laying off 8% of their workforce or about 500 people. I’m not finished. According to Gary Lapidus of Goldman Sachs, he calculates that the big three auto makers could eliminate 50,000 jobs over the next four years due to the closing or divestiture of 10-13 parts and assembly plants. I touched on this subject the other day, and would not be surprised to see these job losses occur by the end of 2005.
Avi Nachmany, director of research at Strategic Insight, said in the last 5 months $110 billion has poured into stock and hybrid (stock-and-bond mixture) funds. He said “for all of 2003, stock and balanced-fund inflows could eclipse $200 billion.” The peak of $279 billion was reached in 2000.
Tobias Levkovich, chief market strategist at Smith Barney, remarked “a word of caution. Part of this willingness to put money into stocks seems to be the result of return expectations that we consider excessive.” According to the UBS Index of Investor Optimism, investors polled this month expect an average 8.5% return on their personal portfolios in the next year. Interestingly, 73% of those surveyed expressed that their overall investment portfolio was medium to high risk.
If I hold a stock for 1 year, and make a profit of $100,000, I pay a maximum tax of $15,000. If I lose $100,000 during that time frame and have no gains, I can only take a loss of $3,000 in that year for tax purposes. In my view, this is ridiculously unfair and reduces the incentive for an investor to take losses unless that investor has gains as well. This is your government at work.
A total of 57,702 soldiers died in Vietnam. Our Iraq death toll is presently 304. When does it stop?
The annual meetings of the IMF and World Bank began yesterday. IMF chief Horst Koehler said the biggest risks to a recovery are the widening global trade imbalance and rising government debts. The Snowman acknowledged concerns about the U.S.’ ballooning budget and trade deficits. He emphasized that the “U.S. can’t be the real engine of growth for the world.” He must be in fantasy land. China’s economy has been growing at a 7% or greater rate for several consecutive years. They are the main growth engine. The proof is in the pudding. Our trade deficit with China exceeds $100 billion a year.
Yesterday the Snowman pledged to the IMF and the World Bank that the massive U.S. budget deficit would be halved by the end of 2008, and that it would be cut through “ample growth” and “disciplined spending.” He said that goal was “certainly very manageable.” Koehler politely informed the global bankers and economists that the U.S. now needed a “credible framework” to reduce its massive deficit as growth stabilizes. In other words, he doesn’t buy the Snowman’s pitch.
World Bank president Jim Wolfensohn criticized wealthy countries for providing just $56 billion a year in development assistance to poor nations as compared with more than $300 billion they spend on agricultural subsidies and $600 billion spent on defense. He said “it is inconsistent to preach the benefits of free trade and then maintain the highest subsidies and barriers for precisely those goods in which poor countries have a comparative advantage.”
Astronomers claim that Dark Matter (excess gravity) makes up more than 90% of our universe’s mass. Matter isn’t solid. At the same time it isn’t weak. This Dark Matter does matter as it interacts with time and space and possibly other dimensions.
Each day I receive emails with remarks about my on-going discussion of the job loss recovery. Yesterday, one said it was boring and another stated no one is entitled to a job. I will receive more email on this subject. Yesterday was a poor day for unemployment. On 8/28/03 Goodyear announced that it will eliminate 500 salaried and non-bargaining unit positions at its North American Tire manufacturing locations. Now Goodyear stated they are considering closing an Alabama tire plant and laying off as many as 2400 workers at other plants in 10 states. I’m not finished. TIAA-CREF has about 3 million customers and $286 billion in assets under management. They’ve been in business for 85 years, and never had a layoff-until yesterday when they announced laying off 8% of their workforce or about 500 people. I’m not finished. According to Gary Lapidus of Goldman Sachs, he calculates that the big three auto makers could eliminate 50,000 jobs over the next four years due to the closing or divestiture of 10-13 parts and assembly plants. I touched on this subject the other day, and would not be surprised to see these job losses occur by the end of 2005.
Avi Nachmany, director of research at Strategic Insight, said in the last 5 months $110 billion has poured into stock and hybrid (stock-and-bond mixture) funds. He said “for all of 2003, stock and balanced-fund inflows could eclipse $200 billion.” The peak of $279 billion was reached in 2000.
Tobias Levkovich, chief market strategist at Smith Barney, remarked “a word of caution. Part of this willingness to put money into stocks seems to be the result of return expectations that we consider excessive.” According to the UBS Index of Investor Optimism, investors polled this month expect an average 8.5% return on their personal portfolios in the next year. Interestingly, 73% of those surveyed expressed that their overall investment portfolio was medium to high risk.
If I hold a stock for 1 year, and make a profit of $100,000, I pay a maximum tax of $15,000. If I lose $100,000 during that time frame and have no gains, I can only take a loss of $3,000 in that year for tax purposes. In my view, this is ridiculously unfair and reduces the incentive for an investor to take losses unless that investor has gains as well. This is your government at work.
A total of 57,702 soldiers died in Vietnam. Our Iraq death toll is presently 304. When does it stop?
The annual meetings of the IMF and World Bank began yesterday. IMF chief Horst Koehler said the biggest risks to a recovery are the widening global trade imbalance and rising government debts. The Snowman acknowledged concerns about the U.S.’ ballooning budget and trade deficits. He emphasized that the “U.S. can’t be the real engine of growth for the world.” He must be in fantasy land. China’s economy has been growing at a 7% or greater rate for several consecutive years. They are the main growth engine. The proof is in the pudding. Our trade deficit with China exceeds $100 billion a year.
Yesterday the Snowman pledged to the IMF and the World Bank that the massive U.S. budget deficit would be halved by the end of 2008, and that it would be cut through “ample growth” and “disciplined spending.” He said that goal was “certainly very manageable.” Koehler politely informed the global bankers and economists that the U.S. now needed a “credible framework” to reduce its massive deficit as growth stabilizes. In other words, he doesn’t buy the Snowman’s pitch.
World Bank president Jim Wolfensohn criticized wealthy countries for providing just $56 billion a year in development assistance to poor nations as compared with more than $300 billion they spend on agricultural subsidies and $600 billion spent on defense. He said “it is inconsistent to preach the benefits of free trade and then maintain the highest subsidies and barriers for precisely those goods in which poor countries have a comparative advantage.”
Astronomers claim that Dark Matter (excess gravity) makes up more than 90% of our universe’s mass. Matter isn’t solid. At the same time it isn’t weak. This Dark Matter does matter as it interacts with time and space and possibly other dimensions.
Tuesday, September 23, 2003
9/23/03 It’s Not Business As Usual
According to the Bureau of Labor Statistics, the number of married-couple families in which both husband and wife were employed declined last year by 368,000. It was the first drop since the initial report on these employment characteristics were recorded in 1993. According to Challenger, Gray, and Christmas, the average number of households in which neither spouse was employed grew by 235,000 in 2002. John Challenger remarked that, “as job losses mount, more families are suddenly going from two-earner status to one-earner or no-earner status, which greatly reduces a family’s overall spending power. The protracted weakening of household income will continue to have an adverse effect on consumer confidence and spending.”
Gilroy, California is known for garlic and the Indian Motorcycle Corp. As I have noted previously, China’s exports of high quality and low-priced garlic have significantly reduced the demand for garlic grown in Gilroy. The Indian Motorcycle Corp. was founded in 1901. It specialized, until yesterday, in premium heavyweight motorcycles and had over 200 dealers. It ceased production effective immediately, and laid off its workforce of nearly 400.
A recent Fed study says 40 billion checks were written in the U.S. in 2002, down from 50 billion in 1995. In 1996, John H. Harland, a large check printer, cut its workforce by 10% and scaled back its 40 check-printing plants. Yesterday, the company said it would cut another 10% or 500 employees and close another 5 plants in its printing division.
According to a mid-September Atlanta-Journal Constitution/Zogby International poll, two out of every three Georgians say that, financially, they are either worse off or no better off than they were a year ago. Four in ten said they have less discretionary income than they had a year ago, and the same 40% noticed no change. Susan Raker of Alpharetta said “we have a neighbor who has been out of work for a while. A friend’s husband has been out of work for a year. It’s now affecting the people you know. We refinanced the mortgage. We are not doing any major improvements on the house. We pay more attention to where we put our retirement fund. You think a little bit more before you go out and spend money.”
According to a recent report by the Silicon Valley Manufacturing Group, whose member companies employ 1 in 5 valley workers, economic growth in the valley will lag the rest of the nation through 2005, and employment won’t return to its boom-era level until 2012. Carl Guardino, the group’s president and CEO, said “we’re still working through the excess of investments in telecommunications and Internet companies.” Roughly 200,000 Silicon Valley workers have lost their jobs in the past three years.
Thomas Tancredo, a Republican congressman from Colorado, is sponsoring a bill seeking to repeal the H-1B Visa program. Bush says “he and Tancredo are at opposite ends of the pole,” and H-1B workers “actually boost the U.S. economy.” About 35 to 45% of the estimated 900,000 H-1B Visa holders currently in the U.S. are from India. Beginning October 1, 2003, there is a stipulated reduction of H-1B quota from its current annual level of 195,000 to 65,000.
From January through July the Bank of Japan sold a record $80.5 billion yen. Since the G 7 countries agreed over the weekend that exchange rates should be more flexible, we have witnessed the dollar plunging against the yen. This morning the rate dropped below 111 yen. The Euro rose above $1.15. A sustained fall in the dollar would increase the risk for foreign invstors to incur currency losses on their U.S. assets.
