The Wall Street Journal has summarized what’s in the stimulus bill. Even their summary is too long to post, so here’s the link.
http://online.wsj.com/article/SB123458384689487271.html
Worth browsing ….
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Obama says the trillion dollar pork-laden, faux stimulative program will “save or create up to 4 million jobs”.
Last week, I pointed out that “up to” provides mucho definitional cover by itself, but that the serious wiggle room comes from “jobs saved” — a comparison against some fabricated “what if” number.
Well, the fabricated “what if” number is already being planted:
Austan Goolsbee, one of Obama’s chief economic advisers, says he’ll consider the effort successful if the worst scenarios don’t come to pass, “if by the end of 2009 we aren’t looking at GDP numbers that are huge negatives, if unemployment rises to the 8% range rather than the 11% that some are predicting.”
I can’t find any non-Obama paid economist saying 11%. Most economists are saying that the unemployment rate will peak in the range of 8 to 8.5% if we do nothing. Apparently, Team Obama is prepared to declare success (i.e. claim millions of jobs saved) is the stimulus plan does about as well as doing nothing. The jobs saved will be calculated against a disaster scenario that they’ll specify, thank you.
In other words, a victory party is guaranteed …
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Reference for Goolsbee quote:
http://money.cnn.com/2009/02/13/news/economy/easton_economicteam.fortune/index.htm?postversion=2009021310
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Excerpted from “Are Lapses Of Best And Brightest Prelude To Our Decline And Fall?”, Hansen, February 12, 2009
Certainly you’ve noticed the ads on radio now blaring out how to renegotiate our mortgages, how to avoid paying the IRS and how to walk away from freely incurred credit-card debt. We hear not to trust in mutual funds or even banks — but instead, like medieval hoarders, to revert to the age-old safety of gold.
An unraveling of the system ?
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Most historians agree that earthquakes, droughts or barbarians did not unravel classical Athens or imperial Rome.
More likely the social contract between the elite and the more ordinary citizens finally began breaking apart — and with it the trust necessary for a society’s collective investment and the payment of taxes. Then civilization itself begins to unwind.
Today, you can take your pick: On the one side, we have free-market capitalists (think O’Neill, Raines, Fuld) who took huge amounts of money as their companies eroded the savings of tens of millions; on the other, we have supposedly egalitarian liberals who skipped paying taxes (think Rangel, Geithner, Daschle).
The result is the same. Our best-educated, wealthiest and most connected in matters of finance proved our dumbest — and our political leaders were less than ethical in meeting their moral responsibilities as citizens.
If ordinary Americans were to follow the examples of Wall Street and Washington elites, the nation would neither collect needed revenue nor invest its capital. All of that is a recipe for national decline and fall.
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The former “masters of the universe” who ran Wall Street took enormous risks to get multimillion-dollar bonuses, even as they piled up billions in debt for their soon-to-be-bankrupt companies.
Financial wizards like Robert Rubin at Citicorp, Richard Fuld at Lehman. and Franklin Raines at Fannie Mae — all of whom made millions as they left behind imploding corporations — had degrees from America’s top universities.
They had sophisticated understanding of hedge funds, derivatives and subprime mortgages — everything, it seems, but moral responsibility for the investments of millions of their ordinary clients.
The result of such speculation by thousands of Wall Street gamblers was that millions of Americans who played by the rules, and put money each month away in their 401(k) plans and elsewhere, lost much of their retirement savings. Many likely will have to keep working well into their 60s or 70s, and delay passing on their jobs to a new generation awaiting employment.
Yet most disgraced Wall Street elites will retain their mega-bonuses and will not go to jail. Their legacy is having destroyed the financial confidence of a society that depends on putting capital safely away to be directed for investment by responsible overseers.
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Meanwhile, we are learning that the brightest and best-educated Americans at the highest levels of government simply refuse to pay their required taxes.
And they apparently did not pay their back taxes until their Obama appointments put them in jeopardy of public disclosures.
That raises disturbing questions: Would we have known about such tax dodging had our best and brightest not wished career advancement in government? And would they have ever paid up if they had not been caught?
Take your pick: On the one side, we have free-market capitalists who took huge amounts of money as their companies eroded the savings of tens of millions; on the other, we have supposedly egalitarian liberals who skipped paying taxes.
The result is the same. Our best-educated, wealthiest and most connected in matters of finance proved our dumbest — and our political leaders were less than ethical in meeting their moral responsibilities as citizens.
