10/18/03 Corporate Tax Receipts
A happy birthday to my son. He brings me daily joy.
Let’s take a moment to reflect on federal government tax revenues. Last week the CBO reported that corporate tax receipts in the fiscal year that ended on September 30 had fallen by 11% to $132 billion. Three years ago the corporate taxes were $207 billion. I understand business profits are a good deal lower today, but there are loopholes that need to be addressed. Let’s look at Nabors Industries, the nation’s largest operator of oil-well drilling rigs. They operate the company out of Houston. In 2001 they moved their legal address, their tax address to Bermuda where there isn’t any corporate tax. Presently, the U.S. corporate tax rate is 35%. In 2002 Nabors saved $10 million in taxes. I have no problem with that. I do have a problem with Nabors stating that their American subsidiary of 33 ships serving oil drilling platforms in the Gulf of Mexico qualifies it for business under the Jones Act, which since 1916 has required that ships engaged in purely domestic trade be built in American shipyards, owned by American companies, and operated by American crews. A 1996 law allows foreign financing of such ships. The company’s Bermuda parent is lending the money for these ships. By avoiding the payment of U.S. corporate taxes, Nabors is able to underbid competitors. If Congress does not do something about this inequity, competitors to Nabors will also move their tax address to Bermuda, and U.S. corporate tax revenues will drop further.
Several times I have written about the pending $4 billion in trade sanctions. The EU has given Congress until the end of this year to come into compliance. Yesterday the EU mentioned they might phase in those sanctions beginning in March 2004, and would begin with a 5% duty on a list of U.S. goods, and this would increase by 1% per month for a year. In the meantime, there is a Senate bill that would replace the export subsidy with a $60 billion tax cut for manufacturers, and this would lower the tax rate on earnings from domestic manufactured goods to 32% from 35%. There is an additional consideration that would shield corporate overseas income from immediate taxation. Another provision would encourage U.S. companies to return overseas profits to this country, and in return, the corporate income tax for one year would be lowered to 5.25%. The latter is absolutely nuts. There would be a rush to produce in China and hire in India, and then with the added profits from lower costs, bring the profits back to the U.S at the low tax rate. This would be accomplished at the expense of lost jobs in the U.S. and place greater tax expense and fees on the pockets of the American taxpayer. This is not capitalism and free enterprise. This is government -engineered socialism. The average American taxpayer now works almost 5 months out of the year for nothing. That working time goes towards the payment of federal, state, and local taxes and fees. Maybe the government wants your lungs and your cohones too.
On October 9 Bush spoke to National Guard and Reserve troops in Portsmouth, NH. He said those two groups had become part of the backbone of the military. He stated “Citizen-soldiers are serving in every front on the war on terror. And you’re making your sate and your country proud.” They may be the backbone but their medical treatment would not reflect it. One soldier who served in Operation Iraqi Freedom remarked “it is not an Army of One. It is the Army of Two- Army and Reserves. One month ago Bush greeted soldiers at Fort Stewart in Georgia. There are 600 sick or injured members of the Army Reservist and National Guard warehoused there. A document states there aren’t any more appointments available for these soldiers from October 14 through November 11, Veterans Day. We can authorize money for Iraq. Bush can promise U.S. help for the Philippines. But we can’t take care of our sick and wounded soldiers. Sgt. 1st Class Willie Buckles has served in the Army Reserves for 27 years, and that includes Operation Iraqi Freedom and the first Gulf War. He stated “now my whole idea about the U.S. Army has changed. I am treated like a third-class citizen.” A Commander-In-Chief should never let that take place.
Since Bush declared an end to major fighting on May 1, U.S. combat deaths exceeded 100 for the first time. Yesterday marked the 101st combat death since May 1.
House Minority Leader Nancy Pelosi of California announced she would oppose the Iraq loan amendment. She stated “American soldiers are taking virtually all the risks and the American taxpayers are paying virtually all the bills.”
Another senior White House staff member is leaving. On Monday, Jay Lefkowitz will rejoin Kirkland and Ellis as a litigation partner. He is senior policy advisor to President Bush and head of the White House’s Domestic Policy Council. Lefkowitz advised Bush on health, education, transportation and policy, labor and veterans’ affairs, environmental regulations, and international trade. In other words, he has been the consigliore. I guess he felt a 2 ½ year White House stint was enough.
Marathon Ashland Petroleum is a joint venture between Marathon Corp. and Ashland Inc. They are the nation’s sixth-largest oil refiner. On Friday they announced 165 cuts or about 2.5% of their workforce. Gary Heminger, the company’s president, said “MAP must continuously improve its competitive position and long-term profitabilty. We are maximizing every dollar spent to run our business and looking hard at all manageable business elements to determine the most efficient ways to increase MAP’s value.” Mr. Heminger’s words ring through most corporate hallways and boardrooms. Cost cutting is king. MAP is looking at ways to outsource IT, accounting, and HR. Hundreds of other companies are searching for similar outsourcing avenues. More U.S. jobs will be eliminated through outsourcing. This trend is picking up speed. It is not slowing.
There is other employment news. The U.S. Agriculture Department is setting up a new enforcement unit to ensure that biotech companies are properly managing field trials of genetically engineered crops. The unit has a staff of 33 and it will grow to 50, not including a director that needs to be named. What would a government unit be without a director? The USDA released enforcement records that cited 115 infractions between 1990 and 2001 on 7,402 field tests of various biotech crops. A total of 8 violations resulted in fines, ranging from $500 in 2 incidents to one incident of $250,000. Four incidents had fines totaling $43,200. In other words, there was a total of about $300,000 in fines over 11 years, and infractions came to about 1.5% over that period. I wish the government ran so efficiently. I wonder if the biotech industry can create a crop that will stop me from upchucking due to government enforcement
Friday, October 17, 2003
10/17/03 The Enemy
There are times my thinking is slow. Since I spend a great deal of time thinking, I expect more of myself. For three years the events of 9/11 have been gnawing at me. Something has been missing. I may be slow but I feel better now. It’s China. They are the real enemy. Three years before 9/11 Colonel Qiao Liang and Colonel Wang Xiangsui wrote a military handbook entitled “Unrestricted Warfare:China’s Master Plan to Destroy America.” You think this is a joke? This is from the book: “Whether it be the intrusions of hackers, a major explosion at the World Trade Center, or a bombing attack by bin Laden, all of these greatly exceed the frequency bandwidths understood by the American military.” Osama bin Laden is mentioned frequently in this book. Adm. Thomas Moorer is the Former Chairman, Joint Chiefs of Staff, and stated “the 9-11 attacks may just be the beginning. Many terrorist nations and groups will try to imitate this operation… and China’s war book “Unrestricted Warfare” will be their text.” Maj. Gen. John K. Singlaub is the Former Chief of Staff, U.S. Forces Korea, and remarked “Unrestricted Warfare is evidence linking China to 9-11. It is also their plan for global operations against America.”
We need to stop investing in China and we need to stop importing from China. Ford, for example, needs to reverse its strategy. China is the world’s fastest-growing major car market. GM has 8% of that market. Ford announced today they would increase their investment in China by $1 to $1.5 billion over the next few years by raising production at its joint venture Chongqing Changan Automobile Co Ltd to 150,000 units from 20,000 units. Last year overall car sales in China passed the one million mark. This year it is expected to double in size.
I am not proposing placing controls on Chinese imports. I am recommending companies voluntarily stop importing from and voluntarily stop investing in that country. China is on an economic roll but it is also an accident waiting to happen. We need to give it a helpful nudge. Let me explain. China has a positive balance of trade with the U.S of about $105 billion. That is for 2003 only. However, China has a trade deficit of about $75 billion yearly with the rest of the world, and most of that is with other Asian nations. Thus, their net trade surplus will only amount to 3% of their GDP. Their capital account was positive by $30 billion in 2001 and $30 billion in 2002, and there is a similar expectation for 2003. The main area of focus must be on their foreign exchange reserves, and these currently amount to $350 billion. Offsetting these pluses, is a major problem in their banking system. The Chinese people, for the most part, cannot take money out of China, and can only hold non-yuan deposits if that money is earned outside China. Consequently, the banking system in China is funded by the high savings rate. The Chinese money supply has risen at a 22% rate this year.; however, this money is being funneled into loans by banks, and non-performing loans have risen significantly in 2003. These loans probably exceed $650 billion. Much of the money has been loaned to real estate developers for industrial development. Much of the development has been for U.S. companies, such as, GM. Under China’s commitments to the WTO, foreign banks must be allowed to enter China by 2004. Consequently, over the next three years, we must take positive action to push that banking system into a collapse. It won’t be difficult. Stop investing there. Stop buying their imports. Their economy will crumble. If that happens, their currency will be significantly overvalued.
In addition to the above- mentioned voluntary actions, our federal government must change its spending habits, and now. On an inflation -adjusted basis, total federal spending has grown 17% during the last three years. Non-defense discretionary spending (ex Social Security, Medicare, and Medicaid) has grown by 23.2% during the last three years. Therefore, our federal spending has risen to more than 20% of GDP. That must change immediately.
Nationwide, the number of local government jobs dropped by 19,000 last month, on a year-over-year basis. It was the first such drop since 1984. Last year, for example, Texas gained 44,000 jobs. Of that amount, 36,000 came from government hiring. During the same time, manufacturing employment in Texas fell by 33,100.
I don’t want you to believe that the U.S is the only country that needs to change its ways. British banking group HSBC said it would slash 4,000 jobs in England and Wales. Call centers in Birmingham, Brentwood, Sheffield, and Swansea would be closed and the jobs would be transferred to centers in China, India, and Malaysia. HSBC had previously announced laying off 1,400 workers in Britain by year-end.
Three American soldiers were killed and seven wounded in Karbala, Iraq. Those deaths mean a total of 197 U.S. soldiers have been killed by bombings, ambushes, and other hostile incidents since the declared end to major combat operations on May 1. It is no wonder that the survey conducted by the Stars and Stripes newspaper indicated that 34% of the troops described their morale as low, and 49% described their unit’s morale as low. Last week Bush said the military spirit was high. He is out of touch with the troops. According to a recent Results for America national opinion poll, 55% of Americans think the United States is either going in the wrong direction or has no direction at all. The poll concludes the majority of Americans believe their current political leaders are either “weak” or “very weak” as “problem solvers.”
Delphi Corp. will cut 5,000 jobs. For the week ended Oct. 4, the number of Americans claiming benefits after filing an initial claim climbed 58,000 to 3.67 million. Workers are having an increasingly difficult time finding new jobs.
Over the last 12 months, the core CPI has risen just 1.2%, the smallest since February 1966.
There are times my thinking is slow. Since I spend a great deal of time thinking, I expect more of myself. For three years the events of 9/11 have been gnawing at me. Something has been missing. I may be slow but I feel better now. It’s China. They are the real enemy. Three years before 9/11 Colonel Qiao Liang and Colonel Wang Xiangsui wrote a military handbook entitled “Unrestricted Warfare:China’s Master Plan to Destroy America.” You think this is a joke? This is from the book: “Whether it be the intrusions of hackers, a major explosion at the World Trade Center, or a bombing attack by bin Laden, all of these greatly exceed the frequency bandwidths understood by the American military.” Osama bin Laden is mentioned frequently in this book. Adm. Thomas Moorer is the Former Chairman, Joint Chiefs of Staff, and stated “the 9-11 attacks may just be the beginning. Many terrorist nations and groups will try to imitate this operation… and China’s war book “Unrestricted Warfare” will be their text.” Maj. Gen. John K. Singlaub is the Former Chief of Staff, U.S. Forces Korea, and remarked “Unrestricted Warfare is evidence linking China to 9-11. It is also their plan for global operations against America.”
We need to stop investing in China and we need to stop importing from China. Ford, for example, needs to reverse its strategy. China is the world’s fastest-growing major car market. GM has 8% of that market. Ford announced today they would increase their investment in China by $1 to $1.5 billion over the next few years by raising production at its joint venture Chongqing Changan Automobile Co Ltd to 150,000 units from 20,000 units. Last year overall car sales in China passed the one million mark. This year it is expected to double in size.