In March 2000, Robert Shiller, a Yale economist, wrote a book entitled “Irrational Exuberance.” He warned of a stock market bubble. In a report written with Karl Case of Wellesley College, he surveyed homeowners through the third quarter of 2002 and compared results with a similar study they conducted in 1988. Schiller and Case found new evidence of a housing bubble by comparing home prices and income data over 71 quarters. Shiller says his data “doesn’t prove there is a bubble.” Yet, using the past as a reference, he states that “30% declines are not out of the question.”
One-in-nine low-income Americans rely on the Medicaid health insurance program, according to a Kaiser Family Foundation study. Because of gaping holes in state budgets, the number of states set to limit prescription drugs in the Medicaid program will likely more than double to 30 in 2004 from 14 this year, the study revealed. The states are trying to curtail double-digit prescription drug costs by adopting preferred drug lists. Additionally, more states are reducing or freezing payments to doctors, hospitals, and nursing homes.
Secretary-General Kofi Annan will deliver a speech today to the U.N. 191-member General Assembly, and will question whether nations have the “right and obligation to use force preemptively” against unconventional weapon systems even while they were still being developed. He will state that “my
concern is that, if it were to be adopted, it could set precedents that resulted in the proliferation of the unilateral and lawless use of force, with or without credible justification.”
According to the Bureau of Labor Statistics, the number of married-couple families in which both husband and wife were employed declined last year by 368,000. It was the first drop since the initial report on these employment characteristics were recorded in 1993. According to Challenger, Gray, and Christmas, the average number of households in which neither spouse was employed grew by 235,000 in 2002. John Challenger remarked that, “as job losses mount, more families are suddenly going from two-earner status to one-earner or no-earner status, which greatly reduces a family’s overall spending power. The protracted weakening of household income will continue to have an adverse effect on consumer confidence and spending.”
Gilroy, California is known for garlic and the Indian Motorcycle Corp. As I have noted previously, China’s exports of high quality and low-priced garlic have significantly reduced the demand for garlic grown in Gilroy. The Indian Motorcycle Corp. was founded in 1901. It specialized, until yesterday, in premium heavyweight motorcycles and had over 200 dealers. It ceased production effective immediately, and laid off its workforce of nearly 400.
A recent Fed study says 40 billion checks were written in the U.S. in 2002, down from 50 billion in 1995. In 1996, John H. Harland, a large check printer, cut its workforce by 10% and scaled back its 40 check-printing plants. Yesterday, the company said it would cut another 10% or 500 employees and close another 5 plants in its printing division.
According to a mid-September Atlanta-Journal Constitution/Zogby International poll, two out of every three Georgians say that, financially, they are either worse off or no better off than they were a year ago. Four in ten said they have less discretionary income than they had a year ago, and the same 40% noticed no change. Susan Raker of Alpharetta said “we have a neighbor who has been out of work for a while. A friend’s husband has been out of work for a year. It’s now affecting the people you know. We refinanced the mortgage. We are not doing any major improvements on the house. We pay more attention to where we put our retirement fund. You think a little bit more before you go out and spend money.”
According to a recent report by the Silicon Valley Manufacturing Group, whose member companies employ 1 in 5 valley workers, economic growth in the valley will lag the rest of the nation through 2005, and employment won’t return to its boom-era level until 2012. Carl Guardino, the group’s president and CEO, said “we’re still working through the excess of investments in telecommunications and Internet companies.” Roughly 200,000 Silicon Valley workers have lost their jobs in the past three years.
Thomas Tancredo, a Republican congressman from Colorado, is sponsoring a bill seeking to repeal the H-1B Visa program. Bush says “he and Tancredo are at opposite ends of the pole,” and H-1B workers “actually boost the U.S. economy.” About 35 to 45% of the estimated 900,000 H-1B Visa holders currently in the U.S. are from India. Beginning October 1, 2003, there is a stipulated reduction of H-1B quota from its current annual level of 195,000 to 65,000.
From January through July the Bank of Japan sold a record $80.5 billion yen. Since the G 7 countries agreed over the weekend that exchange rates should be more flexible, we have witnessed the dollar plunging against the yen. This morning the rate dropped below 111 yen. The Euro rose above $1.15. A sustained fall in the dollar would increase the risk for foreign invstors to incur currency losses on their U.S. assets.
In March 2000, Robert Shiller, a Yale economist, wrote a book entitled “Irrational Exuberance.” He warned of a stock market bubble. In a report written with Karl Case of Wellesley College, he surveyed homeowners through the third quarter of 2002 and compared results with a similar study they conducted in 1988. Schiller and Case found new evidence of a housing bubble by comparing home prices and income data over 71 quarters. Shiller says his data “doesn’t prove there is a bubble.” Yet, using the past as a reference, he states that “30% declines are not out of the question.”
One-in-nine low-income Americans rely on the Medicaid health insurance program, according to a Kaiser Family Foundation study. Because of gaping holes in state budgets, the number of states set to limit prescription drugs in the Medicaid program will likely more than double to 30 in 2004 from 14 this year, the study revealed. The states are trying to curtail double-digit prescription drug costs by adopting preferred drug lists. Additionally, more states are reducing or freezing payments to doctors, hospitals, and nursing homes.
Secretary-General Kofi Annan will deliver a speech today to the U.N. 191-member General Assembly, and will question whether nations have the “right and obligation to use force preemptively” against unconventional weapon systems even while they were still being developed. He will state that “my
concern is that, if it were to be adopted, it could set precedents that resulted in the proliferation of the unilateral and lawless use of force, with or without credible justification.”
Monday, September 22, 2003
9/22/03 The First Day Of Fall
This is the time of the year in the stock market that separates the winners from the losers. It separates the men from the boys and the women from the girls. It’s the first day of Fall. The fall in prices it shall be- just like the falling leaves off the trees; however, unlike the beautiful colors, the falling prices will produce much tears and some panic.
The G 7 meeting ended with the following statement: “We emphasize that more flexibility in exchange rates is desirable for major countries or economic areas to promote smooth and widespread adjustments in the international financial system, based on market mechanisms.” Hello! You guys forgot to ask the market what it wanted. The adjustments promptly began, but certainly not smoothly. The market is bigger than any group. It’s just that arrogance replaces intelligence or possibly there wasn’t intelligence in the first place. The fireworks have begun. The yen surged to 111+. Just a couple of days ago it was at 116 to the U.S. dollar. The Nikkei plunged over 4% for fear the rising yen would reduce the export earnings for many companies, such as, Toyota, Honda, Canon, Sony and many others. Exports are critical to the revival of the Japanese economy. A strong yen places that recovery in some doubt. As such, Japanese government bonds rallied to a one- year high. The South Korean won jumped to its highest point in almost three years. Seoul shares fell, and particularly, Samsung that dropped over 6%. The Taiwan dollar, Singapore dollar, the Philippine peso, the Swiss franc, the British pound, and the Canadian dollar all advanced against the U.S. dollar. Many of these countries have export-driven economies. Exports account for at least 20% of Japan’s GDP. Taiwan’s and South Korea’s exports are critical to their economies as well.
Chinese yuan one-year non-deliverable forwards jumped to a record 2.250 points premium against the U.S. dollar. This increase prices the yuan at about 8.05 per dollar a year from now, and this would represent a gain of over 2.5%. I have been predicting an upward adjustment in the yuan’s value of 2-3% within a year’s time.
Spot gold rose almost $4 dollars to about $387 an ounce, and not far from the February high of $389 per ounce. There is continued speculation that European central banks will continue to limit their gold sales for several more years.
The European Commission earlier this month cut its 2003 growth forecast to 0.5%. With a falling U.S. dollar, it is doubtful that this lowered forecast will be reached. EU Monetary Affairs Commissioner Pedro Solbes said the EU countries will not meet his 2004 growth forecast of 2%. With reduced levels of exports, it is possible the results for 2004 will not be materially unchanged from this year. We must remember that the EU region’s $8 trillion economy fell in this year’s second quarter.
The overall message from the G 7 meeting was to lower the value of the U.S. dollar. The Snowman will pounce on the notion that a lower dollar will help our exports. If those economies importing our exports have some growth in 2004, then that might prove factual; however, that remains to be seen. In the meantime, the purchasing value of the dollar will be reduced; investments in our stocks and bonds will be less attractive to foreigners due to the dollar’s exchange risk; and funding our budget and trade deficits will prove more difficult.
GM will close a parts plant and an engine-parts plant. Delphi Corp. will close or consolidate six plants, and move to cut pay. GM wants to also sell its diesel automotive business. The GM parts plant employs 983 hourly and 128 salaried workers. The powertrain plant has 323 hourly and 55 salaried workers. Its railroad locomotive division employs 3,120 people in two locations.
On Friday afternoon Chris Galvin, Chairman and CEO of Motorola, resigned. The company was founded by his grandfather. The most likely candidate to replace Galvin is Mike Zafirovski, who is now president of the company. Some speculate that Motorola can be divided into six separate companies, and that the parts will be worth more than the whole. Time will tell whether a turnaround can be engineered at Motorola.
Bush’s approval rating dropped another notch to 51%. His handling of the Iraq war plunged 5 points in a week to 46%. Fifty-seven per cent of Americans disapprove of how Bush is handling the economy, and this is an increase of six points from the prior week.
