Archive for April 17th, 2009

Caution: 535 backseat drivers onboard … (all unlicensed)

April 17, 2009

Ken’s Take: 

Many banks were forced to take TARP funds even though they didn’t need or want them.  Why?  So that banks that did need the money wouldn’t be stigmatized and to get more money into the economy.

Now, “industry officials have been expressing growing concern about Washington changing TARP terms, as Congress did last month on rules for executive compensation … That creates uncertainty and disincentives for companies in TARP. You have 535 backseat drivers in Congress. ”

“Think about it: If Rick Wagoner can be fired and compact cars can be mandated, why can’t a bank with a vault full of TARP money be told where to lend? And since politics drives this administration, why can’t special loans and terms be offered to favored constituents, favored industries, or even favored regions? Our prosperity has never been based on the political allocation of credit — until now. ”

Unfortunately (for TARP holders), Team Obama is rejecting attempts to repay the loans … and dodge encumbering Congressional control.

I guess backseat driving is way too much fun … especially when it comes with no accountability.

Source article:
http://foxbusiness.proteus.com/content.html?contentId=29318

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In praise of tax code simplification …

April 17, 2009

Ken’s Take:

(1) Of course a simpler tax code makes sense, but it’ll never happen.  Why?  Because the complicated tax code is Congress’ source of power.  It allows them to pick winners & losers — among people, ideas and, oh yeah, contributors.

(2) I’d add a 7th principle: Everybody has to have some skin in the game.

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Excerpted from WSJ, “We Need a Simpler Tax Code”. April 10, 2009

As the national taxpayer advocate, I am required to report to Congress each year on the most serious problems facing U.S. taxpayers. With April 15 fast approaching, it will come as no surprise to many frustrated taxpayers that the complexity of the tax code tops my list.

The law should be plain enough that most people can compute their own liabilities on a single form.

In developing a comprehensive tax reform blueprint, I recommend that emphasis be given to six core principles.

First, the tax system should not be so complex as to create traps for the unwary.

Second, the tax laws should be simple enough so that most taxpayers can prepare their own returns and compute their tax liabilities on a single form, and simple enough so that IRS telephone assistors can accurately answer taxpayers’ questions.

Third, the tax laws should anticipate the largest areas of noncompliance and minimize the opportunities for such noncompliance.

Fourth, the tax laws should provide some choices, but not too many, since choices are confusing and can lead to taxpayer error.

Fifth, where the tax laws provide for refundable credits, they should be designed in a way that is minimally burdensome both for the taxpayers claiming the credits and for the IRS in administering them.

Sixth, the tax system should incorporate a periodic review of the tax code — a sanity check to guard against complexity creep.

Tax simplification would benefit all Americans, regardless of political party.

Full article:
http://online.wsj.com/article/SB123933106888707793.html

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Hollywood’s Newest Concern? A Big Red Vending-Machine

April 17, 2009

Excerpted from LA Times, “Redbox’s $1 vending-machine video rentals worry movie studios” By Dawn C. Chmielewski, March 30, 2009

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The hottest thing in movie rentals is as old as the Coke machine — and just as red. Redbox movie kiosks are popping up by the thousands in supermarkets, drugstores, restaurants and convenience stores around the country. The kiosks stock DVDs that rent for $1 a day, a remainder-bin price that is less than a cup of coffee at Starbucks.

For all the talk about the Internet, Wi-Fi and cellphones becoming the new gateways to watch movies and wiping out the corner Blockbuster, a ubiquitous vending machine the size of a refrigerator is becoming a growing concern to Hollywood.

Consumers are pulling DVDs out of the Redbox kiosks in record numbers, undermining longtime economics that have propped up the movie business — and in the process triggered a backlash from a major studio that sought to cut off Redbox’s supply of hot new DVDs …

Redbox operates nearly 12,900 kiosks throughout the U.S. — four times as many locations as Blockbuster — and plans to introduce 7,100 more by the end of the year … Consumers rent a DVD from the machine using their credit or debit cards, which enables Redbox to charge an additional day’s rental if the DVD is not returned within a 24-hour period. A typical kiosk can earn significant coin: about $50,000 annually in revenue per machine in operation after three years.

Blockbuster … started rolling out its own DVD-vending kiosks last summer … “We have been watching very carefully as they have progressed … We think it is very consistent with what Blockbuster does, which is to provide convenient access” to home entertainment.

The discount DVD rental business worries Hollywood movie studios because of fears that it is undercutting DVD sales, which dropped 13% in the fourth quarter … DVD sales historically have been how the studios earn a profit on movies, because ticket sales are barely enough to offset production and marketing costs. Some studios believe that consumers will forgo buying DVDs if they have a cheap option to rent movies …

The kiosks caught on, especially in supermarkets, where they catch customers’ eyes as they push their grocery carts through the checkout counters.

The combination of errands to fill the cupboard and rent movies, as well as the consistent flow of customers, turned out to be advantageous … “It’s a regularity of traffic, and the biggest single place people are going after the supermarket is to their homes,” Redbox’s Kaplan said. “Consumers tend not to rent DVDs when they’re not going home” …

Video industry analyst Adams estimates that the kiosk rental market, which totaled $519 million last year, will reach $1.4 billion in five years — or about one-fourth of Blockbuster’s 2008 revenue.

“You could view that as directly competitive” with Blockbuster, Adams said. “It’s a cheaper option, and during a recession people embrace it.”

Edit by SAC

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Full Article:
http://www.latimes.com/business/la-fi-cotown-redbox30-2009mar30,0,3496501.story?track=rss

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Posted in Digital Media, Mktg - Consumer Behavior, Retailing | Leave a Comment »