I am not proposing placing controls on Chinese imports. I am recommending companies voluntarily stop importing from and voluntarily stop investing in that country. China is on an economic roll but it is also an accident waiting to happen. We need to give it a helpful nudge. Let me explain. China has a positive balance of trade with the U.S of about $105 billion. That is for 2003 only. However, China has a trade deficit of about $75 billion yearly with the rest of the world, and most of that is with other Asian nations. Thus, their net trade surplus will only amount to 3% of their GDP. Their capital account was positive by $30 billion in 2001 and $30 billion in 2002, and there is a similar expectation for 2003. The main area of focus must be on their foreign exchange reserves, and these currently amount to $350 billion. Offsetting these pluses, is a major problem in their banking system. The Chinese people, for the most part, cannot take money out of China, and can only hold non-yuan deposits if that money is earned outside China. Consequently, the banking system in China is funded by the high savings rate. The Chinese money supply has risen at a 22% rate this year.; however, this money is being funneled into loans by banks, and non-performing loans have risen significantly in 2003. These loans probably exceed $650 billion. Much of the money has been loaned to real estate developers for industrial development. Much of the development has been for U.S. companies, such as, GM. Under China’s commitments to the WTO, foreign banks must be allowed to enter China by 2004. Consequently, over the next three years, we must take positive action to push that banking system into a collapse. It won’t be difficult. Stop investing there. Stop buying their imports. Their economy will crumble. If that happens, their currency will be significantly overvalued.
In addition to the above- mentioned voluntary actions, our federal government must change its spending habits, and now. On an inflation -adjusted basis, total federal spending has grown 17% during the last three years. Non-defense discretionary spending (ex Social Security, Medicare, and Medicaid) has grown by 23.2% during the last three years. Therefore, our federal spending has risen to more than 20% of GDP. That must change immediately.
Nationwide, the number of local government jobs dropped by 19,000 last month, on a year-over-year basis. It was the first such drop since 1984. Last year, for example, Texas gained 44,000 jobs. Of that amount, 36,000 came from government hiring. During the same time, manufacturing employment in Texas fell by 33,100.
I don’t want you to believe that the U.S is the only country that needs to change its ways. British banking group HSBC said it would slash 4,000 jobs in England and Wales. Call centers in Birmingham, Brentwood, Sheffield, and Swansea would be closed and the jobs would be transferred to centers in China, India, and Malaysia. HSBC had previously announced laying off 1,400 workers in Britain by year-end.
Three American soldiers were killed and seven wounded in Karbala, Iraq. Those deaths mean a total of 197 U.S. soldiers have been killed by bombings, ambushes, and other hostile incidents since the declared end to major combat operations on May 1. It is no wonder that the survey conducted by the Stars and Stripes newspaper indicated that 34% of the troops described their morale as low, and 49% described their unit’s morale as low. Last week Bush said the military spirit was high. He is out of touch with the troops. According to a recent Results for America national opinion poll, 55% of Americans think the United States is either going in the wrong direction or has no direction at all. The poll concludes the majority of Americans believe their current political leaders are either “weak” or “very weak” as “problem solvers.”
Delphi Corp. will cut 5,000 jobs. For the week ended Oct. 4, the number of Americans claiming benefits after filing an initial claim climbed 58,000 to 3.67 million. Workers are having an increasingly difficult time finding new jobs.
Over the last 12 months, the core CPI has risen just 1.2%, the smallest since February 1966.
Thursday, October 16, 2003
10/16/03 Out Of Touch
About a dozen years ago, I would have a discussion about then President Bush Sr. and remark that he is out of touch with the people and just doesn’t get it. Unfortunately, I have the same feelings about his son. Mario Terpstra of Johnston, Iowa has never voted for a Democrat. He stated, however, “I don’t think Bush has a clue what the average guy goes through in life.” Dwaine Milliken, also from Johnston, asked “what’s going to happen to Social Security? And health insurance? We have Medicare, but that don’t cover it…It bothers me when troops have families here, have kids, and they’re gone for a year. That’s not right.” Phyllis Jobst has three grown children and works at a Target store in Des Moines. She relates “I see people working two or three jobs just to make ends meet.” Judy Anderson volunteers at a homeless shelter outside of Des Moines. She’s worried about money going towards Iraq rather than social programs in the U.S. June Causey lives in Jacksonville, Florida and worries about rising healthcare costs. Even with Medicare, she is facing a $2,200 hospital bill that she does not know how she will pay.
Veterans groups have been lobbying campaign to win dual benefits for all retired military personnel who are disabled. Presently, retirees who suffered their disabilities in combat on the battlefield are eligible for full dual benefits. Republicans and Democrats are joining forces to present a package that would extend dual benefits for the first time to some veterans whose disabilities are not combat-related, and this provision would be phased in over a decade, and eventually would cover individuals whose disabilities were rated 50% and higher. Under current law, disabled military retirees lose a dollar in retirement payments for each dollar they receive in disability compensation. This rule impacts 500,000 veterans. Bush has fought the estimated $58 billion in costs over the next decade. At the same time, he proposes spending $87 billion for Iraq’s reconstruction. In my view, a president should first take care of his own people. Our veterans have protected our country. Their well being should come first. If the president doesn’t support this proposed legislation, then he should re-evaluate his ability to be commander-in-chief.
In the September quarter, GM’s auto operations made $34 million versus $368 million in the year ago period; however, GMAC had a profit of $630 million, including $253 million from mortgage operations. GM made more money in the Asia-Pacific region (which includes China) than it did in North America. This is starting to sound like a familiar refrain.
The importation of pharmaceuticals has become a battleground. Humphrey Taylor, chairman of the Harris Poll, remarks “this is a very ugly issue for the pharmaceutical industry. As importation of drugs grow- and it looks set to grow a lot more- drug companies run a big risk of making more enemies as they fight to prevent importation. This would fuel the growing backlash against the industry.” In a Wall Street Journal/Harris Interactive poll, 77% of Americans surveyed said they think it is “unreasonable” for pharmaceutical companies to stop Canadian pharmacies from selling drugs over the Internet to Americans. A bipartisan group in the Congress is trying to include a drug-importation provision in the broad Medicare reform bill currently in committee.
Yesterday Filipino President Gloria Macapagal-Arroyo suggested that it was “critical” for Bush to understand “how closely related the war on terrorism is to the war on poverty.” She stated “there is no denying that poverty provides the breeding grounds for the recruitment of terrorists…if we are to win against terrorism and leftist agitators, President Bush has to win the war against poverty as well. They are inseparable. That is our highest priority.”
A “Coalition of Conscience” is a bipartisan group formed to roll back sections of the Patriot Act that they believe encroaches on civil liberties. Yesterday they introduced the Security and Freedom Ensured (SAFE) Act. It would limit “sneak and peek” search warrants, roving wiretaps, and library computers could not be searched without a court order. Nearly 200 communities have passed resolutions condemning the Patriot Act and refusing to comply with it.
Excluding autos, September’s retail sales rose 0.3%, and it was the weakest performance since May. Auto sales dropped 1.6%, the biggest decline since February. It is expected that sales of durable goods will be down in the quarter ending December 31.
For the 40 million Medicare participants, monthly premiums in 2004 will increase by 13.5% to $66.60. Some Medicare participants also will get a deductible increase in the portion of Medicare that pays for hospital stays, skilled nursing facilities and some home health care. The deductible will rise $36 to $867 next year.
John Antone, general manager for Intel’s Asia-Pacific region, stated yesterday that “we expect China to continue to grow to the point where it’s equal or larger than the U.S. as a consumption market by 2010.” Last year China became Intel’s number two market behind the U.S. According to International Data Corp., China is expected to sell 13 million PCs this year, eclipsing Japan’s 12.7 million units as the world’s number two PC market. By comparison, last year 47 million units were sold in the U.S. market.
Sony Music announced cutting 1500 jobs. Chicago Mayor Richard Daley stated hundreds of city job positions would be eliminated. On the other hand, IBM announced they would add 10,000 jobs next year. They said the new workers hired would be for services, software, and hardware operations in the U.S. and elsewhere. I will be blunt. I don’t believe that hiring number, and for many reasons. As recently as September, I mentioned that IBM had laid off engineers in the IT section of the company. IBM’s CEO Palmisano acknowledges “it is too early to say that a rebound is at hand” yet he is “confident that we will benefit from both a pick up in IT spending and an economic recovery.” The fact is the GDP grew at over 5% in the September quarter but IBM’s revenue gain was less than expected, and most of the gain came from the falling dollar and acquisitions rather than internal growth. The company fired employees to cut costs and improve profits. Even after the payroll cuts, IBM’s gross profit margins declined in the quarter. In my view, the company will continue to outsource, make acquisitions, and have little internal revenue growth. Thus, I doubt the hiring of 10,000 workers. IBM is the world’s biggest computer maker, and yet, they make a growing portion of their money from consulting services. As a matter of fact, computer hardware sales in the September quarter declined 1%.
About a dozen years ago, I would have a discussion about then President Bush Sr. and remark that he is out of touch with the people and just doesn’t get it. Unfortunately, I have the same feelings about his son. Mario Terpstra of Johnston, Iowa has never voted for a Democrat. He stated, however, “I don’t think Bush has a clue what the average guy goes through in life.” Dwaine Milliken, also from Johnston, asked “what’s going to happen to Social Security? And health insurance? We have Medicare, but that don’t cover it…It bothers me when troops have families here, have kids, and they’re gone for a year. That’s not right.” Phyllis Jobst has three grown children and works at a Target store in Des Moines. She relates “I see people working two or three jobs just to make ends meet.” Judy Anderson volunteers at a homeless shelter outside of Des Moines. She’s worried about money going towards Iraq rather than social programs in the U.S. June Causey lives in Jacksonville, Florida and worries about rising healthcare costs. Even with Medicare, she is facing a $2,200 hospital bill that she does not know how she will pay.
Veterans groups have been lobbying campaign to win dual benefits for all retired military personnel who are disabled. Presently, retirees who suffered their disabilities in combat on the battlefield are eligible for full dual benefits. Republicans and Democrats are joining forces to present a package that would extend dual benefits for the first time to some veterans whose disabilities are not combat-related, and this provision would be phased in over a decade, and eventually would cover individuals whose disabilities were rated 50% and higher. Under current law, disabled military retirees lose a dollar in retirement payments for each dollar they receive in disability compensation. This rule impacts 500,000 veterans. Bush has fought the estimated $58 billion in costs over the next decade. At the same time, he proposes spending $87 billion for Iraq’s reconstruction. In my view, a president should first take care of his own people. Our veterans have protected our country. Their well being should come first. If the president doesn’t support this proposed legislation, then he should re-evaluate his ability to be commander-in-chief.
In the September quarter, GM’s auto operations made $34 million versus $368 million in the year ago period; however, GMAC had a profit of $630 million, including $253 million from mortgage operations. GM made more money in the Asia-Pacific region (which includes China) than it did in North America. This is starting to sound like a familiar refrain.
The importation of pharmaceuticals has become a battleground. Humphrey Taylor, chairman of the Harris Poll, remarks “this is a very ugly issue for the pharmaceutical industry. As importation of drugs grow- and it looks set to grow a lot more- drug companies run a big risk of making more enemies as they fight to prevent importation. This would fuel the growing backlash against the industry.” In a Wall Street Journal/Harris Interactive poll, 77% of Americans surveyed said they think it is “unreasonable” for pharmaceutical companies to stop Canadian pharmacies from selling drugs over the Internet to Americans. A bipartisan group in the Congress is trying to include a drug-importation provision in the broad Medicare reform bill currently in committee.
Yesterday Filipino President Gloria Macapagal-Arroyo suggested that it was “critical” for Bush to understand “how closely related the war on terrorism is to the war on poverty.” She stated “there is no denying that poverty provides the breeding grounds for the recruitment of terrorists…if we are to win against terrorism and leftist agitators, President Bush has to win the war against poverty as well. They are inseparable. That is our highest priority.”