Bush will tell the UN “the world is a better place without Saddam Hussein.” That was not the reason for the U.S. invading Iraq. After turning his back on the wishes of other countries-other than England- the U.S. elected to basically go it alone in Iraq. Now, Bush turns to the UN and says “Let’s work together on big issues.” It’s a big issue that over 300 of our soldiers have been killed in Iraq, and it’s a big issue that close to 1600 soldiers have been wounded and or injured. Bush may not like Ted Kennedy’s words, but the majority of the American people don’t approve Bush’s handling of the Iraq war. Until proven otherwise, Kennedy, in my view, is justified in describing our Iraq policy as “failed, flawed, and bankrupt.”
This is the time of the year in the stock market that separates the winners from the losers. It separates the men from the boys and the women from the girls. It’s the first day of Fall. The fall in prices it shall be- just like the falling leaves off the trees; however, unlike the beautiful colors, the falling prices will produce much tears and some panic.
The G 7 meeting ended with the following statement: “We emphasize that more flexibility in exchange rates is desirable for major countries or economic areas to promote smooth and widespread adjustments in the international financial system, based on market mechanisms.” Hello! You guys forgot to ask the market what it wanted. The adjustments promptly began, but certainly not smoothly. The market is bigger than any group. It’s just that arrogance replaces intelligence or possibly there wasn’t intelligence in the first place. The fireworks have begun. The yen surged to 111+. Just a couple of days ago it was at 116 to the U.S. dollar. The Nikkei plunged over 4% for fear the rising yen would reduce the export earnings for many companies, such as, Toyota, Honda, Canon, Sony and many others. Exports are critical to the revival of the Japanese economy. A strong yen places that recovery in some doubt. As such, Japanese government bonds rallied to a one- year high. The South Korean won jumped to its highest point in almost three years. Seoul shares fell, and particularly, Samsung that dropped over 6%. The Taiwan dollar, Singapore dollar, the Philippine peso, the Swiss franc, the British pound, and the Canadian dollar all advanced against the U.S. dollar. Many of these countries have export-driven economies. Exports account for at least 20% of Japan’s GDP. Taiwan’s and South Korea’s exports are critical to their economies as well.
Chinese yuan one-year non-deliverable forwards jumped to a record 2.250 points premium against the U.S. dollar. This increase prices the yuan at about 8.05 per dollar a year from now, and this would represent a gain of over 2.5%. I have been predicting an upward adjustment in the yuan’s value of 2-3% within a year’s time.
Spot gold rose almost $4 dollars to about $387 an ounce, and not far from the February high of $389 per ounce. There is continued speculation that European central banks will continue to limit their gold sales for several more years.
The European Commission earlier this month cut its 2003 growth forecast to 0.5%. With a falling U.S. dollar, it is doubtful that this lowered forecast will be reached. EU Monetary Affairs Commissioner Pedro Solbes said the EU countries will not meet his 2004 growth forecast of 2%. With reduced levels of exports, it is possible the results for 2004 will not be materially unchanged from this year. We must remember that the EU region’s $8 trillion economy fell in this year’s second quarter.
The overall message from the G 7 meeting was to lower the value of the U.S. dollar. The Snowman will pounce on the notion that a lower dollar will help our exports. If those economies importing our exports have some growth in 2004, then that might prove factual; however, that remains to be seen. In the meantime, the purchasing value of the dollar will be reduced; investments in our stocks and bonds will be less attractive to foreigners due to the dollar’s exchange risk; and funding our budget and trade deficits will prove more difficult.
GM will close a parts plant and an engine-parts plant. Delphi Corp. will close or consolidate six plants, and move to cut pay. GM wants to also sell its diesel automotive business. The GM parts plant employs 983 hourly and 128 salaried workers. The powertrain plant has 323 hourly and 55 salaried workers. Its railroad locomotive division employs 3,120 people in two locations.
On Friday afternoon Chris Galvin, Chairman and CEO of Motorola, resigned. The company was founded by his grandfather. The most likely candidate to replace Galvin is Mike Zafirovski, who is now president of the company. Some speculate that Motorola can be divided into six separate companies, and that the parts will be worth more than the whole. Time will tell whether a turnaround can be engineered at Motorola.
Bush’s approval rating dropped another notch to 51%. His handling of the Iraq war plunged 5 points in a week to 46%. Fifty-seven per cent of Americans disapprove of how Bush is handling the economy, and this is an increase of six points from the prior week.
Bush will tell the UN “the world is a better place without Saddam Hussein.” That was not the reason for the U.S. invading Iraq. After turning his back on the wishes of other countries-other than England- the U.S. elected to basically go it alone in Iraq. Now, Bush turns to the UN and says “Let’s work together on big issues.” It’s a big issue that over 300 of our soldiers have been killed in Iraq, and it’s a big issue that close to 1600 soldiers have been wounded and or injured. Bush may not like Ted Kennedy’s words, but the majority of the American people don’t approve Bush’s handling of the Iraq war. Until proven otherwise, Kennedy, in my view, is justified in describing our Iraq policy as “failed, flawed, and bankrupt.”
Sunday, September 21, 2003
9/21/03 Instability On Wall Street
Wall Street investors have a much larger problem than dealing with Dick Grasso’s pay package. Taking a page from FDR’s 1942 speech, after 9/11, all Americans were told to make whatever self-denial is necessary because the fight to combat terrorism would be a long one. This self-denial didn’t include being in denial. Wall Street is in the process of sacrificing the truth. That sacrifice will bring with it a price so dear that the clean up after Isabel will look like a dream come true.
One must be fair. Wall Street gets its clue on denial from Washington’s leaders. In an NBC interview, Dick Cheney called the military campaign in Iraq “a major success.” This morning two U.S. soldiers were killed and 13 were wounded in a mortar attack west of Baghdad. The deaths brought to 302 the number of soldiers who have died in Iraq and the number wounded are approaching 1600. Cheney is in denial. Bush is in denial. The major combat continues in Iraq. It did not end on May 1.
The Nasdaq has rebounded 70% from the lows reached in October 2002, and the Dow and the S&P 500 more than 30%. Many large tech names have jumped 100% or more but these same companies have experienced no rise in sales. Their earnings have improved due to cost cutting; however, reducing expenses cannot eliminate the need for top-line growth. Oracle knows that. Cisco knows that. There are some exceptions, such as, eBay experiencing superior revenue generation. Thomson First Call suggests operating earnings for the S&P 500 will increase about 15% for the third quarter. Despite the analysts’call for higher earnings, insiders continue to sell shares at a rapid rate. There is a growing disconnect between insiders and positive investor sentiment. Meanwhile, there is growing discontent on Main Street with continued job losses, the growing death toll in Iraq, bulging budget deficits, and some political leaders “misspeaking.”
The National Weather Service is unable to predict a storm forming on Wall Street. They can predict Isabel but not the in denial storm. As Pat Dorsey, director of stock analysis with Morningstar in Chicago remarked, “I’m skeptical. Our emotions often steer us horribly wrong. What makes us human isn’t changing. We have not all become rational, arithmetic calculators.” Margaret Jones, chief executive of Whittlinger Capital Management in Minneapolis, stated “it’s too soon to know. It’s going to be very interesting to see if the lessons stick. If history is any indicator, they won’t stick.” Whether the lessons stick or do not stick will be forthcoming. What will stick are losses. As Terrance Odean, an associate professor of investor behavior at UC Berkeley stated, “there is a difference between being told the market can go down and experiencing it. It’s a more expensive lesson to experience it, but it sticks.”
For the very first time electricity from a tidal current has been fed into a power grid. A sub sea power station on the Arctic tip of Norway began getting power from the moon yesterday. It will produce enough light and heat for about 30 homes. That’s what’s needed on Wall Street- an underwater windmill to generate enough energy to keep stock prices moving higher. Offsetting that dream is the knowledge that such energy costs three times that of typical hydro-generated electricity in Norway. Maybe Wall Street analysts can create some rosy cost projections. They’ve been successful in doing so in the past.
Li Ruogu, assistant governor of the People’s Bank of China, told the Institute of International Finance in Dubai that “I just don’t see the logic of scrapping the yuan’s peg. We’ve already promised that we will gradually liberalize, but I cannot give you a clear timetable. We want to do it as quickly as possible.”
Small businesses create 3 out of every 4 new jobs and make up 50% of our GDP. The House of Representatives’ Small Business Committee has created the Small Business Index, and this index reflects the current economic business conditions confronting small business. At the end of the second quarter the index reached a 5-year low, and is down more than 33% from the peak reached in 2000. With a job loss recovery and the economic conditions for small businesses so difficult, then what are the Wall Street indices doing at the present levels? I would describe the condition as being in denial.
Wall Street investors have a much larger problem than dealing with Dick Grasso’s pay package. Taking a page from FDR’s 1942 speech, after 9/11, all Americans were told to make whatever self-denial is necessary because the fight to combat terrorism would be a long one. This self-denial didn’t include being in denial. Wall Street is in the process of sacrificing the truth. That sacrifice will bring with it a price so dear that the clean up after Isabel will look like a dream come true.
One must be fair. Wall Street gets its clue on denial from Washington’s leaders. In an NBC interview, Dick Cheney called the military campaign in Iraq “a major success.” This morning two U.S. soldiers were killed and 13 were wounded in a mortar attack west of Baghdad. The deaths brought to 302 the number of soldiers who have died in Iraq and the number wounded are approaching 1600. Cheney is in denial. Bush is in denial. The major combat continues in Iraq. It did not end on May 1.
