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Labor Unions and Environmentalists

June 30th 2009 19:06
Who would have expected labor unions to hold up development of environmentally positive projects? Well, as IBD Editorials report, that's exactly what's happening in California.
The New York Times [no link], for all its problems, can still do good reporting, one example being its coverage of unions using environmental regulations in California to try to pressure developers into signing "agreements pledging to use union labor."


"If they refuse," reports Todd Woody, "they say they can count on union groups to demand costly environmental
In other words, damn the environment - we want union labor only on these projects.

Since the economic viability of 'green tech' projects is already questionable in most cases, the difference between union labor rates and free market rates may be the deciding factor between projects being profitable (or even being built!) or not.
The difference in unions using greenmail and blackmail, says Sherk, is that in greenmail "unions use government bureaucrats instead of armed thugs to intimidate businesses." And "it happens repeatedly."

Companies that are victims of greenmail should stand up to union shakedowns. While refusing to unionize won't allow companies to avoid the snarl of environmental rules, it will improve their chances to operate their businesses at lower costs and provide investors with better returns.
Oh, glad you 'splained it to us.
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How Bad Is Greed?

May 19th 2009 21:42
Recently President Obama has blamed much of what lead to the economic meltdown to "greed" by various parties: Investors, bankers, mortgage companies, insurance companies, overpaid executives, etc. The media and the public lap this up, since we all disapprove of "greed". But what is greed and how bad is it? Of course, no one ever points into the mirror and accuses himself of being greedy - it's always the other guy. And what does those greedy persons do that is so bad? Aren't we supposed to be making as much money as possible - didn't Vice President Biden recently point out that it is patriotic to pay taxes? But the public clamours for laws that control what some might label as greed, and the legislative class (and the executive class as well, if Obama is a good example) are willing to pass all the expected regulations.


George F. Will, in his column of May 17th, gives a wonderful overview of just how greed works in an unregulated market.

Using a study of ticket sales for a college football game, Will points out that "greedy" ticket sellers will over-price their tickets, expecting to maximize their profits:

A greedy seller -- one who priced his tickets too high -- was less likely than other sellers were to sell them two weeks before the game. Hence he had to resort to much deeper discounts than others did as game day, and the potential worthlessness of his assets, drew near. The larger the number of seats available in the secondary market, and the more transparent that market is, thanks to the Internet, the more likely it is that greed will be punished.

To give the greedy their due, they perform a service: By overpricing, they preserve an eve-of-game supply of tickets for persons willing to pay a premium for last-minute impulse purchases.

But when government interrupts this punishment by the marketplace, prices are lower, the chance for reward is lower and there are fewer participants overall. (Of course, regulation that makes re-sale of tickets illegal means there will be no participants - at least not in the open marketplace.) This may mean that events would not sell out, that sales of programs and food would be lessened and that such events scale back over time. It is hard to predict the outcome of specific laws, but history shows that government intervention makes markets less efficient and less transparent.
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Pay For BBB Score Boost

April 27th 2009 20:56
Reporting today in the Orange County (California) Register, columnist Jan Norman discloses that the Better Business Bureau (BBB) gives higher rating scores to businesses that are members of the BBB than to those that are not members.

Despite the BBB website claiming that "not being a BBB member (which it calls “not accredited”) does not disparage the company in any way", the recently updated scoring system does award 4 points for membership in the organization. That means the only way a company can get the top A rating is if they are members.

The grading system is based on 16 or 17 different factors, such as how long the company has been in business, whether it responds to and resolves complaints, how serious the complaints are and whether advertising raises “concerns.” Cox said the current grading system has been tested and modified since the original one developed by the BBB of the Southland, which serve Orange, Los Angeles, Riverside and San Bernardino counties.

For many consumers, BBB rating is the mark of excellence used to choose companies to do business with. Isn't this new approach a little (or not so little!) misleading?

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What Is Obama Admin Message?

March 30th 2009 16:57
Anyone watching these early days of the Obama Administration has to wonder what the message is. Candidate Obama promised to exit Iraq immediately - President Obama is calling for a phased withdrawal with thousands of troops remaining in Iraq. Candidate Obama discussed attacking Pakistan - President Obama has added 21,000 US personnel to Afghanistan. Candidate Obama called for an end to earmarks - President Obama signs legislation with more earmarks than anything prior. Candidate Obama called for the closing of the detention facility at Gitmo - President Obama signed an executive order, but cannot find any facility to move the prisoners to.