A “Coalition of Conscience” is a bipartisan group formed to roll back sections of the Patriot Act that they believe encroaches on civil liberties. Yesterday they introduced the Security and Freedom Ensured (SAFE) Act. It would limit “sneak and peek” search warrants, roving wiretaps, and library computers could not be searched without a court order. Nearly 200 communities have passed resolutions condemning the Patriot Act and refusing to comply with it.
Excluding autos, September’s retail sales rose 0.3%, and it was the weakest performance since May. Auto sales dropped 1.6%, the biggest decline since February. It is expected that sales of durable goods will be down in the quarter ending December 31.
For the 40 million Medicare participants, monthly premiums in 2004 will increase by 13.5% to $66.60. Some Medicare participants also will get a deductible increase in the portion of Medicare that pays for hospital stays, skilled nursing facilities and some home health care. The deductible will rise $36 to $867 next year.
John Antone, general manager for Intel’s Asia-Pacific region, stated yesterday that “we expect China to continue to grow to the point where it’s equal or larger than the U.S. as a consumption market by 2010.” Last year China became Intel’s number two market behind the U.S. According to International Data Corp., China is expected to sell 13 million PCs this year, eclipsing Japan’s 12.7 million units as the world’s number two PC market. By comparison, last year 47 million units were sold in the U.S. market.
Sony Music announced cutting 1500 jobs. Chicago Mayor Richard Daley stated hundreds of city job positions would be eliminated. On the other hand, IBM announced they would add 10,000 jobs next year. They said the new workers hired would be for services, software, and hardware operations in the U.S. and elsewhere. I will be blunt. I don’t believe that hiring number, and for many reasons. As recently as September, I mentioned that IBM had laid off engineers in the IT section of the company. IBM’s CEO Palmisano acknowledges “it is too early to say that a rebound is at hand” yet he is “confident that we will benefit from both a pick up in IT spending and an economic recovery.” The fact is the GDP grew at over 5% in the September quarter but IBM’s revenue gain was less than expected, and most of the gain came from the falling dollar and acquisitions rather than internal growth. The company fired employees to cut costs and improve profits. Even after the payroll cuts, IBM’s gross profit margins declined in the quarter. In my view, the company will continue to outsource, make acquisitions, and have little internal revenue growth. Thus, I doubt the hiring of 10,000 workers. IBM is the world’s biggest computer maker, and yet, they make a growing portion of their money from consulting services. As a matter of fact, computer hardware sales in the September quarter declined 1%.
Wednesday, October 15, 2003
10/15/03 Centrino
In October 2002 I suggested that the risk/reward for shares of Intel at $14 looked worth investigating on the part of investors. My reasoning was their new Centrino chip which would power laptop PCs, and hopefully, power stronger revenue generation. As it turned out, Centrino exceeded expectations; however, my analysis looked right but was only partially correct. I missed the real story where the most pleasing comparative results have taken place in Russia, China, and India. In essence, I was proven correct but should not be given too much credit. I will not make the same mistake twice and overlook the importance of emerging countries as they re-write the technology landscape.
The Bank of America plans to set up a subsidiary in India, and will cut costs by moving more jobs offshore. Elizabeth Wood, a bank spokeswoman, stated “it will help provide faster, high quality, less expensive solutions to our customers.” Does she mean American workers are slower? The move to India is scheduled for April, and it will result in job losses in the bank’s global operations; however, the number and location of those cuts haven’t been determined. You want me to believe that?
The Pension Benefit Guaranty Corp.’s deficit for 2003 rose to $8.8 billion from $3.6 billion registered in 2002, so said its director Steven Kandarian. He remarked it “is the largest in its history and is still growing.” Last week the House passed a bill allowing corporations to put $26 billion less into their retirement plans over the next two years. The vote in favor was 397 to 2. The private pension system covers about 44 million Americans. The PBGC is funded with insurance premiums paid by companies sponsoring pension plans. Kandarian went on to say that “if companies do not fund the pension promises they make, someone else will have to pay—either workers in the form of reduced benefits, other companies in the form of higher PBGC premiums, or taxpayers in the form of a PBGC bailout.” The PBGC estimates the private pension system is underfunded by more than $350 billion.
Illinois’ quarterly collections from corporate taxes fell 14% while individual income tax receipts declined 3%. Inheritance taxes fell 45%, and sales taxes were little changed. Moody’s analyst, Timothy Blake, said “in general, state taxes are lagging the national economy, and the economy isn’t doing that well.” Illinois has not raised taxes to balance the $5 billion budget deficit estimated for the state’s 2004 fiscal year. Instead, fees were raised, such as, on real estate sales. Aren’t fees another name for taxes?
Often, I have discussed the aging of our population as the most important trend in the U,S. Right behind that is the growth of singles as about 26% of our country presently lives alone. In 1940 less than 8% of Americans lived alone. According to the Census Bureau, there are 86 million singles, and half of our households are currently headed by unmarried adults. One-third of home buyers are single, with women buying houses at double the rate of men, according to the National Association of Realtors. Solo consumers probably represent an under-served market. The Bureau of Labor Statistics reports inequities in the workplace as single employees generally make less money than married workers, have a higher unemployment rate, and receive less compensation for benefits. Unmarried employees comprise more than 42% of the nation’s workforce. Singles also make up 35% of voters.
The annual revision for employment data is normally published by the Bureau of Labor Statistics in August. This year the revisions for 2002 will be released around December 10, the latest it has ever been. It will show that the BLS numbers have under-reported unemployment statistics for 2002. I have mentioned this under-reporting time and time again. The amount will be in the six figures. There is no question that a similar under-reporting is taking place in 2003. Naturally, those facts won’t be released until AFTER the next presidential election.
Germany has the largest economy among the countries participating in the euro currency. For the past two years their economy has grown by less than 1%. It should come as no surprise that a downward revision pegs their 2003 economy at a growth rate of 0.75 per cent. That is consistency at work. Next year is projected at between 1.5 and 1.75%. It is safe to say that future revisions will bring down that estimate.
Mike Rhoads, executive vice president of Blue Cross and Blue Shield of Oklahoma, states “our biggest competitor isn’t another insurance company. It’s the uninsured.” In Oklahoma, the percentage of uninsured is 18.3%, according to the Oklahoma State Department of Health, and that’s well above the national average of 14.6%.
In October 2002 I suggested that the risk/reward for shares of Intel at $14 looked worth investigating on the part of investors. My reasoning was their new Centrino chip which would power laptop PCs, and hopefully, power stronger revenue generation. As it turned out, Centrino exceeded expectations; however, my analysis looked right but was only partially correct. I missed the real story where the most pleasing comparative results have taken place in Russia, China, and India. In essence, I was proven correct but should not be given too much credit. I will not make the same mistake twice and overlook the importance of emerging countries as they re-write the technology landscape.
The Bank of America plans to set up a subsidiary in India, and will cut costs by moving more jobs offshore. Elizabeth Wood, a bank spokeswoman, stated “it will help provide faster, high quality, less expensive solutions to our customers.” Does she mean American workers are slower? The move to India is scheduled for April, and it will result in job losses in the bank’s global operations; however, the number and location of those cuts haven’t been determined. You want me to believe that?
The Pension Benefit Guaranty Corp.’s deficit for 2003 rose to $8.8 billion from $3.6 billion registered in 2002, so said its director Steven Kandarian. He remarked it “is the largest in its history and is still growing.” Last week the House passed a bill allowing corporations to put $26 billion less into their retirement plans over the next two years. The vote in favor was 397 to 2. The private pension system covers about 44 million Americans. The PBGC is funded with insurance premiums paid by companies sponsoring pension plans. Kandarian went on to say that “if companies do not fund the pension promises they make, someone else will have to pay—either workers in the form of reduced benefits, other companies in the form of higher PBGC premiums, or taxpayers in the form of a PBGC bailout.” The PBGC estimates the private pension system is underfunded by more than $350 billion.
Illinois’ quarterly collections from corporate taxes fell 14% while individual income tax receipts declined 3%. Inheritance taxes fell 45%, and sales taxes were little changed. Moody’s analyst, Timothy Blake, said “in general, state taxes are lagging the national economy, and the economy isn’t doing that well.” Illinois has not raised taxes to balance the $5 billion budget deficit estimated for the state’s 2004 fiscal year. Instead, fees were raised, such as, on real estate sales. Aren’t fees another name for taxes?
Often, I have discussed the aging of our population as the most important trend in the U,S. Right behind that is the growth of singles as about 26% of our country presently lives alone. In 1940 less than 8% of Americans lived alone. According to the Census Bureau, there are 86 million singles, and half of our households are currently headed by unmarried adults. One-third of home buyers are single, with women buying houses at double the rate of men, according to the National Association of Realtors. Solo consumers probably represent an under-served market. The Bureau of Labor Statistics reports inequities in the workplace as single employees generally make less money than married workers, have a higher unemployment rate, and receive less compensation for benefits. Unmarried employees comprise more than 42% of the nation’s workforce. Singles also make up 35% of voters.
The annual revision for employment data is normally published by the Bureau of Labor Statistics in August. This year the revisions for 2002 will be released around December 10, the latest it has ever been. It will show that the BLS numbers have under-reported unemployment statistics for 2002. I have mentioned this under-reporting time and time again. The amount will be in the six figures. There is no question that a similar under-reporting is taking place in 2003. Naturally, those facts won’t be released until AFTER the next presidential election.
Germany has the largest economy among the countries participating in the euro currency. For the past two years their economy has grown by less than 1%. It should come as no surprise that a downward revision pegs their 2003 economy at a growth rate of 0.75 per cent. That is consistency at work. Next year is projected at between 1.5 and 1.75%. It is safe to say that future revisions will bring down that estimate.
Mike Rhoads, executive vice president of Blue Cross and Blue Shield of Oklahoma, states “our biggest competitor isn’t another insurance company. It’s the uninsured.” In Oklahoma, the percentage of uninsured is 18.3%, according to the Oklahoma State Department of Health, and that’s well above the national average of 14.6%.
Tuesday, October 14, 2003
10/14/03 Three Strikes And Counting
On Saturday, 70,000 clerks walked out at 850 Ralphs owned by Kroger; Vons and Pavilion supermarkets owned by Safeway; and Albertson’s in Southern California. At midnight Monday grocery workers at 44 Kroger stores in West Virginia. Ohio, and Kentucky went on strike. Kroger is West Virginia’s fourth-largest employer, with about 5,100 workers statewide. In Missouri, about 10,000 union members have been on strike at the St. Louis area’s three largest grocery chains since Tuesday. Ninety six stores have been impacted in that region. As previously stated, the supermarkets want the union workers to share in health care costs. Greg Denier, a union spokesperson, stated “increased health premiums reduces low-wage employees to the poverty level…Unless this is addressed on a national level, there is going to be a crisis.” Greg, don’t worry. President Bush is in charge. The fact our country spends more on health care than we do on national defense. The Anderson School of Business at UCLA reported that health care expenses are the fastest growing sector of labor costs and the average annual premium for a family health insurance policy is now over $7,000. Harvey Sobel of Mellon Human Resources and Investor Solutions remarked that “you will see employers and unions in contentious fights for years to come. It’s hard to imagine it relenting.” Who are the winners in a strike? I can only think of WalMart as it gains market share. Besides expertise in logistics, distribution, and IT, WalMart is a nonunion company with lower labor costs as the wages and benefits for its employees run 25% lower than the comparable grocery clerk at Kroger, Safeway, and Albertson’s in Southern California.
Today mechanics for the third-largest public transportation system went on strike , and shut down buses and trains that an estimated 500,000 daily riders count on to get around Los Angeles County. It impacted 1,900 buses as well as light-rail and subway lines. It is the area’s second transit strike in three years. In 2000, the strike lasted for 32 days. The striking point is coping with soaring medical costs. The MTA pays nearly $17 million every year into the mechanics union’s health fund. The reserves in that fund are close to being dry. The MTA has accused the union of mismanaging the fund. The union wants greater contributions into the fund in order to offset rising health care costs.