The Nasdaq has rebounded 70% from the lows reached in October 2002, and the Dow and the S&P 500 more than 30%. Many large tech names have jumped 100% or more but these same companies have experienced no rise in sales. Their earnings have improved due to cost cutting; however, reducing expenses cannot eliminate the need for top-line growth. Oracle knows that. Cisco knows that. There are some exceptions, such as, eBay experiencing superior revenue generation. Thomson First Call suggests operating earnings for the S&P 500 will increase about 15% for the third quarter. Despite the analysts’call for higher earnings, insiders continue to sell shares at a rapid rate. There is a growing disconnect between insiders and positive investor sentiment. Meanwhile, there is growing discontent on Main Street with continued job losses, the growing death toll in Iraq, bulging budget deficits, and some political leaders “misspeaking.”
The National Weather Service is unable to predict a storm forming on Wall Street. They can predict Isabel but not the in denial storm. As Pat Dorsey, director of stock analysis with Morningstar in Chicago remarked, “I’m skeptical. Our emotions often steer us horribly wrong. What makes us human isn’t changing. We have not all become rational, arithmetic calculators.” Margaret Jones, chief executive of Whittlinger Capital Management in Minneapolis, stated “it’s too soon to know. It’s going to be very interesting to see if the lessons stick. If history is any indicator, they won’t stick.” Whether the lessons stick or do not stick will be forthcoming. What will stick are losses. As Terrance Odean, an associate professor of investor behavior at UC Berkeley stated, “there is a difference between being told the market can go down and experiencing it. It’s a more expensive lesson to experience it, but it sticks.”
For the very first time electricity from a tidal current has been fed into a power grid. A sub sea power station on the Arctic tip of Norway began getting power from the moon yesterday. It will produce enough light and heat for about 30 homes. That’s what’s needed on Wall Street- an underwater windmill to generate enough energy to keep stock prices moving higher. Offsetting that dream is the knowledge that such energy costs three times that of typical hydro-generated electricity in Norway. Maybe Wall Street analysts can create some rosy cost projections. They’ve been successful in doing so in the past.
Li Ruogu, assistant governor of the People’s Bank of China, told the Institute of International Finance in Dubai that “I just don’t see the logic of scrapping the yuan’s peg. We’ve already promised that we will gradually liberalize, but I cannot give you a clear timetable. We want to do it as quickly as possible.”
Small businesses create 3 out of every 4 new jobs and make up 50% of our GDP. The House of Representatives’ Small Business Committee has created the Small Business Index, and this index reflects the current economic business conditions confronting small business. At the end of the second quarter the index reached a 5-year low, and is down more than 33% from the peak reached in 2000. With a job loss recovery and the economic conditions for small businesses so difficult, then what are the Wall Street indices doing at the present levels? I would describe the condition as being in denial.
Saturday, September 20, 2003
9/20/03 G 7 Meeting
The China Daily newspaper remarked “making China the scapegoat can perhaps help some U.S. politicians score cheap political points, but it has nothing to do with the solution of their real problems.” China found an ally in Bundesbank’s Vice President Juergen Stark who stated “we should not let the discussion about the yuan distract from the main problem of the U.S.’s twin deficits.” Meanwhile, Bank of Japan’s Toshihiko Fukui stated “China has clearly said that it will work out ways to make its currency system more flexible. It is important that there is constructive discussions to take it in the right direction.” The Snowman chimed in by declaring “The United States can’t be the only engine of growth.” Looking at almost 3 million job losses since Bush was elected, Snow doesn’t have to worry about the only growth engine being the U.S. If other countries were like the U.S, world economic conditions would be significantly worse than the present. No other country imports more, spends more, and runs up such massive budget and trade deficits. Still, the U.S. thinks they can tell the rest of the world how to run their respective economies. The U.S. has successfully alienated the rest of the world save for England.
The National Association of Manufacturers blames China for U.S. economic problems and intends to file a formal trade complaint protesting China’s “illegal currency manipulation.” In my view, this is one of the stupidest moves I have seen in years. I agree with much of the views expressed by Steve Forbes who believes U.S. deflation stems from our own trade policies and that revaluation of the yuan would hurt the world economies as well as that of China. In actuality, the strongest world economy over the past 10 years has been China’s. It has grown almost 10% a year over the past decade and its GDP now exceeds $1 trillion a year. They have the world’s sixth largest economy. The G-7 accounts for two-thirds of the world’s economy. Realistically, one should note that Japan, Taiwan, South Korea, Indonesia, and Thailand have all sold their currencies in the past 12 months in order to avoid erosion of demand for their exports.
Boeing Commercial Airplanes Group handed out 70 layoff notices Friday. Since late 2001, Boeing has laid off 35,560 workers. Friday was also the last day of work for 420 who received layoff notices 60 days ago.
British Columbia loggers and mill workers overwhelmingly voted yesterday to strike . Union leaders are scheduled to decide tomorrow whether to give legally required 72-hour strike notice. Earlier strikes occurred in 2000 and 1986. Weyerhaeuser has six plants and six timberland operations that could be affected by a strike.
According to the Oil Price Information Service in Lakewood, N.J., the wholesale price of gasoline has dropped 30 cents a gallon in recent weeks. The American Petroleum Institute said high pump prices in August caused the first year-on-year decline in demand since 1997. The Institute said refinery output of gasoline in August set a record for the month. So much for reports of shortages. As the price drops, refinery margins will decline too. Unless a disaster strikes, the party is over for the refiners.
A new study by Stanford University’s Energy Modeling Forum (EMF) concludes that natural gas supplies are likely to meet growing demand in coming decades if policy-makers are able to strike a balance between environmental protection and the need for new energy sources. The EMF’s executive director and co-author of the study stated “recent volatile natural gas prices do not foreshadow a pending, long-term crisis in future natural gas supplies. Industry will respond with more investment, and demand will respond to prices-provided that market participants are given the opportunity.”
A look at the new UAW contracts reveals a good deal of give and take on the part of the union and the big three auto companies. Rather than raises this year and next, UAW employees will receive a $3,000 bonus before taxes and other deductions in 2003. Next year there’s another proposed bonus of 3% of pay. In 2005 there would be a 2% pay raise and in 2006 a 3% pay raise. In addition, UAW workers won’t be hit with drastic hikes in their out-of-pocket health care costs. For the auto makers there are pluses. No longer will they be forced to run factories at full or near full capacity. They have more flexibility to cut their work forces and thereby control labor costs. They can move idled workers from plant to plant. There is increased leeway in cracking down on absenteeism. There are extra incentives to encourage older workers to retire. It is predicted that the auto companies will close more plants and cut jobs.
Ed Yardeni, chief investment strategist with Prudential Securities, states “we have a chronic employment problem because as a result of globalization we are all potentially competing with an enormous labor force in Asia.” I would add India to that competitive labor force.
The China Daily newspaper remarked “making China the scapegoat can perhaps help some U.S. politicians score cheap political points, but it has nothing to do with the solution of their real problems.” China found an ally in Bundesbank’s Vice President Juergen Stark who stated “we should not let the discussion about the yuan distract from the main problem of the U.S.’s twin deficits.” Meanwhile, Bank of Japan’s Toshihiko Fukui stated “China has clearly said that it will work out ways to make its currency system more flexible. It is important that there is constructive discussions to take it in the right direction.” The Snowman chimed in by declaring “The United States can’t be the only engine of growth.” Looking at almost 3 million job losses since Bush was elected, Snow doesn’t have to worry about the only growth engine being the U.S. If other countries were like the U.S, world economic conditions would be significantly worse than the present. No other country imports more, spends more, and runs up such massive budget and trade deficits. Still, the U.S. thinks they can tell the rest of the world how to run their respective economies. The U.S. has successfully alienated the rest of the world save for England.
The National Association of Manufacturers blames China for U.S. economic problems and intends to file a formal trade complaint protesting China’s “illegal currency manipulation.” In my view, this is one of the stupidest moves I have seen in years. I agree with much of the views expressed by Steve Forbes who believes U.S. deflation stems from our own trade policies and that revaluation of the yuan would hurt the world economies as well as that of China. In actuality, the strongest world economy over the past 10 years has been China’s. It has grown almost 10% a year over the past decade and its GDP now exceeds $1 trillion a year. They have the world’s sixth largest economy. The G-7 accounts for two-thirds of the world’s economy. Realistically, one should note that Japan, Taiwan, South Korea, Indonesia, and Thailand have all sold their currencies in the past 12 months in order to avoid erosion of demand for their exports.
Boeing Commercial Airplanes Group handed out 70 layoff notices Friday. Since late 2001, Boeing has laid off 35,560 workers. Friday was also the last day of work for 420 who received layoff notices 60 days ago.
British Columbia loggers and mill workers overwhelmingly voted yesterday to strike . Union leaders are scheduled to decide tomorrow whether to give legally required 72-hour strike notice. Earlier strikes occurred in 2000 and 1986. Weyerhaeuser has six plants and six timberland operations that could be affected by a strike.
According to the Oil Price Information Service in Lakewood, N.J., the wholesale price of gasoline has dropped 30 cents a gallon in recent weeks. The American Petroleum Institute said high pump prices in August caused the first year-on-year decline in demand since 1997. The Institute said refinery output of gasoline in August set a record for the month. So much for reports of shortages. As the price drops, refinery margins will decline too. Unless a disaster strikes, the party is over for the refiners.