Now President Obama says he doesn't want to run General Motors - but forces the CEO of GM to resign.

"We cannot, we must not, and we will not let our auto industry simply vanish," President Obama said at the White House.

"What we are asking is difficult," he said. "It will require hard choices by companies. It will require unions and workers who have already made painful concessions to make even more. It will require creditors to recognize that they cannot hold out for the prospect of endless government bailouts."

The remarks come a day after the administration ousted GM Chief Executive Rick Wagoner and rejected the restructuring plans that GM and Chrysler had hoped would lead to another infusion of government cash. Instead, the White House is giving GM 60 days to come up with a strategy for viability. Chrysler has a month to wrap up a partnership with Italy's Fiat SpA.

GM is expected to hold a news conference Tuesday morning to respond to the White House's rejection of its restructuring plan, a person familiar with the plans said Monday.

The administration says a "surgical" structured bankruptcy may be the only way forward for GM and Chrysler, and President Obama held out that prospect Monday.

But what is the real message? Does a "surgical" structured bankruptcy mean that shareholders and bondholders get wiped out, but the UAW contracts are left intact? Would a forced partnership between Chrysler and Fiat create an organization that will not honor Chrysler vehicle warranties? What about shareholders of Cerberus Capital Management LP, the private investment fund that owns Chrysler?

But beyond these questions are a series of questions regarding priorities and expectations. For example, why does AIG get about $200 Billion, but GM only gets $35 Billion and the tap is shut? Why is it important for the auto industry not to "simply vanish", but it gets less money than the financial industry? Does that mean the auto industry is less important? What about other industries - from steel to planes to appliances to computer chips - any less important to keep from "simply vanishing"? What about industries that have moved out of the US for any variety of reasons - is it a priority for the Obama Administration to bring them back to the US? Is that more or less important than the auto industry? And what will be the costs (to taxpayers, shareholders, lenders and to company management) to qualify for the endless flow of funds from Washington?

The Democrats berated the Bush Administration for seven years for not having an exit strategy for Iraq. I think it is time to begin asking what the exit strategy is for government funding of failed businesses. There cannot be multiple trillion dollar rescue plans indefinitely, yet that appears to be the direction Obama is moving. After the "toxic assets" it was "financial stimulus", followed by a "down payment" on health care and now the auto industry. There is talk about bailing out newspapers, several of which have closed recently or moved to web-based product. There will be huge spending on education following the $100 Billion in the stimulus. There will be huge spending on energy projects of one type or another.

Obama refuses to call any of this "spending", instead referring to it as "investment". However, the US government has never been in the "investment" business. It is not an investment fund and it has no money of its own to invest. Rather, it is spending taxpayer dollars on projects that politicians choose to identify as important enough to fund. How are those decisions being made? Who is involved in making the decisions? What alternatives are (or are not) being considered for each of these spending choices? Finally, how long will the American people allow this destruction of private ownership to continue?
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The Dow Jones 30 Industrails Average, one of the premier benchmarks of stock market performance, has fallen below the 7,000 point mark for the first time since 1997, the New York Times reports.

Businesses and investors alike generally prefer stability to surprises, and that's what they have been getting from the Obama administration for weeks. There were promises of no lobbyists and high ethics, followed by exceptions and withdrawal of nominees due to ethical lapses. There were promises of transparency and public discussion of legislation, followed by 1,000 page bills passed by one-party force, no hearings, no public discussion and not even public disclosure of the content until after the bill had passed. There were promises of no pork projects or earmarks, followed by legislation jam packed full of both. And with record borrowing and record spending already in the pipeline, the government has in effect nationalized the auto industry, a huge insurance company (AIG) and at least one major bank (Citigroup).

At the end of this week a new unemployment report is expected to show whether the trend is continuing toward more unemployment, or a leveling off. Either way, not much improvement in the economy is expected.

[David Dietze, chief investment strategist at Point View Financial Services,] said that investors were also concerned about the message that they were hearing from governments. In Europe, over the week, stronger countries refused to come to the aid of smaller, struggling governments. And out of Washington, he said, the message continues to be inconsistent. The Senate has delayed confirmation of some members of the administration’s economic team, and the government has yet to value the toxic mortgage assets it has accepted from financial institutions.