In 1972 Congress eliminated co-payment for health care under Medicare legislation. The idea was to use home care as an alternative to the greater expense in nursing homes and hospitals. Thirty one years later the House and Senate negotiators are working on Medicare legislation which would impose co-payment on health care. They are considering a co-payment of $40 to $45 for each 60-day period in which a beneficiary receives home care. Medicare typically pays $2,700 to $3,000 for 60 days of home care. The co-payment proposal is being dubbed the “sick tax.” In actuality, great progress has been made in home health care costs. In 1997 it amounted to $17.5 billion, and in 2002 the amount had been reduced to $10 billion. Unfortunately, the man in charge listens to the CBO and that office predicts that annual spending for home care will triple in the coming decade to $32.9 billion in 2013. A proposal will be discussed to exempt low-income beneficiaries from the new co-payment. For the great majority, co-payment will become a reality in the new Medicare legislation. It is poor decision-making. There is a great cost benefit in home care over nursing homes and hospitals. The man in charge must have difficulty in reading comparative cost analysis. That may not be a popular course at Yale.
There is good news and bad news in telecommunications. The bad news is the phone companies are in trouble. The good news is on the consumer side. Have you heard of Niklas Zennstromm and Janus Friis? Have you heard of Skype? Only a million people know about it. That’s because it’s only been available for a month. I will give you a hint. It works best over broadband connections, and yes, as Pew Research Center says, it can reach only 16% of Americans at home. You need a headset. It’s a free download. It has a big advantage because the software and audio connections do not pass through central servers but rather through a peer-to-peer infrastructure. This winter Skype will make it possible for users to call people on regular telephones and not just through their computers. I believe Skype has real potential in the marketplace and for consumers. This service should transform the land-line telephone business. The consumer will benefit; however, the telephone companies will be in trouble and so will their workers.
Convergys Corp. opened two call centers in the Philippines and announced plans to open a third in 2004. Combined, the three centers will employ 3,100 workers, and will provide general support and technical help-desk services to Convergys clients. The investment in the Philippines is part of an effort to make the company’s global operations generate at least 30% of total revenue.
Yesterday’s attack in Tikrit brought to 96 the number of U.S. soldiers killed in Iraq since President Bush declared major combat operations over on May 1. Yes, President Bush is in charge.
WalMart is on target to generate 3 to 5 percent same-store sales growth in October; however, the company has not raised its quarterly earnings forecast, in part because of heavier-than-expected markdowns that trimmed profits. Some economists are cautious about the retail outlook. Richard DeKaser, chief economist for National City Corp. in Cleveland, remarked “we had explosive growth in consumer spending, and I don’t expect that to continue. Many of the goods they want to buy were bought this summer.”
On Saturday, 70,000 clerks walked out at 850 Ralphs owned by Kroger; Vons and Pavilion supermarkets owned by Safeway; and Albertson’s in Southern California. At midnight Monday grocery workers at 44 Kroger stores in West Virginia. Ohio, and Kentucky went on strike. Kroger is West Virginia’s fourth-largest employer, with about 5,100 workers statewide. In Missouri, about 10,000 union members have been on strike at the St. Louis area’s three largest grocery chains since Tuesday. Ninety six stores have been impacted in that region. As previously stated, the supermarkets want the union workers to share in health care costs. Greg Denier, a union spokesperson, stated “increased health premiums reduces low-wage employees to the poverty level…Unless this is addressed on a national level, there is going to be a crisis.” Greg, don’t worry. President Bush is in charge. The fact our country spends more on health care than we do on national defense. The Anderson School of Business at UCLA reported that health care expenses are the fastest growing sector of labor costs and the average annual premium for a family health insurance policy is now over $7,000. Harvey Sobel of Mellon Human Resources and Investor Solutions remarked that “you will see employers and unions in contentious fights for years to come. It’s hard to imagine it relenting.” Who are the winners in a strike? I can only think of WalMart as it gains market share. Besides expertise in logistics, distribution, and IT, WalMart is a nonunion company with lower labor costs as the wages and benefits for its employees run 25% lower than the comparable grocery clerk at Kroger, Safeway, and Albertson’s in Southern California.
Today mechanics for the third-largest public transportation system went on strike , and shut down buses and trains that an estimated 500,000 daily riders count on to get around Los Angeles County. It impacted 1,900 buses as well as light-rail and subway lines. It is the area’s second transit strike in three years. In 2000, the strike lasted for 32 days. The striking point is coping with soaring medical costs. The MTA pays nearly $17 million every year into the mechanics union’s health fund. The reserves in that fund are close to being dry. The MTA has accused the union of mismanaging the fund. The union wants greater contributions into the fund in order to offset rising health care costs.
In 1972 Congress eliminated co-payment for health care under Medicare legislation. The idea was to use home care as an alternative to the greater expense in nursing homes and hospitals. Thirty one years later the House and Senate negotiators are working on Medicare legislation which would impose co-payment on health care. They are considering a co-payment of $40 to $45 for each 60-day period in which a beneficiary receives home care. Medicare typically pays $2,700 to $3,000 for 60 days of home care. The co-payment proposal is being dubbed the “sick tax.” In actuality, great progress has been made in home health care costs. In 1997 it amounted to $17.5 billion, and in 2002 the amount had been reduced to $10 billion. Unfortunately, the man in charge listens to the CBO and that office predicts that annual spending for home care will triple in the coming decade to $32.9 billion in 2013. A proposal will be discussed to exempt low-income beneficiaries from the new co-payment. For the great majority, co-payment will become a reality in the new Medicare legislation. It is poor decision-making. There is a great cost benefit in home care over nursing homes and hospitals. The man in charge must have difficulty in reading comparative cost analysis. That may not be a popular course at Yale.
There is good news and bad news in telecommunications. The bad news is the phone companies are in trouble. The good news is on the consumer side. Have you heard of Niklas Zennstromm and Janus Friis? Have you heard of Skype? Only a million people know about it. That’s because it’s only been available for a month. I will give you a hint. It works best over broadband connections, and yes, as Pew Research Center says, it can reach only 16% of Americans at home. You need a headset. It’s a free download. It has a big advantage because the software and audio connections do not pass through central servers but rather through a peer-to-peer infrastructure. This winter Skype will make it possible for users to call people on regular telephones and not just through their computers. I believe Skype has real potential in the marketplace and for consumers. This service should transform the land-line telephone business. The consumer will benefit; however, the telephone companies will be in trouble and so will their workers.
Convergys Corp. opened two call centers in the Philippines and announced plans to open a third in 2004. Combined, the three centers will employ 3,100 workers, and will provide general support and technical help-desk services to Convergys clients. The investment in the Philippines is part of an effort to make the company’s global operations generate at least 30% of total revenue.
Yesterday’s attack in Tikrit brought to 96 the number of U.S. soldiers killed in Iraq since President Bush declared major combat operations over on May 1. Yes, President Bush is in charge.
WalMart is on target to generate 3 to 5 percent same-store sales growth in October; however, the company has not raised its quarterly earnings forecast, in part because of heavier-than-expected markdowns that trimmed profits. Some economists are cautious about the retail outlook. Richard DeKaser, chief economist for National City Corp. in Cleveland, remarked “we had explosive growth in consumer spending, and I don’t expect that to continue. Many of the goods they want to buy were bought this summer.”
Monday, October 13, 2003
10/13/03 Mighty Beanz
Many of my readers have children and grandchildren. Many will go shopping today. I thought it appropriate to recommend a value-oriented purchase, and one that has the capability of increasing in value as a collectible. Children are nuts for the Beanz. They sell for $5.99 a six-pack. They are small capsules with a bearing that make them shake and bob after being set down. Kids collect and trade them. A collection of Mighty Beanz is sought after by children. The North American distributor, Spin Master, expects to have holiday sales of $60 million this year and is projecting Mighty Beanz sales at $160 to $200 million next year. That’s revenue growth. It’s more than I can say for companies in the Nasdaq 100 and the S&P 500. Your downside risk is $5.99, and you will bring a smile to your child’s face. I only wish I owned the distributorship. Then again, I’d be listening to customer complaints about running out of Mighty Beanz on the shelves. I don’t have the patience for that.
The Commerce Department estimates, while online sales represented less than 2% of retail purchases last year, such sales grew at a rate of 26%.
Senator Richard Lugar, R-Indiana, is the chairman of the Senate Foreign Relations Committee. Yesterday on Meet The Press, he predicted American forces might have to be in Iraq in some capacity for eight years or more. In addition, he stated Iraq’s recovery would cost at least $50 billion more than the $87 billion that Bush has requested and is pending in Congress.
WalMart has 1.4 million employees, and close to half will leave in 2003. Employee turnover is one of the biggest problems facing WalMart. The average wage for a sales associate is $8.23 an hour. In addition to the low wage, health coverage is a massive problem. WalMart does not provide coverage to retirees. The company offers strong catastrophic coverage and some low-priced plans, but charges deductibles up to $1,000. I am not singling WalMart out. They just happen to be the largest employer in the private sector.
The matter of healthcare coverage in the workplace will be an important subject in the next presidential election. Over the past year, almost every labor dispute has focused on health benefits. Some workers postpone retirement in order to get better coverage for prescription drugs. How does one control employer costs and not hurt the employee? With the new auto pact, companies held the line on health benefits and, in return, the workers receive no wage increases for two years. Health premiums for businesses have risen at a double-digit clip for four straight years, and a similar rise is expected in 2004. Unfortunately, revenues have not grown at a similar rate and are not projected to do so in 2004.
There are 95 million Americans invested in mutual funds. Do they really know what those funds own? Do they really know anything about the individuals who manage those funds? Do they know what’s been charged to manage those funds? What do they know? Not very much is probably the answer. If your mutual fund experience is not satisfying, blame yourself. It’s time the public took some responsibility for the ineptness of the money managers. Vote with your money. Either the managers can hack it or give them their walking papers. Don’t settle for mediocrity. It’s too hard to earn the after-tax dollars, and too hard to save those dollars.
Many of my readers have children and grandchildren. Many will go shopping today. I thought it appropriate to recommend a value-oriented purchase, and one that has the capability of increasing in value as a collectible. Children are nuts for the Beanz. They sell for $5.99 a six-pack. They are small capsules with a bearing that make them shake and bob after being set down. Kids collect and trade them. A collection of Mighty Beanz is sought after by children. The North American distributor, Spin Master, expects to have holiday sales of $60 million this year and is projecting Mighty Beanz sales at $160 to $200 million next year. That’s revenue growth. It’s more than I can say for companies in the Nasdaq 100 and the S&P 500. Your downside risk is $5.99, and you will bring a smile to your child’s face. I only wish I owned the distributorship. Then again, I’d be listening to customer complaints about running out of Mighty Beanz on the shelves. I don’t have the patience for that.
The Commerce Department estimates, while online sales represented less than 2% of retail purchases last year, such sales grew at a rate of 26%.
Senator Richard Lugar, R-Indiana, is the chairman of the Senate Foreign Relations Committee. Yesterday on Meet The Press, he predicted American forces might have to be in Iraq in some capacity for eight years or more. In addition, he stated Iraq’s recovery would cost at least $50 billion more than the $87 billion that Bush has requested and is pending in Congress.
WalMart has 1.4 million employees, and close to half will leave in 2003. Employee turnover is one of the biggest problems facing WalMart. The average wage for a sales associate is $8.23 an hour. In addition to the low wage, health coverage is a massive problem. WalMart does not provide coverage to retirees. The company offers strong catastrophic coverage and some low-priced plans, but charges deductibles up to $1,000. I am not singling WalMart out. They just happen to be the largest employer in the private sector.
The matter of healthcare coverage in the workplace will be an important subject in the next presidential election. Over the past year, almost every labor dispute has focused on health benefits. Some workers postpone retirement in order to get better coverage for prescription drugs. How does one control employer costs and not hurt the employee? With the new auto pact, companies held the line on health benefits and, in return, the workers receive no wage increases for two years. Health premiums for businesses have risen at a double-digit clip for four straight years, and a similar rise is expected in 2004. Unfortunately, revenues have not grown at a similar rate and are not projected to do so in 2004.