A new study by Stanford University’s Energy Modeling Forum (EMF) concludes that natural gas supplies are likely to meet growing demand in coming decades if policy-makers are able to strike a balance between environmental protection and the need for new energy sources. The EMF’s executive director and co-author of the study stated “recent volatile natural gas prices do not foreshadow a pending, long-term crisis in future natural gas supplies. Industry will respond with more investment, and demand will respond to prices-provided that market participants are given the opportunity.”
A look at the new UAW contracts reveals a good deal of give and take on the part of the union and the big three auto companies. Rather than raises this year and next, UAW employees will receive a $3,000 bonus before taxes and other deductions in 2003. Next year there’s another proposed bonus of 3% of pay. In 2005 there would be a 2% pay raise and in 2006 a 3% pay raise. In addition, UAW workers won’t be hit with drastic hikes in their out-of-pocket health care costs. For the auto makers there are pluses. No longer will they be forced to run factories at full or near full capacity. They have more flexibility to cut their work forces and thereby control labor costs. They can move idled workers from plant to plant. There is increased leeway in cracking down on absenteeism. There are extra incentives to encourage older workers to retire. It is predicted that the auto companies will close more plants and cut jobs.
Ed Yardeni, chief investment strategist with Prudential Securities, states “we have a chronic employment problem because as a result of globalization we are all potentially competing with an enormous labor force in Asia.” I would add India to that competitive labor force.
Friday, September 19, 2003
9/19/03 Job-Destroying Recovery
Robert Hormats, Goldman Sachs International vice-chairman: “Corporations are not yet convinced of the durability of this recover. People say this is a jobless recovery. It’s not. It’s a job-destroying recovery.” Yesterday, Sun Microsystems announced plans to cut another 3% of its workforce or 1,080 jobs. At the end of fiscal 2001 it had 43,683 employees. At the end of the last quarter the number had been reduced to 36,000. The company’s revenue has fallen for nine straight quarters, and they are the market leader in the server industry.
The number of people continuing to collect state unemployment insurance rose by 39,000 to just shy of 3.7 million in the week ended Sept.6. The total was the highest since the week ended June 28. The FOMC Committee had sad in a statement that “spending is firming, although the labor market has been weakening. Business and pricing power and increases in core consumer prices remain muted.
In his $87 billion request, Bush is doing his part to spur employment. Unfortunately, it won’t help Americans. There is $60 million to register “100,000 militia combatants” in Afghanistan as well as to “demobilize and integrate an additional 13,000 militia combatants” and provide than with “training, job placement, and other integration activities.” Another $35 million would go towards anti-terrorism training programs in Afghanistan to protect Hamid Karzai. There is good news. Bush wants to increase “hardship duty pay” from $300 to $600 per month until 9/30/2004. That hardship pay is too late for the 297 U.S. military personnel killed in the Iraq war. About another 1500 have been wounded.
Airbus doesn’t see the commercial aircraft industry recovering before 2005.
U.S. Comptroller General David Walker, head of the General Accounting Office, spoke yesterday at the National Press Club. He stated “our nation has a major long-term fiscal challenge that is not going away and requires serious and sustained attention. The current and projected deficits far exceed the costs associated with Iraq, the global war against terrorism and any incremental homeland security costs. The bottom line is, there is little question that deficits do matter, especially if they are large, structural and recurring in nature.” The markets are not bothered though. The unweighted S&P 500 is about 5% from its all-time high. The Nasdaq has now reached 1900. Even the Nikkei has rallied to the 11,000 level.
According to the CDC, the U.S is expected to report a record number of West Nile infections this year. In 2002 4,156 people were infected, and 284 died.
In August the semiconductor equipment book-to-bill ratio was 0.91 which means $91 worth of new orders were received for every $100 of product billed for the month. Dan Tracy, director of industry research for SEMI, stated “overall bookings and billings figures for North American-based semiconductor capital equipment providers have remained essentially flat over the past several months.” On the other hand, the stock price for Applied Materials has not remained flat over this time period.
It’s most unfortunate that it takes a hurricane named Isabel to close federal government in Washington, DC. A cut in government spending would create a more permanent closing.
The Federal Reserve Bank of Philadelphia said its index of factory business conditions fell to 14.6 from 22.1 in August, and that drop was much sharper than what had been expected by economists.
The Conference Board’s Consumer Research Center recently completed a survey showing that only 49% of American workers are satisfied with their job. This represents the lowest level of satisfaction since the first survey was taken in 1995. It is the first time the level has been below 50%. Even a terrific company like Southwest Airlines is having trouble with workers. There have been 16 months of negotiations between management and the flight attendants union. They have now turned to a federal mediator. The attendants’ slogan is “Working for free…that’s just ‘plane’ nuts.” The attendants claim they have to clean cabins between flights without being paid, because the planes are idle. They get paid for the time the plane is in the air. The union contends flight attendants work for free more than 23 hours every month.
PeopleSoft had filed a lawsuit against Oracle in Alameda County Superior Court. Yesterday various internal Oracle emails were unsealed. Here is an excerpt from an Oracle employee: “We’ve certainly wounded PeopleSoft…even if we don’t end up closing the deal, this is going to take PeopleSoft time to recover. And, of course, our corporate image of being aggressive, brash, and marching to the tune of a different drummer has been reinforced.” In addition, there were emails pointing to Oracle’s strategy of how to influence industry analysts. From the outset I have stated Oracle’s strategy was flawed and that it would fail. I have not changed my opinion.
Robert Hormats, Goldman Sachs International vice-chairman: “Corporations are not yet convinced of the durability of this recover. People say this is a jobless recovery. It’s not. It’s a job-destroying recovery.” Yesterday, Sun Microsystems announced plans to cut another 3% of its workforce or 1,080 jobs. At the end of fiscal 2001 it had 43,683 employees. At the end of the last quarter the number had been reduced to 36,000. The company’s revenue has fallen for nine straight quarters, and they are the market leader in the server industry.
The number of people continuing to collect state unemployment insurance rose by 39,000 to just shy of 3.7 million in the week ended Sept.6. The total was the highest since the week ended June 28. The FOMC Committee had sad in a statement that “spending is firming, although the labor market has been weakening. Business and pricing power and increases in core consumer prices remain muted.
In his $87 billion request, Bush is doing his part to spur employment. Unfortunately, it won’t help Americans. There is $60 million to register “100,000 militia combatants” in Afghanistan as well as to “demobilize and integrate an additional 13,000 militia combatants” and provide than with “training, job placement, and other integration activities.” Another $35 million would go towards anti-terrorism training programs in Afghanistan to protect Hamid Karzai. There is good news. Bush wants to increase “hardship duty pay” from $300 to $600 per month until 9/30/2004. That hardship pay is too late for the 297 U.S. military personnel killed in the Iraq war. About another 1500 have been wounded.
Airbus doesn’t see the commercial aircraft industry recovering before 2005.
U.S. Comptroller General David Walker, head of the General Accounting Office, spoke yesterday at the National Press Club. He stated “our nation has a major long-term fiscal challenge that is not going away and requires serious and sustained attention. The current and projected deficits far exceed the costs associated with Iraq, the global war against terrorism and any incremental homeland security costs. The bottom line is, there is little question that deficits do matter, especially if they are large, structural and recurring in nature.” The markets are not bothered though. The unweighted S&P 500 is about 5% from its all-time high. The Nasdaq has now reached 1900. Even the Nikkei has rallied to the 11,000 level.
According to the CDC, the U.S is expected to report a record number of West Nile infections this year. In 2002 4,156 people were infected, and 284 died.
In August the semiconductor equipment book-to-bill ratio was 0.91 which means $91 worth of new orders were received for every $100 of product billed for the month. Dan Tracy, director of industry research for SEMI, stated “overall bookings and billings figures for North American-based semiconductor capital equipment providers have remained essentially flat over the past several months.” On the other hand, the stock price for Applied Materials has not remained flat over this time period.
It’s most unfortunate that it takes a hurricane named Isabel to close federal government in Washington, DC. A cut in government spending would create a more permanent closing.
The Federal Reserve Bank of Philadelphia said its index of factory business conditions fell to 14.6 from 22.1 in August, and that drop was much sharper than what had been expected by economists.
The Conference Board’s Consumer Research Center recently completed a survey showing that only 49% of American workers are satisfied with their job. This represents the lowest level of satisfaction since the first survey was taken in 1995. It is the first time the level has been below 50%. Even a terrific company like Southwest Airlines is having trouble with workers. There have been 16 months of negotiations between management and the flight attendants union. They have now turned to a federal mediator. The attendants’ slogan is “Working for free…that’s just ‘plane’ nuts.” The attendants claim they have to clean cabins between flights without being paid, because the planes are idle. They get paid for the time the plane is in the air. The union contends flight attendants work for free more than 23 hours every month.
PeopleSoft had filed a lawsuit against Oracle in Alameda County Superior Court. Yesterday various internal Oracle emails were unsealed. Here is an excerpt from an Oracle employee: “We’ve certainly wounded PeopleSoft…even if we don’t end up closing the deal, this is going to take PeopleSoft time to recover. And, of course, our corporate image of being aggressive, brash, and marching to the tune of a different drummer has been reinforced.” In addition, there were emails pointing to Oracle’s strategy of how to influence industry analysts. From the outset I have stated Oracle’s strategy was flawed and that it would fail. I have not changed my opinion.