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If ordinary Americans were to follow the examples of Wall Street and Washington elites, the nation would neither collect needed revenue nor invest its capital. All of that is a recipe for national decline and fall.
Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=319333609341307
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Excerpted from the Wall Street Journal, “Sprint Prepay Plan Pressures Cell Rivals”, by Roger Cheng, January 16, 2009
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Sprint Nextel’s Boost Mobile plans to offer an unlimited nationwide calling plan for $50 a month, a bid by the youth-oriented wireless service to severely undercut rivals.
With the cheaper plan, which is half the cost of the $99 unlimited plans offered by the major carriers and $10 cheaper than similar unlimited plans offered by local competitors, Boost is hoping to go after budget-conscious consumers. It represents an aggressive move by Sprint to attract customers even as its own core wireless service continues to lose subscribers.
In addition to unlimited calling, customers will get unlimited text messages, mobile Web surfing, and a walkie-talkie feature. Customers aren’t locked into a contract, and can leave at any time.
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Industry watchers speculate whether the move could spark a price war in the cut-throat wireless industry.
The major carriers offer unlimited calling for $99, but those plans typically require a one or two year contract.
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People looking to join Boost Mobile will have to switch to the Nextel network which means buying a new phone not compatible with other. Phones run between $20 and $100, and there are a limited number of choices, all from Motorola. Because there are no contracts, there are no subsidies for the handsets.
Edit by DAF
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Note: It is not mentioned in this article, but Sprint’s Boost network is an older network, significantly slower than Sprint’s current network, and does not allow for any of the new 3G features like GPS navigation. For a customer concerned only with making/receiving calls and even texting, though, though, this could be an interesting proposition.
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Full article:
http://online.wsj.com/article/SB123199251112984943.html
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Excerpted from Ad Age, “Consumers Skip Starbucks for Plain Ol’ Joe” By Emily Bryson York
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Americans appear to be cutting back on their Starbucks … survey results reveal that 60% of Americans have scaled back on fancy or expensive coffee in the past six months; 56% report cutting back just since the beginning of the year.
The culprit was overwhelmingly the economy, with 90% of survey respondents saying they are doing so to save money …
Those who have scaled back the most since the beginning of the year … are consumers 45 to 54, with fully half (50.4%) saying they have “cut back a lot” on fancy or expensive takeout coffee … As might be expected, those who had trimmed the expense the most were in the lower of the survey’s income brackets … But salary didn’t appear to be that big a factor among the 92% who said they are cutting back on back on expensive coffee to save money: The percentage was close to even across all income levels, including $75,000-plus.
And these are clearly Starbucks drinkers: Some 43% said they “buy their coffee the most” from Starbucks, followed by “other” at 20%, Dunkin’ Donuts at 19.7%, McDonald’s at 16% and Burger King at 1.3%.
The biggest shift seems to be in mind-set, as latte lovers trade down rather than out of their fancy-coffee fixes by drinking less, going to less-expensive places or brewing at home … This trading down seems to be affecting the coffee giants unevenly. While Starbucks has reported same-store sales down in the mid-single digits, Dunkin’ Donuts has opened more stores …
Harry Balzer, chief industry analyst at NPD Group, said sales of specialty coffee — lattes, cappuccinos and the like — were up 4% in 2008 but down 1% in the fourth quarter, when the economy really started to tank. That represents specialty coffee’s first quarterly decline since 2004 … In the meantime, prospects for low-rung coffee might be picking up. Sensing opportunity, Quick Chek … recently launched an outdoor and radio campaign telling consumers to “Cut spending. Keep drinking.”
While Quick Chek’s coffee sales were up in 2008 because of price increases, the chain’s sales were down by volume … the company is bracing for the arrival of a major competitor: McDonald’s, which is in the process of installing coffee bars in about 14,000 U.S. restaurants, a move virtually guaranteed to reshape the market once more. It will begin national advertising for the McCafe line early this summer.
She predicted that Dunkin,’ Starbucks and Quick Chek all will lose business when that happens. “Their price isn’t significantly lower, but they position themselves as a value offering … People, whether they’re feeling the pinch or not, are thinking differently about their money.”
Edit by SAC
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While the actual price of a cup of Joe at Dunkin’, Starbucks or even Quick Chek may not differ significantly consumer perceptions of value do vary, which has the effect of skewing the price/quantity value equation. So while consumers “trade down” to non-specialty brews they are in effect trading up to brands that they perceive to provide more value.
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Full Article:
http://adage.com/article?article_id=133871
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