There are 95 million Americans invested in mutual funds. Do they really know what those funds own? Do they really know anything about the individuals who manage those funds? Do they know what’s been charged to manage those funds? What do they know? Not very much is probably the answer. If your mutual fund experience is not satisfying, blame yourself. It’s time the public took some responsibility for the ineptness of the money managers. Vote with your money. Either the managers can hack it or give them their walking papers. Don’t settle for mediocrity. It’s too hard to earn the after-tax dollars, and too hard to save those dollars.
Sunday, October 12, 2003
10/12/03 Bullies Are Easy Prey
Yesterday I wrote about Russia and OPEC. Today the bully is crying. OPEC PresidentAl-Attiyah warned that crude oil prices might collapse next year. In Tokyo he stated “without help, mainly from Russia, we expect oil markets to face a lot of difficulties in the future. Non-OPEC should understand that 1999 is only four years ago. We have to learn from the past.” In 1998-1999 crude oil prices dropped to $10 a barrel. Al-Attiyah further remarked “we don’t just cut because we love to cut, we’re not psychopaths. We don’t want to kill barrels. This is related to markets. We’re forced to cut.” Bullies are easy prey. They are dead on arrival. Russia is producing about 9 million barrels a month, and that country is the world’s second largest oil exporter after Saudi Arabia. Yusufov, Russia’s oil minister, said it best when he related “our colleagues from OPEC consider $28 a barrel normal. We think it’s not. It’s too high. Low oil prices are bad for producers, but exceedingly high prices are bad for consumers in the U.S. and Europe.” OPEC thinks there is only one oil price and self-interest takes the front seat while importing nations pay their set price for supplies. Russia will undercut OPEC’s pricing and poison their arrogance. Another bully will be put to rest. I know of a mausoleum that’s for sale for $250,000 in Oakland, California.
George Bush Sr.’s memoirs are entitled “A World Transformed.” He explains why didn’t go after Saddam Hussein at the end of the Gulf War: “Trying to eliminate Saddam…would have incurred incalculable human and political costs. Apprehending him was probably impossible…We would have been forced to occupy Baghdad and, in effect, rule Iraq…there was no viable ‘exit strategy’ we could see, violating another of our principles. Furthermore, we had been self-consciously trying to set a pattern for handling aggression in the post-Cold War world. Going in an occupying Iraq, thus unilaterally exceeding the United Nations’ mandate, would have destroyed the precedent of international response to aggression that we hoped to establish. Had we gone the invasion route, the United States could conceivably still be occupying power in a bitterly hostile land.”
Some time ago I wrote about the growing demand for soy milk. Today I will take a look at another growing market for soybeans, and one that is coming to your neighborhood. Soy complex combined with vitamin E can help diminish the appearance of wrinkles and age spots, and is being combined in moisturizer creams. In other words, you might find these ingredients in creams promoted to prevent premature aging. Most of the large cosmetic companies have, or will have, soy-based lines of products.
IMF Deputy Director Shigemitsu Sugisaki told the World Form East Asia in Singapore “it’s hard to tell where the appropriate exchange rate is” for the Chinese yuan…”it’s difficult to find a persuasive case that the renminbi (yuan) is substantially undervalued.”
Another subject I have touched on is the tax deduction for vehicles that weigh 6,000 pounds or more. Originally they were intended for farmers and other small businesses that needed large vehicles, and not for the ‘Hummer crowd.’ At the beginning of 2003 the amount of the deduction was $25,000 but it was raised this past summer to $100,000 as part of the economic stimulus package. The Senate Finance Committee voted this month to cut the amount small businesses can deduct for buying an SUV weighing 6,000 ponds or more from $100,000 back to $25,000. Some lawmakers want the entire tax deduxtion repealed.
In the Newsweek poll taken Thursday and Friday, 50% of voters don’t want to see him re-elected to a second term while 44% support his re-election.
Yesterday I wrote about Russia and OPEC. Today the bully is crying. OPEC PresidentAl-Attiyah warned that crude oil prices might collapse next year. In Tokyo he stated “without help, mainly from Russia, we expect oil markets to face a lot of difficulties in the future. Non-OPEC should understand that 1999 is only four years ago. We have to learn from the past.” In 1998-1999 crude oil prices dropped to $10 a barrel. Al-Attiyah further remarked “we don’t just cut because we love to cut, we’re not psychopaths. We don’t want to kill barrels. This is related to markets. We’re forced to cut.” Bullies are easy prey. They are dead on arrival. Russia is producing about 9 million barrels a month, and that country is the world’s second largest oil exporter after Saudi Arabia. Yusufov, Russia’s oil minister, said it best when he related “our colleagues from OPEC consider $28 a barrel normal. We think it’s not. It’s too high. Low oil prices are bad for producers, but exceedingly high prices are bad for consumers in the U.S. and Europe.” OPEC thinks there is only one oil price and self-interest takes the front seat while importing nations pay their set price for supplies. Russia will undercut OPEC’s pricing and poison their arrogance. Another bully will be put to rest. I know of a mausoleum that’s for sale for $250,000 in Oakland, California.
George Bush Sr.’s memoirs are entitled “A World Transformed.” He explains why didn’t go after Saddam Hussein at the end of the Gulf War: “Trying to eliminate Saddam…would have incurred incalculable human and political costs. Apprehending him was probably impossible…We would have been forced to occupy Baghdad and, in effect, rule Iraq…there was no viable ‘exit strategy’ we could see, violating another of our principles. Furthermore, we had been self-consciously trying to set a pattern for handling aggression in the post-Cold War world. Going in an occupying Iraq, thus unilaterally exceeding the United Nations’ mandate, would have destroyed the precedent of international response to aggression that we hoped to establish. Had we gone the invasion route, the United States could conceivably still be occupying power in a bitterly hostile land.”
Some time ago I wrote about the growing demand for soy milk. Today I will take a look at another growing market for soybeans, and one that is coming to your neighborhood. Soy complex combined with vitamin E can help diminish the appearance of wrinkles and age spots, and is being combined in moisturizer creams. In other words, you might find these ingredients in creams promoted to prevent premature aging. Most of the large cosmetic companies have, or will have, soy-based lines of products.
IMF Deputy Director Shigemitsu Sugisaki told the World Form East Asia in Singapore “it’s hard to tell where the appropriate exchange rate is” for the Chinese yuan…”it’s difficult to find a persuasive case that the renminbi (yuan) is substantially undervalued.”
Another subject I have touched on is the tax deduction for vehicles that weigh 6,000 pounds or more. Originally they were intended for farmers and other small businesses that needed large vehicles, and not for the ‘Hummer crowd.’ At the beginning of 2003 the amount of the deduction was $25,000 but it was raised this past summer to $100,000 as part of the economic stimulus package. The Senate Finance Committee voted this month to cut the amount small businesses can deduct for buying an SUV weighing 6,000 ponds or more from $100,000 back to $25,000. Some lawmakers want the entire tax deduxtion repealed.
In the Newsweek poll taken Thursday and Friday, 50% of voters don’t want to see him re-elected to a second term while 44% support his re-election.
Saturday, October 11, 2003
10/11/03 A Preemptive Strike On BS
Yesterday the California State Employment Development Department released unemployment data for September. It is a good primer on how government figures work. Santa Clara County’s unemployment rate of 8% in August fell to 7.5% in September. I can hear the cheers on Wall Street. The traders read the headlines. Let’s read the nitty gritty. The number of unemployed county residents dropped by 6,400 to 67,800 in September, but the number of employed residents fell as well. Why did people move out of the county? Simple. The number of jobs in the county in September, 864,800, was the lowest of any month since February 1996. Overall, the state of California lost 16,600 jobs from August to September. Many of the job losses came in professional and business services, leisure and hospitality, and manufacturing.
Yesterday the CBO said tax receipts, especially corporate receipts, came in stronger than expected this fall. They might have mentioned that, for all of fiscal 2003, corporate tax receipts fell by 11.1%, and amounted to only 1.2% of our GDP. Let’s look closer. Overall federal government tax receipts amounted to $1.78 trillion in fiscal year 2003, and this was $70 billion less than in 2002. As a percentage of the economy, the federal tax receipts fell to 16.6%, the lowest level since 1959. The headlines fail to tell you that little tidbit. The problem is simple. Our receipts continue to drop and our spending continues to rise. You don’t need to have an MBA to know that spells trouble.
The headlines read that oil prices continue to climb. They have recently. That’s a party that will have a not-too-pretty ending for OPEC. Their stranglehold on the market is over. OVER. Russia will stuff it up their you know what. Russia’s Energy Minister Igor Yusufov said in Moscow that OPEC’s price target was too high. He stated “we don’t want to go over $25 a barrel because it hurts consumers, while OPEC believes that $28 a barrel- even $30 a barrel- is acceptable.” In other words, Russia will pull a chinese on the oil market. Russia is the largest crude supplier outside OPEC. World oil output increased by 300,000 barrels a day last month to just over 80 million barrels. Of that increase, Russia, Norway, and Kazakhstan added 135,000 barrels a day last month. Non-OPEC production has risen by 2.2 million barrels a day since September 2002. No one doubts that Iraq has large oil reserves. Russia, however, has the resolve and production to make oil prices fall, and to keep them at non-inflationary levels. In that respect, they have a commonality with China’s efforts in the manufacturing arena.
Today is a gathering of 57 countries of the Organization of the Islamic Conference. Top priority is “the eviction of foreign forces from Iraq, allowing the United Nations to administer Iraqi affairs as a prelude to restoration of Iraq’s independence, and to the rebuilding of what has been destroyed over the past 20 years, all in accordance with a clear and short timetable.”
The dollar hit a 9-year low versus the Canadian dollar and a 3-year low versus the yen. Imports in August exceeded exports by $39.2 billion. Given the weakness in the dollar, that number is extraordinarily high.
Joseph Abate, a senior economist at Lehman Brothers, stated “without some degree of pricing power and signs of stronger economic growth, both profits and labor market recoveries will remain softer than normal.” Some might question that statement. In fact, the GDP might grow almost 6% in the third quarter. That growth is a bit like the unemployment discussion earlier in this writing. One needs to go below the headlines. If expenses drop, then profits may rise faster than anticipated. In the case of the government, the deficit is lessened because spending on welfare payments, health care for the needy, and unemployment benefits were lower than forecast. That does not mean there was an improvement. Overall, spending rose and receipts dropped. In the case of corporations, cost cutting increased but revenues did not keep pace. Companies knock inflation on its heels. Auto makers spent an average of $4,123 on discounts and incentives in September, according to CNW Marketing Research.
Jeff Immelt took over the helm at GE from Jack Welch in September 2001. Since that time, GE has made 120 acquisitions worth about $50 billion. Immelt may be a great manager. I don’t believe any manager can successfully oversee the integration of 120 businesses in two years.
KoSa is a polyester fiber producer with a regional headquarters in Charlotte. They will discontinue production at its Shelby plant and lay off 150 employees. Cavalier Specialty Yarn will lay off 120 workers over the next three to six weeks. The company filed for bankruptcy protection last month.
John Challenger, CEO of Challenger, Gray, and Christmas, talking about the fear factor in the workplace: “They’re working harder because there are fewer people around them than there used to be, and they know there are more people on the job market. So they’re holding on to their jobs for dear life, to a degree. They’re protecting against the risk of losing their jobs and becoming one of the statistics of the more than 2 million people who have been out of work for 27 weeks or longer.”
Yesterday the California State Employment Development Department released unemployment data for September. It is a good primer on how government figures work. Santa Clara County’s unemployment rate of 8% in August fell to 7.5% in September. I can hear the cheers on Wall Street. The traders read the headlines. Let’s read the nitty gritty. The number of unemployed county residents dropped by 6,400 to 67,800 in September, but the number of employed residents fell as well. Why did people move out of the county? Simple. The number of jobs in the county in September, 864,800, was the lowest of any month since February 1996. Overall, the state of California lost 16,600 jobs from August to September. Many of the job losses came in professional and business services, leisure and hospitality, and manufacturing.