Thursday, September 18, 2003
9/18/03 Cape Fear
Isabel moves at speeds of about 14mph. Coastal flooding is expected. Hurricane warnings have been issued from Cape Fear, NC to Chincoteague, VA. The National Weather Service advisory states “all preparations to protect life and property should be rushed to completion in the hurricane warning area.” Other than Dick Grasso’s resignation, it’s business as usual on Wall Street. There aren’t reports of 105 mph winds or high seas or flooding. Nasdaq member firms have just had a fivefold plus increase in margin debt to $26 billion at July 31 from $5 billion at 12/31/02. Yesterday the NASD said trading “on margin” is up 25% year-to-date. It remains to be seen whether the Nasdaq tightens margin requirements as it did in early 2000.
The IMF warned that record U.S. trade and budget deficits threaten global growth in the years ahead. In its semi-annual World Economic Outlook, the IMF raised its forecast for U.S. growth in 2003 to 2.6% and to 3.9% in 2004. The report stated that “it seems unlikely that the U.S. can or should provide the degree of support to the global economy over the medium term that it has in the past.” The IMF predicts Japan’s economy will grow 2% this year and 1.4% in 2004, and they reduced the growth forecast for the 12 euro nations to 0.5% in 2003 and for next year to 1.9%. The IMF said U.S. growth shall probably come at the expense of widening the trade deficit and a depreciation of the dollar.
Hans Blix: “In the Middle Ages when people were convinced those were witches they certainly found them. This is a bit risky…what in a way stands accused is the culture of spin, the culture of hyping… Advertisers will advertise a refrigerator in terms that we don’t quite believe in, but we expect governments to become more serious and have more credibility.”
The Illinois Supreme Court threw out a trial judge’s order for Altria to post a $12 billion bond, reducing the amount to $6.8 billion. In March Illinois Judge Nicholas Byron ruled Philip Morris had misled Illinois smokers about the health risks of light cigarettes, which are intended to have less tar and nicotine, and ordered the company to pay damages of $10.1 billion. Yesterday R.J. Reynolds said it would reduce its workforce by 40% and eliminate about 2,600 jobs. Both tobacco companies have been hurt by the competition from low-cost brands. The company will focus primarily on Camel and Salem, and limit their investments in Winston and Doral.
According to the Bureau of Economic Analysis, defense expenditures jumped in the April-to-June quarter of 2003 by 46% over the first quarter. If the $87 billion is approved, 2004 defense spending would increase to about $470 billion. War costs are rising above $1 billion per week. Winslow Wheeler of the Center for Defense Information stated “the economics of our defense budget are mind-blowing.” Edward McKelvey, an economist at Goldman Sachs, observed “the government is going to be in a position where it’s borrowing $400 billion and $500 billion a year. It’s first in line for borrowing. The notion that that guy can get first in line without shoving out the guy in the back of the line just doesn’t pass the smell test. You don’t have to be an economist to understand that.”
An interesting phenomenon is taking place. Growth forecasts for the U.S. are being raised for this year and next; however, the Fed is expected to maintain current interest rates at the present level for another year. The market believes that scenario as 10- year treasuries closed yesterday at their lowest yield since July 23. The recipe is for higher corporate profits through cost cutting, no growth in jobs, benign inflation, increased government spending, increased budget and trade deficits, and a rising stock market. I say ignorance is bliss.
Elizabeth Warren, a Harvard law professor, and specializes in the bankruptcy field. By the end of the decade, she says, an estimated 6 million families with children, or 1 in every 7 such families, may declare bankruptcy. This year more children are going through their parents’ bankruptcies than their parents’ divorces. Ms Warren remarked “bankers who wear $3,000 suits and starched shirts are now charging interest rates that Jimmy the Leg-Breaker didn’t charge 25 years ago. Nobody sounds the alarm. The consequence is a wealth transfer of tens of billions of dollars every year from middle-class families to a handful of big banks.” A new study by a nonpartisan public-policy group called Demos finds that, in the 1990s, the average family’s credit card debt rose by 53%. Middle class families saw a 75% in crease in that debt and very low- income families had a 184% rise.
In a special fall issue of CFO magazine, Bob Violino writes that there is new software to better track corporate spending. It is called ESM or enterprise spend management software, and it especially has appeal in these times when companies face flat or reduced revenues. The idea is to reduce costs through improved sourcing and procurement and to enhance expense management. Christa Degnan, supply-chain research director at Aberdeen Group, stated “it surprises me how much companies really don’t know about what they’re spending money on. They’ve never had granular detail on who they’re spending with, how much, and why they’re spending.” The board of the NY Stock Exchange might be a good example.
Isabel moves at speeds of about 14mph. Coastal flooding is expected. Hurricane warnings have been issued from Cape Fear, NC to Chincoteague, VA. The National Weather Service advisory states “all preparations to protect life and property should be rushed to completion in the hurricane warning area.” Other than Dick Grasso’s resignation, it’s business as usual on Wall Street. There aren’t reports of 105 mph winds or high seas or flooding. Nasdaq member firms have just had a fivefold plus increase in margin debt to $26 billion at July 31 from $5 billion at 12/31/02. Yesterday the NASD said trading “on margin” is up 25% year-to-date. It remains to be seen whether the Nasdaq tightens margin requirements as it did in early 2000.
The IMF warned that record U.S. trade and budget deficits threaten global growth in the years ahead. In its semi-annual World Economic Outlook, the IMF raised its forecast for U.S. growth in 2003 to 2.6% and to 3.9% in 2004. The report stated that “it seems unlikely that the U.S. can or should provide the degree of support to the global economy over the medium term that it has in the past.” The IMF predicts Japan’s economy will grow 2% this year and 1.4% in 2004, and they reduced the growth forecast for the 12 euro nations to 0.5% in 2003 and for next year to 1.9%. The IMF said U.S. growth shall probably come at the expense of widening the trade deficit and a depreciation of the dollar.
Hans Blix: “In the Middle Ages when people were convinced those were witches they certainly found them. This is a bit risky…what in a way stands accused is the culture of spin, the culture of hyping… Advertisers will advertise a refrigerator in terms that we don’t quite believe in, but we expect governments to become more serious and have more credibility.”
The Illinois Supreme Court threw out a trial judge’s order for Altria to post a $12 billion bond, reducing the amount to $6.8 billion. In March Illinois Judge Nicholas Byron ruled Philip Morris had misled Illinois smokers about the health risks of light cigarettes, which are intended to have less tar and nicotine, and ordered the company to pay damages of $10.1 billion. Yesterday R.J. Reynolds said it would reduce its workforce by 40% and eliminate about 2,600 jobs. Both tobacco companies have been hurt by the competition from low-cost brands. The company will focus primarily on Camel and Salem, and limit their investments in Winston and Doral.
According to the Bureau of Economic Analysis, defense expenditures jumped in the April-to-June quarter of 2003 by 46% over the first quarter. If the $87 billion is approved, 2004 defense spending would increase to about $470 billion. War costs are rising above $1 billion per week. Winslow Wheeler of the Center for Defense Information stated “the economics of our defense budget are mind-blowing.” Edward McKelvey, an economist at Goldman Sachs, observed “the government is going to be in a position where it’s borrowing $400 billion and $500 billion a year. It’s first in line for borrowing. The notion that that guy can get first in line without shoving out the guy in the back of the line just doesn’t pass the smell test. You don’t have to be an economist to understand that.”
An interesting phenomenon is taking place. Growth forecasts for the U.S. are being raised for this year and next; however, the Fed is expected to maintain current interest rates at the present level for another year. The market believes that scenario as 10- year treasuries closed yesterday at their lowest yield since July 23. The recipe is for higher corporate profits through cost cutting, no growth in jobs, benign inflation, increased government spending, increased budget and trade deficits, and a rising stock market. I say ignorance is bliss.
Elizabeth Warren, a Harvard law professor, and specializes in the bankruptcy field. By the end of the decade, she says, an estimated 6 million families with children, or 1 in every 7 such families, may declare bankruptcy. This year more children are going through their parents’ bankruptcies than their parents’ divorces. Ms Warren remarked “bankers who wear $3,000 suits and starched shirts are now charging interest rates that Jimmy the Leg-Breaker didn’t charge 25 years ago. Nobody sounds the alarm. The consequence is a wealth transfer of tens of billions of dollars every year from middle-class families to a handful of big banks.” A new study by a nonpartisan public-policy group called Demos finds that, in the 1990s, the average family’s credit card debt rose by 53%. Middle class families saw a 75% in crease in that debt and very low- income families had a 184% rise.
In a special fall issue of CFO magazine, Bob Violino writes that there is new software to better track corporate spending. It is called ESM or enterprise spend management software, and it especially has appeal in these times when companies face flat or reduced revenues. The idea is to reduce costs through improved sourcing and procurement and to enhance expense management. Christa Degnan, supply-chain research director at Aberdeen Group, stated “it surprises me how much companies really don’t know about what they’re spending money on. They’ve never had granular detail on who they’re spending with, how much, and why they’re spending.” The board of the NY Stock Exchange might be a good example.
Wednesday, September 17, 2003
9/17/03 China
Only 6 years ago our nation’s total trade deficit was $120 billion. This year our trade deficit with China will amount to that figure. According to Xinhua, the Chinese government new agency, the trading band for the yuan will be widened from 8.3 to the dollar to a trading range of 8.09 to 8.5. That maybe modest, but every little bit does make a difference. As the trade deficit with China widens, the job layoffs in our manufacturing sector continue. There is no end in sight for these job losses.
Der Spiegel magazine reported that Chrysler is quite advanced in its efforts to sell some parts production facilities in its efforts to cut operating costs. It is anticipated that additional job cuts will be announced to.