[snip]

HSBC Holdings, the global British bank, fell 20 percent after saying it would seek to raise nearly $18 billion in new capital from shareholders and shut down its American consumer lending business.

“It’s pretty despondent everywhere,” said Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong. “O.K., there are signs that some of the leading indicators have stabilized to some extent, but it’s at a very, very low level, and we’re not seeing corporate investment picking up, or consumers starting to spend again — in other words, the traditional mechanisms by which economies come out of a recession are absent at this time.”

Economic data and company earnings in recent weeks have eroded hopes that a gradual recovery would start to materialize during the second half of the year. If, as seems increasingly likely, a tangible recovery will not come until 2010 at the earliest, Mr. Evans said, “that means corporate earnings will remain extremely soft for quite some time.”

The world-wide markets will remain in turmoil as long as the largest economic force, the United States, continues to pull legislation out of dark corners and immediately impose new rules on existing players.

Larry Kudlow went even further in his assessment of the Obama plan:

Let me be very clear on the economics of President Obama’s State of the Union speech and his budget.

He is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds.

That is the meaning of his anti-growth tax-hike proposals, which make absolutely no sense at all — either for this recession or from the standpoint of expanding our economy’s long-run potential to grow.

Raising the marginal tax rate on successful earners, capital, dividends, and all the private funds is a function of Obama’s left-wing social vision, and a repudiation of his economic-recovery statements. Ditto for his sweeping government-planning-and-spend ing program, which will wind up raising federal outlays as a share of GDP to at least 30 percent, if not more, over the next 10 years.

That's very clear. What will happen next is not known. However, Americans have taken to the streets nationally to complain about these spending and proposed budget bills. Commonly referred to as "tea parties" in a nod to the famous Boston Tea Party held in 1773, protestors are calling for less change and more discussion as the Obama administration pushes forward in their agenda.

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AIG Gets $30 Billion More

March 2nd 2009 04:31
Fox News is reporting that
American International Group (AIG: 0.4299, -0.0721, -14.36%) and the federal government will announce a major restructuring of the insurance giant’s government bailout Monday morning that will commit the Treasury Department to invest up to $30 billion in new equity in the company if it needs it, a person familiar with the negotiations told FOX Business.
AIG has gone from being the largest insurance company in the world to the largest sink hole. At what point does the taxpayers' responsibility to "bail out" a company whose management is completely in the dark end


[ Click here to read more ]
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Can You Trust Personal Info to Anyone?

February 24th 2009 17:47
Who do you trust? I don't mean about politics or life - who do you trust with your personal information? Who should have access to your bank records, tax filings, retirement savings, etc.?

People will put "private" information into many different categories: What to share with family, what to share with friends, what to share with no one, and what to share with professionals in the course of conducting business. In this last group might be medical information (test results, symptoms, personal practices, etc.), legal history, criminal history and financial history


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Consortium Seeks To Stop Malicious Code

February 17th 2009 22:29
A newly formed group of high-tech companies is joining forces against malicious code, such as the Downadup worm currently spreading on the Internet.

Additionally, Microsoft has offered a $250,000 reward for information leading to an arrest and conviction


[ Click here to read more ]
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January's Silver Lining

February 12th 2009 19:32
In a surprising show of strength, the results of January's retail sales statistics shows an overall increase of 1 percent, the largest increase in 14 months.

The various "experts" were surprised, but some of this was predictable: Many people who received gift cards for the holidays used them in January. The revenue gets booked in January, even though the cash changed hands in December. Also, many retailers had various sales (some like Circuit City had close-out sales) and these lowered prices also attracted buyers


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Exxon Mobil Does It Again - Take Note

January 30th 2009 19:40
The media reports are loaded with headlines screaming about Exxon Mobil's $45.2 BILLION in profits for calendar 2008. But, as reported here before, that is not the entire story.

In calendar 2008, Exxon Mobil paid a total of $116.3 BILLION in taxes. In other words, for every dollar in profits they paid almost three dollars in tax. That's roughly a 70% tax rate. But the politicians will yell about "obscene" profits and call for a windfall profits tax


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