Yesterday the CBO said tax receipts, especially corporate receipts, came in stronger than expected this fall. They might have mentioned that, for all of fiscal 2003, corporate tax receipts fell by 11.1%, and amounted to only 1.2% of our GDP. Let’s look closer. Overall federal government tax receipts amounted to $1.78 trillion in fiscal year 2003, and this was $70 billion less than in 2002. As a percentage of the economy, the federal tax receipts fell to 16.6%, the lowest level since 1959. The headlines fail to tell you that little tidbit. The problem is simple. Our receipts continue to drop and our spending continues to rise. You don’t need to have an MBA to know that spells trouble.
The headlines read that oil prices continue to climb. They have recently. That’s a party that will have a not-too-pretty ending for OPEC. Their stranglehold on the market is over. OVER. Russia will stuff it up their you know what. Russia’s Energy Minister Igor Yusufov said in Moscow that OPEC’s price target was too high. He stated “we don’t want to go over $25 a barrel because it hurts consumers, while OPEC believes that $28 a barrel- even $30 a barrel- is acceptable.” In other words, Russia will pull a chinese on the oil market. Russia is the largest crude supplier outside OPEC. World oil output increased by 300,000 barrels a day last month to just over 80 million barrels. Of that increase, Russia, Norway, and Kazakhstan added 135,000 barrels a day last month. Non-OPEC production has risen by 2.2 million barrels a day since September 2002. No one doubts that Iraq has large oil reserves. Russia, however, has the resolve and production to make oil prices fall, and to keep them at non-inflationary levels. In that respect, they have a commonality with China’s efforts in the manufacturing arena.
Today is a gathering of 57 countries of the Organization of the Islamic Conference. Top priority is “the eviction of foreign forces from Iraq, allowing the United Nations to administer Iraqi affairs as a prelude to restoration of Iraq’s independence, and to the rebuilding of what has been destroyed over the past 20 years, all in accordance with a clear and short timetable.”
The dollar hit a 9-year low versus the Canadian dollar and a 3-year low versus the yen. Imports in August exceeded exports by $39.2 billion. Given the weakness in the dollar, that number is extraordinarily high.
Joseph Abate, a senior economist at Lehman Brothers, stated “without some degree of pricing power and signs of stronger economic growth, both profits and labor market recoveries will remain softer than normal.” Some might question that statement. In fact, the GDP might grow almost 6% in the third quarter. That growth is a bit like the unemployment discussion earlier in this writing. One needs to go below the headlines. If expenses drop, then profits may rise faster than anticipated. In the case of the government, the deficit is lessened because spending on welfare payments, health care for the needy, and unemployment benefits were lower than forecast. That does not mean there was an improvement. Overall, spending rose and receipts dropped. In the case of corporations, cost cutting increased but revenues did not keep pace. Companies knock inflation on its heels. Auto makers spent an average of $4,123 on discounts and incentives in September, according to CNW Marketing Research.
Jeff Immelt took over the helm at GE from Jack Welch in September 2001. Since that time, GE has made 120 acquisitions worth about $50 billion. Immelt may be a great manager. I don’t believe any manager can successfully oversee the integration of 120 businesses in two years.
KoSa is a polyester fiber producer with a regional headquarters in Charlotte. They will discontinue production at its Shelby plant and lay off 150 employees. Cavalier Specialty Yarn will lay off 120 workers over the next three to six weeks. The company filed for bankruptcy protection last month.
John Challenger, CEO of Challenger, Gray, and Christmas, talking about the fear factor in the workplace: “They’re working harder because there are fewer people around them than there used to be, and they know there are more people on the job market. So they’re holding on to their jobs for dear life, to a degree. They’re protecting against the risk of losing their jobs and becoming one of the statistics of the more than 2 million people who have been out of work for 27 weeks or longer.”
Friday, October 10, 2003
10/10/03 You Can Handle The Truth
The Labor Department reported yesterday that first-time jobless claims fell by 23,000 during the week that ended Saturday. Why did they fall by 23,000? Because the prior week’s number was raised to a revised 405,000. In other words, the jobless number rose in the prior week. This week’s number shall also, in my opinion, be revised upward. By that time, Wall Street and the media will have forgotten the revisions. Meanwhile, the number of people continuing to collect state unemployment insurance remains in excess of 3,640,000 people. Taxpayers deserve better from the Labor Department. They deserve accurate and not weekly revised upward numbers. This is politely called fudging the facts. The forecast for jobs is not bright. The Business Council stated 63% of its member organizations would maintain current hiring levels next year, and that jobs for manufacturing would remain difficult to obtain. Overall, only 14% said they would step up hiring. A few companies, such as, GE and Union Pacific, have begun selective hiring. In sum, layoffs in technology and manufacturing have slowed, but they continue. The average weekly claims since the beginning of July have amounted to 403,400. In the first half of the year they were 419,270. A good part of the problem was outlined by Jeff Immelt, GE’s CEO. He said excess capacity remains in the economy. Immelt’s statement is reinforced by the Conference Board’s most recent survey of business leaders. Since January, almost three times as many CEOs have scaled back capital spending plans as those willing to expand those plans. In other words, CEOs are even reluctant to spend stockholder money. We must also remember that those same CEOs surveyed are selling stock in increasing proportions to their purchases in a ratio of 36:1.
Telefonica SA is the largest telephone company in Latin America. They plan to cut a fourth of its workforce in the region, or 6300 jobs. France Telecom SA plans to eliminate 13,000 jobs this year, and Portugal Telecom SGPS SA is cutting 1500 workers from the payroll.
Yesterday President Bush addressed the NEW Hampshire Air National Guard, Army National Guard, Reservists and their families at Pease Air National Guard Base in Portsmouth, NH. Bush has carefully crafted new rhetoric to justify the Iraq war. He stated “the regime of Saddam Hussein possessed and used weapons of mass destruction.” He didn’t say was in possession of WPM at the time of our invasion. He can no longer make that statement, and it was the latter which caused our country to go to war. Please note that, since the major combat was declared over on May 1, 94 U.S. soldiers have been killed in action in Iraq. Why did we invade Iraq? Bush said “I acted because I was not about to leave the security of the American people in the hands of a madman.” Where was the problem of security when he didn’t have WMD. I’m told the President likes to do what’s right. If that’s so, then he should apologize to the families of the military who have lost their love ones; apologize to the service members and their families who have been injured and wounded in Iraq; and apologize to the American people for “misspeaking,” as the Vice President describes such actions. Rather than being forthright, Bush pushes on despite any evidence of WMD. Rather, he clings to “our investigators have found evidence of a clandestine network of biological laboratories. They found advanced design work on prohibited longer-range missiles.” In other words, all of the above + $1 will get you on the bus. It means zilch.
The government is not finished with its tricks. Joshua Bolten is the Director of the OMB. The government’s fiscal year ended September 30, 2003 and the OMB last projected a budget deficit of $455 billion. The actual number will be released toward the end of October. Bolten said “my expectation is that we will go below $400 billion as a result of both slower expenditures than were anticipated in July… and some modest good news in revenue collections.” In other words, expenditures were held up until the new fiscal year which began October 1, and the release of the coming year’s deficit number can be delayed until after the presidential election in November 2004. The government will attempt to place an improving face on the budget deficit picture and state there is a dedication for exercising fiscal restraint. This is a dangerous situation. Figures are manipulated. The country’s fiscal well being is at risk. Citizens stand idly by as we invade a country based on misinformation. Our fighting forces are dying every day. Our service members are wounded and injured daily. When will the nation face reality? Recall your brain power and common sense, and your guts.
Before closing, I should touch on the job and inflation fronts. Bankrupt denim maker Cone Mills will close two North Carolina plants and lay off 625 workers. Fluor Fernald produced uranium products for the U.S. weapons program. They released 90 salaried and wage employees in construction, engineering, and project support positions, as well as laborers and porters. About 1.252 remain at this plant located 18 miles northwest of Cincinnati. It is expected that additional workforce reductions shall be forthcoming. Cygnus will reduce its workforce by 60%. Vector will close its Timberlake cigarette manufacturing facility and 150 workers will lose their jobs. There are a couple of bright spots. Houston’s new 1,200 room Hilton Americas-Houston will open on December 4, and the hotel is looking to fill about 1,000 jobs. Their job fair runs through Saturday, and the hotel expects between 6,000 and 8,000 applicants. The hotel estimates about 60% of the applicants are unemployed. Others were making $60,000 to $80,000 a year but now they just need jobs. Karen Gastile is a 41 year-old mother of a college senior and a 5-year old. She has been working temporarily as a $6 an-hour home health care worker. She had been working steadily since the 1980s in a customer service job for an insurance company but was laid off two years ago. She said of the new Houston hotel that “I hope and pray I’ll walk away with a job today…to sum up, since Bush, it’s been hell.” There is another tidbit of good news. It’s for China. Toyota will start producing car engines in China in 2005 for export to other Asian countries.
Crude oil futures closed around $31 per barrel and November natural gas closed at $5.50 per million BTUs. U.S. heating oil stocks are 8.6 million barrels below the five-year average. European supplies, including heating oil, have fallen to a 4.2% deficit versus last year. The one good news in the oil market was Nigeria’s labor unions canceled a strike that had been called to protest an increase in the retail cost of fuel.
The Labor Department reported yesterday that first-time jobless claims fell by 23,000 during the week that ended Saturday. Why did they fall by 23,000? Because the prior week’s number was raised to a revised 405,000. In other words, the jobless number rose in the prior week. This week’s number shall also, in my opinion, be revised upward. By that time, Wall Street and the media will have forgotten the revisions. Meanwhile, the number of people continuing to collect state unemployment insurance remains in excess of 3,640,000 people. Taxpayers deserve better from the Labor Department. They deserve accurate and not weekly revised upward numbers. This is politely called fudging the facts. The forecast for jobs is not bright. The Business Council stated 63% of its member organizations would maintain current hiring levels next year, and that jobs for manufacturing would remain difficult to obtain. Overall, only 14% said they would step up hiring. A few companies, such as, GE and Union Pacific, have begun selective hiring. In sum, layoffs in technology and manufacturing have slowed, but they continue. The average weekly claims since the beginning of July have amounted to 403,400. In the first half of the year they were 419,270. A good part of the problem was outlined by Jeff Immelt, GE’s CEO. He said excess capacity remains in the economy. Immelt’s statement is reinforced by the Conference Board’s most recent survey of business leaders. Since January, almost three times as many CEOs have scaled back capital spending plans as those willing to expand those plans. In other words, CEOs are even reluctant to spend stockholder money. We must also remember that those same CEOs surveyed are selling stock in increasing proportions to their purchases in a ratio of 36:1.
Telefonica SA is the largest telephone company in Latin America. They plan to cut a fourth of its workforce in the region, or 6300 jobs. France Telecom SA plans to eliminate 13,000 jobs this year, and Portugal Telecom SGPS SA is cutting 1500 workers from the payroll.
Yesterday President Bush addressed the NEW Hampshire Air National Guard, Army National Guard, Reservists and their families at Pease Air National Guard Base in Portsmouth, NH. Bush has carefully crafted new rhetoric to justify the Iraq war. He stated “the regime of Saddam Hussein possessed and used weapons of mass destruction.” He didn’t say was in possession of WPM at the time of our invasion. He can no longer make that statement, and it was the latter which caused our country to go to war. Please note that, since the major combat was declared over on May 1, 94 U.S. soldiers have been killed in action in Iraq. Why did we invade Iraq? Bush said “I acted because I was not about to leave the security of the American people in the hands of a madman.” Where was the problem of security when he didn’t have WMD. I’m told the President likes to do what’s right. If that’s so, then he should apologize to the families of the military who have lost their love ones; apologize to the service members and their families who have been injured and wounded in Iraq; and apologize to the American people for “misspeaking,” as the Vice President describes such actions. Rather than being forthright, Bush pushes on despite any evidence of WMD. Rather, he clings to “our investigators have found evidence of a clandestine network of biological laboratories. They found advanced design work on prohibited longer-range missiles.” In other words, all of the above + $1 will get you on the bus. It means zilch.