Kerr-McGee will cut between 200 and 250 jobs or about 7 to 9% of its workforce by year-end.
The MBA reports that seasonally adjusted index tracking mortgage applications dropped 5.8% for the week ended Sept. 12 compared to the prior week.
Military personnel are required to take the anthrax shots and can be court-martialed if they refuse. Meanwhile, a growing number of our troops are getting hospitalized for a mysterious pneumonia-like illness, and many believe it is from the anthrax shots.
Hans Blix believes Iraq destroyed most of its WMD 10 years ago, and suggests that searching for these weapons would most likely only result in finding some “documents of interest.”
The Labor Department reported that real earnings fell 0.3% in August. Average hourly earnings and average weekly hours were about unchanged. The core CPI rate is at a 37 year low. Over the last 12 months, the core goods prices have fallen 2.5%, the biggest drop on records dating back to 1958. At the same time, the cost of services continues its steady price rise.
70% of those voting in Seattle elected to cream the 10 cents a cup proposed espresso tax.
Only 6 years ago our nation’s total trade deficit was $120 billion. This year our trade deficit with China will amount to that figure. According to Xinhua, the Chinese government new agency, the trading band for the yuan will be widened from 8.3 to the dollar to a trading range of 8.09 to 8.5. That maybe modest, but every little bit does make a difference. As the trade deficit with China widens, the job layoffs in our manufacturing sector continue. There is no end in sight for these job losses.
Der Spiegel magazine reported that Chrysler is quite advanced in its efforts to sell some parts production facilities in its efforts to cut operating costs. It is anticipated that additional job cuts will be announced to.
Kerr-McGee will cut between 200 and 250 jobs or about 7 to 9% of its workforce by year-end.
The MBA reports that seasonally adjusted index tracking mortgage applications dropped 5.8% for the week ended Sept. 12 compared to the prior week.
Military personnel are required to take the anthrax shots and can be court-martialed if they refuse. Meanwhile, a growing number of our troops are getting hospitalized for a mysterious pneumonia-like illness, and many believe it is from the anthrax shots.
Hans Blix believes Iraq destroyed most of its WMD 10 years ago, and suggests that searching for these weapons would most likely only result in finding some “documents of interest.”
The Labor Department reported that real earnings fell 0.3% in August. Average hourly earnings and average weekly hours were about unchanged. The core CPI rate is at a 37 year low. Over the last 12 months, the core goods prices have fallen 2.5%, the biggest drop on records dating back to 1958. At the same time, the cost of services continues its steady price rise.
70% of those voting in Seattle elected to cream the 10 cents a cup proposed espresso tax.
Tuesday, September 16, 2003
9/16/03 Dieciseis de Septiembre
Today is Mexican Independence Day. It marks the onset of Mexico’s revolution in 1810, which led to freedom from Spanish rule. Mexico could have another revolution brewing. With a record weak peso, this country must once again regain its freedom. This time they must find new markets for their exports, and lessen the dependence on the U.S. purchasing about 80%+ of the goods leaving Mexico. To rely on the U.S. for their economic well being would be making a grave mistake.
The U.S. can’t even look after its own citizenry. In January 2001 the Fed began reducing short-term interest rates. From January 2001 through August 2003, according to the Labor Department’s monthly non-farm surveys, 3.3 million private-sector jobs have been cut. Hiroshi Yokotani, economist at Tokio Marine Asset Management, stated “with employment not recovering, consumption is unlikely to grow. The latest data also shows companies are not revising up their production plans despite growth of 5% in the July-September quarter.”
The NASD regulates all 5,300 U.S. brokerage firms. Yesterday they issued a warning to investors about buying on margin. Purchases of securities on margin have increased 25% this year, reaching $174 billion in July. They cited a “precipitous increase” in margin use.
The Georgia Department of Labor reported 43,264 laid-off workers filed a first-time claim for unemployment insurance benefits in August, an increase of 12.5% over August 2002. To combat these layoffs, the state has implemented a new program called “Georgia Works,” which involves on-site workplace training and a special training allowance at the same time those laid-off are drawing unemployment insurance benefits.
The Bush Administration is considering shrinking the number of military personnel who qualify for disability benefits. They want to change the definition of service-connected disability, and this could have far-reaching consequences for millions of service members and veterans. Tom Daschle said the proposals, if retroactive, could disqualify 1.5 million veterans, about two-thirds of those now in the VA disability program. Under current law, disabled veterans eligible for military retirement pay have their retirement reduced by the amount they receive in disability benefits. Future benefits to widows could also be jeopardized. Despite what you read and see in photo-ops, this Administration lacks loyalty to our fighting men and women. Their loyalty is to their power base and remaining in office.
More than 150 local governments have passed resolutions opposing the Patriot Act as an overly broad threat to constitutional rights. Tim Lynch, director of the Cato Institute, stated “we’ve already heard stories of local police chiefs creating files on people who have protested the Iraq war…the government is constantly trying to expand its jurisdictions, and it needs to be watched very, very closely.”
In talking with Tim Russert of Meet The Press, VP Cheney said success in Iraq had to be achieved “whatever the cost in casualties and finances. This is the place we want to take on the terrorists.” Maybe the American people should give serious consideration to making Cheney a casualty in the next election- pull the anti-Cheney lever. Do it for our troops and veterans. It will make you smile.
Manufacturing output fell 0.1% in August, the first decline since April. Capacity utilization remained under 75%. With the inventory to sales ratio at near record lows, the folks who run our factories continue to regard any economic upturn with great doubts. Their actions speak a lot louder than the projections by economists and our Administration.
Today is Mexican Independence Day. It marks the onset of Mexico’s revolution in 1810, which led to freedom from Spanish rule. Mexico could have another revolution brewing. With a record weak peso, this country must once again regain its freedom. This time they must find new markets for their exports, and lessen the dependence on the U.S. purchasing about 80%+ of the goods leaving Mexico. To rely on the U.S. for their economic well being would be making a grave mistake.
The U.S. can’t even look after its own citizenry. In January 2001 the Fed began reducing short-term interest rates. From January 2001 through August 2003, according to the Labor Department’s monthly non-farm surveys, 3.3 million private-sector jobs have been cut. Hiroshi Yokotani, economist at Tokio Marine Asset Management, stated “with employment not recovering, consumption is unlikely to grow. The latest data also shows companies are not revising up their production plans despite growth of 5% in the July-September quarter.”
The NASD regulates all 5,300 U.S. brokerage firms. Yesterday they issued a warning to investors about buying on margin. Purchases of securities on margin have increased 25% this year, reaching $174 billion in July. They cited a “precipitous increase” in margin use.
The Georgia Department of Labor reported 43,264 laid-off workers filed a first-time claim for unemployment insurance benefits in August, an increase of 12.5% over August 2002. To combat these layoffs, the state has implemented a new program called “Georgia Works,” which involves on-site workplace training and a special training allowance at the same time those laid-off are drawing unemployment insurance benefits.
The Bush Administration is considering shrinking the number of military personnel who qualify for disability benefits. They want to change the definition of service-connected disability, and this could have far-reaching consequences for millions of service members and veterans. Tom Daschle said the proposals, if retroactive, could disqualify 1.5 million veterans, about two-thirds of those now in the VA disability program. Under current law, disabled veterans eligible for military retirement pay have their retirement reduced by the amount they receive in disability benefits. Future benefits to widows could also be jeopardized. Despite what you read and see in photo-ops, this Administration lacks loyalty to our fighting men and women. Their loyalty is to their power base and remaining in office.
More than 150 local governments have passed resolutions opposing the Patriot Act as an overly broad threat to constitutional rights. Tim Lynch, director of the Cato Institute, stated “we’ve already heard stories of local police chiefs creating files on people who have protested the Iraq war…the government is constantly trying to expand its jurisdictions, and it needs to be watched very, very closely.”
In talking with Tim Russert of Meet The Press, VP Cheney said success in Iraq had to be achieved “whatever the cost in casualties and finances. This is the place we want to take on the terrorists.” Maybe the American people should give serious consideration to making Cheney a casualty in the next election- pull the anti-Cheney lever. Do it for our troops and veterans. It will make you smile.
Manufacturing output fell 0.1% in August, the first decline since April. Capacity utilization remained under 75%. With the inventory to sales ratio at near record lows, the folks who run our factories continue to regard any economic upturn with great doubts. Their actions speak a lot louder than the projections by economists and our Administration.
Monday, September 15, 2003
9/15/03 Getting Off The Titanic
VP Cheney: “Yeah, I did misspeak. I said repeatedly during the show (Meet the Press) ‘weapons capability.’ We never had any evidence that (Saddam) had acquired a nuclear weapon.” That sounds like lying to me, and not misspeaking. The word “never” places a different emphasis on the known facts. Maybe Bush was misspeaking last week in asking for the $87 billion. Asked on NBC’s Meet the Press yesterday whether that $87 billion would be the final request, Cheney replied “I can’t say that. It’s all we think we’ll need for the foreseeable future, for this year.” It’s as if the attitude is we can fool the American people whenever the spirit moves us. I predict the Santini Bros. moving truck will be there in November 2004.
Rumsfeld talking about Iraq: “Tourism is going to be something important in that country as soon as the security situation is resolved.” The two big tourist sites will be the empty tomb of Saddam Hussein and the empty display of WMD.