The government is not finished with its tricks. Joshua Bolten is the Director of the OMB. The government’s fiscal year ended September 30, 2003 and the OMB last projected a budget deficit of $455 billion. The actual number will be released toward the end of October. Bolten said “my expectation is that we will go below $400 billion as a result of both slower expenditures than were anticipated in July… and some modest good news in revenue collections.” In other words, expenditures were held up until the new fiscal year which began October 1, and the release of the coming year’s deficit number can be delayed until after the presidential election in November 2004. The government will attempt to place an improving face on the budget deficit picture and state there is a dedication for exercising fiscal restraint. This is a dangerous situation. Figures are manipulated. The country’s fiscal well being is at risk. Citizens stand idly by as we invade a country based on misinformation. Our fighting forces are dying every day. Our service members are wounded and injured daily. When will the nation face reality? Recall your brain power and common sense, and your guts.
Before closing, I should touch on the job and inflation fronts. Bankrupt denim maker Cone Mills will close two North Carolina plants and lay off 625 workers. Fluor Fernald produced uranium products for the U.S. weapons program. They released 90 salaried and wage employees in construction, engineering, and project support positions, as well as laborers and porters. About 1.252 remain at this plant located 18 miles northwest of Cincinnati. It is expected that additional workforce reductions shall be forthcoming. Cygnus will reduce its workforce by 60%. Vector will close its Timberlake cigarette manufacturing facility and 150 workers will lose their jobs. There are a couple of bright spots. Houston’s new 1,200 room Hilton Americas-Houston will open on December 4, and the hotel is looking to fill about 1,000 jobs. Their job fair runs through Saturday, and the hotel expects between 6,000 and 8,000 applicants. The hotel estimates about 60% of the applicants are unemployed. Others were making $60,000 to $80,000 a year but now they just need jobs. Karen Gastile is a 41 year-old mother of a college senior and a 5-year old. She has been working temporarily as a $6 an-hour home health care worker. She had been working steadily since the 1980s in a customer service job for an insurance company but was laid off two years ago. She said of the new Houston hotel that “I hope and pray I’ll walk away with a job today…to sum up, since Bush, it’s been hell.” There is another tidbit of good news. It’s for China. Toyota will start producing car engines in China in 2005 for export to other Asian countries.
Crude oil futures closed around $31 per barrel and November natural gas closed at $5.50 per million BTUs. U.S. heating oil stocks are 8.6 million barrels below the five-year average. European supplies, including heating oil, have fallen to a 4.2% deficit versus last year. The one good news in the oil market was Nigeria’s labor unions canceled a strike that had been called to protest an increase in the retail cost of fuel.
Thursday, October 09, 2003
10/09/03 Employed Seasoned Women
Between 2000 and now, every sector in the work force has less employment but one. Three years ago, 50.3% of women between 55 and 64 were working full or part time. As of last month, according to the Bureau of Labor Statistics, that had risen to 54.1%. Jared Bernstein, an economist and co-director of research for the Economic Policy Institute, stated women of this age category “work in health services, real estate, and teaching.” He said that health services and real estate have been bright spots in the economy. They may be bright spots; however , according to the Institute for Women’s Policy Research, the median annual income of a woman between 50 and 61 is just under $29,000, about two-thirds of what it is for a similarly aged man.
A week from today the annual cost-of-living adjustment will be announced for the 47 million Americans receiving Social Security benefits. The average monthly check this year is $895. A 2% increase would mean $10 extra to anyone receiving a Social Security check for $500. A 2% increase would be the third-lowest boost in 15 years. According to the Social Security Administration, about 20% of all Social Security recipients have no other income.
Most investors have knowledge of a short sale in the equity market. How many know a short sale in real estate? You will be reading more about that. It’s coming to your neighborhood. To avoid foreclosure or bankruptcy, a growing number are turning to short sales, and that involves selling a home for less than what is owed. According to Loan Performance in San Francisco, the number of delinquent mortgages rose 50% between June 2000 and July 2003. A short sale stays on one’s credit report for 7 years, and is described as a late mortgage payment. A foreclosure remains for 10 years. In addition, one must pay taxes on the difference between the value of the home and the mortgage balance because the IRS considers the difference as taxable income.
Companies have a high expectation for the productivity of physical capital. As such, over the past 11 years the inventory to sales ratio has dropped from 1.56 to August’s 1.20. It is a reflection of the growing trend to just-in-time inventory at the retail level.
Musicland Group operates Sam Goody and Suncoast Motion Picture Co. They plan to close 150 stores and layoff 900 employees.
Bush will visit Japan a week from tomorrow. He will defend the Administration’s record on Iraq and the U.S economy as well as focusing on global trade and exchange rates. For the first time in three years, the dollar slid below the 109 yen level, and certainly doesn’t reflect a strong dollar policy. The latter is a bad joke.
The WHO is bracing for another SARS outbreak this winter. Dr. Lee Jong-Wook, stated “our working assumption is that SARS will come back…in the coming winter, if SARS is mixed with the common cold and flu this will cause a lot of problems.”
The United Food and Commercial Workers Union has called for a strike vote today. The results will be released tomorrow morning. The union represents 70,000 grocery workers at Albertsons, Ralphs, and Vons markets in Southern California. The three unionized chains control 75% of the Southern California market. WalMart, however, is making inroads with their supercenters. The three chains are pushing the union to accept insurance premiums, higher deductibles and co-pays for doctor visits, and a lower pay scale for new employees. Paul Clark, professor of labor studies and industrial relations at Penn State University observed “it’s going to get worse as WalMart opens stores in every conceivable market. This is a problem that’s not going to go away.”
Sean Egan is managing director of Eagan-Jones Ratings Co. in Philadelphia. He remarked that Ford has $25 billion in unfunded pension and health-care liabilities and that Ford has “very skimpy equity: $8 billion of shareholder equity versus $311 billion of assets. That really is a sliver.” He went on to state that “the industry is beleagured by inventory overhang. The time it takes to turn inventory over-basically sell a vehicle- industrywide has increased from 60 days in July 2002 to 78 days in July 2003." I continue to mention the auto industry. It faces significant problems- too little equity, unfunded pensions, rising health care liabilites, and too much inventory, and that inventory is taking longer and longer to sell. It is not accident waiting to happen. It has already happened at Chrysler and Ford, and GM will need to be very adept to avoid a mishap.
Between 2000 and now, every sector in the work force has less employment but one. Three years ago, 50.3% of women between 55 and 64 were working full or part time. As of last month, according to the Bureau of Labor Statistics, that had risen to 54.1%. Jared Bernstein, an economist and co-director of research for the Economic Policy Institute, stated women of this age category “work in health services, real estate, and teaching.” He said that health services and real estate have been bright spots in the economy. They may be bright spots; however , according to the Institute for Women’s Policy Research, the median annual income of a woman between 50 and 61 is just under $29,000, about two-thirds of what it is for a similarly aged man.
A week from today the annual cost-of-living adjustment will be announced for the 47 million Americans receiving Social Security benefits. The average monthly check this year is $895. A 2% increase would mean $10 extra to anyone receiving a Social Security check for $500. A 2% increase would be the third-lowest boost in 15 years. According to the Social Security Administration, about 20% of all Social Security recipients have no other income.
Most investors have knowledge of a short sale in the equity market. How many know a short sale in real estate? You will be reading more about that. It’s coming to your neighborhood. To avoid foreclosure or bankruptcy, a growing number are turning to short sales, and that involves selling a home for less than what is owed. According to Loan Performance in San Francisco, the number of delinquent mortgages rose 50% between June 2000 and July 2003. A short sale stays on one’s credit report for 7 years, and is described as a late mortgage payment. A foreclosure remains for 10 years. In addition, one must pay taxes on the difference between the value of the home and the mortgage balance because the IRS considers the difference as taxable income.
Companies have a high expectation for the productivity of physical capital. As such, over the past 11 years the inventory to sales ratio has dropped from 1.56 to August’s 1.20. It is a reflection of the growing trend to just-in-time inventory at the retail level.
Musicland Group operates Sam Goody and Suncoast Motion Picture Co. They plan to close 150 stores and layoff 900 employees.
Bush will visit Japan a week from tomorrow. He will defend the Administration’s record on Iraq and the U.S economy as well as focusing on global trade and exchange rates. For the first time in three years, the dollar slid below the 109 yen level, and certainly doesn’t reflect a strong dollar policy. The latter is a bad joke.
The WHO is bracing for another SARS outbreak this winter. Dr. Lee Jong-Wook, stated “our working assumption is that SARS will come back…in the coming winter, if SARS is mixed with the common cold and flu this will cause a lot of problems.”
The United Food and Commercial Workers Union has called for a strike vote today. The results will be released tomorrow morning. The union represents 70,000 grocery workers at Albertsons, Ralphs, and Vons markets in Southern California. The three unionized chains control 75% of the Southern California market. WalMart, however, is making inroads with their supercenters. The three chains are pushing the union to accept insurance premiums, higher deductibles and co-pays for doctor visits, and a lower pay scale for new employees. Paul Clark, professor of labor studies and industrial relations at Penn State University observed “it’s going to get worse as WalMart opens stores in every conceivable market. This is a problem that’s not going to go away.”
Sean Egan is managing director of Eagan-Jones Ratings Co. in Philadelphia. He remarked that Ford has $25 billion in unfunded pension and health-care liabilities and that Ford has “very skimpy equity: $8 billion of shareholder equity versus $311 billion of assets. That really is a sliver.” He went on to state that “the industry is beleagured by inventory overhang. The time it takes to turn inventory over-basically sell a vehicle- industrywide has increased from 60 days in July 2002 to 78 days in July 2003." I continue to mention the auto industry. It faces significant problems- too little equity, unfunded pensions, rising health care liabilites, and too much inventory, and that inventory is taking longer and longer to sell. It is not accident waiting to happen. It has already happened at Chrysler and Ford, and GM will need to be very adept to avoid a mishap.
Wednesday, October 08, 2003
10/08/03 Part Time Employment
Over the past week I have received many requests to more fully discuss the part time employment situation in our country. This subject came to the forefront after the Department of Labor had mentioned the primary cause for the rise of 57,000 jobs was the increase of 33,000 part time workers. Many times I have mentioned the growing problem of the inability to find full time, permanent employment. There are 5 million temporary workers in the U.S. It is a part of the workforce that continues to grow each year. Companies do not want to pay benefits as they do with permanent employees. In addition, until there is a growth in the revenue stream for companies, there will be a reluctance to hire full time workers. That is understandable. There is one more point to mention. The number of workers who have been unemployed for 27 weeks or longer has reached a 20- year high, and many welcome the opportunity to work even if it’s part time.
Yesterday, Cooper Tire announced an agreement with Hangzhou Zhongce Rubber Company of Hangzhou, China to supply Cooper with 250,000-350,000 radial medium truck tires annually. This will replace the production at the company’s Albany, Georgia plant where 1,500 workers are employed. HP also announced additional cuts of 1,200 workers and UC Berkeley announced laying off 200.
Consumer credit has now reached the $2 trillion mark. That requires a concerted effort to spend.
Japan spent $40 billion buying U.S. dollars in September. It was money down the drain as the dollar broke below the 110 yen level.
Osama bin Laden is at large. Saddam Hussein is at large. President Bush expressed doubt the Justice Department will ever find the administration official who disclosed the identity of the CIA operative. 320 U.S. service members have died in Iraq since March 20. Maybe the voters have an answer for this ineptness. California voters finally stood up and were counted.
According to the Pew Hispanic Center, more than half of the 759,000 Hispanics who entered the workforce between 2000 and 2003 were unable to find jobs, even though overall Hispanic employment increased by 379,000 to about 15 million. The unemployment rate for Hispanics in August was 7.8%.
For years, Costco has been on my list of favorite companies. Unfortunately, WalMart’s Sam’s Club has Costco in their pricing line of fire. The price war is taking its toll. In August, Costco warned they would not meet its quarterly earnings forecast of 54 to 56 cents. Today they reported a quarterly drop to 51 cents. WalMart is chugging on all cylinders. They can afford a price war. Costco cannot. WalMart smells blood. They will keep up the pressure on Costco’s margins. Hopefully, Costco’s small but growing international business will help to offset the pricing situation.