Cheney sees 4% GDP growth or better. He expects to cut the federal deficit “roughly in half” from next year’s level in the coming five years. Cheney comes from Casper, Wyoming. Have you ever been to Casper? There is an odor permeating this city of 48,000 people. The odor is the residue from closed refineries. It’s not exactly a city known for those with a nose for business.
The world’s 7th largest economy is that of the state of California. This is our largest state in terms of population and business. It’s in serious trouble. The future is a great deal bleaker than the current $38 billion deficit. Employers worry about new mandatory health insurance that may become law. A paid family leave act goes into effect in California in 2004. “These things all cost employers money,” said Allen Zaremberg, president of the California Chamber of Commerce. “You just encourage people to move.” According to a survey by the Small Business Survival Committee, they found (1) California has one of the highest personal income tax rates in the country. Only Rhode Island has a higher income tax rate. (2) The state also is one of the highest for corporate income taxes. Only 10 states have a higher rate for corporate taxation. (3) California also ranks among the five most expensive states for workers’ compensation costs and electricity expenses. (4) In sum, California had the worst business climate among the 50 states. For the first seven months of 2003, the U.S. private workforce declined by 0.2%, but California was down 0.6%. More and more companies are moving to Nevada and Arizona. John Chen is chairman and chief executive officer of Dublin-based Sybase Inc. He remarked “the costs of being in California are too high. I can find qualified people, bright people, in many different places outside of California. We are in a number of states and countries, and California is one of the most expensive.” Bob Marshall, owner of Postal Annex in Concord, stated “in the last year there has been a rush to get out. It’s like everyone is trying to get off the Titanic. I want to stay. But I wonder what they know that we don’t.”
Theresa Ruf, with 15 years of healthcare experience, lost her medical transcription job in August. She was told transcription could be done for 2 cents per line in India compared to 12 cents per line in the U.S.
Sweden’s 7 million voters decided not to adopt the euro as its currency. Over 56% rejected the euro and decided to keep their krona.
The WTO conference in Cancun fell apart. It was as anticipated. European and American farmers receive huge subsidies, and, as such, receive significant protection against imports from developing countries. Sugar would be an excellent example of such protectionism.
“You can’t negotiate with these people, you can’t try to talk sense to these people. The only way to deal with them is to find them and bring them to justice,” Bush said. Was he talking about terrorists or about politicians lurking in pork barrels?
Governor Rod Blagojevich of Illinois said he directed the Illinois special advocate to draft a plan for buying inexpensive medications in Canada for as many as 240,000 state employees and retirees. He stated yesterday “the status quo on prescription drugs is intolerable and unacceptable. This year, the state is spending $340 million on prescriptions for its workforce, a 15% increase over last year. I am optimistic we will be able to save literally millions of dollars for the taxpayers and set a precedent other states will follow.”
HUD says mobile or manufactured homes account for one-third of all new single-family homes. There are about 7.2 million such homes with the average sales price approximating $49,000 compared with about $164,000 for a traditional single-family home. There has been a recent spike in delinquencies and foreclosures on loans for manufactured homes, and this concerns Fannie Mae. As such, Fannie Mae has begun requiring a 10% down payment for 30-year mortgages on such homes, plus a fee of one-half of 1% of the loan amount. Previously, people could put no money down and pay no fee. These new down payment guidelines went into effect on August 24.
David M. Walker is the General Accounting Office head and the U.S. Comptroller. On Friday he stated “from an overall fiscal perspective, it’s time to admit we’re in a fiscal hole, and to stop digging. We must begin to come to grips with the dawning fiscal realities that threaten our nation’s children and grandchildren’s future.” This Wednesday Walker will deliver a speech to the National Press Club. It will begin with a wake-up call and end with a call to action. In the middle he will discuss “the facts and figures to make the case that we have a serious financial and fiscal challenge. Although growth can help, we’re not going to grow our way out of this problem…For example, depending on how you want to calculate what the gap is, how much money for every man, woman, and child in America it is…it’s a big number, and it’s a number that, if you think about what the average wage is in the United States, if you think about the average worth of an American, it’s going to be way in excess of these two numbers.” Walker said he was concerned that many things being discussed in government will make the situation “worse, not better.”
If this nation is in a fiscal hole, you’d never know it on Wall Street. It’s business as usual. Investors have been piling their dollars on the cruise ship Titanic. It’s built to withstand typhoons, hurricanes, and waves of mass destruction. Life boats are not required.
VP Cheney: “Yeah, I did misspeak. I said repeatedly during the show (Meet the Press) ‘weapons capability.’ We never had any evidence that (Saddam) had acquired a nuclear weapon.” That sounds like lying to me, and not misspeaking. The word “never” places a different emphasis on the known facts. Maybe Bush was misspeaking last week in asking for the $87 billion. Asked on NBC’s Meet the Press yesterday whether that $87 billion would be the final request, Cheney replied “I can’t say that. It’s all we think we’ll need for the foreseeable future, for this year.” It’s as if the attitude is we can fool the American people whenever the spirit moves us. I predict the Santini Bros. moving truck will be there in November 2004.
Rumsfeld talking about Iraq: “Tourism is going to be something important in that country as soon as the security situation is resolved.” The two big tourist sites will be the empty tomb of Saddam Hussein and the empty display of WMD.
Cheney sees 4% GDP growth or better. He expects to cut the federal deficit “roughly in half” from next year’s level in the coming five years. Cheney comes from Casper, Wyoming. Have you ever been to Casper? There is an odor permeating this city of 48,000 people. The odor is the residue from closed refineries. It’s not exactly a city known for those with a nose for business.
The world’s 7th largest economy is that of the state of California. This is our largest state in terms of population and business. It’s in serious trouble. The future is a great deal bleaker than the current $38 billion deficit. Employers worry about new mandatory health insurance that may become law. A paid family leave act goes into effect in California in 2004. “These things all cost employers money,” said Allen Zaremberg, president of the California Chamber of Commerce. “You just encourage people to move.” According to a survey by the Small Business Survival Committee, they found (1) California has one of the highest personal income tax rates in the country. Only Rhode Island has a higher income tax rate. (2) The state also is one of the highest for corporate income taxes. Only 10 states have a higher rate for corporate taxation. (3) California also ranks among the five most expensive states for workers’ compensation costs and electricity expenses. (4) In sum, California had the worst business climate among the 50 states. For the first seven months of 2003, the U.S. private workforce declined by 0.2%, but California was down 0.6%. More and more companies are moving to Nevada and Arizona. John Chen is chairman and chief executive officer of Dublin-based Sybase Inc. He remarked “the costs of being in California are too high. I can find qualified people, bright people, in many different places outside of California. We are in a number of states and countries, and California is one of the most expensive.” Bob Marshall, owner of Postal Annex in Concord, stated “in the last year there has been a rush to get out. It’s like everyone is trying to get off the Titanic. I want to stay. But I wonder what they know that we don’t.”
Theresa Ruf, with 15 years of healthcare experience, lost her medical transcription job in August. She was told transcription could be done for 2 cents per line in India compared to 12 cents per line in the U.S.
Sweden’s 7 million voters decided not to adopt the euro as its currency. Over 56% rejected the euro and decided to keep their krona.
The WTO conference in Cancun fell apart. It was as anticipated. European and American farmers receive huge subsidies, and, as such, receive significant protection against imports from developing countries. Sugar would be an excellent example of such protectionism.
“You can’t negotiate with these people, you can’t try to talk sense to these people. The only way to deal with them is to find them and bring them to justice,” Bush said. Was he talking about terrorists or about politicians lurking in pork barrels?
Governor Rod Blagojevich of Illinois said he directed the Illinois special advocate to draft a plan for buying inexpensive medications in Canada for as many as 240,000 state employees and retirees. He stated yesterday “the status quo on prescription drugs is intolerable and unacceptable. This year, the state is spending $340 million on prescriptions for its workforce, a 15% increase over last year. I am optimistic we will be able to save literally millions of dollars for the taxpayers and set a precedent other states will follow.”
HUD says mobile or manufactured homes account for one-third of all new single-family homes. There are about 7.2 million such homes with the average sales price approximating $49,000 compared with about $164,000 for a traditional single-family home. There has been a recent spike in delinquencies and foreclosures on loans for manufactured homes, and this concerns Fannie Mae. As such, Fannie Mae has begun requiring a 10% down payment for 30-year mortgages on such homes, plus a fee of one-half of 1% of the loan amount. Previously, people could put no money down and pay no fee. These new down payment guidelines went into effect on August 24.
David M. Walker is the General Accounting Office head and the U.S. Comptroller. On Friday he stated “from an overall fiscal perspective, it’s time to admit we’re in a fiscal hole, and to stop digging. We must begin to come to grips with the dawning fiscal realities that threaten our nation’s children and grandchildren’s future.” This Wednesday Walker will deliver a speech to the National Press Club. It will begin with a wake-up call and end with a call to action. In the middle he will discuss “the facts and figures to make the case that we have a serious financial and fiscal challenge. Although growth can help, we’re not going to grow our way out of this problem…For example, depending on how you want to calculate what the gap is, how much money for every man, woman, and child in America it is…it’s a big number, and it’s a number that, if you think about what the average wage is in the United States, if you think about the average worth of an American, it’s going to be way in excess of these two numbers.” Walker said he was concerned that many things being discussed in government will make the situation “worse, not better.”
If this nation is in a fiscal hole, you’d never know it on Wall Street. It’s business as usual. Investors have been piling their dollars on the cruise ship Titanic. It’s built to withstand typhoons, hurricanes, and waves of mass destruction. Life boats are not required.
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