Yesterday, ten Southeast Asian nations signed an accord establishing a Europe-like economic community by 2020. In addition, it calls for a regional security community to combat terrorism and other transnational crimes. The accord sets deadlines for lowering tariffs and travel restrictions in the region where trade totals $720 billion a year. The Southeast Asian countries hope, by coming together, they will better counter the economic power of China and India.
Over the past week I have received many requests to more fully discuss the part time employment situation in our country. This subject came to the forefront after the Department of Labor had mentioned the primary cause for the rise of 57,000 jobs was the increase of 33,000 part time workers. Many times I have mentioned the growing problem of the inability to find full time, permanent employment. There are 5 million temporary workers in the U.S. It is a part of the workforce that continues to grow each year. Companies do not want to pay benefits as they do with permanent employees. In addition, until there is a growth in the revenue stream for companies, there will be a reluctance to hire full time workers. That is understandable. There is one more point to mention. The number of workers who have been unemployed for 27 weeks or longer has reached a 20- year high, and many welcome the opportunity to work even if it’s part time.
Yesterday, Cooper Tire announced an agreement with Hangzhou Zhongce Rubber Company of Hangzhou, China to supply Cooper with 250,000-350,000 radial medium truck tires annually. This will replace the production at the company’s Albany, Georgia plant where 1,500 workers are employed. HP also announced additional cuts of 1,200 workers and UC Berkeley announced laying off 200.
Consumer credit has now reached the $2 trillion mark. That requires a concerted effort to spend.
Japan spent $40 billion buying U.S. dollars in September. It was money down the drain as the dollar broke below the 110 yen level.
Osama bin Laden is at large. Saddam Hussein is at large. President Bush expressed doubt the Justice Department will ever find the administration official who disclosed the identity of the CIA operative. 320 U.S. service members have died in Iraq since March 20. Maybe the voters have an answer for this ineptness. California voters finally stood up and were counted.
According to the Pew Hispanic Center, more than half of the 759,000 Hispanics who entered the workforce between 2000 and 2003 were unable to find jobs, even though overall Hispanic employment increased by 379,000 to about 15 million. The unemployment rate for Hispanics in August was 7.8%.
For years, Costco has been on my list of favorite companies. Unfortunately, WalMart’s Sam’s Club has Costco in their pricing line of fire. The price war is taking its toll. In August, Costco warned they would not meet its quarterly earnings forecast of 54 to 56 cents. Today they reported a quarterly drop to 51 cents. WalMart is chugging on all cylinders. They can afford a price war. Costco cannot. WalMart smells blood. They will keep up the pressure on Costco’s margins. Hopefully, Costco’s small but growing international business will help to offset the pricing situation.
Yesterday, ten Southeast Asian nations signed an accord establishing a Europe-like economic community by 2020. In addition, it calls for a regional security community to combat terrorism and other transnational crimes. The accord sets deadlines for lowering tariffs and travel restrictions in the region where trade totals $720 billion a year. The Southeast Asian countries hope, by coming together, they will better counter the economic power of China and India.
Tuesday, October 07, 2003
10/07/03 Keeping It Real
The earnings season has arrived. The expectation is for a 16% quarterly rise in profits. We must focus on the top line and not just the bottom line which reflects cost cutting, including closed plants and employee layoffs. We should notice whether a business is growing, and the nature of that growth. For example, Pepsi reported higher profits mainly due to Frito Lay's snack foods. That's great but they have substantial investments in other areas, particularly soft drinks. When you think of Pepsi, you think of the drink and not snack foods. Today Alcoa reports. Last year's quarter stunk because aluminum prices were 59 cents a pound. This quarter the price is 65 cents and should produce a profit gain of about 4 to 5 cents a share over last year's 26 cents. There is still a world wide oversupply of aluminum, and the aircraft and auto markets have not been great recently for Alcoa. The report should not be startling.
The U.S. dollar is trying to hold 110 vs the yen and 1.18 vs. the euro. However, the Mexican peso fell to a record low of 11.28 against the dollar.
The 2004 campaign message was released last week by Howard Dean. He stated "by this time in his presidency, President Clinton had created over 7.5 million private-sector jobs. In contrast, President Bush has lost over 3.2 million jobs in his 33 months in office."
According to the Natinal Commission on Teaching and America's Future, almost one third of teachers leave the field within the first three years and half before their fifth year.
Goodyear will close its Huntsville, Alabama tire plant. About 1,100 jobs will be impacted.
Rolls-Royce is forecasting 2003 business jet deliveries of about 500 units, down 25% from 2002. Deliveries for 2004 are expected to be at the same level, followed by a slow recovery in 2005.
The Business Travel Coalition said travel spending is expected to fall 7% in 2003. Next year 7 in 10 North American companies surveyed will spend the same or less on business travel next year. About two-thirds of respondents expect to buy more tickets from low fare carriers next year.
This is important. In the third quarter, corporate insiders sold 36 shares of stock for every one share they purchased. This is the worst ratio in ten years. I believe this is so one-sided, that, at the very least, it would be prudent to reduce equity holdings.
Still Governor on Sunday, Davis signed a mandatory health insurance law for California. For companies with 200 or more employees, those firms must provide health insurance for the employees and their families by 2006. With companies having between 50 and 199 employees, health insurance needs to be provided for the workers only by 2007. Companies with 50 or less employees are not affected.
The earnings season has arrived. The expectation is for a 16% quarterly rise in profits. We must focus on the top line and not just the bottom line which reflects cost cutting, including closed plants and employee layoffs. We should notice whether a business is growing, and the nature of that growth. For example, Pepsi reported higher profits mainly due to Frito Lay's snack foods. That's great but they have substantial investments in other areas, particularly soft drinks. When you think of Pepsi, you think of the drink and not snack foods. Today Alcoa reports. Last year's quarter stunk because aluminum prices were 59 cents a pound. This quarter the price is 65 cents and should produce a profit gain of about 4 to 5 cents a share over last year's 26 cents. There is still a world wide oversupply of aluminum, and the aircraft and auto markets have not been great recently for Alcoa. The report should not be startling.
The U.S. dollar is trying to hold 110 vs the yen and 1.18 vs. the euro. However, the Mexican peso fell to a record low of 11.28 against the dollar.
The 2004 campaign message was released last week by Howard Dean. He stated "by this time in his presidency, President Clinton had created over 7.5 million private-sector jobs. In contrast, President Bush has lost over 3.2 million jobs in his 33 months in office."
According to the Natinal Commission on Teaching and America's Future, almost one third of teachers leave the field within the first three years and half before their fifth year.
Goodyear will close its Huntsville, Alabama tire plant. About 1,100 jobs will be impacted.
Rolls-Royce is forecasting 2003 business jet deliveries of about 500 units, down 25% from 2002. Deliveries for 2004 are expected to be at the same level, followed by a slow recovery in 2005.
The Business Travel Coalition said travel spending is expected to fall 7% in 2003. Next year 7 in 10 North American companies surveyed will spend the same or less on business travel next year. About two-thirds of respondents expect to buy more tickets from low fare carriers next year.
This is important. In the third quarter, corporate insiders sold 36 shares of stock for every one share they purchased. This is the worst ratio in ten years. I believe this is so one-sided, that, at the very least, it would be prudent to reduce equity holdings.
Still Governor on Sunday, Davis signed a mandatory health insurance law for California. For companies with 200 or more employees, those firms must provide health insurance for the employees and their families by 2006. With companies having between 50 and 199 employees, health insurance needs to be provided for the workers only by 2007. Companies with 50 or less employees are not affected.
Monday, October 06, 2003
10/06/03 Resilient Oil Prices
Oil prices held above $30 per barrel as Nigeria's main trade union called for a general strike to begin Thursday. The first phase of the strike is expected to last two weeks. Nigeria is the world's seventh largest oil exporter. In additon, two hurricanes and one tropical storm have kept two oil shipping ports shut down in Mexico.
The U.S. Department of Labor and Forrester Research expect 587,000 jobs to be exported overseas in 2005. Recently, Oracle said it was moving 2000 developer jobs from the U.S. to India and HP stated they would be closing a Florida service operation and sending its 1200 jobs to India. With 51 million people on the do-not-call list, telemarketers will need to lower labor costs as they endeavor to absorb their recent financial hit. Labor and rent costs are lower in other countries. The average telephone sales employee is paid $10,000 annually in India compared with $40,000 in the U.S.
In the midst of the hottest housing market in Phoenix history, a record number of people are losing homes to foreclosure. The foreclosure rate is outpacing record increases in home sales and prices, and so far this year, according to the MBA, home foreclosures have climbed an additional 10%.
Gail Thompkins-Bischel's husband serves as a National Guardsman, and those servicemen were told those serving in Iraq would have their stints "in theatre" doubled from 6 months to a year. Her husband was to return home on Nov. 15 in time for Thanksgiving. She says "they pulled the rug out from under us." Major Gen. Paul Monroe, commander of the California National Guard, said "they've been handed a bitter pill, and I can't coat it with enough sugar."
The Chicago Mercantile Exchange will offer futures contracts on the U.S. consumer price index not adjusted for seasonal fluctuations.
Oil prices held above $30 per barrel as Nigeria's main trade union called for a general strike to begin Thursday. The first phase of the strike is expected to last two weeks. Nigeria is the world's seventh largest oil exporter. In additon, two hurricanes and one tropical storm have kept two oil shipping ports shut down in Mexico.
The U.S. Department of Labor and Forrester Research expect 587,000 jobs to be exported overseas in 2005. Recently, Oracle said it was moving 2000 developer jobs from the U.S. to India and HP stated they would be closing a Florida service operation and sending its 1200 jobs to India. With 51 million people on the do-not-call list, telemarketers will need to lower labor costs as they endeavor to absorb their recent financial hit. Labor and rent costs are lower in other countries. The average telephone sales employee is paid $10,000 annually in India compared with $40,000 in the U.S.
In the midst of the hottest housing market in Phoenix history, a record number of people are losing homes to foreclosure. The foreclosure rate is outpacing record increases in home sales and prices, and so far this year, according to the MBA, home foreclosures have climbed an additional 10%.
Gail Thompkins-Bischel's husband serves as a National Guardsman, and those servicemen were told those serving in Iraq would have their stints "in theatre" doubled from 6 months to a year. Her husband was to return home on Nov. 15 in time for Thanksgiving. She says "they pulled the rug out from under us." Major Gen. Paul Monroe, commander of the California National Guard, said "they've been handed a bitter pill, and I can't coat it with enough sugar."
The Chicago Mercantile Exchange will offer futures contracts on the U.S. consumer price index not adjusted for seasonal fluctuations.
Sunday, October 05, 2003
10/05.03 Yom Kippur
This is the most solemn day of the year for the Jews. Yom Kippur is the last day that God keeps open the Book of Life. It means there is a list for those to live and for those to die. By repenting during Yom Kippur, a Jew starts the new year with a clean slate. It is the day of atonement and intertwined is forgiveness with repentance.
I will not make this a traditional blog but rather will simply point out a couple of things I found interesting.
The Toyota Center, a $235 million downtown arena, opens tomorrow in Houston, and it will be the home to the Rockets, Comets, and Aeros.
Costco is increasing the amount employees are required to contribute to their health insurance plan. The mandatory contribution is being raised to about 8.5% from about 4.5%.
This is the most solemn day of the year for the Jews. Yom Kippur is the last day that God keeps open the Book of Life. It means there is a list for those to live and for those to die. By repenting during Yom Kippur, a Jew starts the new year with a clean slate. It is the day of atonement and intertwined is forgiveness with repentance.
I will not make this a traditional blog but rather will simply point out a couple of things I found interesting.
The Toyota Center, a $235 million downtown arena, opens tomorrow in Houston, and it will be the home to the Rockets, Comets, and Aeros.
Costco is increasing the amount employees are required to contribute to their health insurance plan. The mandatory contribution is being raised to about 8.5% from about 4.5%.
Saturday, October 04, 2003
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.
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.
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